A Delivery Specialist: The Growth Story of DTDC
Delivery of goods, samples and important documents to the rightplace, at the right time and at the right price is essential for business. Large enterprise can afford to set up their own delivery systems. SMEs need to shop around for available services that are affordable. DTDC has built a business in the delivery space while facing off competition from global delivery giants. Still they have now emerged as an Indian multinational providing end-to-end logistics and supply chain solutions. SMEntrepreneur tracks how DTDC moved from courier to delivery solutions, and from desk to serving the enterprise, especially the SME.
Growing From Inception
When DTDC was started in 1990 by Subhashish Chakraborty, and for many years later, the core business has always been the courier segment.Within this segment the premium express business is what DTDC has been focusing on.
Expansion and growth was achieved by widening the network. In 1999-2000, DTDC made an entry into international business. Around the same period, it started carrying shipments from India to across the world. The UK and US are the first two countries where it established a base. From 2000 onwards,growth was powered by a combination of the express business in the national and international market. Further expansion of the network occurred with locations like UAE and Dubai being added.
Some time in 2006, DTDC launched a premium segment within the express vertical, which is the fastest growing vertical today in DTDC. The service is a guaranteed time-bound delivery to both individual and institutional clients.
The Franchising Route to Expansion
The matrix of how DTDC has grown is through its partner network. While DTDC is a large organisation having pan-India presence, a majority of it is built on its unique franchise business model. From its start in 1990 to the end of the last decade, it had around 6,500 channel partners, which have networked along with the business and are very much a part of DTDC.
The core vanilla express business is still the largest contributor in DTDC’s revenue, contributing almost 55-60 per cent to the total turnover. Among all other segments, premium business is one of the largest one that contributes approximately 20 per cent to the turnover. But outside India, it is the retailing services that contribute the largest after that. DTDC closed FY 2012-13 for Rs 540 crore. Its market capability though is much large since it operates through a channel partner network. The channel partners service these clients on their account so the actual market share of DTDC is one-and-a-half time what the company turnover is.
In the last 24 years, DTDC has not seen a non-profit making year. Despite turmoil, the dotcom boom and recession, DTDC’s ability to build profits has been very strong. It has the right financial mechanism to ensure whatever expansion it does, is not at the cost of running a profitable enterprise. Across 24 years, DTDC has been a zero debt company.
An International Entity
In the international market, DTDC set up its own subsidy units. In 2010-11, DTDC went on a big geographical expansion. It has now entered into a lot of new markets like Canada, South America, Africa and Kenya. It went to Singapore, China and Australia. In early 2010, DTDC formed a joint venture with the largest express operator in China. It also acquired one of the express companies in UAE, which is a part of the Eurostar Group (now known as DTDC Eurostar in UAE).
A Retail Network for Concierge Services
Around 2010, DTDC also realised that there was a latent demand where individual walk-in customers were looking for specific retail services, such as bill payments, mobile recharges and ticket buying, which are something they do not get access to very easily. These are known as concierge services. In 2010, DTDC formed a separate entity, DTDC Retail Ltd, to focus purely on providing retail services to individual customers. These were in the form of neighbourhood convenience stores where under one roof customers could find lots of business services and products. DTDC has 35 stores operational across the country under the DTDC New World brand.
The eRetail space has also been ventured into with DTDC launching a subsidiary DTDC e-commerce Limited with the site -- DotZot. This was launched earlier this year. DotZot.in focuses only on serving e-commerce and e-retail businesses. So, anybody who has an online business and looks out for a distribution and delivery of procurement support can use DotZot.
Acquisition of Freight Business
In 2013, DTDC also acquired a freight forwarding business.The name of the company was Nikkos, and after acquisition, it has been renamed as DTDC Nikkos International Pvt Ltd. With this acquisition, DTDC has added global freight forwarding capabilities to its business.
The Second Generation
Abhishek Chakraborty, son of Subhashish Chakraborty, joined the business in 2009. He recalls, “When I joined, the first responsibility I was given was in the premium segment as at that stage it was very new. At that point of time, this segment’s revenue was less than Rs 5 crore. You will be glad to know that in the past years, this has grown up to Rs 80-85 crore. When I started looking into the premium business,what attracted me were the sales and marketing operations and also the marketing and branding sides of our business and our service capabilities.”
Later, Abhishek started looking after the international, domestic and the overall express business. The retail business (DTDC Retail) and e-commerce business division also report to Abhishek. He is an engineer by degree following that he completed his post graduation from IIM Bangalore. He also had a stint with Accenture Management Consulting team. Around that time, he had a discussion with his father and the rest of the directors and he felt the requirement of having someone who could look at certain segments of the business mainly the premium segment, which was very new and upcoming.Thus, from career standpoint, he felt this was the right time to grab this opportunity.
On his decision of joining family business, Abhishek says, “Fundamentally, I believe there is a lot more that can be done in this business. That was what attracted me towards the business and that was how I took the decision to enter into business, and the management and board also helped me.”
Upgrade From Courier to Complete Logistics
With all the various segments coming together – expanded network, value added services, e-commerce, DTDC finally took the plunge and has now emerged as a complete end-to-end logistics solutions company. Going forward, DTDC aims at having each of the business entity to become a large company in itself. That will be the real growth as a group. “DTDC will expand geographically, and we want to give a complete offering to ourclients, both small and big firms. We have solutions from vanilla to unique,” says Abhishek.
DTDC covers the entire Indian geography and is the only company that provides services in 10,000 pin codes. Outside the postal department, it is the largest private network today in the country and has not only expanded in the major cities, but also in Tier 1 cites, which goes up to the level of districts and gram panchayats.
Majority of DTDC clients comes from technology, consumer durable, IT, banking, pharmaceutical, e-commerce and manufacturing segments.
DTDC operates on an asset light model where it does not have own fleet, as it only manages the fleet. There are around 600-700 vehicles managed by DTDC across the country.
SMEs Get the Priority
The institutional segment of the business today contributes to about 60 per cent to the total revenue, and 40 per cent of the revenue comes from individual consumers. Today, DTDC has customer from large corporate to SMEs. On the role of SME segment, Abhishek says, “The SME segment is becoming very vital for us. We personally focus a lot on the SME segment. DTDC has the largest presence in the SME market across the country. The SMEs are the fuel of a growing economy. Whatever innovation or practice we bring on we keep in mind that the offering should not only be for large institutional clients, but also for SMEs. We do not market to SMEs separately but we have products that are on priority segment, which is something we launched for large corporates and SMEs. We give competitive robust pricing to SMEs. It is one of the products offered in our service but it is tailor-made and affordable plus scalable. The name of the product is priority and DTDC has special offering of it for corporate clients. Lots of SMEs prefer it.”