The company, which is currently present in about 22 cities, including 7-8 metro cities, is looking to expand to nearly 40 cities in the coming years, Uttam Digga, co-founder and CEO of Porter, told Mint.
“We feel that in some years, with a business model like ours, it makes sense to have 35-40 cities in India, maybe not beyond that. Beyond that, the city will become too small,” he said.
Founded in 2014 by Pranav Goel, Uttam Digga and Vikas Choudhary, Porter offers a logistics platform to help businesses with their last-mile delivery operations.
The company saw a 56% increase in revenue to more than ₹2,700 crore in FY24, with its losses shrinking 45% to ₹96 crore.
“One of the interesting things which we are observing in the tier-2 market is the small and medium enterprises (SME) density in these markets. To take it as a density of population, I think it’s better in these regions and that’s reflected in our numbers as well. Overall, it has been a good growth rate and we continue to invest,” he added. Recently, the company expanded into Visakhapatnam and Thiruvananthapuram.
Around 10-15% of Porter’s revenue comes from newer initiatives, newer geographies and 85% from mature businesses and geographies, according to Digga. The expansion to newer cities would lend tier-2 markets 10% more revenue share.
Talking about the strategy in approaching tier-2 markets, Digga said that given the local context, it needs to make certain tweaks in the product market and the product. “There are certain cost structures which you need to question when you enter these markets. So, your marketing channel makes changes, your strategy (too). You need to question your variable cost hard because in smaller markets, the ticket size becomes smaller and you need to make sense out of the business with the smaller-ticket size,” he added.
Earlier this year, Porter entered the unicorn club after completing an internal round, where individuals bought shares from the employee stock ownership plan (ESOP) pool at a valuation of $1 billion.
The company has raised a total capital of $150 million from investors like Tiger Global, Peak XV Partners, the Mahindra Group and Lightrock, among others.
New initiatives
Over the years, the company has got into newer categories like parcel, and home shifting. While the parcel business is still in the pilot phase and has to pass validation, the house shifting business that started in 2021 is scaling well, according to Digga.
Even as it took the company some time to get to the right product, house shifting would now be 5% of Porter’s business, he said. While Digga admits that it may not become a 25% revenue contributor, he believes it can contribute around 7-10% to the overall revenue.
“Naturally, when people see our vehicles on the road, a lot of retail customers like you and me interpret that we do house shifting; that’s how people recall. Even when we did not do house shifting three years ago, we also used to get a lot of such leads and then we started capitalizing on those leads,” he said.
The biggest focus for the company at the moment is to improve the product market fit across categories. “There’s a lot of heterogeneity in the business. The way you carry a marble and the way you carry a plaque is different and hence, you need to require the right set of molecules, right set of handling to solve for these nuances,” he said.
Porter is also exploring expansion into international markets and has already started in Dubai last year. “We have studied 4-5 countries and realized that in developing countries where the SME shares are usually significant to the overall GDP, the problem statements and the needs of the users on the demand side are fairly similar. This gives us a little bit of confidence in this hypothesis,” Digga said.
“While it’s early and these pursuits contribute less than 1% to the revenue, the next 1-2 years would be pivotal years for us to see how the international plan plays out,” he added.
“Intracity logistics providers like Porter are enhancing convenience for consumers and small businesses with fair and transparent pricing, reduced wait times, and clear responsibilities for tasks such as loading and unloading. Vehicle partners are increasingly preferring to associate with large, well-known brands in the expectation of receiving higher order volumes,” Praneet Singhal, director (technology and internet), at 1Lattice, a market research firm, said.
He, however, added that a major challenge for the industry is building a sufficiently large client base to offer sustainable business to vehicle partners, as the unorganized segment still holds a significant share of the market.
Porter, however, doesn’t have any diversification plans at the moment. “Spreading yourself too thin into various problem statements has not worked out for us. We want to focus on limited problem statements. I think we feel that there’s enough room in what we are doing and we just want to double down on that in the next few years. We might explore other avenues once we see some signs of saturation,” Digga said.
