In recent years, with the rapid growth of e-commerce, the global logistics industry has seen significant advancements in fields of artificial and augmented intelligence, advanced analytics, and automation, to name a few. Amazon, the King of E-commerce, has won approval to operate its fleet of delivery drones which is undoubtedly a move closer to its goal of 30-minute delivery. Over the past two years, the company has also spent billions of dollars transitioning from two-day to one-day delivery. We can thereby fathom the increasing demand for logistic services in ensuring customer satisfaction by providing quality products in the promised timeframe.
Any e-commerce transaction has four components: market flow, fund flow, knowledge flow, and logistics. Among these, the most unique aspect would be logistics, which includes transportation, storage, loading and unloading, distribution, and logistics knowledge management. E-commerce must achieve a seamless match with modern logistics before it can be referred to as true e-commerce.
Traditional and legacy courier services in Bangladesh, such as Sundarban, Continental, and a few others, provide nationwide coverage but have limited digital integration and poor customer service. Between 2015 and 2016, a new generation of logistics tech startups began to flood the market in order to support Bangladesh's burgeoning ecommerce industry.
The pandemic has solidified the position of E-commerce in the country. According to the German online portal Statista, the Bangladesh e-commerce industry stood at $2 billion in 2020 and can reach $3 billion by 2023. It is estimated that there are currently 2,000 e-commerce sites and 50,000 Facebook-based outlets, with only a few major cities accounting for 80% of online sales. As customers shifted their shopping needs online, the e-commerce market experienced a whopping 166 percent growth in 2020.
While e-commerce accounts for just 1% of retail sales, it has provided a tremendous opportunity for e-delivery companies. Several new logistics tech startups are joining the market in order to tackle massive e-commerce delivery demands, while existing players are expanding their capacities.
By offering innovative digital platforms, a new generation of logistics tech startups in Bangladesh like Paperfly, e-Courier, RedX, Pathao, Delivery Tiger, and E-logistics, among others, are reshaping the local logistics landscape.
Some of the important players in Dhaka’s fast-evolving logistics scene
Paperfly: Founded in 2016 by Shahriar Hasan, Md Razibul Islam, Rahath Ahmed, and Shamsuddin Ahmed, Paperfly is Bangladesh's first homegrown technology-enabled logistics company with the broadest cash-on-delivery coverage. Aside from doorstep delivery across 4500+ unions, the business also provides warehousing, packing, and a variety of other services related to logistics. With a 14-step tracker in place, Paperfly allows the merchants to monitor the status of the shipment step by step and see when and how the package arrives at its destination.
‘Return/Reverse’ from customers often creates a conflict among all three parties - buyers, sellers, and logistics partners. To address the challenge, Paperflyhas recently launched SMART RETURN, a method where Paperfly keeps all return cases on hold for 24 hours and during this time, merchants play a part in persuading customers otherwise.
Indian logistics provider Ecom Express has recently invested $11 million in Paperfly. The company plans to use the funds to transform logistics through intelligence-driven automations and data sciences. It will hasten the company's introduction of integrated supply chain and distribution systems, agile fulfillment and warehouse management strategies, and other operational aspects of logistics and supply chain.
e-Courier: In 2014, Biplob G Rahul and his team were working on an automation software project for a local logistics company but the project fell through in the middle. Noticing the demand movement in the e-commerce market, Biplob decided to turn his idea into a logistics firm: e-Courier was born.
The startup began its journey in a small office in Uttar Badda with just two back office employees and four delivery agents. Over time, it has offered a variety of goods and services for online businesses, such as online channel integration services, inventory management, and analytics, as well as multi-city delivery, express transportation, and reverse logistics. Till date, the organization has collaborated with over 25,000 retailers and successfully distributed over 4.5 million parcels with a team of over 1000 delivery agents.
The business received seed funding from Mind Initiatives in 2015, and in 2019, it received a new round of funding from a Hong Kong-based private equity firm after being valued at Tk 300 crore by the group.
Red X: RedX, ShopUp's last-mile logistics company and part of ShopUp’s ecosystem play, is one of the key players in the new generation logistics space. The company aims to transform Dhaka’s logistics space through tech and innovation. i. With national coverage and deep investment in technology, REDX is helping its clients go the distance by being equally skilled at supporting SMEs, large companies, and individual courier needs.
In October 2020, ShopUp raised $22.5 million in a Series A round led by Sequoia Capital India and Flourish Ventures. With this new funding, the company intends to expand its retail footprint, improve its logistics service, strengthen relationships with suppliers, and concentrate on developing tech-first infrastructure. Daraz, the country's largest online marketplace, recently signed an agreement with RedX to reinforce the companies' strategic partnership. During the ceremony, Daraz presented RedX with the first-ever 'Game Changer Award' for 2020-21. The award recognizes Daraz Bangladesh's highest performing logistics partner who has gone above and beyond to help grow the industry's entire ecosystem.
Pathao: Pathao, which began with just four workers, is now an organization with over 500 employees and is regarded as one of the leaders in Bangladesh's startup ecosystem. Apart from its most popular ride-sharing service, Pathao eventually expanded its offerings to include Pathao Food, Pathao Parcel, Pathao Courier (B2B), Pathao Shop, Pathao Tong, and Pathao Pharma.
Courier remains a key business for Pathao. The vertical has grown to become one of the dominant logistics players in the country, especially in the ecommerce space. Pathao Courier is currently operating in 50+ districts and serving over 3000 physical stores and online enterprises including Pickaboo, Daraz, Othoba, Bagdoom and Bata, among others. In 2019, Pathao launched a redesigned merchant Panel for Pathao Courier merchants with new upgrades like mobile-friendly interface, business analytics, order cost prediction, customer success rate check, promo codes, on-demand same-day delivery service etc. Besides, Pathao Parcel allows its users to send and receive essential parcels from friends, family, and colleagues across Dhaka city.
During the ongoing pandemic, Pathao Courier has supported Bidyanondo Foundation by providing logistical support to the organization in providing food to the poverty-stricken communities.
Biddyut: In 2017, SSLCOMMERZ, a FinTech company, came up with a ‘360-degree’ solution for digital commerce including setting up an online shop, payment solution, digital marketing as well as delivery. To ensure secured deliveries, SSLcommerz formed a new company called Biddyut Limited (BL) by incorporating sophisticated technology. Biddyut is thriving with a vision to meet the rising demand for e-commerce product delivery as well as the growing need for various logistics requirements in other businesses in Bangladesh.
Delivery Tiger: Established in 2019 by Fahim Mashroor, founder of Bdjobs.com and Ajkerdeal, Delivery Tiger is the ‘first Online Logistics Marketplace in Bangladesh.’Although the idea of a logistics marketplace is novel in Bangladesh, it is not novel in many other markets, like our neighboring India.
From Sundarban Couriers to Pathao, there are many logistics firms in Bangladesh and specialize in a certain aspect. Some are skilled at shipping heavyweight objects, some at perishable goods, some focus on delivery coverage in rural areas, while others look at the coverage in cities.
Delivery Tiger's goal is to link all of these companies by creating a logistics marketplace. However logistic firms like eCourier or Pathao, have relatively low incentives to enter such a marketplace due to the fear of cannibalization and extremely low delivery charge. In 2021, Delivery Tiger finally initiated its wholesale logistics services for logistics platforms that provide retail and last-mile deliveries.
The company has grown in popularity as a result of its fast product delivery and money transfer. Like e-Courier, Delivery Tiger waives the return fee. In a short span of time, the company has partnered up with prominent brands like Rokomari.com, Jenneys, Lafz, Raw Fashion, Gadget & Gear etc.
E-Desh: E-Desh is a hybrid logistics service provider that offers a wide range of services and solutions for e-commerce, F-commerce, online stores, large B2B Enterprises with digital footprints, SMEs and individual sellers in Bangladesh. From first-mile pickup to mid-mile and last-mile distribution, warehousing and order fulfillment, cross-border and international freight forwarding, air freight, sea freight, and express/courier services, the business has incorporated everything under one umbrella.
E-desh has partnered with Delhivery India Pvt Ltd., India's and the region's largest last-mile distribution company. Furthermore, Maslin Capital Ltd, a Dhaka-based private equity firm, has recently invested in E-Desh and the funding will help E-Desh grow its infrastructure, increase operating capacity, acquire customers and most importantly, expand its international network.
E-Logistics: On March 24, 2020, Evaly Express established its own logistics network called E-Logistics by opening 26 Express shops in 13 areas of the capital. More than 200 express shops have been developed in more than 25 districts across the country. When it comes to product distribution, Evaly largely follows Amazon's model. The logistics provider now makes 15,000 deliveries of grocery, pharmaceutical items and food items.
The Way Forward
The demand for online-based couriers is steadily growing. However, logistics is a tough nut to crack. An increasing number of logistics companies in Bangladesh are experimenting with various models, but the sector presents both a significant challenge and a significant opportunity. Delivery companies require large initial investments which means they take way longer to reach the break-even.
A few logistics companies provide delivery through unions and villages. However, the current logistic infrastructure in Bangladesh has been developed with a primary emphasis on the urban population. The real challenge lies with the rural populace because transportation is difficult and people can’t access products as easily as the city dwellers. So the sector has a real potential if logistics companies can serve the last mile with a reliable solution.
Currently, e-commerce logistics firms are primarily focused on shipping goods from Dhaka. In that case, if a woman in Khulna wants to sell pure honey, she is sure to receive online orders. Her potential to become an entrepreneur, however, could be restricted due to a lack of e-commerce logistics services. So an e-commerce logistics footprint must be built across Bangladesh.
In our country, there is scope to explore our domestic passenger airline network as well. If aeroplanes can get customer forecasted cargo weight through an app ahead of time, they can easily sell the remaining capacity to e-commerce logistics tech startups. It will not only ensure quicker product delivery to customers, but it will also provide airline passengers with competitive ticket price advantages if they do not use their allotted freight.
As of now, only E-Desh provides cross-border and international freight forwarding, air freight, sea freight, and express/courier services. Selling across continents isn't a piece of cake and it certainly involves a lot of groundwork. With the rise of e-commerce in the coming years, it is reasonable to anticipate the arrival of a few logistics providers that will operate on a global scale.
Bangladesh Post Office, which provides postal services, has a national presence with 9,886 post offices, infrastructure, and its own fleet. If these can be digitized, they can quickly create a thriving e-commerce logistics service across the country. In fact, Bangladesh Post Office has been working on several projects to digitize part of its operations and work with fast-growing ecommerce companies.
Similarly, the traditional courier services ensure nationwide coverage regardless of service quality. A large proportion of ecommerce and f-commerce players depend on these players for distribution outside of Dhaka. Working with these players presents a significant challenge because they are not technologically savvy and appear hesitant to become so. If the competitive pressure is any indication, these players will eventually have to adapt to the high road of technology and compete with the new generation logistics tech startups as they eat in their business.
With an expected urbanization rate of 42% by 2025, digital customers with enhanced purchasing power will be placing orders from all over the country in the coming years. This offers a huge opportunity to build large successful businesses in the space. Recent attention from multinational players in the space validates this understanding — the logistics offers huge opportunities.
Having said that, the new generation logistics startup has a long way to go in terms of ensuring optimal service. Service quality remains subpar. Rampant vendor complaints. Limited coverage. Various infrastructural challenges. These are some of the challenges that plague today’s leading new generation logistics companies. The challenges of these companies are unique as well.
Take, for example, return — one of the most critical challenges in the ecommerce industry. Most logistics companies struggle managing returns for their customers. Several ecommerce companies we spoke with told us that logistics companies have a lot to improve when it comes to managing returns and overall service. This is one specific example. There are many such moving pieces. The logistics have come a long way from where it was just a few years ago. But the path ahead does not look any easier. The reason to be hopeful is the industry continues to enjoy a positive momentum in terms of growth.