These Entrepreneurs Started One Midnight on a Hungry Stomach: There’s Been No Turning Back SinceMay 13, 2014 2014-05-13 13:53
These Entrepreneurs Started One Midnight on a Hungry Stomach: There’s Been No Turning Back Since
These Entrepreneurs Started One Midnight on a Hungry Stomach: There’s Been No Turning Back Since
By Lakshmi Sivadas
It was half past eleven at night. Suraj and Sahil, had ordered food from a nearby restaurant in Gurgaon. They got chatty with the delivery person. Soon, the two were at the restaurant, talking to the owner– there was a problem they could solve! This was the beginning of Delhivery, a last mile logistics company which now employs over 3,200 people and handles over a lakh packages a day.
“It was 11.30 at night, I still remember, we took our bikes and went to meet the owner, Anuj Bajaj, who was surprisingly still there. He said he was shutting the restaurant down. He was really happy we had come because he wanted his staff to relocate somewhere. We said bring it on, we’ll hire everybody,” narrates Sahil.
In the course of conversation, they found out that the owner, Bajaj, also ran a cargo business. It didn’t cross their minds that they would be seeing him again for a while.
“A year down the line, when we realised that we needed cargo services, we went back to him and asked him to work with us. Today he is one of our largest vendors,” says Sahil.
Sahil Barua was studying at IIM Bangalore when he decided on his first start-up. The idea did not really take flight. Their thesis was fairly simple, help other startups augment an operations team, a finance team and whatever was needed to scale their business. This was in early 2008.
“Unfortunately for us, when we were graduating in 2008, the economy went south. A part of the entire thesis of our original startup was that we would also be able to finance these startups. But we knew we wouldn’t be able to do this anymore. So we settled on day jobs,” narrates Sahil Barua, co-founder, Delhivery.
Suraj Saharan and Mohit Tandon were already working at the management consulting arm of Bain & Co in 2008 when Sahil joined the company. One of the things they had in common was that they wanted to start their own venture.
“We didn’t have the faintest idea what we were going to do. We decided to quit on one fact, we realised there is only so much you can learn in consulting, and grow,” says Sahil.
They took a six month sabbatical together. After the sabbatical and three years into their consulting jobs they decided to quit to start up.
From Hyper-Local to E-commerce Logistics
The three already had an interest in the internet space, and the numbers indicated that the growth would be staggering. It also helped that they were friends of Zomato co-founders Pankaj Chaddah and Deepinder Goyal.
“When we started the business it was very simple, it was born out of several discussions with Chaddah and Deepinder. Our question to them was look you guys are doing a fantastic business online, and presenting them to users. The next step is obviously to fulfill the order. Why has no one built a delivery network for restaurants? That’s how the idea started with hyperlocal,” says Sahil.
They started tying up with local restaurants and fulfilling their orders for them in under half an hour.
Sahil was out with his friends in 2008, when he was introduced to his soon-to-be co-founder, Bhavesh Manglani, an IIM-Kolkata graduate. “He was introduced to me as a really interesting guy and a great techie. We exchanged numbers over dinner,” says Sahil, “We didn’t see or hear from each other for three years after that,” he adds.
Three years down the line, after setting up Delhivery, they needed a person to fill the gap in the tech department. They had no luck. Sahil picked up his phone in one last attempt to see if somebody he knew would fit the role.
“I was going through my phone book and came across Bhavesh’s number. So I told these guys look there’s this person I know who is supposedly very good at technology, why don’t I give him a call?”
Bhavesh was working with Idea Cellular in Ahmedabad when he received the call. He was talking to Sahil after a long time. When he heard the plan for the startup he was on board immediately. When Bhavesh shifted to handling operations on the team, the 5th co-founder, Kapil Bharti replaced him in November 2011.
They set up their first branch in a 250 sq ft room in Sushant Arcade, Gurgaon which was their corporate office, despatch centre, call centre, development centre all rolled into one. They were 10 people in all, including 4 delivery persons.
Business was good for Delhivery. Soon, they were clocking in over 100 orders a day in Gurgaon. This was when their investor Abhishek Goyal set the ball rolling for them in the e-commerce space.
“Abhishek said – look if you can deliver food in half an hour, why don’t you deliver packages for me as well? Seeing the progress, Prashant of Healthkart came on board and said why don’t you deliver for us as well? It would be great if it would reach customers in half an hour after they ordered them,” narrates Sahil.
That’s when they noticed that this business was win-win not only for them and the e-commerce companies, but also customers who were now happy to receive parcels on time. “We started appearing on blogs, and that’s when we thought – hang on, why is this space so interesting? Why is Blue Dart not able to do what we’re doing?” says Sahil.
To understand the space, Suraj and he began testing the waters and thereby future competitors. They started sending packages to each other using the different delivery services. They ordered a number of products online to understand where the delivery networks had their focus. They soon realised that the problem was that the traditional delivery partners had not understood the scope of e-commerce entirely. They also did not understand that e-commerce delivery was fundamentally different from traditional delivery, explains Sahil.
“That’s when we said – e-commerce is a gigantic opportunity, why don’t we go after this and come back to hyperlocal later? That’s how we made the transition,” he says.
By the end of December 2011,they were delivering over 500 shipments a day for 5 e-commerce clients in the Delhi NCR region. Their team size had grown to 25, and they also launched their second and third centres in Malviya Nagar and Janakpuri and started servicing all of Delhi-NCR. In September 2013, Delhivery raised nearly $5 mn from Nexus Venture Partners in a series B funding round.
What’s the Best Way To Get a Customer?
“When we started out we had problems because people said you guys will go out of business. Then along the way people started saying they will do logistics in-house, then they said you guys are expensive and we have cheaper options,” explains Sahil.
What’s the best way to get a customer? Go to people and ask them to try your product out.
“Walk up to them and ask them what problem they’re facing. See if you can solve it for them. IndiaTimes was not happy with whom they were working for at the time and wanted someone who can deliver in 24 hours. We said we’ll do it for them. That’s how they signed up the account,” says Sahil talking about Times Internet (also their investor) e-commerce venture in India.
Delhivery asked them to start with a risk of 30 packages a day. If they could deliver 30 packages, then increase it to 50 and keep increasing it to test their limit.
For the first year and a half of business, Delhivery walked up to clients and asked them to try the product free of charge for a month. They also gave potential clients 30 packages a day free just to get them to try the product.
Building their Delivery Network
“We knew nothing about this space. All we knew is that we need a couple of things – a distribution centre, an IT platform and you need guys on bikes to deliver this,” narrates Sahil. They met brokers and hunted for real estate.
“We had many parameters to satisfy – it should be 500 sq ft, it should be located on the ground floor, it should be either on the ring road, and it shouldn’t cost more than 15K a month. When we put all the parameters together, you found there were zero properties. So we went back to the drawing board to see which we were willing to relax,” narrates Sahil.
However, with whatever knowledge they possessed on distribution centres, they eventually they found them.
Kapil, Delhivery’s tech head, focussed entirely on building Delhivery’s IT system. He talked to various customers to understand what they wanted from Delhivery, and what they lacked. Thereafter, he and his team, built the IT system from scratch.
What Delhivery Learnt: Fail Quickly, Fail Often
“We’ve learnt so much from doing this. We’ve started branches in wrong locations, our initial network design was implemented, and we realised it was completely wrong within a month. We started with reverse logistics two and a half years ago, but we didn’t anticipate the problems that would arise when customers don’t package products when they return it. We were literally stuck with half a slipper, t-shirts and other products in our centre. We failed, but when we started again we learnt the hard way. We had our own packaging and now it’s far more efficient.
Embrace technology and make it your prime focus
“Whatever kind of business you are doing – restaurant delivery, e-commerce whatever it is, technology makes all the difference. Make sure you have that in focus all the time.”
Sometime it Makes To Reinvent the Wheel
“We’ve re-invented the wheel a lot of times, and what you’ll find is that sometimes the process of re-inventing is more important than the wheel itself. In management we’re taught never to do this, but as an entrepreneur it’s always best if you do.”
Here’s wishing them a great journey ahead.
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