How DOST grew 8x in geographical presence and 10x in gross market value of freight being handled through its distribution logistics platform in 24 months
Around 2012, when Indian e-commerce market started making headlines, Vikas Sethia, then an AVP at KPMG, saw an opportunity to address the challenges in last-mile logistics and delivery that e-commerce players were facing. He quit his job, and visited industrial hubs, warehouses and mandis to understand last-mile logistical challenges across the board. “That’s when I realised that the problem was much larger and beyond the e-commerce segment. Supply chain in the last mile was almost a universal problem in the B2B2C scenario.”
Addressing supply chain challenges
Deciding to focus on the B2B distribution first, Vikas began working on a solution for the consumer goods sector in April 2014. While Vikas knew that his experience in consulting would help a structured solution to address the lack of organisation in last-mile logistics, he needed help on the technology front. He was introduced to Anirudh Batwara, a young engineer from Manipal University, who was running his own startup incubated at the University. “Even though he was fresh out of college, Anirudh was quick to understand the vision and its potential and came onboard,” says Vikas.
Today, Vikas and Anirudh are co-founders of what is today known as- a collaborative freight mobility solution for urban supply chains. An acronym for Delivery Optimization Shared Transportation, DOST offers a supply-chain-specific T2T (Tech to Truck) platform primarily for B2B transactions focused on optimising last-mile distribution of goods and services. DOST consolidates transportation demand for distribution of goods and services and offers Delivery Infrastructure as a Service (DIaaS). DOST has developed a bouquet of shared transportation solutions like DOST eDhan (for fuel/diesel at doorstep), DOST Marudhara (for mineral transportation from mines to sites/plants), last-mile load pooling solution DOST Sugam for wholesale markets/malls, and DOST Micro - a Mobile app-based just-in-time transportation solution. The platform is today being used by over 300 B2B players.
Startup journey 1.0
Interestingly, in the early years of the startup, before pivoting to DOST, the startup was known for its urban delivery aggregator solution, named UDAN (Urban Delivery Van/Auto Network).
“In early 2014, we were providing tech-based local goods transportation services in the local market in Jaipur to distributors and retailers and soon introduced the concept of UDAN to aggregate small transporters under one brand and solve the last-mile logistical challenges,” explains Vikas.
In addition to enabling small transporters to get business through the driver app, UDAN also served as a gateway to get information on motor vehicle laws, financial support like loans, support for returns filing and social status upliftment as a part of the network. Businesses were also using UDAN to consolidate their trips and send through one vehicle wherever possible reducing their costs. By 2015, the startup had expanded its operations to Hyderabad, Bengaluru and Ahmedabad to test the model and its applicability to addressing the challenges of businesses in metros and Tier 1 cities. The year saw them working with Amazon, Apollo Pharmacy, Metro Cash & Carry, Aramex and hundreds of SME enterprises. After a round of angel investments, seed funding from Aramex followed.
While things looked good, two major events made a huge impact on UDAN alongwith the rest of the Indian logistics sector - the demonetisation of 2016 and the GST rollout of 2017. “While the regulatory changes were aimed at bringing a positive transformation from a long-term perspective, the immediate impact was that the sector choked. Because, as a startup, we did not have banking credit facilities to support working capital funding, we had to scale down our operations significantly instead of scaling up,” shares Vikas.
A turning point
They say, when you hit rock bottom, you can only go up. That sort of happened in real life for UDAN. That first came in the form of their acceptance into the JioGenNext accelerator programme.
When we entered JioGenNext, we were not sure of the scalability of our business model amidst an uncertain business environment,” Adding to the challenges was the uncertainty in investments. He adds, “We were desperately looking for ways to de-risk our business model and make it scalable without having a perpetual dependency on capital.”
The interactions and brainstorming sessions at JioGenNext were instrumental in seeding the idea for a pivot.
“The sessions helped to understand the problem clearly and create alternative strategies towards scalability. One of the best suggestions we received was considering outsourcing of operations to a third-party partner to have more focus on innovation and technology,” shares Vikas.
This helped the startup redesign its business model and started pivot from the aggregator model of UDAN to a managed marketplace model of DOST.
Parallely, the startup began looking for partners to outsource the operations of DOST, as suggested by JioGenNext. The search led to Udai Parnami. Then 30 years old, Udai was managing his family business of providing warehousing and 3PL services to brands like Dabur, Castrol, Asian Paints, Tata, Amul, etc across North India. He wanted to transform his traditional business through technological innovation and add new verticals and had started using the DOST platform for his existing business.
A pivot that opened new opportunities
With the pivot, the startup also got the opportunity to work with Reliance’s petroleum team to develop the DOST eDhan solution - a solution for direct delivery of diesel from fuel station to doorstep in a safe and transparent manner through an e-commerce platform integrated with automated logistics.
“Here, we were working alongside almost 12-15 vertical heads/senior professionals from petroleum, IT, Jio and e-commerce teams. This provided us deep insights into the sector, technology requirements and stakeholder’s needs. We met Mr. Neeraj Ambani, Group President - Supply Chain at Reliance Industries. He provided a service provider’s perspective and added environmental and futuristic vision to DOST eDhan solution. This included suggestions to add a reverse logistic solution to DOST eDhan to bring back used hazardous oil for recycling and safe disposal.”
During this time, Udai, who was now well versed with the efficiency of DOST, extended his offer to work alongside the co-founders to develop the DOST eDhan solution as its franchise partner.
“We worked together to develop DOST eDhan solution and started providing end-to-end service to Reliance Jio in Rajasthan - from the technology platform to transport service. His on-ground operational expertise was instrumental in helping us streamline the operations in Rajasthan quickly,” shares Vikas.
And, that in turn saw DOST expanding its operations with Reliance to start operations in other States like Haryana, Delhi and Uttar Pradesh.
By March 2018, it was clear that Udai had played an instrumental role in stabilising the business and leading the expansion of DOST eDhan for Reliance Jio across the four states. “The delivery volume went up from 40,000 to almost 2.5 million litres a month.” Udai then came on board by investing in the startup and became an angel investor. Today, Udai has taken up a larger role of leading the operational rollout across India as Director of Operations.
When the startup embarked on the journey for DOST eDhan , it was a new business segment, but soon DOST realised the larger opportunity and the first-mover advantage that they had, today, it has become the startup’s core business proposition.
Post the graduation from the JioGenNext accelerator programme, Vikas and the team stayed in touch with the leadership teams of Petroleum, IT and JIO for product feedback and further development.
“We regularly interact with the JioGenNext team. In addition to the advice and suggestions from the leadership, we receive many references related to potential market opportunities or collaborations for DOST. We are also given opportunities to work with new startups entering JioGenNext based on our business synergies. We have recently collaborated with eShipz another JioGenNext startup of 2020 cohort for cross-marketing in logistics space.”
Startup journey 2.0 that saw an accelerated growth
Today, nearly 2.5 years after graduating from JioGenNext, DOST has a presence across 70 districts - almost every city, town - of four of the largest states in north India - Rajasthan, Haryana, Delhi NCR and Uttar Pradesh. The value of the diesel delivered through the platform was about Rs 150 crore in 2019-20 with the annual run rate already touching Rs 200 crore. The startup says they are profitable at the current scale of operations.
“Incidentally, when we entered JioGenNext, we were a 2.5 year-old startup and had a presence in just four cities. The accelerator programme really helped us accelerate growth. In the last 24 months, we have grown 8x in terms of our geographical presence and 10x in terms of gross market value of freight being handled through the distribution logistics platform. We are also market leaders in niche verticals such as petroleum and mining,” shares Vikas
Reflecting on how the accelerator was instrumental in helping the startup recognise its core strength and define its future roadmap, Vikas says, “It was at JioGenNext that we picked our direction and started re-thinking our business model design. We decided to become a technology-based intermediary.” Today, its franchise model has ensured that their partners are doing the heavy lifting of operations enabling DOST to focus on innovation and technology to solve market challenges and drive growth.
DOST continues to remain focused on solving the challenges in the last mile of supply chain, the proposition on which they began our journey in 2014.
“What has changed is the business and operational model. This has helped us scale much faster but with much less spend in working capital or operations. We are also focused on addressing the last-mile logistical challenges in niche commodities where the entry barrier is very high due to regulatory and safety norms. We are already the global number one in terms of volumes handled through a single digital platform for diesel doorstep delivery,” explains Udai.
Given its stronghold, deep knowledge of supply chain, advanced but easy-to-use technology platform DOST is all set to expand its market footprint in India and global markets. “We will make the most of our first-mover advantage and strengths to drive the next phase of growth and market disruption.