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The engine powering India’s D2C revolution | Akshay Ghulati @ Shiprocket
243 Plays1 year ago
Did you know about 10 to 12% of India’s GDP goes into logistics? That's even more than what the software or automotive industries get! In this episode, we delve into the remarkable journey of Shiprocket as it shakes up the world of e-commerce. Akshay Ghulati talks about Shiprocket’s vision and how they're tackling unique challenges in India's market. Learn how Shiprocket makes e-commerce smarter and more efficient, especially in international shipping.
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Read more about Shiprocket:-
1. Shiprocket’s ‘back-to-the-future’ mission: Democratising ecommerce for Bharat
2. Tech, Government support driving support in India’s exports: Akshay Ghulati
3. D2C sales made smarter and swifter with Shiprocket Checkout
4.Shiprocket expands services to boost revenue beyond shipping
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Transcript
Introduction to Shiprocket and Akshay Gulati
00:00:00
Speaker
Hi, I'm Akshay Gulati, co-founder of Ship Rocket.
India's Logistics Challenges
00:00:15
Speaker
Here's an amazing fact, something like 10-12% of India's GDP is spent on logistics. That is more than the share of software industry or the automotive industry. The reason why this is so big is because of India's size, but also because of the inefficiencies and logistics at every step of the process. And while the government has made life easier after GSD implementation, challenges remain.
Shiprocket's Evolution and Services
00:00:38
Speaker
One of the largest start-ups in this space is Shiprocket, which helps e-commerce companies to ship goods more efficiently to end customers and now also offers a whole range of products and services to the retail and e-commerce sector. Akshay Gholati is one of the co-founders and leads their international shipping platform. And in this freewheeling chat with Akshay Dutt, he speaks about Shiprocket's amazing journey, their inspiring vision and how they're solving some uniquely Indian challenges.
00:01:04
Speaker
Stay tuned and remember to subscribe to the Found a Thesis podcast and any audio streaming app.
00:01:19
Speaker
I want to start by understanding the history of Ship Rocket.
From Cart Rocket to Shiprocket: The Journey
00:01:25
Speaker
I know it's gone through a fairly long journey full of pivots and it's been an amazing ride. So I'd love to help our listeners learn about the journey first.
00:01:37
Speaker
Absolutely Akshay. This is going to get confusing with two Akshay's on the call, but thank you for having me here today. I'm really happy, you know, like Ship Rocket has been, you know, a passion project. It started off as, you know, an idea and it's been 12 years in the making now. So always very, very happy to talk about it.
00:01:55
Speaker
We started in 2012, so my co-founder Sahel had moved from the U.S. and he had a very clear vision at that time. He wanted to build Shopify in India. The mission was that we wanted to democratize e-commerce for the SMEs in India. It was clear that large corporate brands, they had the capability to spend lakhs of rupees on building websites. A lot of the AMG's websites were vanity websites. There was not a lot of e-commerce happening. So when I say vanity, I mean brand websites.
00:02:22
Speaker
But, you know, the cost was so prohibitively high that SMEs really couldn't access it. So the only option they had was to go to large marketplaces. I had Director of Consumer Commerce really wasn't accessible. And he came to India from the US in 2012 to set up a company called Cart Rocket. That's how we started with the vision of helping SMEs go online. It was an interesting first few years because we were what we call the students.
00:02:48
Speaker
Yes, so to the Sahil Gautam and Vishish, we shared about the part of the first phase of this journey. We raised funds, we raised the seed funding from 500 ventures, 500 startups, sorry, we raised the seed funding from Nirvana Capital. It was a successful venture card rocket. So by no stretch of the imagination, was it a failure? We got product markets fed. At one point, we were much larger than even Shopify in India. And you know, at that time,
00:03:14
Speaker
In India, everyone wanted a global counterpart or a global example of
Pivots and Challenges
00:03:18
Speaker
what you are building. So, we used to call ourselves the Shopify of India, albeit big for India, because it was unlike Shopify, which was a plug-and-play solution. Now, they have Shopify Gold, where it's an assisted solution as well, which is a little bit more expensive. But Card Rocket was an assisted solution. We didn't expect SMEs in India to go online and be able to create a website on their own using the software.
00:03:39
Speaker
That's why it did well. One of the things that we realized during that journey was that... Give me some idea. You're saying it was bigger than Shopify in India. Which year was that?
00:03:50
Speaker
So this would have been around 2014-15 when we raised our series A in 2014. We had about 1,700 websites live on Cart Rocket and Shopify at that point. And please don't correct me for accuracy, but it would have been a lot smaller than us. I think over the journey 2014 onwards, Shopify started catching up. They started focusing on India. And one of the things that we realized was that while it was all well and good to say that
00:04:17
Speaker
Then we wanted to take the Series A, it was like a 10 million fundraiser. So in the Series A pitch to investors was to very much scale up as Shopify of India. Absolutely. That was, so again, our vision all the way till 2016 was not, was very much about, so when we say Shopify of India, we call ourselves the Shopify of India, but the idea was about taking SMEs online and building Shopify for India.
00:04:43
Speaker
which was building an ecosystem parallel to the large marketplaces that could help. So at that point, the other challenge, Akshay, that SMEs are facing is a lot of them weren't successful in places like Amazon and Flipkart because they didn't have the resources or the inventory because a lot of the large marketplaces wanted huge amounts of inventory because if a stew starts selling, they don't want it to stock out. And SMEs just didn't have the capability to provide that.
00:05:07
Speaker
So it was very important to create an alternative demand channel. Social commerce, which is Facebook, WhatsApp, Instagram commerce, wasn't as big back then. Though, you know, if anyone goes back and looks at discussions or interviews that I made during that period, social commerce was a very important theme that we were working on. So while the shopping cart, Cart Rocket was an important front end that we had, the idea was to empower all disaggregated commerce.
00:05:33
Speaker
right? Anything that was not happening through a marketplace, we wanted to create the entire infrastructure to be able to do it. Obviously, with Card Rocket being our lead product there. And one of the things we realized very early on is, again, despite whatever we said, a lot of the websites that were coming on to Card Rocket were also vanity websites because
00:05:50
Speaker
people weren't getting orders. It was as simple as that, is that a website used to go live. A lot of time effort was spent in building a catalog, taking these brands online, and then they just didn't have the marketing capability to be able to generate orders. Direct-to-consumer commerce, D2C, the way we know it today, didn't exist in 2014. I don't even think the term in India was widely used. In the US, people like Shopify platforms had made D2C commerce pretty accessible.
00:06:19
Speaker
But in India, people hadn't heard of it. So essentially, one of the things that we realized during our journey is that demand generation was critical. And that led to the second phase of our journey. And that's when I joined the team in 2016 to build a venture called Craftsly, where we were building an open social commerce marketplace. Idea was any SME who had stock in their store or in their home could literally take a smartphone, click a picture, and go online. And we were trying to build
00:06:48
Speaker
a marketplace where a lot of people who were not selling online, we were going to be able to bring them online. You know, people have local craft fairs. In India, we call them sea markets, night bazaars. That was the kind of inventory we wanted to make accessible across the nation, not just in the local catchment area that was there. Why were you hired to build Craftleak? What was your background?
00:07:12
Speaker
So I was at Amazon actually before this. I was in Amazon. I'd done a bunch of different roles in the UK. One of them being running the marketplace for pan Europe. And, but my main experience was on the B2C side was on the demand side because I was a product manager there and software video games. I had, you kind of, you know, build them had not actually built, but I had, I had run the launch of, you know, the PlayStation five as well as the Xbox one, which was the biggest thing to happen in video games for over a decade when I was there.
00:07:41
Speaker
So, and I loved what I was doing, but I always had this vision that I want to come back to India and I want to do something on my own. And lastly, again, it's a passion project. Even today, if you ask me, at some point I want to get back to doing that and maybe life is coming full circle and we'll talk about it a little later because we see shoots of that back in our business today.
Logistics Backend: A Game Changer
00:08:02
Speaker
But the idea was about taking people online who didn't, again, very similar to 2012 with Card Rocket. There we were talking about brands. Now we were talking about pure SMEs, entrepreneurs, a viewer in Banaras, a porter in Andhra Pradesh. Literally, that is the kind of inventory we were able to take live. But that, unfortunately, was a very ill-fated experiment.
00:08:24
Speaker
Basically, Craftly was like the Etsy of India. Etsy is an e-commerce site in the US, which has a similar approach of allowing these art and craft kind of entrepreneurs to sell online easily. So this was something similar.
00:08:42
Speaker
Absolutely tense. The name also, as you can see, was very inspired by Etsy. So I actually, when I came back to India in 2016, I actually met Sahil in 2015 on a brief visit here. And I was actually trying to raise money for a startup that I wanted to do, which I wanted to do was build the Etsy of India. That's what I used to tell people.
00:09:01
Speaker
Very familiar. I was very familiar with Etsy. That's what I wanted to do. And during the course of that journey, a batch mate of mine from Harvard, I was just investing in CartrotK. And a lot of what I was telling him about what I wanted to do, and he was helping with introductions with VCs as well as entrepreneurs. And he told me, okay, you know, there's this guy from the same high school as you. He keeps on saying many of the same things. Maybe I should connect and see what's happening in the space here.
00:09:27
Speaker
And as fate would have it, Sahel and I met for 30 minutes and then the rest of the change history. Three months later, I was sitting at the Cart Rocket office in New Delhi and we went through that journey together. And I think one of the big mistakes is that we did everything so quickly. Okay. Has anyone so far built the HC of India? Is Misho something similar?
00:09:50
Speaker
No, not at all. Not at least the way Etsy was when Etsy started as well. I think the Etsy's concept of bringing unique products, handcrafted products, a lot of people tried. Craftly was one of ours. There was a company called Crafts Villa. Many people tried with that concept. And I think back then, and even to an extent today, the market just isn't there online because a lot of these purchases, people love the touch and feel, the experience of buying these products.
00:10:16
Speaker
So I think today, I think it's an online plus offline. It's an omni-channel play. Back then, it was probably more purely offline. The idea of people going to a night bazaar or a free market was the experience, not just about finding these products there.
00:10:32
Speaker
Michaud, I think, I wouldn't say it's the HC of India because while they had a similar concept around social commerce, I think the kind of inventory that's there is very akin to a large marketplace, right? So, and that's where it eventually carefully evolved to. So we started off with this vision, you know, our tagline was uniquely yours because we wanted to have unique products on the website and eventually we became the same as any
00:10:59
Speaker
marketplace where we had a lot of sunglasses, a lot of products, you know, like USB fans, all these gimmicky products out there. There was nothing unique about it anymore. And it was a conscious decision that we took within, I think, 12 to 15 months of doing Graphly that this is not what we started out to build. We've created something very, very different. And it's more importantly, it's something we don't believe in. While the platform was doing reasonably well, it was scaling rapidly. It was a lot of cash.
00:11:27
Speaker
So I don't remember the GMV number now, but we crossed over a hundred thousand orders a month at our peak night. So it was not, again, it was not lighting the world on fire. It was significant. And it was still something that, you know,
00:11:43
Speaker
We did it for about 15 months. I literally risked my career at Amazon to come and do the startup. In 15 months, I was the one who went into it like I found this aisle. He's created a beast that we didn't want to create. This is not what we started out thinking. Let's rethink what we're doing because all the value props that we had in mind when we pitched to investors, when we started this,
00:12:05
Speaker
Actually, maybe 7 out of 10 value propositions that we have don't exist anymore. We've built something that is going to be a cash-guzzling machine. It's going to compete with the likes of the large marketplaces. Is this really something we want to do? And you know, our DNA as entrepreneurs is very simple.
00:12:22
Speaker
If we ourselves can't see the value that we are creating in our customers' lives, if our customer can easily switch between a Craftsly or a PTM Mall or a Shop Close or a Woonick at the time, then we didn't really see the value long-term because in e-commerce, we don't have repeat customers and customer loyalty anyways in India tends to be low because of price discounting.
00:12:45
Speaker
If you don't have the repeat, you're never going to build a sustainable business model. And if you just want to keep on raising money, acquiring customers, and then hoping that at some point something changes, we just are those kind of people. So we took the hard call and we actually did a hard shot of Craftly. And during that time, Card Rocket again, had scaled, had reached a decent size, but was not growing. When was this that you said, Craftly?
00:13:11
Speaker
So this is 2017. So I came back February 2016, 2017, November. Craftney shut down. Cart Rocket itself was the main engine of the business till then. But it wasn't growing as quickly as we wanted. To a large extent, we ended up with ARR. So we went about 12 million ARR at Cart Rocket, which is a decent revenue in India, especially at that time. But the big thing is Shopify had figured out
00:13:40
Speaker
Shopify had figured out the India game by then, and they had a better platform than ours, they had better technology than ours, and we were playing catch-up. And at that point, I think Sile got the machine and I got into a room and we just said, you know, what are we doing? I think it was a point where
00:13:55
Speaker
I would say it was the lowest point of the entire journey of the platform, Bigford Retail Solutions, which is our company, because everything that we've done over four to five years, it just seemed as if
Sustainable Growth and Investment
00:14:07
Speaker
the value proposition had gone away. But the fact that we went into a period of introspection for three months was really important because we came out with ship rocket at the end of it. Ship rocket was not something new. It was not a pivot. It was not something that we built.
00:14:22
Speaker
Shiprocket was the engine that had powered Cartrocket and Craftly for the last five years. It started with Cartrocket. The big value proposition Cartrocket had versus a Shopify or any other website by the was that we give you the entire fulfillment in built into the system, which nobody else was doing, which for an SME was brilliant.
00:14:40
Speaker
And that's what our customers used to say that, you know, your front end sucks. Your technology is not that great for the front end. But we love the fact that it's a one-stop shop. You take care of everything. I don't have to now work with a CPL courier company to deliver my products. If the product doesn't get delivered, I call you. You take the ownership. So we love that concept.
00:14:58
Speaker
That three months of introspection that we did between Cart Rocket and Cartflee just made us realize that we were trying to build something for which the customer pull wasn't there. And there was this huge platform that we built, which was pretty much 80% of the time and money we'd invested over many years, was building the Huawei Cart Rocket and Cartflee backend. And people loved it, but because we didn't want to build a boring backend infrastructure company, we never really focused on it.
00:15:24
Speaker
And is that really smart entrepreneurship? And I think at the end of the day, that was a huge learning experience for us. We pretty much shut all our front-end platforms that were card-rocking and crafting down and re-pivoted to ship rocket. And I think our investors played a huge role in that journey for our Sakhshir that I remember one of our earliest investors from Nirvana Capital told us
00:15:47
Speaker
And while we are going through this introspection that which one of your customers will be really unhappy if you shut down? And if the answer is nobody, then you might as well return whatever money you've raised and go home. But if there are customers that you know would be really unhappy or who's
00:16:02
Speaker
business wouldn't survive because you aren't there then figure out what you're doing for them and just double down on it because it doesn't matter how big it is no one thinks of building a unicorn or a billion dollar company at that time you just want to solve a problem when you start out and I think that's the right way to do it because if you because I think the big mistake you made with a craft knee
00:16:19
Speaker
was that we tried to build for valuation and tried to build sort of business that we thought would scale, rather than we were solving a problem, but a problem that did not need to be solved at the time because none of our sellers just didn't want to go online. We were trying to create the market then, and it's a long arduous journey to do that. So I think ship rocket happened to us at the right time. And 2017, we pivoted, shut down both the other platforms, wrote away about 90% of our revenue actually. So we went from
00:16:49
Speaker
the 12 million ARR to like a one or two million dollar company and just started rebuilding from scratch. And the good part is the tech and the platform was there and a lot of our people stayed with us. We still have people in the company who are much older than me.
00:17:08
Speaker
And that's one of the things that has kind of been our testament to what we're building is that our attrition rate is much lower than what other people experience because we're building a company in a very, very different way. We're not building a capital-guzzling startup. We're actually building what we like to call a proper company, which is hopefully going to outlast the founders as well.
00:17:30
Speaker
Okay. Let me pause here at this point of 2017. I want to ask a few questions pre-2017. So you had raised one roughly 10 million Series A around 14. After that, did you raise more funds? Did Chip Rocket raise more funds? Yeah. So actually 2016, when I joined, was coinciding with the point where Bertelsmann invested in us as part of our Series B.
00:17:51
Speaker
And that's the point I joined because that's when Sahel and the team had more capital and, you know, we wanted to do something different. I was thinking about it. See, Sahel was thinking about social college and our mindset converged at that point that why don't we just do this together? And I think 2016, it is a serious thing.
00:18:11
Speaker
Series B, I believe was about $8 million. Again, I am very fuzzy with numbers sometimes. Sajan is the money man. He raises the money. I spend the money. That's kind of cool. But yeah, it was, I think it was an $8 million round we did at that point.
00:18:27
Speaker
advertisement led that round. Come 2000, I think 17, 18, we unfortunately had to do a bridge. So we extended our CSP because we had run out of some of that capital with Caffney along the way. And we kind of recapitalized the company. At no point, you know, did we think, okay, now shutting down the company and building something again, we continued with our investors. And I think that's been one of the big things that has differentiated us from a lot of other startups out there is that our investors have been out with us since 2012, even to this date.
00:18:56
Speaker
Amazing. Some of the VCs that we have, their funds are shut down, but they're still not sold there. Stockholding in our company and our kind of just repack created the equity to the individuals because they love the journey. And unfortunately, the first four to five years for them was all about finding product market spread.
00:19:13
Speaker
Wow, amazing. So how did the logistics part of it get built up? So what you're saying is that from very early days, one key difference between a Shopify and a Cartrocket was that Cartrocket also handled fulfillment. How was it built up? I mean, today, most of the logistics companies are tech savvy, and they can offer you API integration and stuff like that. But I'm sure in 2012, none of that
00:19:40
Speaker
ability to connect through APIs would have existed. So how was that built out? The fulfillment in general?
00:19:48
Speaker
You hit the nail on the head, actually. So you know a lot about how the logistics industry works in India. Actually, forget APIs. When you think about 2012-13, most 3PLO logistics companies did not even want to give contracts to SMEs. So if you didn't have this massive billing, you could not get a contract. You had to work on a prepaid model, and even on a prepaid model, the rates were usually two to three times higher than the contracted rates. So you're talking about
00:20:13
Speaker
Um, a period where it was not about ease. I was doing business. It was about the excess just wasn't there. And I think ship rocket was one of the first black frogs. And I give a lot of credit to Michael Felder got, got them. Yeah. Because he was the guy who was kind of working on the, what we considered at that point was a boring part of the business. Who knew?
00:20:31
Speaker
Now, five years later, it would become the business by itself. And he kind of built this entire backend infrastructure out, working. He used to go for meetings with all the CPL companies explaining to them what we're trying to do. And while some of them may not even have believed in what we were doing, it's a lot about the relationship. They believed that they could trust us. And if you were going to help them tap this SME demand, why not?
00:20:53
Speaker
And that's how it started. Shiprock and Gordon aggregated a contract with these three PLs we started giving, you know, early conversions. So delivery blue dot. Very similar to what we have today, you know, and I think, sorry, I'll just add that because they were the early adopters of this wave, which is why probably they're now the behemoths of the career industry here.
00:21:21
Speaker
Amazing. And how did the integration work? Because they wouldn't have been, I mean, they would have been using a lot of manual processes. So how did Shiprocket offer that seamless integration to the customers? That the moment some of the others are at rocket, it is like the logistics is handled.
00:21:41
Speaker
So the thing is, all of these career companies had the APIs. They were just not easy to be able to access, right? Because with the large customers like the Amazons, a lot of the new age career companies in India got built on the back of demand from Amazon and Flipkart. So the APIs were there. You just needed a team of developers to be able to build that out, and SMEs in India were not going to be able to do it.
00:22:01
Speaker
So our value add was obviously being able to, you know, write into these platforms. We were able to pull the orders from any marketplace. People were able to bulk upload the orders, manually add orders, and then one click ship it using any of the providers they want. So that was like we are and continue to be what we call a middleware, connecting the SMEs.
00:22:19
Speaker
to the careers and now not just the careers because we're trying to do a lot more than six pretty much to any end provider out there in a single platform.
Partnerships and Value Proposition
00:22:28
Speaker
So while I think the value prop in the initial days was access was the biggest thing that we were giving better prices or you know, unit economics was the second thing we were giving and then the technology.
00:22:40
Speaker
The integration was the third thing that we're giving. Like you rightly said, a lot of that has been solved today. So our value proposition over time has also changed when it's not just about the access because every CPL today is focusing on the SME market in a very big way because it's evolved over the last 10 years. So it's a lot about transparency, technology, and something as simple as an API integration today is taken for granted. Today, it's a lot more than that. A lot of the value add that we bring to data and analytics.
00:23:07
Speaker
But that's kind of how we built out. We had a lot of early supporters with platforms like Delivery and GluedArt because they realized that this is something that's going to be big. And they were focusing on the likes of Amazon and Flipkart. They were not focusing on the SMED to see space. So they lacked the fact that Shiprocket was there to kind of aggregate all of this demand and act like another large demand pool for them, which they were structured to cater to rather than individual SMEs.
00:23:32
Speaker
Okay. Understood. What does the logistics chain look like once I click on buy and I make the payment on a website? What are the steps after that? There must be microservices and you would probably be orchestrating that whole chain of microservices. Just talk to me about the whole chain and what all Shiprockin does.
Comprehensive E-commerce Solutions
00:23:54
Speaker
Well, absolutely. So let me walk you through one big difference actually is because what you said right now, which is once I click buy, what happens? That was actually ship rocket from two years ago, from 2022. We used to call ourselves a post-order e-commerce enablement platform. And we've removed the word post-order now. So it's not just about after you click the buy button. It's even at the time of clicking the buy button. And I'll explain to you what we mean by that.
00:24:21
Speaker
So, um, when you go on a website, right, uh, xyz.com or let's see, uh, let's even say mama.com to buy a product, even before you click the buy button, usually there's below the buy button. There's a, there's a, there's an area where it tells you when your product will be delivered. Traditionally, websites used to say product will be delivered in five to seven business States. Today ship rocket through our technology. They would do the same.
00:24:49
Speaker
The way back it was shipped and today we actually power something called EDD which is estimated date of delivery where the websites are able to pull in the actual date of delivery. So a customer doesn't see X to Y business days, they receive your order by business if you order in the next how many hours or minutes, much like an Amazon offers for its customers because it controls the entire supply chain.
00:25:11
Speaker
The other thing we have is you also have the ability to be able to check out with Shiprocket. So if you've bought with Shiprocket, any Shiprocket partner website in the past, you can check out with Shiprocket. You have to log in once and all your details come pre-filled from the addresses that you ship to, to your payment details. And you're able to, you know, one-click checkout with UPI if you have that enabled. Otherwise, you go with one of our partners, build desk, laser pay, etc., to be able to click.
00:25:36
Speaker
So that, you know, the word post-order, so we actually start playing a role in the customer's journey, even before they click the right button now. And that's how we evolved as a platform, because it's not just the logistics that we're solving for, it's the entire customer experience. And that's been a huge part of our journey post-COVID. So, you know what? So let's assume that, you know, you see the ADD, you check out with Shiprocket, or even if you check out with any other native checkout, doesn't matter.
00:26:00
Speaker
Once the order is successful, if the order has been placed on your website or if the order has been placed on an Amazon or a Flipkart, we actually pull the orders on our platform. So the seller is there and immediately see all the orders out there. If the order has come through an unstructured channel to a seller, they have the ability to upload the order either through an API or through a manual upload. Literally, you will create an order on our platform. So either way, your orders automatically flow through to on the Shiprocket dashboard or as a seller, they upload the order manually.
00:26:30
Speaker
And then the moment the order comes there, the seller sees all the shipping options and the times of delivery available. We don't force them to use one versus the other. They have all the carriers. They can choose which carrier they want. And at the end of the day, depending on the price and the SLA, they choose the carrier.
00:26:45
Speaker
Again, click a button, behavior bill, and the label prints out, and the pickup with the 3PL is generated automatically. Usually, the same day or next day, the pickup happens with the cat courier from the seller's warehouse and the delivery to the customer starts.
00:27:02
Speaker
And throughout this journey, the customer is kept informed at any point if there is a delay. For example, there are a lot of handovers that happen because most credit companies follow Haben's book model in India. So if there's a miss in the handover happening or if there's a delay in the shipment getting there, we make sure that customers know so as to reduce the anxiety about when an order is going to come.
00:27:21
Speaker
And the other part of the journey is that as, especially for cash on delivery orders, this communication is really important because if you don't communicate to a customer, they have the orders, maybe it's going to be there a day earlier or a day later, you'll find a lot of people that just go and they buy the order. They may place multiple orders on COD and the first one that comes, they keep, and the other one they return. And for our merchants, that's a huge loss because they incur the shipping cost, but at the same time, they don't convert on the sale. And the chances of the product getting damaged in transit as well.
00:27:51
Speaker
So, you know, Shiprocket is part of that journey with the customer. You know, a lot of times, sometimes our customers give us feedback saying that, why do I need to know every time my parcel breeds? It feels like Shiprocket is like standing over a hawk over the parcel. And that's one of the value adds that we have. And it's to make sure that, you know, optimizing for that delivery experience. Once the order is delivered to the customer, we power the entire returns as well if they want to return the order.
00:28:17
Speaker
The NPS for our sellers, we help them collect that as well because not a lot of them will have NPS tools built into their platforms. And that's important because they want to understand what customers are thinking about the product. We help power repeat purchases through our CRM platform. So, end to end, you know, we've gone from a logistics aggregation platform, which is very simply what we were in 2017, to being what we call ourselves as an e-commerce enablement platform today.
00:28:42
Speaker
We want to help power the entire customer experience, not just the supply chain. That is the problem that we focus on and solve and continue to solve. But today with direct-to-consumer commerce evolving, there are a lot more problems that we're trying to solve, again, along the journey from the buy button to the order being delivered.
Integrating with Major Platforms
00:29:00
Speaker
Okay. Interesting. I'm going to zoom in to some of the things that you've spoken about. Yes. So when you're saying automatically, the order flows into the ship rocket dashboard. So that is through like a Shopify integration and also like Amazon integration as well.
00:29:15
Speaker
Yes. So we integrate with all the platforms out there, Amazon, Flipkart, Shopify. We pull in orders from like WooCommerce, you know, we pull in orders directly onto our platform. The orders that the seller wants to ship, they can choose whichever orders they want to ship because a lot of the orders, for example, we don't pull in FBA orders because those are shipped directly from Amazon. But from every channel that the seller has to literally just go click, put in the user credentials and the orders automatically pull into the ship rocket platform.
00:29:45
Speaker
Okay. Now when the sentence choosing, there are multiple, like this first mile, last mile, et cetera. So they choose a single service provider throughout. Or do they also receive like a bundled offering like first mile here and last mile through another window? How does that happen?
00:30:01
Speaker
So for Ship Rocket, it's actually a single authoring that we offer from the pickup to the delivery because in India, again, like I said, with the handovers happening, there's not much of a value I had to want to disaggregate entire parts of the supply chain. Though, as I see this, things are changing now. You know, Misha was one of the big platforms that announced their own courier network now that they're building out. And I think the space in India will also evolve.
00:30:26
Speaker
That's actually direct end-to-end delivery for the customer from the seller. So it's exactly what you said, right? A different partner doing the first mile, someone doing the mid-mile, the trucking, or the air freight, and then the last mile being done by a different provider. We actually offer that exact model for cross-border, which is India to US, UK, GCC, Europe.
00:30:47
Speaker
and Canada because there the value add is significant enough to want to break these parts of it down because the express layers there are at a very, very high price point. So if you want to create value for the seller, there's enough
00:31:04
Speaker
bandwidth in the supply chain to want to disaggregate all of that. So on cross-border, we're actually able to offer almost 30 to 40% cheaper prices than we expect because we do this. On the domestic side today, we don't do it to a large extent. So I'll tell you where we do offer this is we have a business called Ship Rocket Fulfillment. We store a lot of products from our sellers at two or three key locations across India so that we're able to do same day, next day deliveries for them.
00:31:29
Speaker
And in this part of the business, we would disaggregate the service where we would use our line order provider, for example, to get the product from our warehouse and put out the to go out and then use bikers to be able to deliver them to the end customers. But today, I think the key behind cheaper and more efficient logistics is to be able to use the infrastructure that's already there. And the courier companies have done a fantastic job in optimizing this infrastructure.
00:31:53
Speaker
Our key goal is one of the metrics that we track within the business is the miles traveled per package. So one of the things that we're trying to do is make sure that we can store goods closer to customers to reduce that miles track per package. It creates cheaper logistics and as well as better for the environment. So it's something that as a goal we are aspiring towards and that at some point will definitely lead to some disaggregation of the supply chain. But I think today the 3PLs do a fantastic job.
00:32:21
Speaker
So fulfilled by Shiprocket is like fulfilled by Amazon equivalent, like faster delivery, same day, next day, stuff like that. Okay. Interesting. Very interesting. I want to zoom in on more things that you were speaking about. So you spoke of checkout with Shiprocket. How does that work? Is it that, is it like a Google, like I can log in using my Gmail into any website? Is it something similar to that?
00:32:47
Speaker
Absolutely. So it's basically you can log in using Shiprocket using your user credentials. And basically, obviously, the first time you want to do it, you have to give us permission to be able to use your data. We don't do it on the slide. So you have to be able to give us that permission. And once you do it, we basically have all the addresses that you have ever entered in on any website if the parcel has been delivered with Shiprocket. And in a lot of cases today, that is the case because we are one of the largest logistics providers for DTC.
00:33:16
Speaker
So all you need to do is literally your login using ship rocket. Your address is pre-filled into the platform. If you want to ship to a different address you've used before, you can change that easily. And you can literally check out the entire two, three page process that it takes to enter the address goes away. Also, the fact is with the address is successfully delivered there before. So we're able to, you know,
00:33:37
Speaker
ensure that the RTO or the non-delivery is minimized because, for example, if you entered an address earlier and our delivery provider enriched that address with certain particular details, which made it easier for them to find the location, for example, behind XYZT store.
00:33:54
Speaker
that actually gets added to your profile. So the next time someone goes to deliver, it's much easier for them. And this use case is massive in India. Data enrichment is one of the large value ads we have in reducing RTOs, which are basically if the time and order does not even get taken, accepted by a customer, it just gets returned to origin.
00:34:11
Speaker
which is the term RTO, and it's the biggest, you know, I think from an economic standpoint and an environmental standpoint, it's the worst thing that can be there because sellers lose money because they pay for logistics, the order doesn't complete, and you have this parcel going up and down the supply chain for no end use, so no economic benefit at all, and that's not good for the environment.
00:34:29
Speaker
So Shiprocket checkout started off as a tool to help make fulfillment and make the delivery process easier. And obviously with UPI coming into play, you have that one click checkout, which is basically seamless. Okay. And what is the adoption that you have seen of this checkout by Shiprocket? Very new business section. Okay.
00:34:51
Speaker
Very new business. We just started this a year ago. We're seeing great traction. We have, and again, one of our co-founders who joined from Flickr actually runs this entire business and he would have the exact numbers around this. But we are seeing a lot of traction around this business. There are a lot of people trying to solve this problem, by the way. We're not the only ones. Obviously, there's competition as well. The global presidents are there for companies like Borde who have tried to solve this for many, many years.
00:35:20
Speaker
The idea behind us is that it's that data that I told you about, even to deliver more efficiently because of having done billions of deliveries over the last so many years that we have all these data points that are there. Do you also, for example, allow OnTheFly a brand to offer cash or delivery versus not offer cash or delivery based on historical behavior and stuff like that?
00:35:47
Speaker
So absolutely, so based on, you know, behavior, based on address quality, we're able to tell a seller that, you know, this order has what we call an RTO score. This order has a high chance of being returned. So we are alerting you that if you don't want to ship it or you want to call the customer wants to control, please do that.
00:36:04
Speaker
a huge value add for our customers, the fact that we're able to predict this for them. And a lot of customers decide not to ship the orders because of this data that we're able to provide them. A large part of it is the address quality because we can tell them that, you know, based like different sales, lay in number four, New Delhi, XPIN code.
00:36:22
Speaker
It's not going to get delivered, right? So that's able to kind of provide that. I can tell you like, you know, anecdotal experience. My wife made this error a few days ago where she put in our residential address, which was blocks, so-and-so, house number, so-and-so, without putting in the locality.
00:36:39
Speaker
And she just put in Delhi and the PIN code. And today, luckily, the order was coming through Ship Rocket. So we got an alert immediately saying, and we didn't know it was going to come through Ship Rocket. It just happened. My wife wanted to order olives. And we got an alert saying that this order will not be delivered because this locality is missing. And we were able to go into that locality. And this is just like three, four days ago.
00:37:00
Speaker
and get the order delivered. Before this, that order would have just come to the last mile center in New Delhi. The person would have tried to call my wife. If she would not have picked up the phone, they would have returned it to the center. If she would have picked up the phone, they would have kind of added the detail. And then they might have had to reroute it because it would have come to a hub with services like in North Delhi and North South Delhi or West Delhi. And that entire circle got
00:37:25
Speaker
That entire whole workflow got eliminated because you were able to online add the locality. So when it came to the dairy hub, it got sent to the clinic last mile hub and we got it delivered. My wife loved it, by the way. It's the first time she experienced this workflow because she's like, she doesn't enter all the dresses, but it's the first time it happened and the order got delivered on time. So there's a huge value add around the whole data piece that Shiprocking is building.
00:37:50
Speaker
And I'm assuming when someone is doing a checkout through ship rocket, you will probably have a rule to not even show cash on delivery if the RTO score is very high, something like that. Absolutely. Absolutely. We can do that. We have the ability to do that and merchants also have the ability so we don't do anything.
00:38:09
Speaker
The way the platform is built is we leave the choice to the merchant unless the merchant explicitly says ship rocket decide you decide which career you decide what to do and there's a lot of transactions that happen with that and you know algorithm as well but we give the merchants the ability to you know toggle everything on and off because a lot of merchants say no I
00:38:29
Speaker
For example, we have a customer who does a lot of telemarketing sales, right? People calling on the phone and taking orders. And obviously the address quality is very different there, that the telecaller takes on the phone and he says, no, I don't care. I want every order that comes in should get dispatched out.
00:38:44
Speaker
because I believe it will get delivered when the rider will call the customer. The customer will tell them generally how to get there. So we give customers the ability to customize. And at the end of the day, for every product, there's a ship rocket version of it, which is backed purely on data without any human intervention, where we will, like you said, not show cash on delivery. We will automatically reject the order or send notifications to the customer saying, please update your order, or we will not ship this out.
00:39:14
Speaker
If the person does not do it, we cancel the order. And very importantly, we also offer, you know, nudges throughout the transaction to convert cash on delivery orders to prepaid orders as well. Certain merchants can say, offer an X percent discount if the person does a prepaid order.
00:39:30
Speaker
Because we want to remove the uncertainty of the delivery or we identify a high RTO score, we will start that work-processing of the reward, give an expert discount and be able to convert the merchant to prepaid. So a lot of tools have been built along the journey to help optimize that customer experience.
00:39:49
Speaker
What is the cost of RTO in a transaction? I mean, you know, every wasteful expense eventually is being borne by the customer, right? Like if, for example, you know that 10% of my orders are RTO, so eventually the customer will end up paying 10% more just as an example. So I just want to understand at a broad level, what is the cost of RTO?
00:40:11
Speaker
So it used to be massive when you think about the pricing, right? So when we started solving this problem in 2017, RTO was somewhere around 30 to 40% generally of old cash on delivery orders. So almost one out of every two orders used to come back.
00:40:29
Speaker
Today, the problem, I think, over time, tools have become better, customers have become more sophisticated, but it still ranges about 20% or so in terms of cash on delivery orders. I think when you talk about prepaid orders, the RTU percentage is low single digits, because it's also a lot about intent, right? So with cash on delivery, a lot of times it can be an impulse purchase. So we're able to kind of help our sellers identify
00:40:55
Speaker
through that RTU score. But even today, the number of values between 17 to 22% depends on product category. It depends on the channel through which the order comes. Certain product categories are impulse, which is higher with higher RTU scores.
00:41:10
Speaker
You know, you have a shampoo and you're going to deliver it on time. Most likely the person will take the shampoo versus let's say a hair accessory, which they may want today, may not want tomorrow. They picked up something along the way. So category, the difference is very stark across categories, especially also on where the order comes from.
00:41:28
Speaker
In a way, the prepaid customers are subsidizing the COD customers here, it seems like, because prepaid seems to have much lower RTOs, but it is not. I mean, it won't work if as a seller, you say, if you want cash on delivery, then you have to pay 10% more, right? Like, so they have to...
00:41:45
Speaker
overall. So some people actually, some people charge, right? So there are some platforms which will charge a COD fee. And I think it's a great tool, but there's a COD fee that actually has to be paid to logistics company as well, because they actually physically have to handle that cash and go deposit it into a bank.
00:42:03
Speaker
So it's actually much more inefficient. COD was a large part of e-commerce when it started, but as customer trust has increased, a lot more people are doing prepaid. And what we've seen, you know, with data, there's a stark difference between customers who do prepaid and customers who do COD.
00:42:20
Speaker
this segment of customers in India who have gotten used to buying online. And for them, the trust factor is there. And even if they know fraud happens, they have the confidence that they'll be able to recover their money. And a lot of those customers are doing prepared because the convenience of not having to have someone at home with cash when the person comes to deliver is significant in us because there are so many personal deliveries you get today.
00:42:43
Speaker
But there is a segment of customers who don't have that trust online. People who are being damned by all of these new phishing schemes that come in every day, who prefer cash on delivery. I think post-demonetization, you saw that change drastically. Prepaid become a larger, larger component of what people are doing. Payment with UPI makes it much easier. You don't need to have a credit card. And the industry is very much evolving towards a prepaid model. COD, by definition, today, at least in the large cities and towns in India,
00:43:12
Speaker
The reason why people do COD is because they're not sure they want the order. So that by itself is a big flag. Okay. And on the ship rocket platform, what percentage of orders are COD?
00:43:23
Speaker
So on the ship rocket platform today, we still do about 30 to 40% orders. Again, it varies depending on the time of the year. So you will find a lot more COD orders around seasonal festival, festive seasons, a lot more people coming to buy online. So a lot of COD percentage increases that, but otherwise the majority of the orders we have today now have become prepaid.
00:43:45
Speaker
By the way, about five years ago, this was exactly the opposite. And so a lot of it has changed. And I think that the platform generally is also helps, you know, convert a lot of our orders from COD to prepaid. Does the checkout by CProkit offer customers additional protection to build trusts, for example, if they don't like the order or something like that?
00:44:08
Speaker
So you're talking about a project that is underway right now. So it's a stealth mode. It's something we call ship rocket promise, but it's very much in the works to be able to provide that promise of, you know, seamless e-commerce transaction.
00:44:23
Speaker
It's something that we're doing in pilot with select merchants right now. We'll take feedback from the market. At the end of the day, platforms like PayPal have shown that customer trust is something that is, and you know, forget PayPal, even American Express, well before that as a card company, you know, when fraud used to happen, it was all the best platforms to deal with from a customer experience perspective.
00:44:44
Speaker
I think we've learned and we're trying to offer somewhere something along the line very much bundled into the whole customer experience platform that we're saying. So it's not just about fraud, it's even about seamless returns. So today, much like an Amazon, if someone picks a product and they want to return it and we have data, why can't we refund them in 24 hours? Why do we have to wait for the product to come back to the seller's warehouse and then refund? So we're experimenting with a lot of these solutions to help make D2C Commerce more and more trustworthy and seamless.
00:45:17
Speaker
Can you help me understand who are the players in the logistics market? Because every player claims to do end-to-end, but then each player has their own niche where they operate. For example, Shadowfax is more for Last Mile. Similarly, each player would have some niche that they are strong in. So as an insider, I'd love to hear from you, what is the niche for each player?
00:45:38
Speaker
Absolutely. I think the large 3PLs and carriers in India are very much platforms like Delivery, BlueDart, EcomXpress, ExpressBees, who deliver throughout India. We obviously have IndiaPost, which has the largest reach of any of these platforms. And IndiaPost came on board with us as a partner a year ago as well.
00:45:58
Speaker
And a lot of direct-to-commerce transactions are being powered by India Post as well now. So they've been a phenomenal partner for us, as commerce expands to smaller towns and cities and villages across India. Its e-commerce penetration is increasing. India Post is a big partner. But I would say with these four platforms in India Post, they actually have the largest national reach. And then you have players like A Shadow Facts. You have players who are specializing in certain cities.
00:46:25
Speaker
You have a lot of regional players, you know, which specialize in even states. They guarantee you a much quicker delivery across certain states in India. And they only function in those states because of the simple reason that their rider can take an address and look at it much more efficiently because they have expertise in that area. You have a lot of last mile, same day, next year delivery platforms that we use as well. The biggest thing that they
00:46:50
Speaker
Specializing is picking up from a warehouse around the outskirts of a city and delivering within that city and only that city. You have players like Paige who specialize in hyper-local deliveries. Last mile would be like a Shadowfax warehouse to home. Last mile, people like, yes, absolutely. Platforms like Shadowfax are doing the van deliveries as well as the bike delivery last mile. But it's more on the make-run basis, right? They would pick up from a warehouse and then one by one deliver to
00:47:17
Speaker
a customer like a rider would get a list of 30-40 addresses they have to deliver and they would deliver one by one. Then you have platforms like Proso or a Pitch, which actually just do point-to-point deliveries. They would pick up from the warehouse and go to one customer and that's it. And then the next time go back to the warehouse, pick up again. Obviously, when you're doing a milk run, you can do same-day deliveries. You can't do one or two deliveries.
00:47:41
Speaker
So depending on the platform, depending on the customer, depending on the promise, you have to switch between all the different providers that are there. So a lot of times, you know, and then there are platforms which specialize even within India on the mid-mile. So are we using a trucking solution to get from Mumbai to Delhi? Are we using air to get from Mumbai to Delhi? Are we using trains now, which we are starting to experiment with for e-commerce as well? We don't actually, we will not today,
00:48:07
Speaker
break down the transaction into all of these pieces of tells a ship rocket, but there are logistics companies which are breaking this down. For example, is it more efficient for us to use a train for cargo from a Delhi to an Ambala rather than using a truck? There are logistics companies which are innovating around that and ship rocket powers, you know, works with them to power them with data to do more efficient demand planning.
00:48:30
Speaker
because the easiest and in some ways I would say the stupidest way is one person gets picked up, gets delivered to a customer. You don't need a lot of intelligence to do that, right? You can have a great customer promise, but it is the most inefficient, most expensive, and most environmentally unfriendly practice to be able to do that. So using data is where we work with a lot of our logistics partners to be able to help them do the demand planning, akin to what people like Amazon have been doing for many, many years.
00:48:58
Speaker
What is the role of data and AI in the ship rocket platform? What are the different places where it's playing a major role?
00:49:06
Speaker
So big data has been the crux of our existence. It's the reason why we exist as a platform because very quickly we went from access to reliability, transparency, and technology. And big data in terms of being able to do demand planning and being able to work with providers and our logistics partners to deliver stuff more efficiently has always been the core of what we do with why we exist as a platform. For example, we work with multiple logistics partners across India.
00:49:36
Speaker
During the peak season, during natural disasters, during situations like COVID that happened, we were able to very quickly use data to be able to identify which hubs were getting choked for which logistics partner and be able to divert demand to a different logistics partner. Why? Because very simply, in periods of stress,
00:49:58
Speaker
the more demand that you push through to a partner's hub, it exacerbates the situation, makes it worse, takes that much longer for that hub to come back to normal. So using data, and obviously the customer promise gets worse and worse. Because once I have jokes, for whatever reason that might be there, the promise goes from a three day to could be a 10 day to a 15 day to maybe an item getting lost because there's so much chaos that gets created. So we're able to use predictive data analytics if we see shipments getting
00:50:26
Speaker
Not moving from stage A to stage B at a hub, we are able to predictively identify that there's something wrong here. We're able to speak to the carrier, understand if there is something wrong here, never demand to a different carrier on the fly. It's something that data helps us do. Demand planning in terms of where to store goods, data helps us do. So big data has been a large part of what we do.
00:50:46
Speaker
GenAI today is a very important part of our platform, which we talk about e-commerce enablement, which is beyond just the logistics piece. It's about helping our merchants draft on-the-fly marketing messages using WhatsApp, on-the-fly communication, you know, also is that they want to pass to their customers. We have a platform called Wigso by Shiprocket, a company that we acquired. So GenAI is an important part of, you know, an SME being able to create a marketing message in exactly 30 seconds.
00:51:13
Speaker
without having to think through or getting it vetted by someone who looks at marketing offers in their team. We just look at the commercials that all really need to figure out the tech or the grammar piece of it, helping our merchants get better catalog. For example, using Gen AI, they're able to dramatically improve the quality of the listing by 70% to 80%, which otherwise they would have to go to an agency. It would be prohibitively expensive. You have to pay a minimum 10,000 rupee fee for someone to want to look at your catalog.
00:51:40
Speaker
Sure. You know, journey is becoming a more important part of the enablement journey for us, but big data has been the core of what we've been doing. It's why we exist. Talk to me about beyond logistics and when did that journey start? And I believe a lot of that happened through acquisitions, beyond logistics.
00:51:58
Speaker
So yes, some of that did, but you know, the move beyond logistics started very early for us in 2019 itself, because as entrepreneurs, we very clearly reflect every year on what problem we're solving. And the problem in 2012 was very acute and very clear.
00:52:14
Speaker
2017, access, pricing, transparency was still a very big problem. But as the carriers started to evolve as well, I didn't come 2019-20. Just before COVID, we realized that a lot of these problems were getting solved, a lot of them directly by the carriers. So we needed to disrupt ourselves and innovate beyond. We had to help improve the customer experience. So we started solutions, for example, to get cash and delivery payments quicker to our customers because working capital was a very big problem that they were solving.
00:52:44
Speaker
to being able to use data to help them get access to financing from third parties. So we started working around this FinTech play very early on, but a lot of it was just working with partners and helping our customers get better access to financing. It was not really doing anything here ourselves, it was using data. It was being able to use help our customers, you know, on the value added services around CRF.
00:53:07
Speaker
So around WhatsApp communication, around customer email communication, creating branded checkout pages where they could cross-sell products. So around 2019-20, a lot of this innovation started organically. 2020 COVID hit and the entire supply chains around the world went for a toss. So we started doubling down back on the logistics piece and using big data to be able to build more efficient supply chains.
00:53:29
Speaker
And I think 2021-22 as the effects of COVID started to go away, supply chains started to get more normal, we started focusing again on a lot of the value-added services like we used to call in our business. And I think that's where we made a conscious shift that if we wanted to build and build quickly,
00:53:46
Speaker
We would look at inorganic acquisitions as well as part of our journey rather than wanting to build everything ourselves. Because that would just delete the stack that we wanted to build. It would take us five years, which we could potentially do in two years. And we went along the journey of getting Glocus on board, which was one of the companies we acquired and merged very quickly to build our fulfillment solution. We bought Big So to build our
00:54:08
Speaker
CRM solution or WhatsApp communication Omni to build the Omni channel platform that we're building to bring online and offering retail together. And I think that continues to be a very strong part of what we do. But for us, it's very much, you know, inorganic acquisition is not done for us for revenue or
00:54:26
Speaker
you know, acquiring customers. It's very much and it has to become a part of the stack that we want to build and has to be very much a part of the stack that we want to offer, which integrates into Shiprocket. It's not, we don't want to acquire a company and then let it run independently forever catering to a different customer base. The vision has to be very much common. The company might run independently from Shiprocket, but the customer pool and the tech stack has to become common at a certain point.
00:54:52
Speaker
Okay. I'm going to zoom in on some of the things that you said. Let's start with the FinTech play. How did you enable cash and delivery to become more effective for the sellers? Like you said, you enabled them to get access to that cash faster. How was that done?
00:55:08
Speaker
So the simple thing about cash on delivery is that once the cash is selected for the customer, the counterparty risk in this entire transaction is very low because the cash is already with the courier company. So outside of the exception of a courier company going bankrupt,
00:55:24
Speaker
the certainty to being able to get that money back to the seller is a lot higher. So we worked a lot with our courier companies who used to let's say do remittances once every week when we started to twice a week to thrice a week and that helped us being able to get this money quicker to customers.
00:55:41
Speaker
We were able to partner with NBFCs to be able to advance loans for three or four days for sellers to be able to get the money earlier at a very cheap cost because there was this secured capital at the back end that they were going to get anyways. So it was about using data to be, initially it was about making the money chain quicker and more efficient. And beyond that, it was then partnering with people to be able to get this money out to customers a lot quicker.
00:56:05
Speaker
Okay. Okay. And was this monetized, the FinTech lending? Absolutely. So the second part of it had to be monetized obviously because there is someone who's extending the money and not actually receiving the money at that point. So it was monetized, but the first part of it, which was, you know, weekly remittances to merchants instead of.
00:56:23
Speaker
bi-monthly remittances every 15 days, that is something that just happened a lot quicker and more efficient and it's something that we powered and that's the innovation that we brought to the table. The moment if you want, the moment in order is delivered if the merchant wants the money before even, you know, the carrier has gotten it, then obviously then there's someone who has to extend that capital out and there's a cost to finance.
00:56:45
Speaker
And Shiprocket also earns from this when it's financed? Absolutely. So Shiprocket, the whole value-added services that we provide is an important revenue stream for us to be able to kind of build these services back onto the platform.
00:57:03
Speaker
Okay. Understood. So I guess 21 is when you had the big, big funding round $185 million, I believe it was the end of 21. Yes. Yes. So 21 acquisition. Okay.
00:57:18
Speaker
Yes, it was primarily for acquisitions. And it was one big acquisition we'd done. We had bought out one of our competitors, Picker. We loved the team there. And they had built a very complimentary business to us. We were focusing more on SMEs. They were focusing on some of the larger customers. And as we met the founders, we'd been talking to them for some time.
00:57:38
Speaker
It just made sense because we were all building the same stack eventually and we were just replicating in two different places. So idea was to kind of bring it together under one roof and build quicker.
00:57:50
Speaker
And does Picker exist as a separate brand today, or is it now just single Shiprocket brand? It's all Shiprocket. So we fully merged Picker into Shiprocket in 2023, and the founders are very much part of the Shiprocket team. And so, for example, Gaurav, who was one of the founders of Picker, now runs the checkout business, which is what we call faster.
00:58:10
Speaker
Because we were building that checkout business within Shiprocket. They were building it within Pickle. It was called FASTA. They were at a much more advanced stage of that evolution. So we kind of just brought it together. And he runs that entire business for us. The other co-founders of Pickle are building out some of the newer innovations within the supply chain. Part of our B2B business is on BioNCAT. So it's one of the founders there. But it's all within the Shiprocket gamut now. So Pickle as a company has been fully merged.
00:58:35
Speaker
Okay. Understood. And then there were a couple of other acquisitions which you did. So like Wigzo, talk to me about why you acquired Wigzo. What was the synergies you saw there?
00:58:46
Speaker
So with Vixivit, it was very simple. We believe that our customers, as D2C evolves in India, our customers need to start focusing more on, and when I say our customers, it's the seller base on repeat transactions. New customer acquisition cannot be the model on which you build a business forever. And unfortunately, a lot of our sellers were not focusing as much on the repeat side of it. They were doing it, but they were doing it in a very ad hoc fashion.
00:59:09
Speaker
So Wixo as a customer data platform, as a CDP was brought in to help our customers do it in an automated, easy to use way. It was also one of our first needs of using GenAI to help customer communication, to help marketing automation. And it was again, it was part of our stack that we, you know, very frankly, we kept on thinking about wanting to do this internally, but as part of the product journey, you know, when you have a finite amount of resources and you want to
00:59:34
Speaker
allocate them, you allocate them to problems that are really solving the core of what you're doing. This is a problem we really wanted to solve and we kept on thinking, it kept on getting delayed on our old man. So one of the things was, you know, we came across the team, we loved the product that had been built, and we kind of integrated it into our platform. They were probably on day one of the journey, they were on day zero. So it made sense to kind of bring them here, use the learnings that were there and build it now within the Shiprocket platform as well.
01:00:01
Speaker
And Vigzo is also now absorbed. It is not a separate brand anymore. It's part of it. Absolutely. Fully part of Shiprocket. They ran separately for a few years. Again, the decision that we have or the objective that we have is very clearly to make it a part of Shiprocket. We don't want to run three, four different companies. But when we decide to do what we decide to do, it gets determined by the product journey, by the entrepreneurial journey that the founder has.
01:00:29
Speaker
with Picker and Locust because they were very core parts of our stack. They were integrated in earlier. VIXO as a platform was integrated in later. And we actually also found through our journey that was a large part of the platform that we wanted to rebuild and rebuild more closely with Shiprocket. So a large part of it. So the VIXO team sits out of our central office.
01:00:49
Speaker
The VIXO, the person leading the VIXO platform now within Shiprockets sits out of there. And it's a journey that we realized we wanted to build in more closely into Shiprockets. But that's a realization that happened probably a year and a half after the acquisition. It was not the mindset at the time of the acquisition.
01:01:06
Speaker
And Vigzo would compete with, say, a clever tap, these kind of platforms. Absolutely, like a Clavio, like a Clavio, like a more engaged. You know, Vigzo is a CDP, which is built purely for e-commerce, unlike some of the other platforms which cater to use cases across industries. Vigzo very much is an e-commerce use case, again, because of the ship rocket platform and the focus that we have on e-commerce. OK, understood. And what about Glaucus?
01:01:34
Speaker
Yes, so Glaucus was one of our first acquisitions, actually. Nitin and Vivek, who were the founders there, joined us very early in our journey. They were running a fulfillment business called Glaucus catering to both e-commerce as well as offline commerce. And this was something that took power same day next day, delivery, which is where the world is evolving. We were very clear we wanted to build this out. And here, it was not so much about
01:01:59
Speaker
you know, tech or product, it was more about expertise and domain because fulfillment is a very different, you know, our logistics operation is very different from running a technology company. And we didn't have that domain there. So we, you know, we love the founders who brought them on board. They had been running this more from a domain perspective for a few years. And there was a meeting of the minds and then the, actually the integration was immediately at the time of acquisition. And we brought them in and ship rocket fulfillment as a business was built on the back of Glocs.
01:02:28
Speaker
Okay. And fulfillment is essentially warehousing plus logistics, like the addition fulfillment is warehousing. So it's the warehousing, the WMS, as well as the logistics. So a lot of the warehouses that we work with, for example, they're deep storage warehouses. A lot of them are geared for e-commerce. So what we do is we take space within these larger warehouses and we're able to optimize them for e-commerce. So from the time an order comes, the tech that operates in the warehouse is able to ship it out or keep it ready for shipping.
01:02:54
Speaker
within two to three hours of the order coming. Traditional warehouses would probably have it ready for dispatch next day. So that's really the innovation that we brought in with Shiprocket fulfillment is we're able to shave a day off the supply chain by doing this very, very quick, at least keeping the shipment ready for collection. The collection might take four to six hours to happen, but the shipment is ready and it can be shipped out. Okay. Understood. Okay. What about Omni?
01:03:20
Speaker
So Omni was a very interesting play for us. Omni channel is something we've been thinking about for a very, very long time about how we take some of these large offline brands and make them one, easier to shop online. And number two, inventory stockouts is a huge issue for a lot of large retailers. And how can we, given that there's this pool of inventory that exists across stores,
01:03:42
Speaker
for the large retailers across India. Why are they not able to take an e-commerce order and ship it from the closest store when it is available? Why does it have to go to a warehouse? For example, I could order from a shoe retailer in Delhi. That inventory could be available at a store less than two kilometers away from my house. But still, the dispatch might happen from a warehouse in Bhivandi in Maharashtra because that's where the e-commerce operations are now.
01:04:06
Speaker
incredibly inefficient, incredibly costly. It creates conflicts in our supply chain also because the e-commerce has been powered centrally by the company out of a warehouse, but you may have a franchise in Delhi who can actually fulfill that order. You should be part of their customer base, but you're eventually going through
01:04:27
Speaker
a head office or a centralized operation there. So it's something that we see this as a huge problem even today in e-commerce and omni-channel commerce like we like to call it because even as some of the D2C brands go bigger, they go offline, they will start facing this channel.
01:04:44
Speaker
And unlike some of the older established players, they have the ability to want to create this supply chain in a more efficient manner. So we actually, you know, we've been talking about partnering with Omni for a very long time. You know, it was a company which was owned by Aravind Retail earlier, Aravind, the promoters behind Aravind Mills, one of the largest fashion retailers and offline retailers in India.
01:05:05
Speaker
And we've been speaking to them for some time to partner with them. And I think through that journey, just a meeting of the minds happened that maybe this company has a better home in Shiprocket than that. And we met the founder, we met the team, you know, Kulin Lalbhai, who was kind of the, from the Yarvit family, who was running this operation.
01:05:22
Speaker
I was a big supporter, believed in our vision and we did that transition that happened where, you know, obviously to a large extent it was an equity swap and some cash out for investors. That actually still operates as a separate entity out of Bangalore. Again, it's been a huge value for us. It's a team that brings a skill set of working with large brands that we've never done before in ship rocket. And we truly believe that, you know, we're going to benefit from this investment in the years to come as offline and online starts to converge in a more meaningful manner.
01:05:53
Speaker
Okay. Understood. Help me understand what does the revenue for ship profit look like? Do you, I mean, is it like the GMV model where the total cost of logistics is on your books or is it only the margin you're taking it in that, which is on your books or like, how does that happen? So the actual, so there's no GMV that's on our books, right? But what's on our books is the entire free cost.
01:06:19
Speaker
The entire money that is spent on fulfillment, on logistics, that's something that we take from the merchant and we in turn pay to our suppliers. So our revenue number is the number that is the entire supply chain cost almost of the transaction. And obviously a large part of it is paid forward to our partners, which are the Kuja companies and the 3PL logistics companies.
01:06:41
Speaker
And what is your typical take rate? What percentage do you want? So the take rate, again, it varies by size of customer. It varies by the complexity of the transaction, but it can go anywhere from 10% to 12% to 25% to 30%. Again, depending on if a customer is working with me along multiple value added services that I'm providing, then I can get a larger share of wallet there versus if it's a large customer working with me only on the supply chain, then you're talking about
01:07:10
Speaker
high single digits, low double digits, which is just powering the supply chain and the technology part of it.
01:07:17
Speaker
Okay. So the value added services would be like the checkout service and fulfilled by Shiprock. These two, what else? RTO reduction, early COD, you know, CRM communication. So, you know, for us, you know, when we talk about, we don't really monetize this part of the logistics cost, but that's just part of the entire e-commerce enablement stack that's there. So a customer works with me along more services. I actually may end up making no money on the logistics.
01:07:45
Speaker
Because I'm able to add so much value to them on the other parts of the technology stack, the logistics might even be a very small fact fraction of the revenue that I earned from that customer. The idea is that at the end of, for example, when you think about Amazon FBA, you pay an X percent of GMV to Amazon to be able to execute it end-to-end for you where you don't have to worry about it. That's the holy grail for us at the end of the day. And the fact that we're able to do it in such a disorganized and disorganized
01:08:12
Speaker
intermediate space is the middle of that component that we have with all the partners here. At the end of the day, it's much easier for our customers to be able to model their unit economics because they say, okay, you know what, Shiprocket is going to take care of this. This is the fulfillment delivery percentage I have. This is my cost of goods sold. This is how much money I'm going to take home at the end of the day and I want to leave it to Shiprocket.
01:08:34
Speaker
So a lot of our customers, especially on the smaller and mid-sized SMEs, work with us on that model. The larger SMEs or some of the larger brands, they obviously want to be able to manage this more internally because they have large teams to do it. They work on supply chain costs. Maybe we will buy this solution. Maybe we will not.
01:08:53
Speaker
But as a stack, we offer everything, but we don't compel a customer that you have to buy everything from us. The big thing, you know, we call ourselves, it's a very fanciful word, but we love it. We call ourselves the operating system for e-commerce. And within that operating system, we're very clear that we want to give choice to our merchants. It's not a, you know, we don't want to force products out someone's throat because that's not how this works. If a merchant sees value in a product, they will do it. For example, if a merchant is working very much on a prepaid model,
01:09:22
Speaker
on a model which is not impulse consumer buying, why should they buy the RTO reduction tool? They just don't need it, right? If they have a 99% delivery rate. So we allow our merchants to figure out what they believe is the biggest value we add to the ecosystem. While for example, for me, it would make more money to sell that RTO reduction tool to a merchant with high pre-paid because
01:09:44
Speaker
They'll have orders that will get delivered, right? It will show a high amount of success, but maybe for the merchant, it doesn't make sense to pay for an RTO reduction tool to do an RTO score of 99% of the orders, which already is getting delivered. The RTO reduction tool is, is it like a fixed subscription or is it like the take rate increases?
01:10:06
Speaker
So we don't work on a subscription model. We're not really a SaaS company. We started out that way, but very quickly, we realized in the SMEs space in India, people want to pay for success. They don't want a subscription modeling. And we pivoted very early on. Card Rocket was a SaaS company. Ship Rocket pretty much from the day it started, while there was a SaaS component, the majority of the revenue was always made for success. Interesting. So even the customer communication platform, Wixo, that is also,
01:10:35
Speaker
A take rate. It's going to be a take rate. It's going to be a take rate. The only flat fee that you charge there is on the communication costs, right? Which are very separately the SMS, WhatsApp, but the platform itself very much is a, it's a transaction base. So the more you do, the more we make, but the less percentage you pay us.
01:10:53
Speaker
Okay. So based on how his repeat orders is generated, there will be some percentage of the repeat orders that will. Absolutely. So the amount of orders that we are able to generate using the platform, you only pay us a percentage of the orders we generate, not obviously on all the orders that you are generating.
01:11:09
Speaker
And, you know, we feel with the SME community, this model works because they make money, we make money. Alignment is very, very important in this industry. You know, for example, if actually, if you think of it on an RTO shipment, Shiprocket will make more money because he will have a take rate on the outbound shipment and the take rate on the inbound shipment.
01:11:28
Speaker
But this seller is worse off. So at some point, someone asked us, why are you creating this RTO reduction platform that you have? Because you make so much money because you'll make money on two legs of the ship. And our answer is that it's not good for the seller. At the end of the day, short term, yes, maybe I will make more money either way. So very quickly, we reduced our fees on the RTO side saying that, no, you have not been successful. Shipments coming back. We want to make money off this.
01:11:53
Speaker
We will help build this platform where we will align with your success, not with making money, whether you succeed or you don't succeed. So, you know, our thinking has been very much that our seller should become bigger with us on the platform. It is not about how much money we can make of one transaction. Amazing. How much of your revenue now comes from SMBs versus enterprise customers?
01:12:16
Speaker
About 70% of our revenue very much is SMBs. That was last financial year, and that number is already increasing as we're bubbling down. So while a lot of the headlines are around the large customers, but a lot of the work we do is we work with 100,000 active merchants every month for the transactions that we do.
01:12:36
Speaker
If you were working with maybe 25-30 large customers, you would be able to do that volume as well. So a large part of it is SMB focus.
Customer Acquisition Strategy
01:12:44
Speaker
That said, a lot of our customers start with us as SMBs and become big brands. The biggest example is on my mouse, which recently went for an IPO, right? But people who work within that range of 500 to 20,000, 15,000, 20,000 orders a month are a large part of our business.
01:12:59
Speaker
I want to understand, you said 100,000 merchants. How does your sales process work? What are some of the best practices around acquiring SMBs? That's like a challenge every, made in India, made for India kind of startup in the B2B space is struggling with like how to acquire customers at scale. So how do you do that?
01:13:19
Speaker
So I think actually one of the big things that we do is we always realize very quickly that we don't want to go to a feet-on-street model. We want to go to a digital model, an inside sales model. A simple reason behind it being that there was a conscious decision we had to take early on. Are we targeting customers who are going offline to online?
01:13:39
Speaker
which was the case with a car rocket, which was the case with a Krasnay, or we want to target customers who are already online. And we were very clear with Shiprocket. We wanted to go after the digitally enabled customers because going to a local Kirana store, teaching them how to do business online, then helping them ship online was a journey. First, we wanted them to make that leap of faith of going online before, because there's no point selling them a Shiprocket account if they don't have any online orders.
01:14:07
Speaker
And that kind of defined the customer acquisition process for us, which is that if you're not on Google, you're not on Facebook, you're not on WhatsApp, you are probably not digitally enabled. So we will not target you through our digital marketing, right? You hear of Shiprocket and you want to use Shiprocket, you're more than welcome to.
01:14:24
Speaker
onboard with us organically. But from an outbound marketing perspective, you have to be digitally enabled. And these are some of the platforms they use as proxies for someone who was digitally enabled. As we grew bigger, for example, one of the things that we started using is people who had a domain name. For example, your email address was xyz at brand.com rather than at Gmail. We started using that as a proxy as well, for example, for LinkedIn marketing.
01:14:49
Speaker
It was much easier to be able to do that. People who are titles, certain titles on LinkedIn where you were the logistics of the supply chain in charge of the company. But digital enablement has always been a very important part of what we did. Offline sales, street on street sales is not something that we focused on as a company because we truly believe that there are enough platforms that are trying to build
01:15:11
Speaker
make you go online, whether it's a Facebook and Amazon or WhatsApp, you know, but once you make that leap of faith, Shiprocket is the platform that's going to help you become more successful when you talk about digital commerce.
01:15:23
Speaker
Typically, does every sale happen through a human touch, like a person on a call with a customer? Not at all. So early days, most of our sales, I'm not even talking about early days, other than 2017, I'm talking about till 2021-22, majority of our sales were self-onboarding. People, the platform is that easy. You can do your kyc, you can be good to go, you can recharge your wallet online.
01:15:50
Speaker
And even today, in terms of number of sales, the majority of them happen self-onboarding. In terms of the value, obviously, some of the larger customers add more money. So then, obviously, in terms of value, some of the sales are not majority self-onboarding. But if you talk about the only number of customers, majority of it is all self-onboarding. We do have a large insight sales team, which basically calls customers if they get stuck anywhere on the process.
01:16:16
Speaker
But given the platform is pretty seamless, pretty simple, most people are able to go online themselves.
01:16:23
Speaker
Okay. Interesting. Interesting. And how much of your revenue is from cross-border? Is that a big piece? The cross-border is a new part.
Global Expansion with Shiprocket X
01:16:30
Speaker
It is. It is a significant piece of the business today. It's something that I run personally, which is why, you know, when you ask me about the domestic business, I'm giving you more generic answers a little bit in terms of numbers. I know in terms of strategy and how we operate, obviously, I'm very much involved in it, but I moved out of the domestic business in 2022 to run what we call Ship Rocket X, which is my t-shirt here, which is our cross-border platform.
01:16:53
Speaker
We started in 2022, scaling very rapidly. It's up 10% of our business right now, between 5-10%, but we expect it to be almost 15-20% of our business this financially, which is 24-25. So it's growing very, very rapidly and very much powered by the fact that
01:17:12
Speaker
more and more Indian brands, Indian SMEs are wanting to sell globally. The product is there in terms of the packaging, the quality of the product today. There is a huge Indian diaspora overseas which buys these products and now there's an increasing population of international customers as well. When I say international, I mean people of non-Indian diaspora or non-Indian descent who want to buy some of these products.
01:17:37
Speaker
We're scratching the surface. This is probably going to be a very large part of India. Indian commerce is going to be exports. What is the profile of the cross-border customer? Is it somebody who is selling through a marketplace in the US or is somebody who's built his own D2C website and is selling through that in the US?
01:18:00
Speaker
So it's on both, it's on either ends of that spectrum, you know. And so there are large brands who have been in crossword exports for many years who have very successful D2C businesses, right? A lot of these brands tend to be, for example, it's like where, you know, people have built these massive Saudi brands, these suit or kurti brands that cater to the Indian diaspora overseas.
01:18:23
Speaker
And a large part of what they do is D2C. But the majority of the Indian SMEs that we see and the people that we deal with at Shiprocket are actually people selling on international marketplaces like Amazon, eBay, Etsy, and Walmart. And they're generating the orders there because obviously doing D2C cross-border
01:18:41
Speaker
is prohibitively expensive when you think about acquiring marketing costs, right? Customer acquisition costs. So the first stage, and we always recommend this to sellers, we approach us for help along the cross-border enablement journey is that marketplace selling should always be your first product goal. Understand product market fit for your products, understand customer preferences, then do D2C and then offline, which is the holy grail for most people, right? Wanting to be on offline shelves.
01:19:07
Speaker
So that's kind of the customer journey that we help facilitate at Shiprocket. But a large part of the customers we deal with are marketplace customers, traditionally selling on platforms like eBay, Etsy, Walmart, and Amazon. Do you also help them in getting themselves listed? Like, you know, these e-commerce agencies which help a brand, they manage the listings and the catalog, et cetera, et cetera, into it. Is that something which you also do or you're only doing logistics?
01:19:33
Speaker
So we absolutely, we don't do it ourselves, but we do have, we have a product called launch X, right? So ship rocket X is across model platform. Within that, we have an end-to-end e-commerce enablement product called launch X. And in that, you know, an entrepreneur can basically come to us and say, I want you to take my brand live. So I'll.
01:19:51
Speaker
I've done a lot of these conversations in the last 12 months, and it's funny. So we meet a lot of entrepreneurs who want to do cross-border. And I say we want Shiprocket to help us take our brand global. And the first thing I say is, okay, you know, global is a very big word. Which country do you want to go to? And a lot of entrepreneurs haven't even really, you know, they'll have four or five countries that want to launch it.
01:20:10
Speaker
They want to do US, they want to do UK, they want to do Dubai, they want to do GCC. And we're like, okay, you know, going global, it sounds great, but you first have to pick one market because you're talking about a market as complex as your domestic business if you're already an entrepreneur. So we have a product called LaunchX that actually works with our customers to be able to help work with them from the strategy to the execution.
01:20:33
Speaker
The listing and the enablement part, which you're talking about listing on market basis. We don't do it ourselves. We, again, we have an ecosystem of partners that we've established much like on the domestic side. We work with them. Yeah. Again, some partners for different geographies, especially it's also that we partner with.
01:20:48
Speaker
And we let the brand choose, you know, if they want to do it themselves, they want to do it through a partner that we have on the platform or a separate partner. They have the ability to choose, but we can help them orchestrate this entire global launch. And these partners help list them on international marketplaces. If they need a seller on record service, they provide that for them. They do the compliance, they do the payment recon. Ship rocket itself, they do the entire end-to-end supply chain. So that's what we focus on. But we have this product where
01:21:15
Speaker
You can choose the partner you want, or you can use one of our empowering partners and go global. And that product is actually getting a lot of traction. Again, Shiprocket X as a platform is only 18 to 20 months old, so we're still in our early days. But going forward, we do see this network of partners becoming a very important part with SMEs wanting to go global. I was really glad tech would be a more concierge kind of a service, your self-service thing.
01:21:43
Speaker
So LaunchX is very much, so the beauty of LaunchX is the supply chain of the platform is pretty much end-to-end technology, right? And so the, you know, the partner ecosystem that we have, we don't try to be that concierge, by the way. We want the brand to have a direct relationship with the partner. Even the brand gets a direct contract with the partner.
01:22:02
Speaker
One of the things that we wanted very early on is we didn't want to create an asymmetry of information in the ecosystem. A lot of people trying to solve this problem today are trying to make profits because of asymmetry of information or blocking information. Shiprocket as a platform has all been about democratization. It has been that people should work with us because they see value in what we do, not because they have no other option.
01:22:26
Speaker
Right? And so one of the things we did is we actually didn't want to create that concierge model. We very much, so within this entire ecosystem, let's say you come to LaunchX. You will have, for example, Google Local is a brand which is helping doing this. Raveen Mistry is a very close friend and an advisor at Ship RocketX, who's the founder of this brand. We work with them for the listing part of the journey. We work with them even for the payment part of the journey.
01:22:49
Speaker
They're the separate partner we have for the compliance if the brand needs it. But we will connect the brand with all the different parts of this ecosystem. In an ideal scenario, the brand will not need to speak to any of these partners once the listing goes live. They only need to ship rocket because the supply chain is the only moving part in the business.
01:23:08
Speaker
But if they need to, they have that direct relationship, they have that direct contract, direct account, that they don't have to be dependent on us to get answers. That's something that, you know, as a design choice, we implemented very early on. Whereas a lot of the people that we work with in the ecosystem today are trying to create that, you know, single window solution that concierge service. While I think, yes, there's a huge value add for that, I think long-term,
01:23:33
Speaker
If a brand becomes successful, they want to break out of that concierge service because they want to optimize parts of the workflow themselves. And then you create a conflict of interest. So day zero, we wanted to remove the conflict of interest. You want us to help you do it, we will help you do it, but you have the ability to do it yourself. In the long term, I somehow feel that
01:23:57
Speaker
Transparency might work against you because you and delivery could both compete for the same business from an SMB who wants to ship. You know, wouldn't you be better off if you're telling the SMB we'll handle your shipment, don't worry about it, in terms of who is actually doing it.
01:24:19
Speaker
Because both you and delivery would want to get that same customer delivery, you would get a better margin if they acquire the customer directly versus going through your pocket. That conflict does seem to be there.
01:24:31
Speaker
But you know, actually, the conflict has been there throughout our existence, if you really think of it, right? At the end of the day, delivery is an incredibly tech-forward platform that's there. The fact that Shiprocket as a platform still exists and is thriving is because there's a lot more beyond just moving the parcel from A to B. Today, Shiprocket is thinking about the e-commerce journey of the customer.
01:24:53
Speaker
Delivery is thinking about delivering person A to person B because they're a logistics company and they are the best at what they do in terms of optimizing the logistics infrastructure. We are there to help optimize the customer experience. And as if during that journey, a customer says, you know what, I don't want to pay you for the supply chain anymore because I believe I can do it.
Internal Disruption and IPO Preparation
01:25:12
Speaker
By introducing that natural break in that journey, they are now saying that you do why let this person do X. When things work, great. When things don't work,
01:25:22
Speaker
For example, for whatever reason, if there's a hub that gets choked for delivery, now they want to use a different provider. They are not going to get that same rate from five providers that we are able to provide them, right? So there's a reason why Shiprocket exists as a platform. And at the end of the day, for the large customers who are able to do this, absolutely, their first port of call will be delivery. Please do this for us. Shiprocket, please make sure you work privately with the delivery. And for large customers, we will even take them to delivery directly if we believe they have a better rate.
01:25:51
Speaker
and we can provide the tech backbone and the tech infrastructure. Eventually, you know, as businesses evolve, as industries evolve, things get disintermediated. It's what we did. We disrupted the logistics supply chain when we started. Today, what we built also will get disrupted.
01:26:07
Speaker
And we are better off disrupting ourselves and waiting for someone to come and disrupt us, whether it be our delivery or whether it be someone solving one part of the supply chain or the enablement part of the supply chain, the payments part of the supply chain, right? So having the best people in terms of this partner ecosystem and doing what people do is far better than us long term. And we will survive as that enablement engine. And that's what we're doing. And we have, again, I mean,
01:26:33
Speaker
As founders, if a customer feels stuck with Shiprocket, that is the worst feeling we have in our morning. If a customer tells us, I have no other option, I have to work with you. While some people might be really happy, but an unhappy customer, that person will replace you the day they get their option at the one reception, right? We want people to use us because they want to use us, not because they have no other option.
01:26:55
Speaker
So I understand the value proposition for a customer, the lot of things which you are providing them to make e-commerce happen. What is the value add for logistics provider? Why would they want to keep working with you and some of their commission, like some of their earnings?
01:27:13
Speaker
I think the simple thing is that managing SMBs in India is hard, right? No one's been able to do it. I think India Mart is all the few platforms that's been able to do it and scale and huge respect to the founders there, the nation, Vijay Shagarwal, they've been able to build something that's truly unique. But there are not a lot of platforms that have been able to effectively monetize and manage SMBs in India. And Shiprocket probably is all the few platforms that's been able to do that.
01:27:38
Speaker
So for them, the cost of customer servicing, the cost of acquisition, the cost of customer management is something that just goes out of the window because we're able to do it for them. And they're able to tap into a deeper customer base. Now, if you think about an account manager at a large carrier, they will want to focus on their top 10 accounts or they will want to focus on their bottom 90 accounts.
01:27:59
Speaker
their bottom 90 accounts are the top 10 accounts of chip rocket. So there's a very big difference, you know, it's the same way when you think about a bank, right? Very early on, when I came back to India, I used to use this analogy with Sahil, I got them at Machesh. Bank has different levels and tiers that they have. They have private banking, they have priority banking, they have advantage banking, they have consumer banking, right? And the reason is because whoever
01:28:26
Speaker
As you evolve in your journey, at each stage of that journey, when you go from a one lakh deposit to a five lakh deposit, you want to be made to feel special that you are more important than when you had that one lakh deposit now that you have a five lakh deposit. So you get into this advantage banking.
01:28:41
Speaker
Then from 5 lakhs when you go to 20 lakhs, I'm talking about 2016-17 when I come back to India, this is how the structure used to be. You certainly came into priority banking. What it meant was that in advantage banking, you used to get a relationship manager on call. Now you went to priority banking, you had a relationship manager who used to call you.
01:29:00
Speaker
In the first case, it was inward, right? When you had a problem, you called the person. Now somebody should call you everyone, call you for coffee to the brands, sell other products to you because you had reached that stage. And then when you went to private banking, it was like that white glove service people coming and introducing you to all of these products.
01:29:16
Speaker
So at each state of that journey, when you think about banking, today you could go get a loan from a specialist loan provider, you could go buy a mutual fund from a specialist mutual fund distributor, and you could go buy insurance from someone there. But at some level of the journey, one person is buying something from everybody. And trust me, it's not the most efficient way to buy.
01:29:39
Speaker
It is the easiest and most convenient way to buy, and each of those industries over time has been disrupted. Mutual funds today can access people across the length and breadth of the country. It's not like, oh, you have to go to a bank to get access to a mutual fund anymore. But still, bad people buy mutual funds from banks because there's a single point of service that's there. A lot of people decide to buy mutual funds directly from wealth managers because they believe the advisory there is more important. So people have choice.
01:30:07
Speaker
The same way, customers in SMBs in India have choice today. Maybe they did not have choice 10 years ago. They will have more choices five years from now. Maybe there will be an SMS company that will just come and say, we want to just sell your SMS. It's the same way, by the way, gay stories played out in the US.
01:30:24
Speaker
U.S. SMBs will go to providers for one specific reason. They will not just go to a CDP saying do everything. They will go to a company like Clavio and say, you power my SMSs. They will go to somebody for email marketing, like maybe a web-engage or a mobile-engage. They will go to somebody else for WhatsApp marketing, right? And they're willing to pay SaaS. They're willing to pay
01:30:46
Speaker
for each of these subscriptions. Within India, the market will also evolve there, right? And you better be the best at what you do. The one-stop shop is great in the early days, but as businesses scale, they get more successful. People want the best of each and every category. And within the ship profit ecosystem, that's what we endeavor to provide you. It is not a one-stop shop which does everything mediocrally well. It is a one-stop shop that has partners that do everything extremely well.
01:31:14
Speaker
Amazing. How big is the ship rocket team today, headcount wise? Oh, wow. So with all the, I think with all the acquisitions we have, you would be about 3,000 people between Delhi and Bangalore. What is the ARR or this year's revenue? So I can tell you what we've declared, which is $150 million was our ARR last year. And I'm sure this like, it would be 1.5 or 2x of that for current year.
01:31:39
Speaker
Well, hopefully, I think a lot of the big thing that will change is that the platform has obviously gone towards a lot more in terms of health. The growth is robust, but at the same time, I think what's changed in the last one year is our focus on unit economics. I think that's where you will see the biggest changes in terms of our margins, in terms of our customer profiles. A lot of that has especially changed and a lot of the acquisitions have obviously helped in that because we've been able to bring in the pool of
01:32:07
Speaker
talent that has helped kind of build each part of the business more efficiently. What's the exit roadmap for investors?
01:32:16
Speaker
Well, the goal is always to go towards an IPO. So we've been on this journey to prepare for an IPO for some time now. We haven't really put in a timeline. It's something that we believe is a little bit premature and only to do right now, because the way the platform is evolving, we have so many growth businesses right now. As some of these growth businesses start becoming more mature in the way Ship Rocket as a platform has, I think that's going to be the infection point. For example, Ship Rocket X, for example,
01:32:45
Speaker
our checkout product is the point at which we will start thinking about an IPO, but very much the planning is there. Last year was the first year we declared our financial results proactively in the public domain. You didn't have no stealth or investigative journalists had to go out to pull our filings from, you know, MCA to be able to figure out what the numbers were. We proactively did it much like a public company would do in an earnings call. So it's something
01:33:12
Speaker
We are getting into that rhythm very early on. We're preparing in terms of corporate governance, transparency, everything, but we're not putting a timeline around it because it has to be the right time for the business. No one gets to time the markets. We don't want to time the markets. The day the business is ready is the day we kind of put a neck out there and say, we want to do this. We do believe though, as a platform, as a business, this business would be more suited to an IPO long-term. Amazing.
01:33:41
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.