Loss of a founder, loss of its biggest client and lost value – How Ecom Express landed in Delhivery’s cart

Delhivery’s acquisition of Ecom Express may trigger a wave of consolidation in India’s third-party logistics sector, say analysts.

After months of operational challenges, failed listing attempts, and allegations of misreporting financials, logistics provider Ecom Express is now being sold to its larger rival Delhivery at a discount of over 80 percent to its peak valuation.

In a surprise move on April 5, Delhivery, a listed third-party logistics (3PL) player, said it is acquiring Ecom Express for Rs 1,407 crore or around $165 million, a significant drop from its peak valuation of $850 million, as the firm looks to expand its expand its customer base and corner a larger share of the market.

Now, analysts are saying that Delhivery's move could result in more 3PL companies acquiring smaller firms.

“3PL players need capital to scale up...(but) private markets are currently not that upbeat in terms of investments...(and) public markets are becoming challenging because not everyone will reach the scale and depth that public market investors demand. The only other available option is to consolidate,” Satish Meena, founder, Datum Intelligence, a market intelligence firm, said.

3PL companies have been in a wait and watch mode and are closing deals when companies are becoming available at the right price. In fact, Delhivery's chief executive officer Sahil Barua, had told analysts in February that he is open to acquisition

How did we get here?

Founded in 2012 by Sanjeev Saxena, Manju Dhawan, K Satyanarayana, and T A Krishnan, Ecom Express rose to prominence riding the e-commerce boom.

After raising as much as $324 million in funding to date from notable investors like Warburg Picus, Partners Group, and British International Investment, among others, across a series of 12 rounds, the company achieved a peak valuation of $850 million, as per data from market intelligence platform Tracxn.

After receiving a nod from Sebi last year, the company was headed for an initial public offering (IPO) – looking to raise as much as $310 million (Rs 2,600 crore). However, the company ended up shelving its IPO plans earlier this year. It even laid off as many as 500 employees in a bid to cut costs, as per media reports.

This was the company’s second attempt at accessing the public markets, after earlier plans had stalled in 2022 due to volatile market conditions.

Notably, Ecom Express' decision to roll back its IPO came after Delhivery, in September, alleged that the firm had misrepresented numbers with regards to the two companies’ shipment volumes, profitability and capacity metrics in its draft red herring prospectus (DRHP).

“The IPO was going nowhere because they (Ecom Express) were relying on Meesho as a big client, which accounted for 50 percent of their business. The company has also been reporting flat growth in shipments, amid growing competition in the market,” Meena said.

In February last year, Meesho launched its own in-house logistics platform Valmo.At the time, the Bengaluru-based e-commerce firm was the largest customer in the 3PL space with a market share of about 50 percent, as per a report by brokerage firm Bernstein.

The loss of Meesho’s business via Valmo, which is now servicing over 50 percent of the firm’s orders up from 22 percent at the time of launch, struck a huge blow to the revenues of several 3PL operators, and particularly Ecom Express, a company heavily reliant on Meesho for its business.

In parallel, the untimely demise of one of the company’s cofounders – T A Krishan – in October 2023, may have also weighed on the company’s operations.

Krishnan served as the company’s chief operating officer and chief executive, before relinquishing the roles to become a director – while battling a prolonged illness. According to sources, several former top employees at the company also resigned with Krishnan’s passing, leading to further instability at the company.

While the company did rope in Ajay Chitkara, a former executive at Bharti Airtel’s enterprise arm, in June 2023, Ecom Express did not turnaround its business in a meaningful way.

Slowing growth

Ecom Express has been reporting slower growth over the past years as it focused on controlling losses, in the lead up to its planned IPO.

The company, in August last year, reported a 22 percent increase in revenue to Rs 2,548 crore in FY23, which slowed to just 2 percent in FY25 at Rs 2,609 crore. In parallel, its losses declined by 67 percent to Rs 256 crore in FY24.

At the same time, Ecom Express, like many other 3PL players, has been grappling with slowing demand in the e-commerce market, amid a slowdown in consumption.

According to a recent report by Flipkart and Bain, even as India's e-retail market scaled to $60 billion in 2024, its growth rate slowed to 10-12 percent during the year compared to over 20 percent seen historically due to macroeconomic and consumption stress.

Consumption growth in the country declined from around 11 percent pre-Covid (2017–19) to approximately eight percent post-Covid (2022–24) as a result of inflationary pressure and stagnating real wages, the report showed.

As such, 3PL players, which are heavily reliant on e-commerce operators, have also been facing the heat.

While the future prospects of Ecom Express remain dubious, management at the firm expects the acquisition to unlock the company’s next phase of growth.

“Delhivery is among India’s leading fully-integrated logistics service providers with significant scale advantages and will be the ideal shareholder for Ecom Express’ next phase of growth,” said K Satyanarayana, co-founder, Ecom Express.