Can a Young E-Commerce Logistics Startup Take On Aramex in the UAE?
"Typical courier companies are not built to handle the logistics of e-commerce", says entrepreneur Robin Antony, founder of Powergistix, a logistics company exclusively focusing on e-commerce in the UAE.
It's a bold statement, in a market where courier company Aramex has risen to become synonymous with logistics. But this little startup, that launched only 5 months ago, is gunning to become a quicker, more agile solution- music to the ears of small startups that have had bad experiences with Aramex's delivery times.
With only six clients on board so far, it is pushing hard to for more efficient solutions:
Reducing delivery time: "We promise to deliver within six hours in Sharjah, Ajman, Dubai and 24 in the rest of UAE", says Antony. He explains that since most e-commerce customers buy products using cash on delivery (COD), it becomes very easy for them to change their mind after 2-3 days due to the lack of commitment. "This leap time can increase the return rate faced due to COD, but by reducing the delivery time we ensure that the customers receive their order same-day", says Antony.
Accelerating cash returns: "We do the cash returns on the same day or, at most, the day after," says Antony. According to him, many young e-commerce platforms rely a lot on cash returns for their viability, which sometimes take weeks to be delivered by other courier companies.
Not charging return fees: "We do not take any return fees when a customer decides to return a product; we prioritize building a good relationship with our partners," says Antony.
Antony doesn't hide the fact that Powergistix prices are higher than other courier companies, but he seems to be very confident of his partners' satisfaction and his ability to deliver.
Their extremely simple website might need some work, but thus far, it seems that their approach is working. "JoyOffer.com had a return rate more than 25% when they used to work with another courier company. Their return rate dropped drastically to less than 1% when they started working with us," says Antony.
Growth and Expansion
It is definitely too early to talk about monetizing yet, but Antony seemed quite confident that by January 2013 (less than a year after launch), Powergistix will start having returns in business.
Powergistix is working inside the UAE for now, but most e-commerce platforms aim to deliver to the whole region and expand quickly. This factor is likely holding back some e-commerce platforms from working with Powergistix, since they will have to work with another courier company at the same time to deliver outside the UAE. "I want to start with UAE, make sure everything is going very well for us in this market, and then expand to the region, especially since 60% of e-commerce deliveries happen inside the UAE," explains Antony.
Competing with Major Players
When asked about major challenges, Antony cites being new in the market, the general challenge of efficiency and punctuality in logistics, and finding the right team.
"Recruiting the right people is a key point for us, especially delivery boys, since they represent the only physical contact we have with customers," he says. The Powergistix team spends time and effort training recruits how to talk to customers on the phone during both the ordering and delivery process. "Making our partners happy makes our business more viable."
What's interesting is that Antony doesn't seem daunted by the challenges and risks of being a new entrant in a sector where giant companies like Aramex and Fedex have been dominating for awhile, and offer special packages for young e-commerce startups. Their narrow focus on the UAE is a strength; it will be interesting to see how much of the market they can capture in the next year.
Are we witnessing the rise of a new giant? Will the team act creatively enough to actually become a real competitor to Aramex and other courier companies?