The CEO of India’s latest unicorn maintains that logistics start-up Shiprocket is tuning and bettering the existing market
Basking in the glory of his start-up becoming India’s latest unicorn, Saahil Goel, CEO of Shiprocket, talks about the logistics company’s slow and steady road to success, why he does not consider established segment players as competition and how the start-up managed to keep investor confidence intact by raising Rs 259 crore in its latest round of fund raise even amid a slowdown. He also maintains that start-up is tuning and bettering the existing market.
Edited excerpts from the interview:
You are the country’s latest unicorn. What made investors back you during a fund crunch and slowdown?
Shiprocket, for its core business, has been profitable for a while. Our newer businesses, of course, require investments, which we are doing.
We are a market infrastructure company so as long as ecommerce continues to grow over the next two decades, we will be used more and more. In that kind of an environment, there is a very natural upside available. Plus, great unit economics and being capital efficient, inspires confidence and that is probably what our investors also saw.
What has been Shiprocket’s USP over the years, considering several logistics players have mushroomed in the segment?
We are building an interface which allows merchants to compete with bigger players without having to invest in large teams, technology or supply chain solutions and being able to pay as they go without any hassle in a simple-to-use app. That is our differentiator and that is what we are bringing to the market at large.
Do you think older players in the segment have an advantage over you? If yes, in what way?
I do not think they have any advantage in this segment over us. There may be segments where we do not have an advantage but in our segment, merchants need an end-to-end provider versus going to a big company. Many of our merchants are doing less than 50,000 or 1 lakh sales a month and we have thousands of merchants using our platform.
It is a long-tail-focused platform where everything—from customer service, onboarding to pricing—is designed to support our customers. Our business is built with a different DNA.
The big logistics players are very good at capacity planning, manpower planning, and on-ground planning. They will attempt to go further and faster, and we will attempt to add more and more merchants. So, in a way, we are complementary in our thinking.
Are you catering to a different market or taking a share of the existing market?
I think it is a mixture. In some cases, particularly in the case of many new brands, if we were not around, it would have been very difficult for them to navigate the complex ways of logistics. Sometimes, it so happens that merchants want to use us and we want to provide to them and automatically, we start to feed off each other and there has been a great amount of market making as well.
But the whole ecosystem has to come together to make it happen. Timing also is a big factor—it started before Covid, got accelerated during the pandemic and continues to move forward. In terms of the existing market, we may not be creating a market but tuning it and making it better.
Which segment forms your biggest clientele and why?
MSMEs and micro entrepreneurs make up almost all of our clientele—almost 95 per cent. A lot of direct-to-consumer (DTC) brands, medium-sized customers, and upcoming digital-first brands use Shiprocket to power their business. Recently, some large offline brands also have started using us for the direct commerce or the omnichannel part of their business.
Any plans to become a consumer-to-consumer company?
Not really. We are a merchant centric company and if you look at all our acquisitions, product rollouts and everything that we are doing, it is keeping the retailer at the centre of our universe. So, we try and understand what challenges these merchants are facing when they are trying to sell directly and then we try to solve their problems.
For us, it is not about going deep into logistics but doing payments, inventory management, order management, buyer communication and fulfillment and shipping. So it is a stack that we are trying to build. Like payment gateways, we are a shipping gateway.
How has Covid been a game changer for Shiprocket?
There was the pre-Covid stage, which was the steady stage when we were adding more and more merchants. Then there was the during-Covid stage when, during the lockdown, business went to zero and then there was the unlock stage when the physical retail was not open for a long time—at that point of time, seller activity increased.
Many offline stores—large, medium and small—wanted an online way to sell, buyers also wanted to buy due to the absence of physical stores so there was a huge boost in digital adoption and we were the beneficiary of that. Some changes that happened during that time stayed while the rest went away.
What were the biggest challenges you faced while building Shiprocket? Any challenges that you continue to face today?
When you have capital, you try and do backward and forward integration into everything. Sometimes, that is a bad idea.
For us, the focus around being disciplined and being clear about what it is that we want to do and more importantly, what it is that we do not want to do has been a big boost as that has kept us focused in solving real world problems. I noticed years back that in India, everyone was trying to do everyone’s business and India is such a large market that it is impossible to do everything. Also, we are being very long term in our approach.
One challenge that I continue to struggle with is how to ensure that a growing enterprise as well as a fast-innovating business unit work in tandem—how you go on working like a seed-level start-up while you have this larger ship which needs to navigate more carefully.
Somewhere, our acquisitions have really helped. They have brought in fresh DNA, fresh leaders and fresh founders who have been able to do this at their own pace without getting the overhang of this larger organisation.