Inside Pathao’s Big Plan To Take On Logistics And Transportation Industry In Dhaka
Sending things, braving Dhaka’s incredible traffic to courier service office, is a pain in Dhaka. Besides, most of the existing big consumer logistics companies in Dhaka don’t care about customers, as the demand for their service is abundant. Moreover, it is hard to maintain time with existing courier services.
These were the problems Pathao originally wanted to solve. Unlike many of the ecommerce delivery focused new generation logistics startups in Dhaka, Pathao started as an on-demand logistics service that would move anything, from office documents to flowers before getting into ecommerce delivery.
“On-demand delivery is a challenging space to operate because of poor market demand and huge resource requirement, so we shifted our focus to ecommerce in last October 2015,” says Hussain M. Elius of Pathao.
Moving to ecommerce delivery makes sense from a business logic. E-commerce is growing rapidly in Bangladesh and majority of ecommerce sellers don’t own logistics who depends on the third party operators to deliver goods. Delivery is a key challenge for many small ecommerce sellers and the complaints against existing logistics services is endless.
This real problem has helped Pathao to grow fast and become one of the strongest players in the space within a very short time. It has got a reputation for its responsive service and better technology.
The origin story
Pathao started with a team of two, Elius, and his co-founder Shifat Adnan and 03 delivery agents in July 2015 as an on-demand delivery service. They were operating from now inoperative HackHouse, the business building platform launched by Fahim Saleh in 2015.
It was one of the several experimental projects from HackHouse. The team found out in no time that given the resources, doing on-demand delivery was not possible,but they could try ecommerce delivery. So, they made an instant pivot and focused on ecommerce delivery.
Elius is a business graduate from North South University and a programmer as well. “I have always been passionate about technology”, says Elius. “I have been coding since 2004, which I started as a hobby, and used to do a lot of part-time gigs and website building on the side throughout my university life.”
Elius and his co-founder, Shifat, have been working together even before Pathao. “I and Shifat have been working on IT things for a while now and then we met with Fahim Saleh of HackHouse and I became a managing partner at HackHouse. We started many different projects including Jete Chao, Dhaka Rides, Jaben.co, and Pathao was also a project of HackHouse. After a while we came to realize that Pathao has potentials to go big, so we decided to pause HackHouse and focus full time on Pathao.”
The State of the union
Pathao has now 60 delivery agents in Dhaka and another 20 partners outside Dhaka. The startup now handles 500 deliveries a day, mostly ecommerce, and experiencing a 40% MoM growth.
With their present footing in ecommerce delivery, Pathao plans to do more, i.e. launch Pathao Rides, the ride-sharing service and restart on-demand package delivery. So It has raised a fresh round of undisclosed funding from a pool of local and foreign investors and plans to double down on both logistics and transportation.
“When we started in 2015 the market was different,” says Elius, “we were newcomers in the space, we did not know much about logistics business. Now after a year, we have learned things, got intelligence and we think that we are ready to try on-demand delivery again with the fresh perspectives.”
The startup is about to launch a fleet of 200 motorbikes that will also move people in Dhaka city along with ecommerce delivery and on-demand logistics service. “We are moving to transportation,” says Elius, “the 200 bikes will not only move packages, they will move people as well during the extra time of package delivery.”
This simple addition makes Pathao a complex thing to explain. Elius agrees.
“It is difficult to articulate what Pathao is becoming, ” says Elius, “but we hope to become a new way of moving things and people.” Which, however, fails to fully graphs the essence of Pathao. Pathao wants to become an on-demand logistics plus transportation company while also keeping its position in ecommerce delivery.
In the middle of a transition
From the management perspective, handling and focusing on one vertical is easy, but it becomes chaotic to manage both growth and focus in multiple verticals. And you suddenly identify yourself in the middle of a lot of different types of competitors and challenges. But Elius claims that ride-sharing and on-demand delivery sync well with their model. “We don’t have to move away from our existing priorities to accommodate this new modality”, says Elius, “I don’t see a lot of competitions either.”
Elius affirms that the new model will rather help minimize a lot of inefficiencies in the existing system.
“Morning and evening are the peak times in a day because of the office goers and you will see rest of the day is slow times for transportation.” says Elius, “This is the kind of inefficiencies we want to address. We will be doing deliveries during those slow hours. In the morning and evening our bikes will move people and in between deliveries will happen. We will have higher efficiencies and add more value to our delivery agents because they will be able to earn more money.”
Both sectors carpooling and logistics is becoming competitive every day. 8 car-related startups and almost equal number of logistics companies are now serving ecommerce industry. However, there is almost no one in the on-demand delivery space and bike-pooling has only one player, Sam, which has yet to pull off a good show.
Pathao is now a team of 25 people, apart from almost 80 delivery agents in and outside Dhaka. The company is hiring rapidly as well. It gives a basic salary to delivery agents and also offers commission based on performance.
For the past year, key metric for Pathao has been the number of deliveries per day and per month. But with Pathao Rides, things are about to get a lot complex. “As we are getting into the consumer market, we will be focusing more on net promoter score and a couple other metrics.”
Pathao has reputation for smooth service in the ecommerce industry. Goponjinish.com that uses Pathao for delivery expressed their satisfaction working with Pathao. This reputation has been helping the firm to grow without having investing much in marketing.
“We did not invest much in marketing,” says Elius, “we have a small FB ad budget but that’s all. But now that we are launching transportation you will see a lot of us and we plan to spend a bit more in advertising”, says Elius
For ecommerce delivery part of the business, Elius claims that they are about to break-even operationally. The market for ecommerce logistics is quite big. There are a couple more serious players doing well and more formidable players are entering the market. However, Elius is not worried about the competition.
“The market is big for a couple of companies. Monopoly is not going to happen,” says Elius.
Pathao started largely as an experiment. “We had to do everything ourselves starting from operations to customer service,” says Elius. “The challenge we faced during the early days is common for every startup.” The resource constraints and a small team doing everything and trying to achieve more.
But as Pathao is growing the challenge is different in nature now. “At the early stage when the team is small everyone knows everything but when you starts to grow it becomes suddenly difficult to manage that sync and everyone knows part of it. That is the challenge we are facing at Pathao now”, says Elius.
Focus is very important said Elius when asked about his most important lesson so far. “At HackHouse we did a lot of things but at the end of the day what I learned is that you get to do one thing very well,” says Elius.
Doing multiple things often backfires. People seek growth from different areas but at the start deep is often better than wide. Elius works exceptionally hard which is common for most early stage founders, still it is very critical to remind oneself that it is all about putting in more hours and doing it in a focused way.
For moving people and things
Pathao Rides is not a whimsical thought for Pathao. They have been running a pilot in Dhaka using a Facebook group with 5 bikes and doing 30 rides a day for a while now.
The response was great said Elius and “now we are in the process of launching a fleet of 200 bikes. Pathao Rides follows a hybrid model. Unlike Uber or carpooling startups, Pathao owns some of the 200 bikes that are to be launched.
Going forward Elius anticipates that legal issues will be a challenge as the startup is getting into ride-sharing and the market is not regulated yet. “It is not illegal but it is not regulated,” says Elius, “and that leaves us open to challenges.”
At the same time, educating people on ride-sharing, especially on bikes, seeing motorbike as a medium for transportation is going to be tough. Making people accept that is going to be a quite formidable challenge for Pathao.