How Locus Is Using AI To Enhance End Customer Experience And Logistics Management With ‘Uber For X’ Model

[Note: This article is part of The Junction Series. We will be covering the DeepTech sector in detail at The Junction 2017 in Jaipur. Learn more about The Junction here!]

When Nishith Rastogi and Geet Garg thought of starting a business not more than two years ago, they had a very different idea in mind. One that consumes everyone who lives in India and has a close female relative and friend they care about – personal safety.

Begins Nishith, “In December 2014, post the infamous Delhi Uber incident, my sister was visiting Bengaluru late night and travelling from the airport. This got me very paranoid about her safety. That just triggered something irrational in me. There was no statistical basis for the fear, but what I did every 10 minutes was to ask her to share her location with me.”

This fear got Nishith and his colleague from AWS Geet Garg to come up with RideSafe, a real-time route deviation detection mobile application, wherein one can get to know if a driver is deviating from a pre-decided route. According to Nishith, RideSafe was not seen as a monetisation tool; it was developed just to help people out.

The Pivot: From A Consumer Safety App To A Logistics Startup

Since the logistics and supply chain market is highly unorganised in India, the under-utilisation of resources is not surprising. And increasing adoption of technology in operations is what is  essential to maintain customer satisfaction. Nishith, a BITS Pilani alumnus, and Geet, an IIT-Kharagpur graduate had launched RideSafe by then.

Adds Nishith, “But we were pleasantly surprised when foodtech companies started adopting RideSafe to track their delivery fleet in early 2015. Realising that there was a huge opportunity in this sphere with technological innovation largely absent, we launched Locus.”

According to Nishith, scheduling, tracking, & managing an on-field fleet was a common problem being faced by several startups in the on-demand and hyperlocal industry. The tooling & automation that existed here was primitive.

This was the main pain point behind launching Locus in April 2015. With Locus, the company aims to deliver end-to-end automation from point of dispatch till the order reaches the end customer, with a competent end-user experience, with intelligent events & live tracking.

Ecommerce + Machine Learning: The Logistics Game Changer

As Nishith defines, “Locus is the intelligence behind logistics which optimises operations to provide consistency, efficiency, and transparency using machine learning and advanced algorithms. The system incorporates various business rules and fuzzy real-world scenarios (service level agreements, traffic delays, capacity constraints etc.) while planning and dispatching orders. This enables businesses to take decisions backed by data and analytics thus reducing costs and saving time.”

The company helps traditional logistics businesses with services like hyperlocal delivery, intra- and inter-city logistics and helps them gain a technological edge over the others.

Nishith describes the technology in a very interesting way and says, “Between you, me, and X, there are 30 cards that need to be distributed, and in order for an efficient distribution, maybe we will group them by area. But then clauses appear, where we need to figure out a plan for maximum route optimisation. A person always won’t be able to solve it optimally. There needs to be a way to distribute the cards that optimises time in the shortest distance possible. Major ecommerce companies, be it furniture, grocery, or horizontal trading, face this problem everyday. Locus is essentially the intelligence behind your logistics, the one product that sorts out the time, distance, and grouping of your delivery fleet.”

He adds, “Previous tracking solutions only told you where your truck is, Locus is going to tell you where your truck should be.”

Locus is a single product that is designed to solve multitude of problems. It manages everything from dispatching, route optimisation, and real-time driver tracking to managing on field workforce to sending SMS alerts to customers.

When asked about the monetisation model, Nishith says, “It works on a pay-per-transaction model, with no overhead costs. We don’t charge any annual or quarterly licensing fee – we work on a pure transaction-based pricing, so that we are aligned with our clients’ business goals. We strongly believe that Locus grows with its partners. We have grown 30 times in the last six months.”

Locus primarily extends its services to startups, enterprises, and brands across various sectors like grocery, furniture, pharma, & consumer electronics and has reportedly over 25 partners in production, with several others in the pilot phase. It also works with some market leaders such as Delhivery, Quikr, Urban ladder, Licious, Lenskart etc.

‘Uber For X’ Business Model All The Way

Locus secured around $250K in its Seed investment round from GrowX ventures and Manish Singhal in July 2015. The investment round also saw participation from industry veterans like Bhupen Shah, Sanjay Mehta, and Ankit Pruthi. The startup is banking big on the “Uber for X” business model and is helping its clients, the other logistics players build the same and enhance the end-customer experience.

Adds Nishith, “We have begun investing in digital marketing and social media campaigns. We have a strong sales team led by our seed round investor, who reaches out to potential partners and industry leaders to build healthy pipeline.”

Talking about the challenges faced, Nishith says, “We are not a business that runs on technology. Our business is technology. For us our team becomes very important. The initial challenge we faced was hiring the core talent team. In 2016, we saw over 18,000 applicants. Selecting 15 out of them was a mammoth task. Then came the task of creating a market for ourselves. We were trying to computationally model irrational behaviour. It was challenging, yet interesting. We had to create the ecosystem for automation ourselves, and that is basically our technology itself.”

Locus has also been a part of Microsoft’s eighth accelerator batch. In May this year, the company then raised $2.75 Mn (INR 18.3 Cr) in Series A funding led by Exfinity Venture Partners. Other investors who participated in the round were Blume Ventures, BEENEXT and Rajesh Ranavat, MD of Fung Capital along with its existing investors.

As Nitish says, “During our Series A funding, we were a team of 8 members and have grown exponentially to 30 since then. We have made a genuine attempt to bridge the gap between industry and academia in India. 25% of our team are PhDs, and this in parallel helps us build groundbreaking innovations, and apply what’s been learnt in classrooms for 30 years in real world scenarios.”

Competition And The Road Ahead

Locus faces major competition from companies such as Shipsy, Assettrackr, LogiNext, and DotZot. As the supply chain and logistics sector is still largely fragmented, all the different players are trying to solve the same problem in their own ways – bringing in unique solutions to change the first, middle, and last-mile delivery game.

When prompted to talk about competition, Nishith says, “Either they are a combination of technologies plus operations, or they more are focussed upon one aspect of logistics – like automation or workflow management. We are more focussed on the intelligence aspect of it all. We are a thoroughly B2B company that works on enterprise tech. We are the decision-making engine. As a matter of fact, we sometimes sit on top of some of these fleet management solutions that you think are our competition. Other than just being a logistics tech company, we also provide assistance to ecommerce companies for ideas and decision making.”

Locus has a routing engine that is deployed on the ground, instead of just being a pointer at a web interface. Nishith adds,

“While our core is the routing engine, Locus has built algorithms around it to help solve various logistics problems in the real world. We have one unified platform which serves various verticals, right from new age on-demand, to traditional cement, and FMCG movement.”

The company currently automates intra-city logistics and is working towards enabling its platform to service intercity operations as well. But talking about future plans, Nishith says, “Transportation is the largest unorganised sector globally. In India, the freight industry is estimated at $100 Bn and contributes to 6% of the GDP. And a bulk of this is inter-city logistics. We also plan to tap into surface logistics. By 2020, we aim to automate all human decisions in dispatching a package from Point A to Point B.”

Editor’s Note

Till recently, machine learning was an esoteric science, today it is a pragmatic tool to enhance everyday user experiences & provide production quality automation. In 2016, the amount of storage, computing & RAM available per dollar, is affordable enough for large sets of data to be easily collected and quickly manipulated, making machine learning more relevant today than ever before.

Technological developments in logistics have surely surpassed manual methods in connecting sellers, third-party logistics partners and customers. Online marketplaces such as Snapdeal, Flipkart, and Paytm have already come up with innovative strategies in logistics and supply chain management, backed by ample investment.

Logistics has always been the Achilles’ heel when it comes to solving Uber for X startups and the full stack solution from Locus seems to be the best way forward as it automates the entire delivery process and also takes care of the deviations. Supply chain, delivery, and logistics are key to competitive advantage for enterprises.

Given that, Locus looks to be in a position to crack this market further by creating high-end algorithms and systems and carve out a competitive space for itself. How far it will succeed is a question that remains to be seen.