COVID19 has brought issues that used to be ignored or overlooked into the limelight. For example, ecommerce growth accelerated and forced many small business owners to reassess their operations. The pandemic has forced businesses of all sizes to accept that ecommerce and local delivery are fundamental aspects of their business model that they can no longer ignore.
The Problem: Local Delivery Does Not Work For Small, Local Merchants and Retailers
Yet, there are no good alternatives for small businesses that are in the process of increasing their sales through digital distribution channels.
Yet, small businesses are a powerful engine for global economic growth. For instance, according to the United States’ Small Business Administration’s (SBA) 2019 Small Business Profile;
There are about 30.7 million small businesses in the United States, representing 99.9% of all businesses.
Small businesses employ about 59.9 million people, representing about 47.3% of all employees in the United States.
There are about 8.7 million minority-owned small business employees in the United States. Based on other reporting and research, we know that increasingly, many of these employees are employed in businesses started by Black and Latinx business people. According to the U.S. Senate Committee on Small Business and Entrepreneurship, “There are now more than four million minority-owned companies in the United States, with annual sales totaling close to $700 billion.”
I am intimately familiar with the challenges faced by small business owners around the world - as a child I helped my mom and dad operate various small businesses in Kano, Nigeria. In many ways the problem is more acute outside the United States and Western Europe where data infrastructure for ecommerce is less mature and therefore more costly to deploy. According to the World Bank, Small and Medium Enterprises (SMEs) “represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.”
Shopify has made it easier for anyone to set up an ecommerce operation. Stripe and Paypal have made it easier for anyone to incorporate online payments into their business model. Twilio has made it easier for businesses of all sizes to interact with their customers through digital communications channels.
Local delivery has no analogue to Shopify, Stripe, Paypal, or Twilio. This is where Shipday comes in.
Shipday: Arming Merchants Globally With Data Infrastructure to Build Their Own Local Delivery Operations
Shipday has built a simple to deploy and easy to use software platform that enables organizations of all sizes to manage every activity that is related to local deliveries. It is especially ideal for small restaurants, grocery stores, and other retail merchants since they do not need any technology or software expertise to get set up on the platform - they can be up and running in minutes.
Counterintuitively, Shipday is also facilitating the creation of new local delivery companies since these business people do not need to create their own software and data infrastructure to manage their operations, they can simply rely on Shipday for that, while they perfect the physical operations of the businesses they are building.
If you are in the upper middle class in any society anywhere in the world, it is tempting to believe that this is a problem that has been solved. After all, you may in fact be reading this while awaiting the delivery of your next meal or some other product you purchased online. Yet, it is worth remembering that the gig-economy platforms that we have become accustomed to have business models that do not work for many SMEs because they impose a 20 - 30% commission on these merchants and break the direct link that these SMEs have with the customer. Put another way, the gig economy last mile delivery platforms create a misalignment in the cost-structure of the SMEs that adopt them, making things more difficult for the SMEs because of the highly extractive nature of the relationship that they impose on the SMEs that are compelled to adopt them. This is an issue that has been widely reported, but for which there have been no good alternatives for SMEs seeking an alternative.
We believe the following macro forces work in Shipday’s favor;
Customer behavior continues to change in ways that drive greater adoption of local delivery,
Commerce is moving to digital channels in nearly every industry around the world,
The enabling technologies that make what Shipday does are becoming more robust, cheaper, and more ubiquitous by the day, and
Urbanization is a trend that will drive continued growth in local commerce as SMEs rethink how they get work done in order to satisfy their customers.
With Shipday, merchants can use 3rd party delivery services and marketplaces for overflow capacity after exhausting their self-delivery capacity. In this way merchants will gain a level of control that has not been possible before Shipday.
A Team That Has Been in the Trenches Together - Starting in Grad School
Shipday’s cofounders, Moin Islam - Cofounder & CEO and Adem Esen - Cofounder & CTO, have known one another since their days together as international graduate students at the Georgia Institute of Technology, where Adem earned a Masters of Science in Operations Research and Moin earned a PhD in Industrial Engineering with a focus on supply chain logistics.
The genesis and inspiration for Shipday arose from Moin’s experience in the nonprofit sector, and his quest to simplify logistics network operations for small and large nonprofits alike.
We met Moin through Dave Anderson, Cofounder and Managing General Partner of Supply Chain Ventures. I have known Dave since 2017, and over the years he has become a mentor and collaborator with our team at REFASHIOND Ventures. He is also a limited partner in REFASHIOND Seed. Shipday falls under our Data & Decision Analytics, and Next Gen Logistics investment categories at REFASHIOND Ventures, 2 of the 4 categories under which we group our investments.
L-R: Moin Islam and Adem Esen
Potential Customers Are Actively and Desperately Seeking The Solutions From Shipday
As I have stated earlier, the COVID19 pandemic has forced business people everywhere to reconsider how they adopt technology in their operations. This is a phenomenon I wrote about during the early days of the pandemic, and that has been widely reported on by the mainstream business media as the pandemic has progressed.
Furthermore, in my November 27, 2019 article, Commentary: Observations made on the future of supply chains from #FWLIVE Chicago, I made the observation that; “Consumer preferences are also slowly affecting how people expect supply chain technology to work. One may think of this phenomenon as the consumerization of supply chain technology; the digital and information technologies that have revolutionized consumer technology have led people to expect enterprise technology to be just as simple and intuitive to use.”
More recently, in his July 11, 2021 article, The Democratization of Supply Chain Technology, Dave Anderson notes; “Let's assume that large and smaller companies using expensive and complex supply chain software make up 30% of global companies that rely on supply chains to source, manage inventory, or ship goods. That leaves 70% (probably a large underestimate) on their own when it comes from running the supply chain part of their businesses. We realize that many of these companies may rely on homegrown or excel spreadsheets to approximate more sophisticated business tools, but many just wing it.”
In the early days of the pandemic, my cofounder and partner, Lisa, and I routinely heard business owners asking about ways in which they could get some help managing their supply chain operations. That was in March and April 2020. As the pandemic has stretched on, the need has become more acute, and this behavior - SMEs adopting more sophisticated software for their supply chain operations - is setting in and becoming permanent more quickly than I would have anticipated in November 2019.
In the short time that it has been in business, Shipday has powered more than 3 million deliveries in over 100 countries. It has been a global company from Day 1, and growth is only accelerating.
We are encouraged that downstream investors have awoken to the opportunity in #SupplyChainTech, with the Wall Street Journal’s Jennifer Smith reporting that Investors Are Piling Into Supply-Chain Technology, and Bessemer Venture Partners recently outlining and publishing their own #SupplyChainTech thesis in Roadmap: Supply Chain Software.
At REFASHIOND Ventures, we couldn’t be more excited to back supply chain technology founders at the early stages of their journey to transform the way the world makes, buys, moves, stores, and consumes the products and services that we all need.