Bengaluru, Apr 07: As India’s e-commerce growth increasingly shifts beyond metros, Velocity Shipping, the AI-powered shipping aggregation platform by Velocity, has reported an 11% improvement in delivery completion rates in Tier-2 and smaller cities through AI-driven interventions.
With Tier-2 and Tier-3 cities emerging as key growth engines for India’s digital commerce ecosystem, brands are increasingly leveraging artificial intelligence to address last-mile delivery challenges. According to Bain & Company, nearly 60% of new online shoppers since 2020 and a similar share of new sellers are from non-metro markets, underscoring the shift in demand.
Bridging the Demand–Fulfilment Gap
Velocity Shipping’s analysis of over 40 lakh orders reveals a widening gap between demand and fulfilment in smaller cities. While these regions account for over 67% of total shipments, only about 60% are successfully delivered—significantly lower than the 73% delivery success rate in metro cities.
This disparity is driven by structural challenges such as inconsistent address formats, limited courier coverage, larger delivery geographies, and a high proportion of cash-on-delivery (COD) orders, which increase cancellation risks and return-to-origin (RTO) rates.
Abhiroop Medhekar, Co-Founder and CEO of Velocity, said, “Logistics inefficiencies are increasingly impacting profitability for digital-first brands. While demand from Tier-2 and Tier-3 markets is growing rapidly, fulfilment reliability remains inconsistent. Our data shows that early AI-led interventions across verification, risk scoring, and delivery workflows significantly improve delivery outcomes and enable scalable growth.”
AI-Led Intelligence Driving Results
To address these challenges, Velocity Shipping has implemented an AI-driven intelligence layer across the fulfilment lifecycle. Key features include:
- Pre-dispatch risk assessment based on buyer behavior and address quality
- Automated WhatsApp-based order confirmation and updates
- AI voice calls to validate non-responsive customers
- COD-to-prepaid conversion through localized AI interactions
Orders processed through these AI workflows have shown a notable 11% increase in successful deliveries in Tier-2 and smaller markets.
Parikshit Batra, Co-founder of PureFlow Tape, noted, “AI-led verification and consistent support have significantly improved our delivery success rates and streamlined operations.”
Similarly, Pratham Solanki, Founder of Magnet Club, added, “AI-driven order validation has reduced uncertainty, improved cost efficiency, and enhanced customer experience, allowing us to focus on scaling our business.”
Tackling Profitability Challenges
Failed deliveries and RTO shipments remain a major financial burden, accounting for 25–30% of revenue losses for digital-first brands during peak seasons, according to Velocity Shipping’s analysis of over 1,000 brands.
Challenges such as limited courier coverage in Tier-3 regions, inconsistent service quality, and lack of real-time visibility further complicate fulfilment. To address this, shipping aggregation platforms are gaining traction by integrating multiple logistics partners and dynamically assigning shipments based on pin code-level performance.
Velocity Shipping evaluates courier partners on parameters such as delivery timelines, RTO rates, and service-level adherence, ensuring optimal courier allocation for each order. Automated non-delivery report (NDR) validation further improves order recovery and reduces avoidable returns.
Scaling AI-Driven Logistics
To accelerate its growth, Velocity has earmarked an investment of ₹100 crore to scale its shipping platform. Since its launch in 2025, Velocity Shipping has onboarded over 1,000 brands and recorded more than 50% month-on-month growth in order volumes.
The platform currently supports same-day, next-day, express, and standard deliveries across more than 19,000 pincodes in India, working with leading logistics partners including Delhivery, Ekart, Amazon, Blue Dart, XpressBees, and others.
With AI-led intelligence reshaping logistics operations, Velocity Shipping is enabling digital-first brands to improve delivery reliability, reduce losses, and unlock growth in India’s next wave of e-commerce expansion.
