Delhi-based startup Shiprocket wants to provide Amazon-like services for Indian SMBs, generates Rs 100 Cr in monthly GMV
Using artificial intelligence, Delhi-based startup Shiprocket aims to enable and empower small and medium businesses across India in direct-to-consumer ecommerce with an aggregation of tech and services.Athira Nair
As ecommerce takes over India, lakhs of sellers have put up their products online. But in a country with around 50 million small and medium enterprises (as of 2018), the advantages of ecommerce is still lost to a majority.
A large number of homepreneurs and SMBs have sprung up in the country over the last few years, especially in the unorganised sector. These mostly sell via Facebook, Instagram, and WhatsApp - directly to the consumer rather than via online marketplaces.
The biggest challenge these ‘social sellers’ encounter is a proper logistic partner. Although the likes of Delhivery and BlueDart have made shipping easier for larger players, a viable volume (of orders) is an essential factor for their services. With 4-5 orders to be shipped on an average day, these sellers are unable to provide this volume for larger logistics players.
Enter Shiprocket, a Delhi-based startup that is filling this gap and enabling shipping for smaller volume of orders. With artificial intelligence (AI), it provides not just free shipping to these small sellers with lowest RTO (return to origin), but also services like customer support, online store creation, and management.
A long voyage
Shiprocket began as Kartrocket in 2012. A larger entity, it had several products around ecommerce – one being ‘Kraftly,’ a website publishing and marketing platform for small-scale sellers. But Co-founder and CEO Saahil Goel says that demand from their direct-to-consumer seller base was the highest for logistics.
“Smaller sellers had trouble running the shipping due to smaller volumes. So, we launched as a new product ShipRocket in 2016.”
Kraftly still exists as an online marketplace, although the spending on the B2C platform is minimal now. “Our focus is running logistics,” says Saahil.
Following an asset-light model, Shiprocket has integrated 15 domestic and four international logistics providers on its platform, helping any seller integrate with a partners through tech.
Their logistics partners include ShadowFax, Delhivery, FedEx, Ecom Express, Wow Express, and Professional Couriers for hyperlocal, regional, and national deliveries and pickups. It is also onboarding regional/local courier companies for a regional stronghold.
Shiprocket also helps these sellers take their business international, collaborating with DHL and Aramex, while TCI Express caters to bulk orders.
Looking up to Amazon
If a consumer is choosing between buying a brand on Amazon or on the brand’s own website, Amazon may generally look like the better option as it predicts the date of delivery. This loses out on the customer conversion for the home website. Saahil says that Amazon is the company’s benchmark for experience in logistics.
The entrepreneur tells YourStory,
“Local courier companies take seven to eight days for delivery as they don’t usually do ecommerce deliveries. They do not provide tracking services either, but charge higher rates. Shiprocket provides customised, fully branded webpages for online-only brands for order tracking, with frequent updates. They can also reach out to the sellers or us at any time.”
For instance, if a consumer wants a delivery delayed by one or two days, this communication channel makes it seamless. “To build such tech independently is hard. We do all these for the client,” adds Saahil.
However, he says that SMBs need a lot of education in this area. “Most of them don’t know the difference between volumetric weight and dead weight,” says Saahil.
To create brand awareness, the startup often conducts events for sellers around its main hubs. He claims that most of the customer acquisition has been organic and that marketing is done only digitally.
To provide cheaper and faster deliveries, and a better consumer experience, Shiprocket makes recommendations about a logistics player based on the sellers’ requirements on speed of delivery, price, rating, etc.
“We can optimise the best options for your package(s) looking at real-time data. Some service partners offer truck mode transport, and some do air mode. The former will be faster for delivering in Tier-III towns. That is just one of the many parameters to pick from, which is manually very hard. Hence, we have automated it for our clients.”
Additionally, to cover more pincodes, the startup has onboarded logistics players from across the spectrum. For instance, although Professional Couriers does not do ecommerce deliveries, it has a stronghold in south India. Hence, Shiprocket has partnered with it.
“For all logistics players, we integrate deeply with their tech. If they don’t have that tech, we will build it for them. Thus, we have a virtual network of couriers,” Saahil states.
In addition, Shiprocket also provides faster cash on delivery (CoD) reconciliation. While independent couriers take 10-12 days to transfer CoD amounts to sellers after delivery, it does so in five days.
Saahil explains, “If a seller is working with multiple courier partners, and money comes in late from some of them, it is hard to keep a track (without the right technology, which most of them don’t have). By negotiation with our logistics partners, we ensure it is done faster. Also, if the CoD amount is taking time, and the seller is out of working capital, we let them do shipping for that amount via Shiprocket. We deduct it from the CoD amount later when it is processed.”
What is in the pipeline?
The startup plans to onboard more local players in the next few months even if they are smaller players with 20 delivery boys or so - like Trackon, Shri Balaji, and Maruti couriers, which have a strong grasp of specific areas for last-mile delivery.
Additionally, it has integrated with channels like Shopify, eBay, and Amazon, among others, so that they can automatically import their clients’ orders on these websites, and assign a courier based on real-time data.
Sellers can also choose a courier partner, but Saahil claims that 50-60 percent go with Shiprocket’s recommendation as it tracks each player’s performance.
Market opportunity is huge in enabling logistics, with data and tech empowering players. Saahil says that Shiprocket’s competition is mostly from courier companies who were already doing this but with poor experience.
“Each logistics company has its own issues – data, delivery, CoD processing, reconciliation. We exist to solve these challenges.”
Shiprocket is now a team of 180 with half of them in tech. It has raised $14.2 million from investors including Bertelsmann, Beenext, Nirvana Ventures, and 500 Startups. Although not a capital-intensive business, Saahil says they will look for funding post July to improve the network of logistics partners, and build an omnichannel/hyperlocal delivery for grocery and fashion sectors.
“We are looking for our logistics partners to do specialised services across sectors. Recently, a seller approached us with a package weighing 50kg. We did not have that capability, so we added CCI Logistics to our network as they handle heavy cargo.”
Although he did not reveal numbers, Saahil says that all key metrics (including revenue) have grown 4x in the last year.
He claims that the company moves cargo worth Rs 100-110 crore GMV per month. At present, Shiprocket has around 17,000 paying users, of which 70 percent comes from Tier-II and Tier-III towns.
About 45 percent are social sellers, and the rest are online brands with their own websites like Suta, Man Company, and Mama Earth. The startup is aiming for 10 lakh shipments per month this year, from the current 7 lakh per month.
With Indian logistics industry expected to touch $215 billion by 2020 (as per IBEF data), the scope for logistics-tech is huge.
In fact, Shiprocket aims to turn profitable by 2020 as well.
Also watch: How Flipkart is using automation to deliver your products on time