Inside the warehouse of an

eCommerce store: How to manage

inventory and operations explained

Problem we were facing at managing inventory and operations at

DogSpot.in :

1. How to make Picking scalable and easier

2. How to avoid dependency on human resource while picking the products
3. What will be the logic of arranging products in a ware house
4. How to make operations of inward and picking smooth

In a warehouse, cost of order picking is highest and it becomes more

crucial when you are dealing with niche products. Handling niche
products is difficult because the picking staff will fail to identify a product
in your warehouse.

At DogSpot, we always think to build systems and processes scalable.

Operations should be fool proof, and should not be dependent on a single
person.

The solution is to give Product ID and Location ID to every product. Here

is how we did it:

1. We brain stormed as a team, consulted retail professionals, discussed our own

experiences and read online to build a logic to sort all the products.
2. Every product/item need to have a location mapped to it in the Database
3. Location ID should be awarded in a way that once you sort them in excel or any
other data base it should align in the same way you would like to arrange them
in your warehouse map
Here are the steps to execute the whole process:

First step: Every product is measured for length, width and height and
weight. Calculate the volume of every product, volumetric weight and
weight. Once you have volume of every product, based on your inventory
levels you can estimate racking space you would need, as a whole in a
warehouse. Your total SKUs’ volume should be far less than the
warehouse volume.

We had to dedicate five people from the team to measure each and every
item using scales and electronic weighing machines p. it was one week of
diligent and hard work. Tip: at DogSpot we have a culture to have cross
functional skills and out team members do not mind multi tasking or and
do not hesitate when it comes changing roles.

Second step: Sort all the products according to their volumes. Arrange
products in descending order according to their volumetric weight to
upload up to down in the racks so that it will be easy to pick the product.
Note: The picking person will always have a limit in terms of Volume to
pick a list of products. The idea is, whenever you generate the picking list,
volume of all products taken together in the list should be constant,
depending on the capacity of the picking trolley.

We do not have a trolley as of now at DogSpot warehouse; however we

have planned it in such a way that the processes and systems are ready to
support the scalability.

Our team did spent lot of time on data analysis to create zones as per
volumes and few other points. This helps the team to understand the
inventory very well. We got a very good macro level understand at this
step about arranging the stuff in the warehouse.

Third step: Add another level of sorting, velocity of movement of

products.

Velocity= No. of SKU sold/Time

As said earlier we made different zone. One of the zones will be high
velocity zone. Location of high velocity zone should be easy to approach
and near to packing area.

Fourth step- Nomenclature: Providing location id to the aisle, racks, to

the columns and bin in the racks.

1. Aisle can be numbered as 1, 2, 3. Etc.

2. All racks will have their own rack number following left to right or vise-
versa. Now the best way of providing the rack number is R1, R2… Rn (where R
stand for rack).
3. Next, we provided location to the shelf in the racks the location ID will look like
R1A1, R1A2… RnAn (where A stands for column) for the first column and the
same for the second column R1B1, R1B2... RnBn and so on for all columns
alphabetically.
4. For Smaller products can divided one column horizontally and vertically. When
we divide column vertically/horizontally we can provide location id like, R1A1V1,
R1A1V2… R1AnVn (where R-rack, A-column and V-Bin).

A typical Location/Product ID will look like: 1R1A1V1

For example here are the zones we have created:

 1. High Velocity Zone [HVZ]: Here we keep all our fast moving items here
2. Very heavy Zone [VHZ]: Here we keep all items weighing more than 5 kg, such
as big dog food bags
3. Heavy Zone [HZ]: Small dog food bags are kept in this zone
4. Small Zone [SM]: you will find Items like dog bowls, shampoos etc here
5. Very Small Zone [VSZ]: small toys, leashes colors, pendants etc are can be
found here

Few more practical examples:

• We print location ID on the picking list now. It is very easy for everyone at
DogSpot to pick products. Even a s/w developer can do picking in case needed
• We have also integrated location ID and mapping at the GRN level (Goods
Received Note), as soon as our inward executive receive goods from vendors,
the system awards Location ID based upon the logics built
• We have put Location Map as part of training as well as have stick it at many
places on the walls, to find where is what
How ColdEX, a cold chain logistics
company, pulls in a top line of INR
200 crore annually

Gaurav Jain is a gritty entrepreneur. He entered the world of business in

1999 by joining Swastik Roadlines, a trucking company setup by his father
along with two others. Started nearly three decades ago, Swastik was well
established but its business majorly relied on one big client – JK Tyres.
When that client went away, the company suddenly hit a wall and that is
when young Gaurav took the matter in his hands. He found an opportunity
with cold chain logistics and made a huge bet in that direction. Cadbury
was their pilot client and that deal helped them turn the tide. Over the
years, Gaurav transformed the company from a dry logistics to a cold
chain business. Swastik Roadlines started operating under the brand
name ColdEX Logistics from 2007.
Today, ColdEX is a leading integrated cold chain logistics company
providing end-to-end customised supply chain solutions to client. ColdEX
serves leading brands, catering to almost all industries from QSR chains,
confectioneries, food processing units, pharmaceutical, meat, poultry,
fruits and vegetables, etc. Presently, ColdEX has six warehouses (five
leased, one owned) and is in the process of increasing its cold storage
capacity from 6,000 pallets to 30,000 pallets over the next 18 months. “We
have a large reefer fleet of over 825 trucks and 1,500 drivers. To ensure
last mile delivery where products are transported from distributors to
consumers via two wheelers, ColdEX is augmenting its fleet of scooters
from 10 to 400,” says Gaurav.

Since 2007, ColdEX has bagged some of the biggest customers in the
business, and provided logistical support and distribution services to
well-known international brands operating in India, including Subway,
Domino’s Pizza, Starbucks, and KFC. “Last year, we got the first big client
for integrated services in the QSR sector: Yum! Brands, which operates
KFC, Pizza Hut, and Taco Bell in India,” says Gaurav. For KFC, ColdEx
manages daily pickups from 80 vendors and delivers frozen goods to six
Yum! Brands distribution centres in a -18°C environment. Apart from
QSRs, ColdEX also has presence in the field of pharmaceuticals, fruits, and
the confectionery industry with clients like Nestlé India, Hershey India,
Amul, Kwality Wall’s, and GlaxoSmithKline. “Today, we have a top-line of
about Rs 200 crore, and sales are growing at 35 per cent annually in the
last five years,” says Gaurav.

India’s temperature-controlled logistics industry is estimated at Rs

12,000–15,000 crore and is estimated to grow at a minimum 20 per cent
year-on-year over the next three to five years. One of the drivers of this is
the increase in the consumption of perishable goods that are sensitive to
temperature. The Government of India has recognised the need to nurture
the cold chain industry and has introduced several incentives to achieve
its objectives. The Budget 2011–2012 provided infrastructure status to
the cold chain sector. This opens up the sector for perks like viability gap
funding. The Budget also exempted air-conditioning equipment’s and
refrigeration panels used in cold chain infrastructure, including conveyor
belts, from excise duty. It also extended excise duty exemption to
conveyor belts and equipment used in cold storages, mandis, and
warehouses. These government initiatives has further added impetus to
the sector.

ColdEX is a pioneer in the space in India and brings in a lot of experience.

“We have mapped out a growth plan for the next five years, one that could
easily propel us into a Rs 700-crore business,” says Gaurav. ColdEX plans
to create a plug and play model in the cold chain logistics business, which
can then be sold to any QSR that wants to set up shop in the Indian market.
ColdEX already provides services to five of the six major international QSR
companies. And according to the company, there are at least 40
international players who are looking at the Indian consumption story
seriously.

Currently, while its revenue is based on a business-to-business model,

ColdEX wants to reach the end customer (the people who eat the burgers
and fries) as part of its integrated services. ColdEX should be in a position
to reach the city’s narrow lanes and inner roads where the end customer
or retail shop is located. “If we can crack this last link in the supply chain,
we will target e-commerce companies and offer a separate service to fast
food chains,” says Gaurav. ColdEX is a great example of a traditional Indian
business that can leverage technology and keep up with the times to give
the newly venture funded startups a run for their money.
5 Result-Yielding Warehouse
Management Methods Overlooked
by Businesses

You’ve got your staffing right, enough of storage space to stock products, great
procurement partners, fulfillment team and enough demand for the commodities you sell.
Well, all these are not just enough for your supply chain lifecycle to be frictionless.

What you will still be needing is perfect warehouse management method that works well
for your business. It can differ based on the products you deal with but there are a few
warehouse management techniques which can unanimously be followed retail
businesses to streamline warehouse operations.

If you wonder how to manage warehouse operations, the following warehouse

organization tips can help a great deal.

Your Fulfillment Team’s Picking Method

It is of prime importance that your fulfillment team’s picking method should be smart
enough to save time spent on location products within warehouses. For this two basic
warehouse management techniques for picking improvisation which are i) BIN Location
and ii) Navigation.

Direction signs, signboards, labels which indicate what is placed where can avoid
confusions in walking down to the wrong aisle. On the other hand, storing BIN location
information of every product in your warehouse along with other information, can help
in directly picking up from the rack it is in.

One of the warehouse management new techniques which is now being used by Amazon
is ‘Automate Picking’ through robots. Amazon deploys Kiva Robots to pick and deliver
products orders to the packing zone which reportedly said to have reduced the
company’s order processing time by more than 30 minutes.

Making the Most of the Available Storage Space

Space utilization is one of the warehouse management methods which helps in making
the most of the available space without expanding, which means, without shelling out
additional money. Warehouse space planning will have to be done base on the product
portfolio.

Mezzanine flooring, using up the vertical space of a warehouse and revamping racks can
prove useful in digging out more space out of the existing one. These practices can help
in clearly defining each storage location which leads to more organized warehouse
structure which is very much known to the management staffs.

Tracking and Communicating KPIs

Businesses generally track key performance indicators but this warehouse management
method doesn’t end with that. Communicating it to the base-level management staff is
something which is often overlooked and kept for higher level managerial hierarchy.

Letting your management staffs know about the key performance indicators individually
or team-wise can bring in a significant change in your warehouse productivity. First of
all, to know the metrics, you should define the baseline and make sure what are all the
metrics that will reveal improvements.

The performance indicators must be easily measurable. For instance, due date
performance or time taken to retrieve products from storage locations to the packing
department can be measured to re strategize operations involved in between for
achieving betterment.

Learn From the Baseline

The above discussed warehouse management techniques depend upon observation but
the one we are going to discuss now is purely based on knowing your staff expectations.
If you wonder how to manage warehouse operations by introducing techniques that are
loved by your management staffs, you’ll have to listen to their ideas first.

Warehouse management staffs are those which do the learning, adopt themselves and
perform fulfillment activities. So, they can provide warehouse organization tips which
when implemented can be instantly adopted by them as they will be excited to experience
their suggestions being considered right away.

Icing on the Cake - A Perfect Warehouse

Management System

If you are still dealing with hard copies to make a note of your warehouse operations you
will be considered an alien. Digitalization of your warehouse operations has become a
minimum requirement just to stay in the game and to do it you need a warehouse
management system in place.

A warehouse management system can help in automating processes which are prone to
human errors to improve accuracy. These systems can pave way to find warehouse
management new techniques by providing insight on warehouse operations in various
angles.

Multiple warehouse management, stock transfers within warehouses, BIN location

information storing, order status updates, real-time inventory updates, alerts for low
stocks and much more are the benefits that come along with digitizing your warehouse
operations.

To streamline warehouse operations the above discussed warehouse management

methods can be helpful but as a matter of fact, these methods have to be personalized
considering the products, scale and demands in order to obtain best results.
From last-mile delivery to now
end-to-end logistics, Delhivery is
forging ahead full steam

Over the past two years and so ecommerce has drawn attention of every
quarter - consumers, entrepreneurs, venture capitalists and media.
Subsequently, we have successful startups such as Flipkart, Snapdeal,
ShopClues including others. However, when it comes to supporting
services for ecommerce, such as logistics, we have only a few startups
which have improved the situation for the sector. One such startup is
Gurgaon-based Delhivery. Started as a last-mile logistics company in
June 2011, Delhivery has now become an end-to-end logistics service
provider.

Delhivery began as a last-mile logistics partner for Urbantouch and

Healthkart in Gurgaon. Later on, the company expanded its footprints in
the whole National Capital Region (NCR). “We saw a big challenge for
ecommerce firms while delivering the shipment at consumers’ doorstep.
Though the opportunity was real big, it requires significant investment.
So initially we decided to serve NCR region only,” said Mohit Tandon. co-
founder, Delhivery.

After completing two successful years, Delhivery currently offers end-to-

end logistics service to more than 1500 pincodes, and delivers around
15,000 to 20,000 shipments everyday. “Currently we handle logistics for
more than 100 clients including Snapdeal, Myntra and Indiatimes
Shopping,” said Tandon.

Pricing

Delhivery charges Rs. 30 to 35 to pick and deliver a 500 gm. packet in

NCR, Rs. 40-45 for transferring a packet (same weight) to metro cities
and Rs 50 for tier-2 and tier-3 cities. For reverse logistics, it charges
anywhere between 1.2X to 1.5X of forward logistics.

With over 20,000 sq ft warehousing space in Delhi and Bangalore,

Delhivery also offers third-party warehousing and transit warehousing
services to its partners, and coordinates across the supply chain
ranging from inbound to inventory management to packaging, dispatch
and fulfillment. “Around 70 to 80% of our warehousing space is being
utilized by vendors supplying to ecommerce marketplaces. Besides these
offerings we also handle drop shipping for more than 1,000 vendors
across India’” added Tandon.

To give complete control to its clients, Delhivery has developed Transit

Warehouse Management System (TWMS) and Transport Management
System (TMS). These software enable ecommerce firms and vendors to
integrate seamlessly with multi-tier processes, including procurement,
warehouse and order management systems.

On acquisition of GharPay and raising fund

In June 2012, Indiatimes Shopping, an online retail arm of Times

Internet Limited (TIL), bought minority stake in Delhivery after
investing an undisclosed sum. Though Tandon didn’t disclose the
amount raised by Delhivery, it is said to be in the range of $2-5 million.

Earlier this year, Delhivery acquired offline cash collection network of

Gharpay for an undisclosed amount. On the acquisition, Tandon said,
“Even before acquiring GharPay, we have been offering multiple
payment options to our clients' customers through different mediums
like cash, cheque or POS credit and debit card swipe. GharPay’s strong
network and expertise will give us greater control on cash collection for
our partners ”.
Truck aggregator Lynk Logistics
steers SMEs and individuals in their
last-mile connectivity

Leyland

In today’s cities, while Uber and Ola are solving one part of the
transportation problem, intra-city logistics has largely remained
unorganised. As a result, booking cabs has become a breeze, while figuring
out options to move a company’s goods from the warehouse to the store,
or shifting one’s wares to a new office are still difficult tasks. Intra-city
logistics is a nightmare especially for small and medium-sized enterprises
(SMEs) and individuals in India.

The intra-city last-mile connectivity is a segment that is largely untapped

by the digital economy. Though a number of startups have emerged
recently to solve this problem, many of them shut shop or merged with
rivals either due to lack of funds or due to a lack of strong technology
platform. But a few persist and are still serving the sector, one of them
being Chennai-based Lynk Logistics, founded by Abinav Raja and Shekhar
Bhende
Founders of Lynk - Abinav Raja (on the right) and Shekhar Bhende (on the left)

The beginning
Both founders are alumni of Northwestern University, Chicago. When
Shekhar (26) was in Pune for a wedding, he experienced first-hand the
difficulty in shifting goods around. Back in the US, he discussed it with
Abinav (24), and they decided to plunge into the intra-city logistic
business in India.

The duo returned to India in 2015. “We started building up in small way
by working on the platform and model,” explains Abinav, adding that they
spent the initial 2-3 months studying the market and building the
technology platform. “We spent the first half of 2016 just doing data
testing with a few customers and drivers, and eventually launched the
operations in June 2016,” he says.

It wasn’t easy starting up in the space. The founders had to deal with
questions on speed and timeliness of operations, as they had only few
trucks on board initially. “They also had concerns regarding the drivers’
reliability, theft and damage of goods. The sales cycle were longer initially.
It took us the first few months to get these initial customers on board,” he
adds.

How Lynk works

Lynk operates just like a cab aggregator, wherein it partners with truck
owners who attach their trucks with the platform. The startup’s app has
over 3.5 lakh downloads so far. The app is available for iOS and Android
as well.

Founders of Lynk with truck owners and staff

Individuals and SMEs looking to shift their goods and furniture can book
a mini-truck (typically 0-4 tons) for their logistics requirement. The driver
or truck owner benefits from higher capacity utilisation of truck through
more trips. The fare structure is transparent and is framed to encourage
efficiency from both the parties. The platform, in turn, charges a percent
of commission of the fare. Abinav says, “The commission structure was set
on right expectations and is reasonable even five years down the line”.

On its app, cashless payment can be done through Lynk Money and other
features include ‘track your truck’ and ‘get fare estimate’ for customers.
Journey so far
Starting with aggregating just a few trucks at the beginning, Lynk now
boasts of having more than 5,000 driver partners. It has operations in
Chennai, Hyderabad and recently started operations in Mumbai as well.
While Chennai has more than 2,500 driver partners, the rest are in
Hyderabad and Mumbai.

Delving into revenue and growth, Abinav notes, “We are growing at 15-20
percent month on month. In Chennai and Hyderabad, we are already
operationally positive (unit economics). Till date, the platform has seen
more than four lakh transactions,” adding that the company has tripled its
revenue in the last one year.

While the average driver utilisation is 1-1.5 trips per day in the industry,
Lynk is having an average driver utilisation rate of 3.5 trips per day,
Abinav explains. Eighty percent of Lynk’s revenue comes from SMEs and
kiranas, and 20 percent from individuals. The company also claims that
while average market driver earns is between Rs 30,000- Rs 35,000 per
month, most drivers at Lynk earn anywhere between Rs 40,000-Rs
45,000.

Team
Lynk has more than 140 employees spread across three cities of its
operations. Ramaswamy Shankar, COO of Lynk, was a former VP at
TaxiForSure. The Chief Product Officer is Ramkumar Govindarajan who
worked at Rocket Internet in the past.

Competition
Unlike the cab aggregator sector, there are no established players in this
sector of intra-city truck aggregators. Although a lot of companies have
started up in the sector, it’s still a very early stage. “It’s still a very
fragmented sector and there are only one or two players emerging now.
India is a very big market and there is no one who is operating in all major
metros. And if you look at overall transactions in these cities, I would say
that we are slowly gaining more and more market share in a place like
Chennai and Hyderabad. The industry is still evolving and in the next one
or two years, the logistics industry would attract a lot of interest and
investments,” says Abinav. The intra-city logistics market is estimated to
be around $10 billion in India and a majority of the demand is in Tier I
cities. The market is driven mainly by individual owner-cum-drivers and
SMEs.

Trucks attached with Lynk

Future plans
Lynk expects to expand to all major Tier I cities in next 12-18 months. “But
before going to other cities, we want to go deep into every city. We want
to make sure that we are not inch deep and miles wide. We have a very
strong growth rate of 15-20 percent and if we can maintain similar growth
rate by launching in new cities, we would be happy,” Abinav says.

The startup wants to gain a good market share in Hyderabad and Mumbai
as well. “We want to be able to drive utilisation for drivers and assets
there and at the same time ensure on-time availability of trucks at a good
price,” Abinav adds.
Logistics data analytic startup
LogiNext confirms $10M Series A
funding from Paytm, plans to
expand to SE Asia

Logistics has always been looked at as a chaotic, fragmented, and

unorganized function of any business. However, with the rise of e-
commerce and on-demand delivery companies, businesses and
consumers are demanding deliveries and supply chain to be more
organized, agile, and transparent.

Mumbai-based LogiNext is solving the aforementioned inefficiency by

leveraging big data. The company has just confirmed to YourStory that it
has secured $10 million Series A from Alibaba-backed Paytm. Earlier in
April this year, LogiNext had raised little over a half million USD seed
round from Indian Angel Network.

LogiNext aggregates the location data consumed from multiple clients

with similar delivery networks, anonymizes it and then uses this power of
real ‘big data’ to generate insights that helps companies predict delays,
save cost and provide reliable customer service.

Speaking about where proceedings will be deployed, Dhruvil Sanghvi, Co-

founder and CEO of LogiNext, said, “We will use the funds for customer
acquisition, marketing, product development, and hiring more talent.”

Currently, it’s serving close to 50 clients hailing from large to small

enterprise. With this capital bolster, the company also plans to hire 60
employees over the next six months. “We don’t want to make mistakes
like other growth stage startups while hiring. We will hire gradually and
sensibly. LogiNext believes in stable hiring,” added Dhruvil.
LogiNext offers SaaS-based pricing for software. “We typically sell one
license per asset. An asset could be a vehicle, a bag of shipments, a delivery
boy, a biker or even an individual shipment/transaction,” outlined
Dhruvil.

The back story

In late 2013, Dhruvil and Manisha Rai Singhani observed a huge surge in
e-commerce, hyperlocal commerce, and Uber kind of services where a lot
of startups and even large companies were jumping in but most of them
were making losses because of very high logistics cost, uncertainties, and
frequent delays.

That is when the duo decided to use their previous big data experience to
build a product which most companies in this segment can utilize and cut
down on their cost while providing the best customer experience.

What’s on the platter?

The company offers cloud-based solution for e-commerce and hyperlocal

in five areas -- last mile delivery (Intra-City: All models including door-to-
door, hub-to-door, hub and spoke), Line Haul Movement (Inter-city), ad-
hoc reverse logistics and pick-ups and analyzing the delivery timings,
distances, locations, and delay trend analytics.

“We are currently catering to nine models of hyper-local deliveries,

including groceries, food, pet care, child-care, alcohol, medicine, home
services, laundry, electronics, and apparel,” stated Manisha.

Team LogiNext
Road ahead

LogiNext also has plans for global expansion and will eye China, South
East Asia, and the Middle East regions. “We will test these markets next
year and it’s easier for us after Paytm fund infusion,” concluded Manisha.

YourStory’s take
According to some rough estimate, the market size of technology in
logistics in India is roughly $2 billion and is much larger in other markets
like South East Asia and the Middle East. Globally, companies like ORION
software, OnFleet, Bringg, Infor, and JDA software and Elementum are
established players.

Visibility of a shipment is a big headache for digital startups (e-commerce,

hyperlocal, travel etc.) Traditionally, all the planning and optimization is
done using static and stale information. However, LogiNext is disrupting
the ‘reactive’ aspect of logistics to a more ‘pro-active, predictive and
preventive’ way.

The investment makes a lot of sense for Paytm which has identified
logistics after payment as a big pain in India. The Noida-based company
had also invested $5 million in hyperlocal logistics and transportation
startup Jugnoo. The investment will also help Paytm to streamline its
logistics for marketplace and hyperlocal aggregation arm.
Rivigo shows how a humane but
tech-enabled logistics company
can command a billion-dollar
valuation

All Gazal Kalra and Deepak Garg had was faith and hope when they
founded transportation company Rivigo. Faith in their revolutionary idea
and hope that the industry would accept it.

The idea was simple enough. Transportation in India is among the most
part of operations for companies in sectors as diverse as manufacturing,
FMCG, and ecommerce. Trucks are typically old, open to the elements
(tarpaulin is used as an inadequate cover) and badly maintained, and
there is very little visibility on when a truck will reach the destination
after it has started from the source location. In Indian logistics,
traditionally, a single driver travels with the truck for the entire distance
that a particular delivery requires, making halts on the way for rest. This
causes deliveries to take over a week when doing runs between cities like
Delhi and Chennai or Bengaluru and Guwahati. This also makes drivers
stay away from home and family for over 20 days a month.

Gazal and Deepak’s idea was why not change the model. Ensure they use
only new covered trucks, give complete visibility to the client on a truck’s
journey, and ensure that a truck can cover the distance between any two
parts of India in less than three days.
Walking the talk
This is exactly what the Rivigo team has done in under four years. They
have created a fleet of around 3,000 containerised trucks, all sourced
directly from the manufacturers. These trucks are also heavily tech-
enabled. But we will come to the tech side later.

For the most revolutionary step they have taken is to introduce the relay
trucking model in India. Their fleet of 3,000 trucks runs almost non-stop
with drivers working in shifts, handing over the truck to the next driver at
pit stops along the route. The driver who has handed over the truck then
takes the wheel of another truck making the return journey and so is back
at his home stop by end of the day.

The fact that drivers stay on the road for days on end makes this a
profession that is looked down upon. Many truck drivers take to alcohol
and drugs to cope with the stresses of the job, which include harassment
from the police and dacoits. Studies have shown that long distance truck
drivers are highly vulnerable to HIV transmission due to risky sexual
behaviour, like sex with prostitutes. The National AIDS Control
Organisation (NACO) estimates that around three percent of India’s two
million truckers are living with HIV. The prevalence rate among truckers
is much higher than that for the country as a whole, which is at 0.3 percent.

Gazal and Deepak knew that getting the truckers home at the end of the
day would solve many of these issues. It would solve a business challenge
too. It is difficult to find capable truck drivers due to the issues listed
earlier. Making the profession respectable would ensure a steady supply
of good drivers. Also, the pit stops are located in semi-urban and rural
areas such as Pataudi. Since drivers come from rural and semi-urban
areas and not main cities, salaries are at around Rs 25,000 per driver a
month. Long distance driver salaries have gone up to over Rs 40,000 in
many parts of the country.

There is a precedent to this relay system. That’s exactly what the airlines
industry does. The planes keep flying through the day, the pilots and crew
change each sector. No wonder then that Rivigo calls its drivers pilots.

A truck with tech

Gazal Kalra, Co-founder of Rivigo

On paper, this system sounds simple enough. But in practice, it is anything
but easy. The company has created a network of over 70 pit stops across
the country. This translates to a driving distance of around 250 km or
around five hours for a driver between pit stops.

But to ensure that a trip happens without any hiccups, the team needs to
ensure complete control over many moving parts.

Gazal explains:

When I accept a booking from Delhi to Bengaluru, I need to allocate eight

drivers for the 48-hour journey (which others typically cover in five days)
as there are eight pit stops. But I need to confirm the eight drivers today
for tomorrow’s journey as the truck cannot stop.”

There is further complication. The pilot after handing over one truck
needs to take the wheel of another truck that is coming in the opposite
direction. So, the trip planning and routing needs to be done in such a way
that there are trucks travelling in both the directions at about a similar
time.

The first Rivigo truck reached Mumbai from Delhi in 24 hours. The client’s
entire warehouse team was present to receive the truck because they had
never known the distance to be travelled in a day. The second truck also
reached in 24 hours, but the third truck took 36 hours as it experienced a
breakdown.

This and the need to have complete control and visibility over routing and
each part of a truck’s journey made the company invest heavily in
technology.

The mobile app for a pilot, which is more image-based than text and is
available in 11 languages, tracks everything a driver needs to do, from
notification of duties to surveys.

The pilot gets the duty alert on his phone, reaches the pit stop and scans
his unique QR code to show he has reached. The incoming pilot has
already got the alert on his app on the pilot he needs to hand over to. There
is a tech handshake through QR codes on the two pilots’ app. The pilot
taking over has a checklist regarding the truck’s and shipment’s condition
that he needs to verify through the app. All this takes less than five
minutes and the pilot can drive off to his next pit stop.

Driving in change
It is this use of tech to solve the problems that have dogged this industry
for years that has impressed clients, analysts, and others.

Rivigo is giving a product offering which is pathbreaking. Benefiting the

customers and the most unprivileged stakeholder, the driver. They are
doing this at a cost that is competitive. In transport, fixed cost is around
45 percent to 50 percent, whether a truck runs for 10 km or 100. While
trucks in the traditional model do about three trips a month, Rivigo’s
trucks do about seven return trips,” says Manish Saigal, Managing
Director at advisory firm Alvarez & Marsal and a leading expert on the
logistics industry.

Manish says road transportation is a $80-billion opportunity in India,

making it the single largest opportunity in logistics. It is still a highly
unorganised industry with only about three to four percent of players
owning over 30 trucks.

Rivigo has a client base of around 3,000 enterprises and corporates and
many more SMEs across over 16 sectors, including automative, pharma,
lifestyle, white goods, ecommerce, apparel, and publications.

Rivigo’s clients too are impressed with the company not just for the
improved turnaround but also for bringing in a better model for drivers.
“The model is very intelligent. They sweat the assets. The way they treat
the drivers is very unique; they are adding a lot of value to the drivers,”
says Hari Menon, Co-founder of e-grocer BigBasket. The company uses
Rivigo’s refrigerated trucks.

We are building a national grid for sourcing our fruits and vegetables and
we transport this produce over long distances. So, temperature control is
important. With Rivigo I can track the temperature in the truck in real
time. Otherwise too, if we need to make sure stuff needs to reach fast, we
use them,” says Hari.
BigBasket’s Head for fruits and vegetables, Vipul Mittal, says: “Rivigo has
disrupted the industry. They have helped us compress the time taken to
transport produce between Delhi-Bengaluru, Guwahati-Bengaluru to half
the time typically taken. That’s a big value-add for perishable products. I
have been in supply chain for decades and I know the driver is the most
important part but is also the most badly treated traditionally. Rivigo’s
model changes that and that fascinated me.”

He, however, adds that Rivigo has not been able to pass on the entire cost
benefit to clients.

If I pay Rs 1 lakh for a trip to a traditional player for a return trip, Rivigo
will be about Rs 10,000 cheaper. This, despite me paying extra to the
traditional player because he needs to return with an empty truck. Rivigo
does not have empty trips,” says Vipul.

Rivigo declined to reveal the price it charges customers, nor the current
revenue figures. The company only said that clients see a saving of 12
percent to 20 percent in overall logistics cost when they shift to Rivigo. In
FY2017, the company’s revenue stood at Rs 402 crore up from Rs 149
crore the previous fiscal. Losses also galloped to Rs 137 crore last fiscal
Why Amazon chose online bus
aggregator Shuttl to invest $11M

Gurugram-based bus aggregator platform Shuttl has raised $11 million in

Series B funding led by Amazon Fund and Dentsu Ventures. Existing
investors Sequoia Capital, Times Internet, and Lightspeed Ventures also
participated in this round of funding.

When Amit Singh and Deepanshu Malviya started Shuttl in 2014-end, it

wasn’t the first on-demand commuting service in the Delhi-NCR region.
Ola and Uber were already making inroads in the book-a-ride market, but
the problem was far from resolved. Cars don’t offer economies of scale,
and buses were overcrowded.

Having worked in Mumbai, Amit was familiar with the practice of one
‘holding’ a place in a bus for the other, and this simple idea led to the birth
of Shuttl. Later, when he began working with Deepanshu at Jabong, the
problem of buses being overcrowded led to them joining hands to start
Shuttl.

While Ola and Uber focus on cars, Amit and Deepanshu went for buses.
The team has on board over 350 bus vendors. They started off by meeting
transporters in different parts of Delhi.

Starting with a rented Innova, and a basic ride-hailing app, the two would
visit key bus stops in Gurugram, and sell the Shuttl, and had soon touched
a few hundred rides.
“People don’t want to be stuck in traffic. The number of cars on the
road is high. If the number of buses increase, the number of
vehicles will reduce because the number of people in buses can be
higher,” Amit explains.
Vendors are on-boarded on the platform on a rental model, where the
Shuttl team pays them a percentage of the earnings. The routes are
decided based on the density and number of commuters.

Amit and Deepanshu, the Founders of Shuttl

The Shuttl platform today offers over 45,000 rides a day, with over 700
buses and 150 routes in seven cities across the country. The service is
available through a mobile app, and there are three steps to book the
service - register an account on the app, pick a boarding point, drop point,
and time of commencement, and get your ride pass.

The subscription model charges a customer between Rs 1,800 and Rs

2,000 for a monthly pass of 20, 30 and 40 rides in a month, and drivers
are paid for every trip they make, with an average payment of Rs 5,000
for two trips. Irrespective of the number of trips a customer makes, the
driver is paid, and so are commissions.

Once the number of seats in a bus is filled, that timing is no longer open,
ensuring buses aren’t overcrowded.
According to Shuttl’s filings with the Registrar of Companies, its post-
operational revenue was at Rs 14.34 crore for the financial year 2016-17.
Its net loss stood at Rs 59.07 crore.

While cities like Mumbai, Delhi, and Chennai already have a strong public
transport network, it is not always convenient or comfortable.

The fund raise

Shuttl raised its first round of funding within three months of operations
and today announced another round of $11 million from Amazon. It had
previously raised $20 million led by Sequoia Capital. The latest funding
will help the bus aggregator consolidate its position in the technology-
enabled seat-based bus mobility market.

The investment will also allow Shuttl to expand its geographical reach,
and serve more consumers across Indian cities. The team intends to begin
expanding in Pune and Kolkata.

Amit Agarwal, Senior Vice President and Country Head, Amazon India,
said, "By taking on the everyday urban commute, Shuttl is solving a
large and relevant customer pain point. Amazon is impressed by
Shuttl's journey so far and excited to back missionary founders and
management teams."

Regulatory grey areas

Like others in the transport business, Shuttl faced its fair share of
regulatory hurdles towards the end of 2015 and in early 2016. Regulators
impounded a few buses, and forced the company to halt operations. Ola,
which had launched Ola Shuttle, was also forced to cease operations.

Bengaluru’s ZipGo also faced several regulatory challenges.

According to the Regional Transportation Authority Office, Gurgaon,
shuttle services cannot operate in the city as they don’t fall under the
ambit of the Haryana Contract Carriage Permit Act 1988, 1993, 2001,
2004, and 2013.

Bharat Bhushan, Assistant Secretary at the RTA, had said in 2015:

"Ola and Shuttl have got licence to operate under the Stage
Contract Act, which is valid for inter-city travel (without multiple
stops in city limits). But they can ply in the city limits (intra-city)
only under Contract Carriage Act [licence]. This is illegal, and we
have started penalising them.”

The regulators said any company soliciting or canvassing customers in

vehicles should take a licence for the same. Any company can take a
permit under the Contract Carriage Act, but that allows it only to transport
passengers from one point to another and they can’t pick up or drop
passengers en route.

Amit and Deepanshu, the Founders of Shuttl

Connecting passengers and drivers through a web-based app makes these
companies solicitors and they must operate under the Contract Carriage
licence as per Section 93 of the Indian Motor Vehicle Act.

The norms, however, are slowly changing. “The Contract Carriage Act has
loopholes, and we are working closely with the government to bring in
alternate transport services,” Amit explains.

Like Amit says, things are changing and this is evident from the fact that
in April, Shuttl received the Urban Innovation Award at the 2018 "Happy
Cities Summit” in Amaravati, Andhra Pradesh, and signed a memorandum
of Understanding with the state government to run a pilot in the region,
which has the potential to impact 3.5 million inhabitants by 2050.

Amazon keen on transport

One reason why Amazon might have considered it investment in Shuttl is
that the global company has shown ken interest in the transportation
space for close to a year now. In October 2016, it launched Amazon Ride,
a regional shuttle programme for its employees in Seattle, US.

There have been several reports that suggest Ride could be expanded as
a separate ride-sharing model across different parts of the country and on
different routes.

"Commuting to work is difficult in our country given the state of traffic

and limited public transportation in many cities. Close to 70 percent of
traffic on Indian roads is made up by cars, but cars transport only 5-10
percent of the population. Amit and Deepanshu set out to create an
alternative by allowing office goers to use a mobile app to book a
guaranteed seat on a 26-50 seater Shuttl bus, enabling them to commute
to and from work in air-conditioned comfort,” says Mohit Bhatnagar,
Managing Director Sequoia, Capital.
The company has also partnered with companies like American Express,
GMR, and Evalueserve. And, the Shuttl Founders say, they are just getting
started.

As a growing number of people push to commute towards tech-intensive

areas, the need for a reliable transport and shuttle service is only
growing.
Paul Bernard, Director, Amazon Alexa Fund, which fuels voice
technology startups, said, "Millions of people use shared
transportation options for their everyday commute. Voice
represents a new, convenient way for them to manage these types
of daily routines, and we look forward to supporting Shuttl as they
work to deliver this experience to Amazon Alexa customers across
India."

As rising pollution and traffic snarls force people to revisit their daily
commute options, ride-sharing and cab-pooling have seen some success.
According to media reports, the market for bus aggregation is around Rs
60,000 crore.

There are other emerging players such as Poolmyride and Zify that offer
ride-sharing services. Global giant BlaBla Car had raised $200 million in
Series D in 2015, and its main focus has been on inter-city rides.
Bengaluru-based Zipgo and Mumbai-based rBus offer bus commutes,
riding the same space as Shuttl.

Why buses?
“On the one side, you have more seats than people, and the other side you
have more people than seats. But what people need is one seat each. That
product didn’t exist. We thought let’s build for that product, which has
larger economies of scale and looks after comfort. The user doesn’t care if
it is a bus, car, or metro. She wants to just reach point A to point B in a
given time in the most comfortable way,” Amit says.
Booking a ride is simple but Shuttl gives much more – it gives the
commuter, safety, comfort and security in one place. Buses, Amit says, are
the most cost-efficient, space-efficient and carpet-efficient way of moving
people in cities.

Shuttl is also adding many safety features to its buses like face-recognition
and live-CCTV feed, particularly important for working women.

"At Shuttl our mission is to take the pain away from everyone’s commute
and reduce congestion in cities via a seat-based smart bus option. We have
shown that this can be done at scale. We will continue to improve the
consumer experience, design more routes, and restore the dignity of
commuting for millions of people,” Amit says.