LogiNext is betting on the SaaS model to help retail businesses solve logistics and delivery challenges
Cofounder Dhruvil Sanghvi said businesses will look to create efficiencies through automation in processes
The company is looking to penetrate deeper into overseas markets after its recent Series B funding round
When ecommerce entered India, little did people realise the impact it would have on businesses and the Indian economy. It wouldn’t be a stretch to say that ecommerce gave rise to aspirations and hopes in other sectors as well, and threw a big challenge to the traditional retail industry, the effects of which are still rippling through the Indian economy. The shift brought in by ecommerce in consumer behaviour is also palpable and can be seen in the rise of food delivery and hyperlocal delivery and services. And in hand with ecommerce, India’s ageing logistics infrastructure also got a tech upgrade, but not all retail players have joined the rush to adopt technology.
Convenience and low prices have been the driving forces for ecommerce since the early days and a bone of contention between traditional players and new platforms. But today, with ecommerce retailers catering to every kind of product, service and shopping experience, the challenge for the retail industry has become more nuanced than just knowing what price to offer. “With the coming of Amazon into the market, many retail giants shut down and businesses realised the need to run operations in a tech-savvy manner,” believes LogiNext cofounder Dhruvil Sanghvi. He further added that today, we are using applications powered by machine learning and artificial intelligence without even realising their presence.
Founded in 2015, five years after the founding duo, Manisha Raisinghani and Dhruvil Sanghvi met at Carnegie Mellon University in Pittsburgh, USA, LogiNext operates via headquarters in California and an office in Mumbai.
“It is at our university where we were taught data science and machine learning by the founding members of companies like Uber and Google which became a game-changing experience for us,” said Sanghvi. He added that while machine learning was a buzzword back then, the duo has witnessed how machine learning evolved from a research topic to an industry-wide application over the years.
After college, the two separated and joined different firms. “While I started working with Deloitte and Manisha joined IBM and garnered experience in retail, transportation, ecommerce, and home deliveries. The trends that were picking up in the USA between 2010-2015. This helped us in establishing LogiNext,” Sanghvi said.
This streamlining of logistics is where most ecommerce platforms failed after the initial growth spurt. As costs for deliveries and returns spiralled up and with limited visibility into the products in transit, India’s first few ecommerce companies were running bloated operations. The entry of tech-heavy platforms such as Amazon and the growth of Flipkart in the logistics domain made it clear that logistics was a crucial component in ecommerce.
LogiNext’s SaaS offering helps businesses plan and manage their dispatch schedules, delivery routes and fulfilment capacity through data and predictive analytics. The company uses artificial intelligence-based algorithms that predict location-based decisions and automates the delivery processes like route planning, ETA calculation, traffic prediction and also manages exceptions, notifications and the customer experience in real-time.
The last decade has brought transformational changes in the way Indians shop. As per Statista, India had the fastest growing online retail market in 2019. The number of digital buyers across the country was estimated to be approximately 330 Mn in 2020. The figure suggests that almost 71% of internet users in India have purchased products online. But ecommerce is just one slice of the retail market overall. And even retail players these days are recognising the need to improve their logistics operations.
Sanghvi told Inc42, “Retail companies never used to do deliveries earlier but now almost everyone does as more than 25% of their revenue is coming from ecommerce so that is a big change that happened over the last 5-7 years.”
With established majors such as UPS and FedEx, which were the traditional partners for the retail industry, also burning a lot of cash to compete with technology, the retail logistics industry was riddled with inefficiencies, lack of optimisation and a lack of automation. Founded in 2015, LogiNext bet it could change this in a manner that doesn’t impact the industry.
“While we were building this company we were seeing a lot of startups and companies failing across the world because they ended up burning a lot of money. We, however, retained our SaaS model which is a high gross margin business and currently have more than 90% gross margin making us EBITA profitable in the fourth year of our journey (last year),” Sanghvi stated.
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In January 2020, the company had raised $39 Mn funding from US-based investors Tiger Global Management and Steadview Capital. The Series B investment is its third funding round in the last three years after it raised $10 Mn in a Series A round led by Paytm and Alibaba in 2016. Sanghvi said the company will be using the funds to penetrate deeper into the overseas market, where it’s earning the majority of its revenue currently.
Loginext has been in the news for the exit of Sanjay Mehta, the company’s first investor, who made a 16x return on his first cheque investment. Mehta told Inc42, “LogiNext was one of the companies that walked the talk and delivered on everything that the cofounders — Dhruvil Sanghvi and Manisha Raisinghani — had pitched.”
Mehta had led LogiNext’s seed-stage funding round with about INR 3 Cr ($420K in current conversion rates), along with other 37 investors from Indian Angel Network (IAN).
With a team of around 100 employees, the startup currently has operations in India, Singapore, Thailand, Malaysia, Indonesia, UAE, UK, Germany, USA, Canada, and Australia. The startup further plans to penetrate countries in the Asia Pacific, European and North American markets. LogiNext has clients such as athletic goods major Decathalon, fast food giants McDonald’s and Dominos, one of the world’s largest breweries Heineken as well as consumer goods giant Unilever.
The key strength Sanghvi believes is LogiNext’s technology. Most SaaS businesses are heavily reliant on the feet-on-street model where they have salespeople and account managers visiting customers regularly. This adds to the travel cost and the cost of hiring local people in each market, he said.
“We are a pure-play software shop, we have been able to grow by establishing partners across the world. This model has been the key to our efficiency because we don’t have to stress about visiting the customers.”
Talking on the progress of LogiNext, the investor added that the company started off by focussing on small and medium enterprises in India and then moved to larger players in the segment. Eventually, the company shifted its focus to customers from overseas markets such as the US, Asia-Pacific region (APAC) and others.
Transportation being a very fragmented industry, globally there are a lot of small-scale companies that have a good relationship with local transportation companies in different countries. “We build incentives for these small companies to sell and implement our software and also do marketing in a hyperlocalised manner. Our partners become our catalysts.”
Route optimisation on LogiNext
“One of the biggest trends in the coming years will be as to how people-free you can make your business.” – Dhruvil Sanghvi, cofounder LogiNext
While that might sound ominous from the point of view of jobs, it’s about striving for efficiency. LogiNext believes that inefficiencies in newer retail markets will help them solve real problems. Sanghvi even claimed the company will be ready for an IPO in the next five years.
He puts that conviction down to the market conditions. After 2010, a global shift has happened fundamentally in expectations. The customer no longer wants to wait, Sanghvi said. “They no longer want to go and buy the product but want it delivered right away. With this expectation setting in globally, there is a stronger need not just to improve home delivery but also improve the entire supply chain,” he added.
Real-time tracking of deliveries by LogiNext
While every business considers last-mile delivery a major challenge, particularly in developing markets, Sanghvi said every leg of the process matters, which trickles down to efficiency in the last-mile. “To be efficient the service has to be cheaper and faster. The only way to do that is by real-time processing of information about routing, capacity management, dynamic pricing of the load, tracking and availability of drivers,” he said.
As a highly technology-dependent startup that uses a large scale of customer data on a day-to-day basis, LogiNext believes that while they have access to a customer’s data the ownership rights still lie with the customer. Sanghvi said that their cloud instances and architecture are designed in a manner that allows a customer to wipe-out their data when they feel like.