The Last Half-Mile

One evening last week, I came home to find two separate deliveries waiting on my doorstep. Both had been delivered in error. The first was a bunch of flowers, but the named recipient, the street address and the suburb were all incorrect – it was for someone else in another postcode. The second was a packet of coffee beans (part of my monthly subscription), but I had already received the same delivery the day before – so this was clearly a duplicate. Welcome to the perennial logistics challenge of the “last half-mile”.

Delivery-on-Demand: 5 years ago, Auspost was experimenting with drone deliveries (image sourced from IT News)

It seems that despite the increased demand for on-line shopping and home deliveries during lock-down, supply chain logistics are still struggling to find a consistent and reliable solution. Coincidentally, in recent weeks I have been pitched two different start-up ideas that aim to address the last half-mile challenge for e-commerce. Although they are each taking slightly different approaches, both start-ups are trying to address the “recipient not at home” dilemma – what to do with parcels and deliveries when there is no-one at home? Their respective solutions revolve around a “localised point of collection/delivery” – either using a more convenient network of click & collect facilities, or a network of trusted neighbours to receive deliveries on your behalf. I have previously covered another Melbourne start-up called Passel based on a network of trusted local couriers – but it doesn’t seem to have progressed very far.*

So if this is a recurring theme, why can’t it be fixed – or are the solutions out of step with the actual problem? Or is the problem not that big of an issue to warrant over-engineered answers? In attempting to provide constructive feedback to both the recent pitches, I gave similar responses in each case, which can be summarised as follows:

Using a proxy recipient still does not solve the problem of items being delivered to the wrong address (or wrong items delivered to the correct address). In particular, it doesn’t address the issue of Australia Post personnel carding an item as “not at home” when in fact they simply can’t be bothered to attempt delivery and prefer drop it off at the local Post Office for collection – believe me, I have had more than my fair share of those.

Localised click & collect services already exist – usually in convenient locations, and often accessible outside Australia Post’s normal hours. Plus more parcel locker and similar services are appearing – so is the demand really there for another delivery solution?

Who is responsible for insurance claims on lost or damaged packages, where the named recipient (who has the sales contract with the seller) does not match some of the relevant transaction details associated with the proxy recipient?

Likewise, if you are using proxy delivery or collection services, who is responsible for managing returns and/or unclaimed items? Some retailers will take items back and offer refunds as a matter of policy – but others won’t or can’t process returned stock, and end up re-selling into secondary supply chains at a discount.

How do you recruit and screen proxy recipients and deliverers, and build trust into the network? How do you avoid an under/over-supply of proxy providers – too few and the system gets choked; too many and it’s not worth their time and effort to sign up.

How do you recruit and service multiple retailers and/or their point of sale and fulfillment providers to make it a viable service for customers who wish to shop from multiple shops and brands?

Who (and how) do you charge for the additional convenience you are trying to offer – retailer, customer, or both? Suggested options include a per transaction fee and/or an annual subscription fee, or a check-out fee which can be rebated based on loyalty or other frequent buyer rewards. But the “convenience premium” cannot be disproportionate to the value of the transaction.

Even with more customised delivery options such as trusted neighbours, the issue of having to be at home during quite wide delivery hours (e..g, 8am to 1pm, or 9am to 5pm) still applies.

Confirming proof of delivery is still a pre-requisite – even more so if using proxy delivery addresses – and potentially adds another layer of complexity.

Finally, the need for immediate “Delivery-on-demand” may be overstated, at least on non-perishable goods, so a constant stream of delivery drones down every suburban street is probably some way off….. but maybe don’t rule it out if we have further pandemic-related lock-downs or continuing challenges in the COVID vaccine rollout.

* Similarly, I also blogged about other customer experience with the final step in fulfillment across a number of sectors, including e-commerce.

Next week: Notes from Blockchain Week

StartupVic’s E-commerce #Pitch Night

A new venue, and a new theme – last week’s Pitch Night organised by Startup Victoria was hosted at Kensington Collective, and featured four contestants each working in different areas of e-commerce.

With some high-profile judges (including Ahmed Fahour, outgoing CEO of Australia Post, and Kate Cornick, CEO of LaunchVic), and an audience warmed by hot soup and mulled wine on a very cold and wet Melbourne night, it was not surprising that the event was packed out, despite the weather.

In addition to hearing the competing pitches, attendees were also able to meet with a number of other e-commerce startups exhibiting in “silicon alley”, including: VolStreet (a new market place for consumer goods), Liven (a loyalty program for restaurants), Buying Intelligence (data on retail trends from the fashion industry) and Straight From Farmers (a D2C platform for agricultural produce).

As per the usual practice of this blog, the startups appear in the order in which they pitched (and click on the startup names for their website links):

 Passel

Passel’s business model is built on a crowdsourced solution for same day deliveries, so that shoppers can get their purchases quicker from omnichannel retailers. According to the founders, a high percentage of online cart abandonment is due to freight costs, and delivery times.

Using something akin to the Uber model, retailers will book a delivery that could be fulfilled by one of their own staff on the way home, or by another shopper if they are in the vicinity. Same day delivery is apparently more secure, and with a registration process for delivery “agents” and no charge to the retailer until proof of delivery, Passel is also designed to de-risk the delivery service. But, not quite delivery drones across suburbia!

Currently running a limited trial at Bayside Mall in Frankston, Passel is putting most of its efforts in to training staff at the stores they work with, to make sure the process is bedded down.

The judges had a range of questions and observations about the business proposition and assumptions behind the pitch, such as: Retailing can be quite a separate function to distribution and fulfillment, and for larger retailers stock management may cover several stores, or be handled by core distribution centres – so how will shops retailers be able to match orders and deliveries on a same day basis? Within large outlets, the time taken for delivery staff to actually locate an item may become burdensome, so has Passel considered geo-coding within stores? What is the opportunity outside Australia?

My own observations about this pitch included: what are the issues with insurance, what is the fit with click’n’collect services, and is there a bigger opportunity in solving current problems with the use of contract couriers on demand?

Vesta Central

Describing itself as “a marketplace for destination partners“, Vesta Central is also one of a growing number of Product Data Distribution Platforms (PDDP), between suppliers and retailers. Essentially, it offers an API to allow manufacturers to upload their inventories to support downstream distribution and sales.

Citing technological, time and cost barriers for product suppliers and retailers to upload and distribute product data, Vesta Central’s main proposition is to help move from physical to digital, via a centralised master data platform. From here, retailers can pull product data in real-time.

I’ve seen similar startups and businesses that also provide product manuals, technical specifications and even product training to sales staff, so the judges also felt that the founders need to gain a better knowledge and understanding of the competitor landscape. Another word of advice they had for the pitch was, “Let go of the PowerPoint…”

To Me Love Me

With a tag line of “Fashion Tech – Made To Measure“, this startup is trying to address the issue of incorrectly fitting clothes which is creating retail dissatisfaction.

Using key measurements and six data points, the service develops personal profiling
based on a proprietary algorithm according to body shape and style preferences. In return, it can offer curated, personalised, and even some custom-made suggestions and recommendations – but mostly ready-to-wear brands.

Aiming to help brands bond with their customers, the service also introduces social elements via peer/customer feedback. The service provides a seamless experience and offers a level of control to customers – but essentially, it’s a data play: collecting, aggregating and distributing customer statistics and profiles to the industry.

Although the pitch mentioned a SaaS model (with three tiers of service and pricing), the economic model was not fully outlined. However, the judges were clearly impressed by the founders’ international contacts in the US, UK & Europe, and their global ambitions.

CableGeek

With one simple sales proposition (“selling trusted mobile accessories at low prices“), CableGeek aims to address three common problems in this retail product category: Inconsistent product quality, high retail mark-ups, and difficulties in buying online (especially the shipping costs on lower-price items).

The CableGeek solution includes: free shipping from Australian suppliers, offering global brands, a focus on mobile (ApplePay), and key partnerships (instant pickup via Blueshift’s IBP, and fulfillment via eStore Logistics).

With a Google customer review rating of 4.8, CableGeek must be doing something right. Asked about what sets it apart from the competition, and how it will fend off competition, the founders cited the end-to-end automation plus their own full stack development – so any challenge is more likely to come from large retailers (who don’t necessarily have the focus or the in-house technical capabilities?).

However, given that the business was started by Ryan Zhou, who is also a co-founder of CoinJar, the judges wondered whether he would be over-stretched, or unable to commit 100% to this new business – especially as in this type of retail business, the only way to succeed is by dominating market share, which requires full-time commitment.

The judges were obviously won over by To Me Love Me‘s approach, as it took out first place on the night. There was also a sense that it was the only pitch that clearly had a real eye on international opportunities, and had demonstrated some serious industry credentials.

It was also interesting that a couple of the pitches referred to issues with delivery costs in Australia, especially for smaller, lower value items – something that the incoming CEO at Australia Post might want to address?

Finally, it was disappointing that there was no opportunity for questions or input from the audience – with one of the largest turnouts ever for a regular pitch night, Startup Victoria needs to think about how to incorporate more audience participation – these events should not just be a spectator sport.

Next week: Law & Technology – when AI meets Smart Contracts…

 

The latest installment of Startup Victoria #pitch night

The numbers were out in force for the August edition of Startup Victoria‘s monthly pitch night. A full house (no doubt helped by a new beverage sponsor…) heard from another batch of startup hopefuls, operating in very different sectors: medtech, recruitment, food logistics and domestic services. Despite some AV issues, this event showcased some interesting businesses, all of them demonstrating some impressive early stage traction.

In order of appearance, the night’s pitches came from:

VideoMyJob

Launched in April 2016, this online tool allows recruiters and hiring managers to film, edit and share their job ads. The business already boasts more than 60 clients (some of them very high-profile), with the data suggesting an 82% higher success rate in hiring outcomes. This performance is largely attributed to the simple fact that candidates spend up to 4 minutes watching a video ad, rather than the average 12 seconds candidates spend reading a text-based ad before they submit an application.

The tool, which runs on a mobile device, includes a tele-prompt feature, in-app editing functions, a one-step process to publish to social, plus e-mail. Customer pricing is based on a $79 monthly subscription to place unlimited video ads. One reported benefit for clients is much stronger candidate short lists.

Given the changing dynamics in the recruitment market, where companies are finding themselves competing for talent and striving to become employers of choice, any new hiring solution has the potential to be a game-changer. Which is what the founders are probably banking on as their exit strategy, with a likely trade sale to a complementary recruitment platform.

PredictBGL

This medtech startup (previously known as ManageBGL) offers an app-based solution to help diabetes patients manage, monitor and predict their blood glucose levels. Despite regular patient testing, according to the founders, 80% of the data is actually ignored.

Able to offer more “real-time” testing, the app claims to fix wrong insulin doses within 3 hours (not the usual 14 days with traditional clinic-based testing), offers more precision dosing, and predicts patient levels up to 8 hours ahead.

It also has the option to incorporate live exercise data (from wearables), and serve patients who can’t afford expensive insulin pumps. As well as paying a monthly subscription, patients are also paying for insights based on the data. With a $10 per month fee, over 80% customer retention rates, and around 600 sign-ups per month, the app is breaking into the US market.

Asked about potential risk factors and the margin for error in patient testing, the founders explained that the user results are somewhat conservative, so they are embarking on clinical trials to refine the analytics.

Jarvis

Billed as “your very own personal butler”, Jarvis is one of a number personal concierge services, catering to the time-poor, inner-city residents who want to outsource domestic chores and errands.

From $33 per week (and an average of $55), Jarvis differentiates itself by offering a more personal touch, because the business hires and trains employees, rather than using freelancers or contractors.

Launched in January 2016, Jarvis is experiencing 20% growth per week, 90% customer retention, high referral rates and generating 10-15% margins. The founders are working on their logistical efficiency – routing, grouping – and deploying scalable technology – such as cluster algorithms. Pat of the attraction for clients is the fact that Jarvis does not see itself as a transactional service like some freelance and task-based apps and platforms.

The panel of judges asked about the risk of being disintermediated (by their own employees going direct to client). Jarvis claims that their key defense is the proprietary Butler app for employees.

Pantreeco

Last up was Pantreeco, which was established in 2014, with the goal of building “productive partnerships in food” by streamlining the logistics and supply chain communications between food suppliers and buyers.

A self-styled “co-commerce” solution, Pantreeco includes a messaging tool between producers, wholesalers, distributors, restaurants, cafes, grocers and providores.

Offering a freemium SaaS model (based on a per customer per channel basis plus commission), Pantreeco is in the process of taking its model to overseas markets via some major international expansion.

Asked by the judges about the competition, such as TradeGecko and Unleashed, the founders stress that they are not simply an e-commerce or inventory management solution. Instead, Pantreeco developing a range of integration services in response to customer demand – e.g., invoicing, accounting, communications as well as inventory management with 3rd party platforms such as Xero, ZenDesk and SalesForce. They also have plans to on-board major enterprise clients in the food and beverage industry.

Based on the audience voting, Pantreeco took out the honours on the night.

Next week: When robots say “Humans do not compute…”