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Creating Blue Oceans in the Delivery Space
Author : Sandeep Padoshi, Co-Founder and Director WOW Express
Friday, November 04, 2016

How would you describe your business model?

We are a technology enabled, customized delivery solution provider. We are not in the e-commerce space. And therefore we are not burning cash to acquire customers. We provide customized, quality, on-time, reliable and predictable delivery service to our customers. And luckily for us, as our customers grow, so will our share of their business. What counts in delivery is hassle free service. For example, we have a 30 percent share of Paytm’s first mile delivery business. And they are happy with us. As they grow, so will we.

What are the innovations brought in by you in delivery space?

E-commerce is set to grow 10 fold over the next five years. It is believed to be a USD 100 billion industry by 2020.  If we work back and calculate the number of delivery boys required to service this volume, we will need a 20 fold increase in delivery guys – which approximately works out to four million guys – this is the industry requirement. This means we will need 4 million motorcycles for these guys – a tall order. The only way out is if we innovate. The way forward may be bicycles.

WOW express is a unique endeavor. It marries technology with innovation to derive value to our customers. One such low technology, but impact innovation is the use of bicycles for delivery. The Department of Posts has been using it for years. But that has been it. We have adapted bicycle for delivery – we call them rushers. We have around 80 rushers at present. We have provided them with 18 geared sport cycles, ad complete cycling gear. These rushers cover a range of three to five KM. It is a short distance. We have a van which carries the parcels parked in a location. The rushers will fill their packs from the van and effect deliveries. At present, a rusher ca carry 10 KGs in his pack. We are designing a saddle which will help them carry heavier loads. This has interested customer interest. The rushers use the same smart phone apps our bike and van based delivery guys use – the deliveries are pushed on to their handsets, and they take digital acknowledgment on their phones. This model is environment friendly. We are planning to use this to create interest in cycling. Who knows, we may even organize a cyclathon. This also helps provide employment to those who wish to become delivery guys. Normal industry practice is – the bike belongs to the delivery guy, the company pays a per kilometer charge. If you cannot afford to buy a bike, you can start off as a bicycle delivery boy and then buy a bike later on.

Another novel idea we have started is “Breakfast at Branch” – In delivery industry, the delivery guys are the face of the company. And they need to feel a part of the firm. Our delivery boys start their day with breakfast at the branch – the breakfast varies by region. We believe this has contributed to lower churn – we have less than 10 percent attrition. We are a year old – and of the eight guys we started with, six are still with us. In an industry where guys move for Rs. 200 more, this is an achievement.

We are a technology enabled delivery firm. We are process driven and everything is systems driven. We have the technology.We feel that technology will not be a differentiator for long.Today anyone who has the money to invest can buy better technology. We realize that. We will have to bring in such differentiators that will leverage the technology DNA we have. We are sure competition will soon launch similar services.

What are the challenges technology pose?

Smaller players like us have to keep upgrading our technology base to keep ourselves in the race. And unfortunately, technology is evolving at a rapid pace. This means we need to commit more resources to stay in the race. Cost certainly is a challenge. On the other hand, while we use technology to reduce manpower – not the delivery guys – we need people to manage technology. This is certainly an issue. But apart from this, usage of technology is an issue. That is what we are trying to do. Technology is just an enabler. Its usage determines how efficient you are. We can provide an app to a guy. But if he does not use it during his delivery, the technology is not of much use. It is using technology to the full extent that is important. Each of our service marshals go through a mandatory two day training before they hit the streets. To encouragethemto use technology, we have an incentive system tied to the usage of the apps. If they use the app 100 percent, they get an incentive.

We believe the differentiator   isin the use of technology. We are in the process of building an analytic engine that will run on the delivery data we collect every day. We plan to use this data to provide better service to our customers. We can use the data to identify days of the week when the delivery load is higher, and plan to augment our delivery capacity on those days. Or we can identify good customers, who have a good payment track record and convert them from a Cash on delivery to card on delivery. This will be good both for us and the seller – cash handling will reduce.The challenge is not technology, but the intelligence with which we use it. We wish to be known for our use of technology, not what technology we own.

Are there any technology you wish to experiment with?

One of the technology innovations we would like to tryout is hyperlocal. (Hyperlocal connotes information oriented around a well-defined community with its primary focus directed toward the concerns of the population in that community.  It refers to the emergent ecology of data (including textual content), aggregators, publication mechanism and user interactions and behaviors which center on a resident of a location and the business.) In simpler terms, it is point to point delivery. We wish to build on-demand delivery and hyperlocal delivery in our business. What this means is, if our customer wants a pick up or delivery within the next 2 to 4 hours, or in later phases within 30 minutes, we should be able to do it. Hyperlocal players exist in the food, grocery and electronic products delivery space.

The on-line seller would have a tie-up with a number of point of sale shops across the country. An order will be routed by the on-line seller to us, asking us to pick up the product from a location nearest to the customer and deliver it. This is a point to point delivery. The traditional e-commerce is a hub and spoke model. Hyperlocal is intra-city, or locality specific. Right now we are talking of two to four hour delivery. But we see half hour guaranteed delivery requirements coming up! This will change e-commerce as we know it.

 

How do you choose technology?

There are a mix of factors that go into determining the technology base for a firm. WOW Express is a startup. We believe that the crucial pieces of technology have to be owned by us. The technology is not crucial per se. But data is crucial. The outcome of the data is very crucial. These two have to belong to us. The analytic engine we are building Is proprietary to us. For the last mile, we work with a third part technology provider on a pay per use basis – essentially a SaaS model. For the first mile, which is a unique product is being developed exclusively for us. It is a mix of our own technology and outsourced pieces. As we grow, we will still want to follow the same model as it helps us. Own the crucial parts and hire the generic parts is our approach.

Are you seeing any disruptive technologies emerging?

There are quite a few disruptive technologies emerging. In the e-commerce delivery space, hyperlocal technology is a disruptive one. A couple of years ago the technology that powered Ola and Uber were not there. The only recourse we had was our own vehicles. To be able to see your delivery moving towards you on a google map will change the face of delivery. We are trying to bring that into the delivery space in India.

A simple technology like the GPRS, if used imaginatively can be a disruptor. We use trucks for our line haul. The bags that go into these trucks has a GPRS device inside it. This enables us to track the back. Loss in transit is history to us. We are exploring a similar solution for air parcels. The batteries in the GPRS device are a safety hazard here. We need to get over this hurdle.

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