Why intracity delivery is getting crowded

The company, long known for its intercity and e-commerce logistics expertise, now competes with Porter, Borzo and Uber. According to regulatory filings, Delhivery Direct enables pickups within 15 minutes using two-wheelers, three-wheelers, and four-wheelers for larger consignments. While currently in the “supply creation” phase, the new service accounted for part of Delhivery’s ₹6 crore adjusted Ebitda loss in Q4 FY25. Still, the company redirected new small and medium enterprises (SME) client acquisitions toward this vertical, signalling its long-term intent.

Why is intracity suddenly hot property?

India’s urban micro, small and medium enterprises (MSMEs) and local businesses remain largely underserved in logistics, according to Pranav Goel, chief executive officer (CEO) of Porter. These businesses often lack the scale or consistency to work with large third-party logistics (3PL) firms.

“The problem in the market is that SMEs usually don’t have high volumes. They can’t afford to buy their own vehicles or have dedicated vehicles. They can’t work with large 3PLs either—those providers don’t serve them well, and SMEs don’t meet the minimum business thresholds,” Goel said.

“We chose this market while a lot of our competition chose enterprise or customers,” he added.

In intracity logistics, demand can be unpredictable, ticket sizes are small, and there’s always the question of what happens when demand slows down.

“Our business model is built around density…As volume increases, standard deviation reduces. So, at scale, the chaos starts to reduce. It may still be chaotic at the individual level, but at the network or system level, it becomes much more stable and manageable,” added Goel.

The rise of logistics-as-a-service also plays a role. Platforms like Porter offer plug-and-play logistics to SMEs, with drivers, vehicles and apps bundled into one real-time interface. The appeal for urban retailers, direct-to-consumer (D2C) brands and service-led businesses is immediate—no fixed contracts, minimal setup and rapid turnaround, says Pratik Shah, partner at EY Parthenon, Auto & Mobility.

Can density create a defence?

However, relying on fragmented and chaotic segments like MSMEs is not a defensible moat or a sustainable competitive advantage that protects a business from rivals, by itself, says Shah. “Fragmentation doesn’t equate to loyalty—MSMEs are highly price-sensitive and opportunistic. Without embedded value, churn remains high,” he said.

However, dense commercial hubs (e.g., Mumbai’s Andheri, Delhi’s Lajpat Nagar and Bengaluru’s KR Puram) support high delivery volumes within short radius, ideal for narrow-stack models that don’t require cross-city infrastructure, added Shah.

However, he adds that defensibility begins to emerge when this fragmentation is layered with operational scale and ecosystem enablers. “The moat comes from city-wide route density and integrated ecosystem services. Porter, for instance, strengthens its position through fleet-onboarding tools, driver financing and subscription-based models—all of which anchor supply and build stickiness.”

How is intracity different from intercity?

Porter’s Goel said that intracity logistics will be fundamentally different from intercity logistics for competitors like Delhivery.

“In intercity logistics, planning happens a day in advance, with high-value shipments and time for manual coordination. But intracity is immediate—you need a vehicle in 5-15 minutes for a ₹500 trip. That changes everything. If you’re offering a vehicle in 15 minutes, your allocation engine needs to work immediately,” says Goel.

“Full-stack players bundle warehousing, tech, first/last mile and analytics,” says Shah, “But narrow-stack players defend their market share through precision, cost-efficiency and speed.”

Moreover, Goel added that margins are razor-thin at small-ticket sizes. You simply can’t afford to have people manually find vehicles. The cost of matchmaking would exceed the margin. That’s why automation is not optional in intracity—it’s fundamental.

He acknowledged that there might be some overlap between their operations as competition intensifies; however, his company remains focused on serving SMEs, while Delhivery tends to concentrate more on enterprise clients.

Why do Porter and Borzo stay away from enterprise as their primary focus?

For Porter, e-commerce and enterprise aren’t a primary focus—a sentiment echoed by its peer Borzo.

Goel said that large enterprises, like bulk buyers, demand lower prices, tailored services and key account management—all of which increase operational costs, which is why they are not their primary focus.

“They push hard for pricing, demand key account management and want operations tailored to their internal processes, which adds cost. On top of that, they delay payments. That’s why enterprise is not our core focus. While it contributes around 5% to revenue, SMEs remain our primary growth driver.”

Alina Kisina, Borzo’s CEO, emphasized that the company’s strong focus remains on the small and medium business (SMB) segment, which makes up 90% of its client base.

While present in over 20 cities, Borzo is prioritizing deeper penetration in existing markets over aggressive expansion in 2025.

She added that Borzo consciously abandoned large e-commerce clients in 2024 due to poor margins and reliance on dedicated fleets.

“We once worked with large enterprise clients like Big Basket, Blinkit, Zepto and Meesho, but we stopped those deliveries in 2024,” she said. “I took that decision because the business required a dedicated supply and didn’t leverage our platform. The prices and ticket sizes were extremely low. Instead, we chose to focus on SMB clients, where we have a better mix of deliveries and healthier margins.”

For 2025, the key priorities include improving service quality, ensuring secure and reliable supply, and regaining lost share in Delhi. The average ticket size ranges from ₹150 to ₹500, she added.

Delhivery turned profitable for the first time in FY25, posting a net profit of ₹72.6 crore as revenue rose 6% year-on-year (y-o-y).

According to Tracxn data, Porter reported $334.2 million revenue in FY24, growing over 49% y-o-y, while trimming net losses to $11.6 million. Borzo, on the other hand, clocked $6.4 million in FY24 revenue, a 36% y-o-y increase, but remained in the red with a net loss of $810,400. Both companies continue to focus on operational efficiency and service reliability as they navigate the path to profitability.

Queries sent to Delhivery and Uber did not elicit an immediate response.

Porter recently became a unicorn and is actively preparing for an initial public offering (IPO). According to media reports, it raised $200 million in a Series F round in 2025 at a valuation of around $1.1-1.2 billion, and is expected to file soon.

Will this lead to a bifurcation?

However, entry into the intracity delivery market isn’t without friction. “Full-stack players may initially subsidize services to secure enterprise deals, triggering short-term price wars in major metros,” warns EY Parthenon’s Shah. “To stay competitive, narrow-stack players must run lean, efficient operations.”

Looking ahead, Shah predicts a clear market bifurcation: “Full-stack models will cater to enterprise clients and multi-city logistics, while narrow-stack players will focus on SMEs, D2C brands and hyperlocal verticals, where flexibility and precision matter most.”