Direct-to-consumer brands are deploying artificial intelligence to conquer persistent last-mile delivery challenges in India’s Tier-II and smaller cities, achieving an 11% uplift in completion rates through proactive tools like AI voice calls, automated address verification and COD-to-prepaid conversions, according to logistics platform Velocity. The interventions address structural gaps driving 25-30% revenue losses from failed deliveries and return-to-origin shipments during peak periods.
Velocity co-founder and CEO Abhiroop Medhekar explained that while Tier-II/III demand has exploded—with three in five new shoppers and 60% new sellers from non-metro areas accounting for 67% of shipments—fulfilment lags metros (60% vs 73% success). “Logistics inefficiencies are where profitability is lost for digital-first brands,” Medhekar said. “AI-driven intervention across verification, risk scoring and workflows consistently improves outcomes in sparse networks.”
AI Tackles COD Risks and Address Chaos
India’s e-commerce, projected to quadruple from $70-80B in 2024 to $180-200B by 2030 with D2C outpacing marketplaces threefold, faces acute non-metro hurdles: inconsistent addresses, limited courier density, expansive radii and COD dominance amplifying cancellations. Velocity’s platform—rebranded from Shipfast after ₹100 crore internal investment—integrates Vani AI voice agents in local languages for instant COD confirmation, slashing premature RTOs.
The platform’s proprietary RTO Risk Score and WhatsApp/AI call verification flag high-risk orders early, enabling courier reallocation and dispute automation. Brands report 5-7% RTO drops, with AI calls capturing 10-20% more issues like weight discrepancies. Velocity processed 10 lakh+ orders in Dec 2025 (70% MoM growth), onboarding 900+ brands across 19,000 pincodes via partners like Delhivery, Ekarth and Xpressbees.
From Metro Dominance to Nationwide Scale
Bain & Co data underscores the shift: non-metros power growth but suffer from operational complexity. Velocity’s end-to-end AI layer—validating orders pre-pickup, optimising routing and verifying NDRs—bridges this divide, targeting 5x volume growth in CY2026 through hiring from NimbusPost/Pickrr/Delhivery.
As D2C scales amid festive peaks where RTOs devour margins, AI logistics emerges as profitability’s linchpin, converting structural friction into competitive moats for brands prioritising reliability over raw speed.
