Last-mile delivery is the final leg of a product’s journey from the time it leaves the warehouse to the time it reaches the customer’s hands. And it is generally the most expensive, least efficient, and most problematic part of the overall delivery process. Wrong addresses are just one challenge that delivery ventures face. There’s also the lack of proper roads, bad internet connectivity, poor maps and location data, and, of course, terrible traffic. Absence of real-time data on traffic and road conditions is another problem that increases the time and cost per delivery.
The Indian eCommerce market is estimated to touch $38 billion in sales by 2016 from $23 billion in 2015, as per Assocham.
There are dedicated logistics startups for last mile fulfilment. They are tying up with eCommerce companies and small merchants to overcome the problems of last-mile delivery. However, the sector is deeply affected by high costs in last-mile deliveries due to failed deliveries, which lead to second or third delivery attempts.
Addressing this solution is a smart way is a new solution in the market – Smartbox. It provides an alternative where the delivery boy could simply drop the parcel at a secure locker right near user’s apartment and the users could pick it up in their own sweet time.
What is Smartbox?
The company is an eCommerce enabler which makes receiving online deliveries as convenient as shopping online. The product brings privacy, security and flexibility to online deliveries by automating the complete system. It also allows users to pick up parcels as per their schedule.
“As we envision it, Smartbox is the answer to the last mile delivery problems of Indian Ecommerce Industry. Smartbox terminals are placed at strategic locations for easy drop and collection and are available 24/7 for round the clock deliveries. Deliveries can be made at night and collected in the morning”, said Vineet.
In a nutshell, the company provides convenience for the customer and efficiencies for its eCommerce partners.
Product Details and Business Model
Every Smartbox terminal has 52 lockers in small, medium and large sizes. The terminal is completely automated and compact, occupying only 1.5 square meters.
A Smartbox operates in the following manner
- Step 1: Order Online and choose Smartbox as a delivery option
- Step 2: Delivery person drops off the parcel at the chosen Smartbox terminal, customer receives OTP on email and via SMS.
- Step 3: Using that OTP, customer collects parcel from the terminal on the day and time that is most convenient.
Smartbox also provides Card Swipe on Delivery (CSOD) for faster COD settlements. This feature enables users to pay through credit/debit card at the time of collecting the parcel from the terminal.
Once the parcel is delivered to Smartbox terminal, regular notifications are sent to the customer, first at the time the parcel is delivered, second after 24 hrs, third after 48 hrs and last one 6 hrs before the parcel expires. If the parcel is not collected even after 72 hrs then it is marked as expired and is returned to the eCommerce client.
Currently the company works in integration with Snapdeal, Shopclues, Oriflame & Voonik and are in advance tie-up stages with more such eShops. The company monetizes by charging clients depending upon the number of parcels and weight of the parcels.
Traction and Funding Details
Till date the company has deployed 20 terminals and plans to scale up to 125 terminals in Delhi NCR by July 2016. Next milestone is to take this number to 1000 by covering top 8 cities by the end of FY 2016. The company currently fulfills 5000 orders per day, which they project to scale to 30,000 orders per day once they cover all 8 metro cities.
Smartbox is currently financed by its parent company that is Friends Color Images Pvt Ltd which is a variable data management company. Commenting on the future plans to secure investment, Amit maintained, “As and when we expand, we will be raising funds for the same. Currently our investment bankers are in discussions for the first round of fund raise.”
Smartbox co-founder and CEO, Amit Sawhney has 18+ years in strategy, marketing and operations excellence. He has led Friends Color Images (FCI) from a print copy shop to a 1000 people strong Customer Communications Management company. Smartbox is his second innings as a entrepreneur.
Vineet Sawhney, Co-Founder and CSO of Smartbox is a US graduate, He has been an instrumental force in the success of FCI after his last stint in US with UBS Investment Bank. He is working as a Chief Strategy Officer, developing & executing Smartbox strategic initiatives.
Challenges and Competition
As with any other technology startups, there are challenges associated with the adoption of a new method. With both technology product and physical infrastructure being deployed the challenges are multifold.
Innovative technology deployment for scaling, high capital requirement for setting up the terminal and need for seamless execution are the key challenges the company needs to figure out. Beyond that increasing the adoption rates of the solution by both users and clients can also be challenging. How many people in India would really want to shell out extra money for sake of such convenience?
As of now there are no established competitors for the company in the market. Last year Bluedart launched its locker and another startup in this space – Qikpod raised $9 million from Flipkart, Foxconn and Accel Partners but no further development was reported from both the companies. Amazon has its own lockers in US and UK and we might see them in India too. Once these companies become active in this domain we can expect a healthy competition.
In a similar concept, Amazon India recently also partnered with Storeking to provide a fixed destination for eCommerce deliveries which later can be distributed by the offline retail store itself.
According to Tracxn, more than 400 Indian logistics startups solving this big problem of eCommerce ecosystem have collectively raised more than $300 million. From past 3-4 years the supply chain have witnessed intervention of many technological startups to increase efficiency of last mile delivery.
Delhivery uses a machine learning system that identifies the different addresses and standardizes them in one format. Runnr (previously Roadrunnr) has built a grid system for navigation, Opinio used to store the data with exact latitude and longitude for the deliveries to identify the fastest route possible for the next trip and now Smartbox has come up with a unique idea of installing lockers for eCommerce companies so that these big players can save on their delivery expenses .
Smartbox cofounder Vineet believes that to make eCommerce a long term success story in India, a lot of investments must go into infrastructure, especially logistics infrastructure.
Since ecommerce channels has been adopted in India we have witnessed continuous improvement in the model-efficiency driven by huge capital investment and consumer demands. The collective improvements in last mile logistics infrastructure will act an advantage for players and consumers alike.
So can Locker Terminals startups bring-in more predictability and efficiency in the system? What are your views about it?