While on the one hand the fast trade or flash delivery businesses received a lot of criticism regarding passenger safety issues, on the other hand the “dark stores” that appeared in the neighborhood were seen by retailers as a “threat” to their local business. Without technology support, local retailers had fewer options to meet customer needs for instant delivery. That’s when Saurabh Agnihotri and Ziaul Hoda, co-founders of DukaanSe (from the store), thought of democratizing technology and scale for these traditional offline retailers. Operating in the fast commerce space, DukaanSe provides last mile delivery solutions to these retailers to enable fast and affordable home delivery services across multiple categories like grocery, pharmacy, laundry, food, among others.
At first
A graduate of IIT Kharagpur, Saurabh has always been fascinated by startups. He has worked in several startups and also managed operations and other projects. He met co-founder Ziaul, an IIM Rohtak alumnus, at one of the first companies where they both handled vertical operations.
Says Saurabh, “As I had been working in the previous company for about seven years, I was looking for a change. It was around this time that some e-commerce and fast-commerce companies were making headlines with 10-minute delivery. As we had experience in logistics and operations, we knew that flash delivery companies had not optimized their operations, we also thought that local retailers should be prepared for this new wave of fast trade and dark stores.”
“Since 90% of commerce still goes through local offline retailers, we decided to enter the local commerce space and empower it. Although we started operations in 2021, we incorporated the company in April 2022,” Saurabh said.
The challenges of home delivery
During the confinement period, local businesses and businesses were also affected. Large crowds were seen in stores, people were buying goods and products far beyond their immediate needs and creating a shortage of products. As a result, local retailers could not cater to their loyal regular customers. Moreover, even on normal days, the executives of the e-commerce or delivery company show up at the door at an inconvenient time. The recipient or customer must be present or make arrangements to receive the package, otherwise the order may be returned, causing further anguish for the customer.
There were challenges such as limited or no delivery manager, lack of reliable service, weight limit per order, cash handling, surge pricing and complex user interface
Explaining further, Saurabh said, “About 80% of the population of our country enjoys the benefits of local products and services. Even in the age of e-commerce, local shops and businesses will remain relevant. Some problems encountered in these stores are that customers may have to wait longer to get their product or service. They can sometimes return empty-handed, either due to product unavailability or closing time. Some retailers arrange for products to be delivered later in order to retain these customers. It becomes unmanageable at the time of the festivities.
Cluster surveys
Saurabh believes that instead of creating dark stores, local and offline retailers can be made smart and efficient. “Offline and local retailers were the only supply chain that was uninterrupted during difficult times like Covid-19 and lockdowns. Even today, a large part of our population uses this channel. I was also ordering items through e-commerce companies, so we decided to start with the easier segment of groceries.
“We divided the city into clusters. We decided to leave the Balewadi region because we are located there. Initially, we did a survey in which we got a positive response for home delivery of groceries. We realized that customer expectations have changed. Previously, people waited two or more hours for the delivery of the order, but now they want it to be delivered in 30 minutes or in one hour maximum,” Saurabh said.
Sharing other insights from the survey, Saurabh said: “Retailers have no mechanism to deliver to homes. They will have to appoint a person in charge of the delivery, assume their salary expenses as well as the maintenance of the vehicles and the fuel costs. It goes up to ₹22,000 to ₹25,000 per month. Retailers simply cannot afford it. And even if they do, they can’t deliver multiple orders at the same time. However, retailers have their customer base intact and they want to retain and engage with them without any complex user interface. »
Optimization
Saurabh and his team integrated some grocery stores and were called upon during the investigation itself. However, they could not optimize the operations and the costs involved.
Says Saurabh, “We were trying to optimize our operating costs. So we replaced gas-powered bikes with electric vehicles. We succeeded in lowering the operating cost per kilometer, but the level of optimization was not sufficient. So we decided to open new segments for delivery. We started with the pharmacy because we realized that e-pharmacy players could only deliver drugs within two or three days. If a pharmacy owner or operator wanted to deliver medication, they needed a delivery manager, but that was not a financially prudent option for them. The pharmacy delivery model has proven to be more efficient than grocery shopping for us. »
Minimize dry running
“We have now decided to be category agnostic. The more orders we can generate from a small location, the less run-dry there will be for our courier (delivery manager). The dry run refers to the distance the runner travels between two commands. In our case, the dry run has been reduced drastically and it is now only 500 meters. We thought this could work. In our business model, it n There is no risk for the cyclist while delivering the order in 30 minutes because it is possible from the design itself.
Scope of technology
Saurabh and Ziaul saw a lot of possibilities for the technology to grow the business. Saurabh said, “When we spoke to retailers, they said they don’t use any other apps for their business. Indeed, the overall literacy level of local and offline retailers is low. Thus, for the first six months, the DukaanSe team managed its operations only through Whatsapp groups. We have now developed an Android app for retailers and will soon be launching an iOS app as well. Currently the app accepts English instructions, but soon we will launch Hindi and Marathi version as well. »
“Technology has allowed us to combine orders and bring efficiency to operations. Merchants and local businesses could schedule their customers and manage crowds at peak times,” he added.
“Our user acquisition cost is close to zero. Additionally, we do not impose a minimum order per day on any retailer. Since we do not collect any data related to the order being delivered, retailers do not ‘have no trust issues with us,’ Saurabh said.
Confidence Building
Starting with a few retailers in Balewadi and Wakad region, DukaanSe has now integrated more than 120 retailers from these two regions.
Saurabh informs, “We deliver more than 350 orders per day that we receive from retailers. There is a huge demand for our service. There are around 60 retailers placing orders daily on our app. Nearly 95% of retailers place orders through the app, while the rest will soon start doing so. »
Application for passengers
Along with the retailers, Saurabh and his team also had to sort out rider assignment issues. Six months before the launch of DukaanSe, 10-minute delivery was considered the fastest service, while 30-minute delivery was the slowest.
Saurabh said, “We didn’t have the money to burn and deliver in 30 minutes. Also, the big fast-trading companies were paying their passengers heavily, which we couldn’t afford. We therefore opted to hire security personnel, who had no vehicle. We provided them with our vehicle and asked them to deliver. This arrangement saved us on our salary expenses and the riders also earned a decent amount as well as other incentives.
“We have now developed a passenger app through which we sort logistics in the background to assign orders to passengers based on their proximity and other factors. Currently we have 19 riders on a contract basis working for us. We will soon have more runners who will be paid per order.
