While eCommerce growth is driving everyone in media crazy and getting VCs to think about, “What am I missing?”, the ecosystem around eCommerce stills seems to be ruled by old world companies and is seeing very little innovation. From payment gateways to logistics everything has such high entry barriers in terms of capital investment that not enough people are ready to risk it up. The end situation has come down to eCommerce companies creating their own back-end, as in the case of Flipkart.
Chhotu (or Santa Claus Couriers) is one startup that is daring to venture into the big bad world of logistics. Based in Delhi, Chhotu is a last mile delivery solution targeting the niche eCommerce logistics space. The startup claims to be eCommerce friendly as it is tech. driven and wants to be an extension to the eCommerce sales channel. Going the typical tech. product prototype route, they are keeping investments in control with last mile delivery only, for now.
Chhotu currently delivers only within Delhi and is looking to open shop in Mumbai later this year. They already have some known eCommerce players amongst their 10+ clients including Myntra, GKB Opticals etc.. The startup claims to keep costs and delivery returns low due to effective use of technology. The return rate in their case is about 1.5% for all reasons of failure.
Here’s a quick QnA with Chhotu founders, Navneet Singh and Aadhar Aggarwal.
1. What is it that you think the regular courier guys are doing wrong and how do you make it better?
Regular guys are doing business in a traditional way in which they are suppose to “just make the delivery” and get paid for it. We see our relationship with E-Commerce companies as partners and we act as an “extension of their sales channel”.
We align our revenue model to E-Commerce revenue model. In around 99% of cases, we charge our partner when he is making a sale. In other words, we empathize when a sale is lost on CoD. That is one example of alignment. Second thing I would say is responsiveness. We are working with technology companies where things are suppose to be very responsive, be it their website, customer support or shipment. Other players lack this which makes the whole shipping experience painful for shipper and shippee(if that is a real word). Our technology is very focused on collaboration. Simply put, three parties involved in a process needs to have a predictable streamlined communication medium. Chhotu relies on technology for this. Despite we are small today, our technology is evolving around that philosophy which is really working.
2. You offer last mile delivery, so what happens to the long distance logistics? How is it taken care of? Partnerships?
Currently we don’t do long distance logistics as it requires huge investment and expertise which anyways current shipping companies are doing acceptably well.
3. What is the current team size? What is the structure, delivery vs. technology vs. Business Development?
We are currently 50 odd people, most of which are in the field. We are building our technology and BD teams. We don’t do logistics by the book and are building our own in house specialization.
4. Given the niche you are playing, how sustainable is it as compared to a main stream courier company? Are there enough volumes to play on economy of scale?
There are enough volumes to have a good profitable sustainable business. We are receiving a good amount of attention from VCs and Angels for investment.
Note: Some questions around their operations have been held back in interest of the startup due to IPR sensitivity. They will share once the filings are in order.
I had a brief telephonic conversation with the founders and they sound quiet sanely enthusiastic about building a business here and not just starting up. With the growth of eCommerce it will be interesting to watch how competition builds up for them.
The logistics in this space is currently ruled by well known players like BlueDart, Aramex etc. who are supposedly good in service but come out to be quite costly, specially for small ticket size goods. Add the return consignments to that and the ratio skews up even worse. There might be some more startups in this space soon and hopefully other courier companies will gear up as well. The space will see action.
So all you guys cribbing about not enough guys solving ground level issues in eCommerce, here’s your answer. Place your bets! And eCommerce guys, do try out Chhotu’s service and help them understand the market better.
If you have received a courier from Chhotu, do let us know your experience.
[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]