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Logistics Co Shadowfax On Chinese Imports, Challenges And AI In Transport Tech

Logistics Co Shadowfax On Chinese Imports, Challenges And AI In Transport Tech

Shadowfax is running trials with Chinese ecommerce players to import goods to India

Startup estimates China to India ecommerce market receiving daily orders worth $12.8K

Its AI-driven solution called Frodo helps in optimising the delivery route accurately

A Bengaluru-based logistics company, Shadowfax has recently announced that it will expand its business-to-consumer (B2C) logistics service for Chinese ecommerce and logistics companies to deliver goods at the doorstep of Indian online consumers. The startup’s initiative to tap into Chinese imported goods comes at a time when China’s imports to India rose by 16.6% to $50 Bn in 2017-18.

Rohit Gupta, business development vice-president of Shadowfax, estimates that China to India ecommerce market is currently receiving orders worth INR 8-9 Lakh ($11.4K-$12.8K) per day, and is growing every day. “This is the kind of market opportunity we are tapping into,” he says.

Chinese ecommerce players such as Shein and Aliexpress provide cheaper goods and, over the years, have forged tie-ups with many Indian logistics companies, as the former didn’t require to set up the base in India to do business. However, this is likely to change.

The Indian government through the draft ecommerce policy is mulling to mandate all foreign online retailers to register entities in India if they want to set up ecommerce platforms in the country. In such a scenario, how will this policy impact logistics startup like Shadowfax in their initiative to import foreign goods? Inc42 asked Gupta.

This policy won’t bring a major impact to the startup’s latest foray, Gupta maintained. “We are just a logistics player who ensures that their products are delivered to the consumers. The policy will not impact our operation at large. But, for the Chinese companies to whom we were talking to earlier, the contract might happen with their Indian entity when the regulation comes into force,” says Gupta.

Shadowfax is currently keeping the table open for Chinese ecommerce players with its end-to-end delivery both for shipping products directly from the Chinese factory to India and for Chinese companies having a port in India.

Gupta says that it will provide an Express Delivery with a guarantee to deliver the product at the customer’s doorstep within seven days from the time of placing the order online. While doing so, he also claimed to take full responsibility to ensure the error-free rate of the products that are returned by the customer.

It provides a return solution with doorstep quality check on the product. “We will assure that there is less than 2% error rate in the product which is returned compared to an industry average which is three times to that,” he said.

How Has Shadowfax Used AI On Its Logistics Platform

Managing logistics in India is a very complex process because there are multiple routes, and the package may be delayed for various reasons. At the core of its delivery platform, Shadowfax has deployed artificial intelligence (AI)-driven solution, called Frodo, which helps in optimising the route accurately.

The startup has widely deployed this solution for its Indian delivery business and plans on catering the same for its Chinese partners as well.

To the question on how AI has been implemented on its platform, Gupta cited an example saying, “If I need to go from city A to city B, there would be a network of hubs who can deliver the package. Frodo determines, for instance, which partner would be able to go, which would be the most optimal route for the rider.”

In order to ensure the fastest delivery of the product, the system’s algorithm has been developed in such a way that it keeps on learning from the ground result and helps the startup to continuously monitor update the platform with best delivery solutions.

“For instance, if a particular delivery happens in seven days, which should have been delivered in five days. Then the system will automatically learn what went wrong, so that, next time the route is optimised to make delivery decisions. It also looks at the riders way of performances, mainly for improvement reasons. It keeps reading the data points and keeps improving on its own,” Gupta said.

The startup is currently developing capabilities in line with what the situation demands, for both ecommerce players and logistics companies.

It follows a crowdsourcing model, wherein the delivery partners can look at the timings at which they want to work, and they get full visibility and payout accordingly. The delivery partners are paid in an hourly basis.

Launched in 2015 by two IIT Delhi alumni, Abhishek Bansal and Vaibhav Khandelwal, the startup has divided its logistics in India into three categories — ‘Business Now’ for foods and medicines delivery, ‘Insta’ for same-day delivery of grocery items, and ‘Connect’ for ecommerce with an express delivery option for intercity and intracity.

The startup claims its India business to be currently fulfilling 1.5 lakh orders per day and deliver products in more than 3,000 pin codes with more than 50K delivery partners. Its Indian clients include players like Amazon, Swiggy, Bigbasket and others. It last raised $22 Mn Series C funding round led by NGP Capital.

Logistics is the pillar behind India’s supply chain industry. The sector is currently valued at $160 Bn and is poised to hit $215 Bn by 2020. Over the years, startups in this sector have come up with innovative new technologies with logistics-related software solutions, last-mile delivery, robotics, automation solutions.

According to Inc42’s The State of The Indian Startup Ecosystem 2018 Report, India had over 900 logistics startups as of November 2018. Of which, many startups have forayed its logistics expansion outside India, mainly in the Southeast markets.