Shaerul H. Joarder is the co-founder and CEO of Parcelmagic, a Dhaka-based tech-first logistics company, primarily serving a broad range of eCommerce companies. Logistics is one of the fast-growing verticals in Bangladesh. The fast growth of ecommerce has created new opportunities in the sector. The last few years saw the reinforcement of this reality with several logistics players raising meaningful capital. Parcelmagic says it has developed a product that is unique and addresses many of the major challenges in logistics and a strategy that allows it to deliver excellent service to its customers.
I recently had an opportunity to speak with Mr. Shaerul. Mr. Shaerul has over 30 years of experience working and seeing the Bangladesh technology industry evolve. He started his career in the software industry and worked across industries and markets in the technology industry.
We talk about his journey to entrepreneurship, the evolution of Bangladesh’s technology industry, how Parcelmagic came into being, an overview of the company today and ambition going forward, what separates Parcelmagic from other players in the vertical, logistics industry in Bangladesh, fundamentals of building business and much more.
The interview is full of excellent ideas. I hope you enjoy it reading as much as I enjoyed doing it.
Ruhul Kader: Thank you for agreeing to this interview. Can you please tell us about your journey to what you are doing today?
Shaerul H. Joarder: My journey into the world of information technology began in 1989 as the president of Notre Dame Computer Club. So I started my journey into the tech world even before I was a student of BUET. After graduating from BUET, I worked as a computer software solution developer. Access to computers was very limited. I worked for several companies during this period. I implemented and operated almost 8 ISPs in the country, including taking the BTCL (formerly BTTB) in 64 districts. That was back in 2005.
Afterward, I joined City Bank Ltd as an SVP and Head of IT. After City Bank, I worked at Warid Telecom Ltd. After Warid, I became the Country Manager of Singapore Technologies Electronics (Info-Software Systems) Pte. Ltd. During this time, I lead a two and half year Bangladesh Bank automation project.
After that, I went to Australia where I worked at KPMG and a software development company that used to develop software for banks. I was involved in developing Mobile Financial Services (MFS), Agent Banking, Semi-Automated Teller Machine, etc. at that time. This was between 2009-2014. I developed a few products that I sold to an Australian company. They were working for banks and they were readily recruited. Then I switched to KPMG Melbourne.
In 2014, I came back to Bangladesh. Upon my return, I worked on IT and Manufacturing ERP integration in four major Garment and Textile manufacturing exporting companies in Bangladesh including DBL Group, EPIC Group, Hameem Group, ACS Textiles, and Manabay Waterpark at Gajaria. I also worked at LabAid for a short period of six months.
Then I started my venture that is Parcelmagic. That is my background in short. It has been thirty years since I started my professional career.
Ruhul: I want to go a little back to your early life. Before BUET and tech, where did you grow up? What was your childhood like?
Shaerul H. Joarder: Growing up, I was a restless child. That was the complaint of my school teacher and my mother. My father is a patient and calm person. I would say I was lively as a kid always trying to find new things to do. I was a reader throughout my early life. I used to read anything I could get my hands on.
I started my schooling at Motijheel Boys’ High School and did my SSC from there. Then I went to Notre Dame College. I passed my SSC in 1989 and did my HSC in 1991. After Notre Dame, I went to BUET. But I started working before completing college. Between Notre Dame and BUET, I became a professional from a student, although I was not a graduate yet.
I pursued education even after completing my formal education. In 2013, I did several Software Development courses at Monash, Melbourne University, and Charleston University. I did my late MBA in 2017, an online MBA. I'm currently doing my master's in Data Science at the University of California, Berkeley.
I recently did a six-month BootCamp on cyber security at the University of Toronto, Canada. As part of the program, I have studied cyber security thoroughly and learned a lot. We had high-profile instructors from world-renowned organizations and participants from all over the world. It was an excellent opportunity for me. I'm readily applying much of this know-how to Parcelmagic infrastructure and security systems.
Ruhul: Those were the early days of technology in Bangladesh. When did you first come across the computer thing?
Shaerul H. Joarder: My father used to work at the Danish Embassy. They had some sort of CPM (Control Program for Microcomputers) based computer. He used to bring books to study computers and these things. I would take a sneak peek into these books and read them when no one was around. For example, BASIC programming. He used to learn BASIC and I used to take a lot. I didn't understand any of it but I somehow found those things fascinating. My father used to encourage it, although we didn't get any practical exposure. These were the days when you needed a temple to keep a computer. You handle these devices with utmost care and respect. So that’s how I came to learn about computers in my early years.
When we were students of Notre Dame College, our Hon'ble Minister Mostafa Jabbar gave Notre Dame Computer Club three computers from Ananda Potra. It was tremendously helpful. I had an awe feeling about all these computing things. Consuming a lot of science fiction contributed to this feeling. We had a feeling that you could do everything with computers. This whole otherworldly aspect of it I guess inspired me. And gradually I got into it before I knew it. It has been 30 years since I've been working in this field.
Technology is a fast-paced world. It is changing every day. You have to update yourself daily otherwise you will become obsolete. You can view it as both a challenge and an opportunity.
Technology has democratized the opportunity for everyone no matter whether you are six or 60, you have an opportunity to do something. You no longer need an institutional education. You can take a three months course on Python and start working on data science and ML.
As just happened (we had to pause the interview to fix my unstable internet connection), technology is not yet foolproof. We still have a long journey ahead.
We have so much to do, I sometimes feel like why are we not doing this or that? It has become second nature to me. I like to think that way. Without the excitement and challenges, I don't think this would have happened.
Ruhul: You have seen part of the evolution of the technology industry of Bangladesh. Can you briefly talk about your take on the overall technology industry of Bangladesh, the progress we have made, and where do see the industry going in the next 5/10 years?
Shaerul H. Joarder: If you ask me about the industry now, I would say our industry has progressed a lot. Particularly, young entrepreneurs and technologists have brought this industry a long way forward. We are not much behind our peer countries in the region. Over the last 15 years with excellent support from the government, we have come a long way.
That said, we have a few areas where we need to improve. One is communication. We're looking to take the industry to the next level and attract global attention. To that, I think we need to improve our communication and how we approach this particular aspect of growth.
The second is the quality of our technology. If I give the example of Parcelmagic, our operation is 100% reliant on our technology stack working properly — our website, servers, technical stacks, and so on. For these things to run smoothly, we have to make sure that they are robust enough to tackle any cyber security risks. Codes are world-class. Security measures are world-class. And every aspect of technology design is world-class.
Many times we overlook quality and excellence and remain happy with something that is merely working. We have to up our standard. Some organizations take seven days to upgrade their system, which is absurd. It is a huge challenge for customers when your system goes down for seven days. For instance, we have 700/800 ecommerce customers who rely on us for delivery support. If we close our operation all of a sudden for maintenance for seven days, it is a major disruption for all of these companies. It hampers their business. And it takes time to switch services. So it is an important question of whether we are designing our technology stack with enough care.
We develop software and export it. And when we go into a collaboration with an international customer, they look into the quality of your code, whether you maintain proper documentation and whether you use any methodology such as DevOps, Agile Scrum, etc. I see some weaknesses in these areas. We have excellent software companies but whether we are maintaining these things is a good question to ask.
We still lack user experience. When you use Bangladeshi software, you know it is Bangladeshi and not North American software. We have to blur this distinction.
At Parcelmagic, we've tried to design our technology stack with these limitations in mind. I wouldn't claim our tech is 100% flawless but we have tried to ensure superior quality in every area of our operation so that we can compete with any global solution and people take us with equal seriousness.
Our competition is global. Today, we have multinational players operating in this vertical. We have kept that in mind when designing our products and services.
The second aspect I would draw attention to is creating our technologies and our technical know-how. There are two aspects here. One, we use a lot of foreign software and technologies. We import this software and with them, we also import the know-how in the form of people who come from abroad and help us with the implementation of this high-end software. I think we should at least have the implementation knowledge in Bangladesh. Bring the software from abroad but we can have our people implement them.
The second aspect is even more important. We export technology labor, which is a very good thing. Our engineers today work for global companies. Our software firms have clients across the world. But do we have a Bangladesh technology product/solution that is used globally? Do we have a firewall, a router technology, or a software piece that is number 15 or 20 globally? I think we should also focus on creating local technologies which are starkly missing.
This is an at least 30 years old industry and unfortunately, we can't say proudly that we have something that is used globally.
Contrary to that, look at our peers like India, Hongkong, Singapore, Taiwan, etc. They have developed their technology industry. I think if these countries can do it, we can do it too. We should look at markets like China where companies are developing their operating system and technologies. We should try to do the same.
Our university graduates don't need to move abroad if we could use them properly here. A lot of our people, highly capable ones, move abroad and are doing excellent work. I see a lot of young people work in the country for a few 3/4 years and then move abroad. They purely work for getting experience so that they could apply abroad. This wouldn’t happen if we can create enough opportunities. Unfortunately, this has been happening for a long time. A lot of brilliant people from our time living abroad. They meet me when I go abroad. If 20% of these people come back and give back what they have learned, it could change this country. I think this should be a priority for us.
We'll build our technologies and export them. If we rely on the technologies of other people, we would not be able to progress.
For the next decade, I think our vision should be to create a skilled population. Second, we need to create more support systems for people who are doing things. We need to create opportunities for getting investment. We should create programs that would invest in these initiatives. Once you have the investment and product, it is not a major challenge to sell it in today's world. If we can create excellent IT products, we can sell them everywhere. It is possible to do it in 10 years if we work on it.
Ruhul: Coming to Parcelmagic, can you tell us about the background of the company? How did you come up with the idea and put together resources to get started? Also, please give us an overview of the company.
Shaerul H. Joarder: Parcelmagic is a smart delivery service company. We offer on-demand rush delivery, slightly like Uber/Pathao for delivery. If you want to send a parcel right away, we'll pick it up and deliver it. We have overnight/next-day delivery for the e-commerce and f-commerce industry. We pick up bulk packages/parcels from the client's location, sort them out in our hub and deliver them to different places.
There are a few things that inspired us to get into the logistics market. Rapid growth in e-commerce in Bangladesh over the last few years creating a demand for a seamless, transparent, and smart delivery solution. There are players in the market. Global players are paying attention to this market. But we have seen an opportunity to offer a better solution backed by superior technology and data.
Ecommerce has seen phenomenal growth in the last two years fueled by the pandemic. A UNDP survey suggests it is a $2.3 billion market and has been growing at a rate of 20% in the last two years. There are some 3000 e-commerce companies in the market and some 250k f-commerce pages.
We have also been setting several cultural and consumer behavior shifts. People are now more open to home delivery. Ordering online has gone mainstream. The second aspect is, dual-income households are on the rise where both husband and wife are working. Since we work with f-commerce merchants, we see that close to 95% of f-commerce entrepreneurs are women who are duly supported by their families to grow the business. These changes are transforming consumption patterns in the market.
Economic growth has also created new economic opportunities. We now have a rising middle class who are into new shopping behavior. Then there is the growing penetration of the internet and smartphone. We have seen a phenomenal growth of financial inclusion in the form of MFS and financial services penetration making money more available to more people. This has also made online payment easier, a crucial node in e-commerce growth. The payment was a huge challenge for digital commerce just a few years ago. It has changed since. Since payment has improved, it has encouraged more people to join the race.
Moreover, e-commerce has made access to products and services easier for people who live outside metro areas. They can now order products online that they didn't have access to before. Now people are ordering online, paying using MFS, and getting the products through these logistics services.
Moreover, people from rural areas can also sell their products through marketplaces across the country. It is two-way traffic.
Finally, government patronization of the digital economy has helped a lot in the growth of the entire industry.
These are the trends I have seen in the market that I thought could offer huge opportunities for technology-driven delivery service providers that can offer excellent logistics solutions. That was the initial motivation/thought process for getting into the logistics market.
We currently deliver within Dhaka. We have almost 100 riders and 380 merchants, and we work with on-demand deliveries as well. If you want to send something, you open our app, place an order, and we get it done for you. It is super simple. You can get it done just with a few clicks. We have made sure to offer an affordable cost.
Challenges are there. Recent fuel price hikes have created new challenges. It has increased our transportation costs. Similarly, frequent power outages are putting us in a difficult position because our operation is 100% online. The devaluation of the Bangladeshi taka and restrictions on imports have created some challenges because many e-commerce/f-commerce companies are unable to import and hence the demand for logistics services has dipped.
Finally, there is growing competition in the vertical. There are some 300 enlisted logistics companies in Bangladesh. Now new international players are entering the market. In a way, it is an opportunity as well. Especially when multinational companies are entering the market. When you want to be a top-notch delivery service company, it is an unexpected boon when multinationals enter the market. I'm looking at the positives now. Competition is not always a negative thing.
First, you can always compare your service standard and improve. Competition can always push you to improve. Second, native entrepreneurs understand their market better. It can create a competitive advantage for a local startup.
Ruhul: You started operation in early 2021. Can you talk about the early days of the company? How did you put together the resources such as funding, logistics, and all other resources? How big was the team and what were the challenges in those days?
Shaerul H. Joarder: Before starting Parcelmagic, we had to put together the investment and finances. One of my partners at the company is a hugely successful entrepreneur in Bangladesh. We approached each other with the idea of doing something in logistics. We would meet over a cup of coffee and talk about logistics and other business opportunities. Through discussion, at one point we agreed to start something together.
I have been an employee throughout my career, so I did not have that much money to start a big operation like parcel delivery. That was the first thing. We sat together, discussed the challenges, competition, and opportunities, and saw an opportune moment and started the company.
We didn't spend a lot of time deliberating, developing technology first, and doing market research. We started right away.
After confirming the investment, we started the tech development. We put together a small team of engineers and started working on the product. We studied the market, and other products inside and outside Bangladesh and started creating the product. We realized the day one that we have to design a superior product if we want to win the competition.
Throughout 2021, we spent time developing the product. We developed, tested, discarded, and worked again. Through a rigorous process, we have perfected the product. We started testing the product in early 2022. We recruited logistics people, and digital marketing people, and started testing the product. We tested the product for three months in the field. We asked our friends and colleagues to generate parcel delivery requests. When we're satisfied with the basics, we finally launched our service on March 7 this year.
That is the story. Now we have a team of almost 100 riders and a team of 60 full-time people in the team. In almost all major districts we deliver on our own. We also have third-party logistics partners we work with to deliver in remote areas where we don't have a presence yet.
We are now considering delivering outside Bangladesh. We have already signed agreements with several global logistics companies as partners. It will be yet another revenue stream for us.
We are an R&D-focused company. We are working on several unique products around electro-mechanical AI-based robotics that we plan to launch in the coming days. We are working to create some prototypes. We want to innovate so that we can deliver products faster and at less cost.
Ruhul: You said you are currently working with 380 plus companies who are using Parcelmagic as their delivery partners. What are some of the things that worked for Parcelmagic in attracting customers?
Shaerul H. Joarder: Customer service is the key to attracting and retaining customers in any business. One part of the growth has happened because of our inherently superior product. We have developed an easy-to-use merchant panel and mobile app that make it super simple for our users to use our service.
You can easily integrate our app/system with your existing ERP or logistics system. We have wanted to give our merchants a tool that can make their life easy. When they are using our system, they don't need to write their orders multiple times into our system. Instead, our system automatically pulls data from their orders aka customer details and addresses of the customers, and prepares the delivery details.
In f-commerce, the order management process is not streamlined. People take orders through various channels — WhatsApp, messenger and phone calls/SMS, etc. We have created a system to pull your order data from all these places so that you don't need to write details every time.
We are working to release a tool that will help merchants to generate orders automatically on our system. This will be a big relief for our merchants.
We mostly work with ecommerce and f-commerce merchants. We haven't reached out to big companies as yet because we are maturing our system for now.
Our digital marketing is super good. They have been promoting our work and building positive brand equity in the market.
We're offering discounts on delivery charges. We're sponsoring events and working continuously on indirect sales. When a customer takes our service for once, we work hard to retain them. We try to learn from them and take their feedback. Once you give importance to customers, they take it very positively. I tell our delivery people and CS people that unless we can ensure excellent service we would not be able to retain customers. We can bring in new customers with marketing and offers but unless we invest in service, we would not be able to retain them.
We are constantly improving our product and service. When we make changes in the system, we train our customers on usage. We actively help customers to use the system. I would say we are getting excellent responses from customers.
I think customers don't care much about your technology or your fancy things, they care about service. I think service has been at the heart of our growth so far.
Ruhul: These are excellent points. On the one hand, you have built a product that is excellent and customers come for the product since they love it. And then you use superior service to retain them in the long term. What do you think about the competition? And how do you plan to respond to the competitive pressures in the market as you can see competition has been rising over the years and competition is going to be a challenge for early-stage companies like yours.
Shaerul H. Joarder: I briefly touched upon this earlier. I said competition is challenging yet positive, especially when multinational players enter the market. When you have the intention of becoming a top-notch delivery service company, it is an unexpected boon for you. You can always compare your service standard with these companies. It allows you to improve yourself constantly. Because they have gone through many challenges, they offer a good learning opportunity for you. They have been there and done that. So you can learn from them and quickly improve.
People usually respond to big competition with fear and worry. I think that's an inappropriate response. In the excellent Top Cruise movie Top Gun: Maverick, there is a line when Top Cruise and his wingman had to fight a superior fighter jet with their old F-14, where the wingman tells Top Cruise, "it is not about the plan, it is about the pilot." That's an inspiring take on a challenge.
My logic runs close. I will observe my competition, their service, and everything and then try to deliver something better than them. I think people don't necessarily buy from a company because they are a large multinational company. People take service from a company because they find their service good compared to other options in the market. We want to be that option for our customers. They are free to choose and try other options but we hope they will eventually return to our service because we will always be delivering superior service.
Then and again, it's important to note that it is not good for any market when you have new players entering it now and then. I think there should be some regulatory and policy measures to address this challenge as well. How many companies and under what conditions should be allowed to enter the market?
No doubt this is a necessary service. But it needs to be understood where to draw the line when it comes to the competition.
Native entrepreneurs enjoy certain advantages. They can better navigate local policies and market norms and cultural conditions that multinationals take time to navigate.
Multinational companies entering your market can create new opportunities for M&A for local companies. These things can be positive for the local players.
Finally, you have to be always on your toes. You have to continuously improve your service ahead of your competition. How you do that is an entirely different matter but you have to find a path to doing it.
I think there are five-seven aspects you need to pay attention to when running a company. You need to have the financial controls in place. You need to build the proper structure for execution. You need to innovate continuously. You need the investments in the right moments. If you can do these few things, it can help generate a predictable outcome for any company.
For the logistics market, demand is there. Now, how you play and execute that's what matters. This is not a new market. People are used to this service. So I'm not worried about competition.
For Parcelmagic, we already have some unique differentiation factors. Our tracking and operational transparency are excellent. We have compared with many international players and we are at par and in some instances, better than many of them.
We have some strategies that I have learned from the manufacturing industry while working there and we have implemented them in the company and it has improved our efficiency and reduced our costs. We have built our web and tech tools for our country. For instance, finding an address is not easy in Bangladesh, which we have kept in mind while designing our systems.
We have made integration super simple. You can easily integrate our system with almost every major system, making it super relevant.
I believe that if Indians and Indonesian and Americans can do it, we can do it too. We have people all over the world doing important work for global multinational companies. I know people who work for some of the largest companies in the world and have tons of patients in their names. So I believe that we can do it and compete with any company given the level playing field.
Ruhul: What are the core dynamics of the logistics business? If I break down the question, what are the cost centers and how do you make money? To the naked eye, it appears simple. You charge a fee from merchants for delivery. You spend some of it on infrastructure, pay some of it to the delivery personnel and the rest keep as your margin but it is not how it works in practice. It is a much more intricate business I guess.
Shaerul H. Joarder: We generally provide two common services. One is on-demand. You call when you have a delivery to make and our rider goes to your place, picks it up, and delivers it to the destination.
Ecommerce and f-commerce companies use two approaches: one is scheduled delivery and the next day delivery. In 99% of cases, next-day delivery is the standard process. We collect the product, sort it in our hubs, and another team delivers it. This is a very convenient method of doing it.
We can earn some additional revenue here by providing some indirect sales, financial services, etc. We are looking into some of these. If you can get some revenue from here, you can make an excellent business. The needs of the consumer are not that high. How many people send parcels daily?
Not many. eCommerce, f-commerce, and corporates need this service more often. This is the main revenue.
Rider management and fleet management, if you have one, is the main cost center. But you can optimize this cost by using technology. We have found empirically that you can optimize this cost by 10-15%. If you can reduce your cost, it opens up many doors. It reduces pressure on your working capital. If you can combine these two — generate some revenue from some external sources and reduce cost in some other areas — it can create additional margin for you without acquiring additional merchants. Everyone wants to increase the number of merchants they have but if you want to increase the number of merchants, it can increase your cost and requirement for capital as well. You can however find new ways for growth in serving your existing merchants.
Ruhul: How do you work with riders? Is it contractual like everyone else or do they work as your employees?
Shaerul H. Joarder: Honestly speaking, riders are our lifeblood. We provide appropriate payment to our riders. We have insurance for our riders for health hazards. Anyone can be a rider and earn additional income if they have a cycle or motorbike and a smartphone and they have basic literacy.
In the future, we plan to provide cycles/motorcycles on installment to riders.
Our riders work with us as employees, not as contractual. We follow our labor law and maintain the proper process. We try to provide all the facilities including a safety net to them. In the future, we plan to introduce provident funds and similar schemes for them so that they can feel job security and stay with us. I think this is a space where it needs improvement. I think our policymakers should pay attention to this.
Ruhul: It is good that you think about your riders. Many of the jobs created by this gig economy are not fair to the people who work in this new sector. The structure is neither good for the companies nor the workers. Job security and income security are a far cry. Your policies sound very positive to that end. What are the plans for Parcelmagic?
Shaerul H. Joarder: In the next five years, our goal is to introduce some innovative products and services in the space and change the culture of how the industry functions.
We're working on some products that can transform this industry. We want to make it easier to send products to remote areas. We want entrepreneurs in villages to export abroad. We want to connect the supply chain dots.
There are people who live in villages who are doing good work but do not have the support, know-how, and access to take their work forward. We want to help them. In the next five-six years, we want to work with these entrepreneurs.
Ruhul: The biggest lessons from your journey so far.
Shaerul H. Joarder: I would start with entrepreneurial lessons. One lesson is that it is always wise to start something with adequate understanding. Study. Do market research. Try to understand the market and how the industry functions. There are unforeseen events that are hard to gauge. But you should have a thorough understanding of the market.
The second aspect I would say is the mixture of data, technology, and operation. We don't see a good mixture of this in Bangladesh but if we can connect these three in how companies are run, it can be transformative for any company. It is happening in every market. Tech has become the center. We should move towards it. This can reduce costs and improve service.
The final thing is a timely investment and financial control. Financial control can make or break a company. Resource allocation is the ultimate test of your business acumen. If you could do it, you can have a fantastic run as a company. Some companies raise a ton of money but eventually fail because of the failure of resource allocation and financial control.
My entrepreneurial lessons, in a nutshell, are: you have to have a solid understanding of the market, you should enter a market when it is ready — timing is critical, your service has to be competitive, and you have to use data and tech properly, and finally, you need timely investment and financial control.
There are other common things such as you have to be honest, working hard, and so on. These are hygiene factors. You have to do them. But your success depends more on the things that I mentioned earlier.