A sector-agnostic focus helps Mumbai-based Grab ensure last-mile delivery
Grab is a platform that provides last-mile logistics solutions to businesses in the form of same-day and on-demand delivery services.
It is eight in the morning and you just happen to be the first one in the office. The rush to leave early and reach office on time has cost you breakfast. But with food and on-demand delivery services such as Swiggy, Zomato, FreshMenu and Dunzo, it is hardly a concern now.
With online delivery steadily gaining importance in our day-to-day lives, the delivery boys working in these companies play an important role. This was something Prathish Singhvi, Nishant Vora and Jignesh Patel noticed. They felt the rise of ecommerce needed tech-based logistics services, especially one that involves transforming the blue-collar fragmented pool to an organised one.
The trio launched Grab in 2014 in Mumbai. It is a platform that provides last-mile logistics solutions to businesses in the form of same-day and on-demand delivery services. Grab adopts a sector agnostic approach by partnering with various clients ranging from restaurants, food aggregators, ecommerce companies, grocery platforms, pharmacies, etc.
“We integrate our APIs or provide app and web platforms to our clients, enabling them to place order and pickup requests and get real- time updates until the order is delivered. Similarly, we have an Uber-like fleet of riders who get notified on an app for an order to be picked up in a nearby location,” says Pratish.
Post this, an algorithm assigns the order to a rider who picks it up from the clients’ location and delivers it to the end customer — each step of the process being shared on a real-time basis with the ability to track the order.
Nishant and Pratish were school friends, and prior to founding Grab, were working in the US for Toyota and BlackRock respectively. Jignesh, also a friend from school, is an electronics Engineer and has run three companies with over 1,200 employees.
Grab started out with five people and a fleet of 15 riders the trio had sourced. However, in 2014, it was a challenge to convince businesses to utilise the riders, cost benefits and the value attached to it.
Other platforms such as Opinio and Runnr too are tech-enabled hyperlocal logistics startups that help small businesses (merchants) – restaurants, grocery stores, bakeries and laundry stores – fulfill their demand by offering delivery as a service.
Opinio halted operations in the end of 2016 and Runnr was acquired by Zomato last year.
“This sector saw a funding frenzy and hyper competition. We again fought price wars and countered those times with a deep focus on execution and building multi-layered technology that best optimised our fleet on street,” says Pratish. What helped Grab was its focus on a sector-agnostic approach.
While ecommerce might not provide consistent business, other offline sectors had consistent demand. “Our platform has garnered significant traction due to its approach of blending peaks of various businesses. Our demand ecosystem ensures a rider is available regardless of the season of the year or the hour of the day - there will always be an order for pickup in the neighbourhood - be it grocery, restaurant, an ecommerce shipment, or a box of medicines,” says Pratish.
Growth and clients
Today, apart from full-time delivery personnel, Grab also has college-going students, working professionals, and part-time field executives working with them. During their spare time, they login to the app to fulfil delivery requests in their neighbourhood and get paid for those number of deliveries.
The team has grown to over 4,000 riders and 175 employees at present. Grab currently is present in 38 cities in India, providing delivery services to some of the top companies including McDonalds, Dominos, Zomato, Swiggy, Amazon, Fedex, Flipkart, BigBasket, Croma, Big Bazaar, and many others.
The firm raised a funding of $1 million from Oliphans Capital and investor Haresh Chawla in April 2015. In 2016, global logistics service Aramex invested in the firm. Last year, the team again raised funding from SIDBI (Small Industries Development Bank of India).
The team charges its clients a delivery fee that varies based on the delivery type and the sector. This translates to a rider on the Grab network eligible to make significantly more money as compared to working on a sector specific platform.
“This very reason is why attrition of Grab’s rider pool hovers around 10 percent versus the industry average of 36 percent and one of the many reasons why leading brands, across sectors, choose to use Grab’s delivery network to fulfil their deliveries," says Pratish.
Revenues and future plans
The team claims to have broken even at a gross margin level as of November 2017. The team is also reporting a 14 percent gross profit. Pratish adds that they are now four to five months away from being net profitable - a feat many thought was impossible to achieve back in 2016.
Apart from the growing margins, Grab has also expanded its geo scale, product offerings and clientele. “We closed FY17 with 200 percent growth in revenues and a 300 percent improvement in gross margin,” says Pratish.
The team is aiming to become EBITDA positive this year and claim to be on track to achieve that. Moreover, for FY19, they are looking at a 350 percent revenue growth. Grab is currently witnessing significant interest from organised retail brands that are keen to use its same day delivery service and compete with its online counterparts.