Cashing in on delivery

To the emancipated buyers of today’s internet age, true happiness perhaps would be little less than a long-awaited package ordered online being delivered at their doorstep on the exact date promised by the website. But the reality is much different: most of us usually spend the time between order placement and delivery involved in back-and-forth with the website in question. Not only is this process cumbersome for customers, but it also leads to waste of money and other resources on part of the site. 

To tackle the logistical challenges that most companies in the e-commerce space face, Carnegie Mellon University graduates Dhruvil Sanghvi and Manisha Raisinghani started LogiNext Solutions in 2014. Having worked with Deloitte and IBM in the US, the duo had gained significant consulting experience after finishing their management course. “When we were studying for our master’s around 2011, big data analytics was the buzzword. There was a huge wave of logistics service providers but there weren’t any tech-savvy companies making the most of the opportunities in the space,” says Sanghvi. “We would frequently hear service providers say ‘maal nahi pahunch raha hai’ or ‘heavy traffic hai’. We then realised that delays are a part of trade in India, unlike what happens in the West. Today, even if an e-commerce company makes a commitment to deliver a package to you within seven days, you cannot know for sure whether it will reach you by the fifth, sixth or the seventh day,” he adds, explaining that this was what made them realise the need for a strong logistics solutions provider in India. 

Tracking the process
But what does LogiNext do? The company employs smart technology to help e-commerce firms avoid delays, incorporate transparency and perform real-time tracking of packages besides providing insights about moving assets, distribution efficiency and supply chain. LogiNext aggregates the location data generated by multiple clients with similar delivery networks, then uses this data to generate insights that help companies predict delays, save cost and provide reliable customer service. “As a tech company, we wish to enhance customer experience as well as cut costs,” says Sanghvi. LogiNext installs GPS trackers and sensors on the shipments it transports and tracks them real-time. 

Assuming the shipment and resources of each client as the inputs, LogiNext then calculates the capacity of the respective company and the geographical area it covers. Once it has this information at hand, the company divides each client’s resources uniformly based on the geographical codes corresponding to the delivery addresses and draws suitable routes for the delivery boys, who receive the same on their smartphones. “The companies get a real-time, bird’s eye look at how the delivery boys are performing, which also helps them figure out how to streamline the process,” Sanghvi explains. 

 For its efforts, LogiNext has secured $10.5 million in Series A funding from the Alibaba-backed Paytm and over $500,000 in seed funding from the Indian Angel Network. The company not only provides efficient technology to its clients, but also carries out tech-enabled logistics by helping them deliver last-mile shipments. “Our clients are hence able to promise their customers a definite time window for delivery. Cost of delivery also gets reduced due to the technology employed and the number of deliveries increases,” adds Sanghvi. The company currently counts about 50 large enterprises — including players such as Myntra, Paytm and Mahindra — and 100 SMEs among its clients. “Clients can choose to source just the technology from us or get us to make the deliveries as well. We have completed about 50,000 shipments so far — 70% for the bigger enterprises and 30% for the SMEs,” he explains. The company crowdsources its delivery staff, none of whom are on its payroll. “Just like Uber, we have an application through which the end customers can be tracked. If someone is willing to take up a delivery, all he or she has to do is to click a button on the app,” says Sanghvi. The company doesn’t accept cash payments, integrating this part of the transaction with Paytm’s wallet instead. Sanghvi says the company pushes for online payments to speed up integration cycles for customers. “This helps us get working capital quickly and removes the possibility of cash hassles.” 

Although LogiNext currently derives most of its orders from e-commerce sites and hyper-local players, retail follows close behind. “Retail, of course, is the big fish. We are working for players like Croma, to whom we provide last-mile, mid-segment and reverse logistics delivery,” says Sanghvi. LogiNext is also making a mark in the home-delivered medicine and pharmaceutical services space. Here, the company handles the entire logistics chain — from post-manufacturing delivery to warehouses to retailers and, finally, to the customers. “We currently have about 10,000 delivery boys on our network. Clients pay us a monthly license fee ranging from Rs.800-1,500 for the technology employed,” describes Sanghvi, adding that an additional Rs.50-100 is charged for last-mile delivery. The company doesn’t have any delivery offices and instead rents out small sales offices where its team stores the delivery paraphernalia. LogiNext has further boosted its network by ensuring that its delivery boys own a bicycle or a motorbike at least. “We get them on board only after receiving proper documentation and duly completing police verification.” While the delivery boys can access the logistics information on the company’s app as stated above, the clients can in turn analyse data and trends through the app and its website. 

Next big think
While the company has been growing steadily, Sanghvi says the focus right now is on expansion. LogiNext plans to double its current team of 75 employees — 40 of whom only handle technology — over the next two months. It has also tied up with chat-based clients such as Lookup and Johukum, which it believes will aid in aggressive expansion. While it provides last-mile logistics in Mumbai, Delhi, Ahmedabad and Jaipur, it is also present in 20 other cities such as Kolkata and Guwahati, where it mostly provides only technology. “By the end of this year, we aim to cover the top 20 cities in India from a logistics point of view.” 

Of course, all this growth has not come easy: LogiNext has had to consistently battle a dismissive attitude on part of retail majors towards its services and talent acquisition and retention problems. “What’s worse, of late, price undercutting has started in the courier delivery space. The only way out is tech optimisation, which means more automation and less people. Hopefully, this will help us reduce our costs, decreasing the chances of us getting into a price war,” Sanghvi explains. “We don’t believe in discounting. Which is why while we might be operationally profitable today, we expect overall profitability only by mid-2017.” With estimated revenue of $1 million in the last fiscal year, LogiNext is expecting to earn $3 million in the next. “Most companies in this space don’t employ a larger proportion of people with IT backgrounds, which I think is a mistake. Because only if you understand technology properly can you play with cost in this space. Moreover, logistics start-ups set unrealistic targets when they’re starting out and only later actually understand the sector.” 

Competition-wise, the logistics space does look dense and challenging. Amit Mishra, CEO and co-founder of intra-city logistics player Quifers, says that the biggest problem is that the logistics market in India is highly unorganised. Besides, since technology-assisted logistics delivery is a comparatively new space in the market, not many other such players exist. Currently, LogiNext’s key competitors include WebXpress and global players such as Elementum and Bring. Quifers is a similar start-up in the logistics space that currently focuses on intra-city logistics and hyper-local deliveries, serving 35 clients. Unlike LogiNext, the company doesn’t let clients choose between technology and deliveries. “We essentially bundle both to give our customers the maximum benefit, reduce costs and also save on time taken to pick up the technology involved,” he adds. Sanghvi in turn highlights the key advantages his company boasts of. “We are a one-stop shop for all the large companies for processes such as first-mile, last-mile and reverse logistics. Then, we have the distinction of minutely studying the location-based data available and offering customised solutions,” he says. For now, that should be enough to get LogiNext to your front door.