How start-ups in logistics are navigating COVID-19
Against a backdrop of economic turmoil, a host of start-ups are finding that there is plenty of room for growth supporting logistics, distribution and warehousing
There’s a lot of economic doom and gloom out there right now but the logistics sector can legitimately claim to be one of the brighter spots. A booming e-commerce market and increased demand for warehousing space, alongside a need for leaner logistics operations, means there are opportunities aplenty for start-ups, according to a roundtable held by eyefortransport by Reuters Events.
We haven't seen a single one of our customers that we're engaged with slow down or cancel any business at all
For David Clear, Chief Revenue Officer at Vecna Robotics, “It's like peak season,” to the extent that “We haven't seen a single one of our customers that we're engaged with slow down or cancel any business at all,” putting them in a “very big growth mode this year.”
However, it hasn’t been all upwards motion, with the battle to get new prospects interested and new customers signed up proving difficult. “It seems like a tale of two cities for us, where, on the one hand, we have whole categories of customers that are saying ‘How much more can you do for us?’ On the other hand, we have a whole category of customers we want to get, where their capital budgets are frozen. They're trying to figure out how to work in this environment, and we don't think we're going to be able to engage those new customers at the same speed that we wanted to.”
For logistics tracking and visibility platform FarEye, it has also been a case of grasping the opportunities where they arise in a set of complex market dynamics. “The markets where we are servicing companies that are doing groceries, foodstuffs, medical supplies, that's gone up about 200% in our business, and the non-essentials is dropped anywhere between 50% and 90%. So we've had to do a little bit of repositioning, figuring out where we put our resources in, etc.” said the company's Chief Revenue Officer and partner Amit Bagga.
Now the focus is on speed and it's on making sure that the on-time delivery percentages are up
This means there has been a lot of demand, where “customers are scrambling for digital solutions,” as “they want to get the online delivery platforms up and running quickly [although] customer organisations have to work with each other to get approvals and all that it's taking a little bit of time for the new normal to set and to get projects up and running.”
Jeff Lerner, Vice President of Marketing at Flock Freight has also seen a heightened sense of urgency among their customer base, “We've seen both a shift in the customers that we have and the priorities which they're looking for…. Now the focus is on speed and it's on making sure that the on-time delivery percentages are up. The freight needs to get there in a pandemic, shelves need to get restocked. Because of the solution we offer, it's been a boon for us in the sense of more and more awareness of moving [goods] from point A to point B on time and really looking to drive speed and delivery, rather than just focus on what is the best possible price that I could get from, you know, 20 different brokers out there.”
Think of this as a black swan event. It's going to fundamentally change the way people have been thinking about supply chain.
For the customers of Locus.sh, many “Think of this as a black swan event,” says Krishna Khandelwal, Chief Business Officer. “It's going to fundamentally change the way people have been thinking about supply chain.”
They are seeing customers now being pushed into introducing more automation to cope with the different demands the crisis is putting on businesses after many years of neglecting to do so. “Suddenly, we are seeing customers who probably would have shaved off some of these implementation programs a year back two years back, all of a sudden come back and ask things like, ‘Can you do this tomorrow? Can you help us in setting up our e-commerce deliveries tomorrow?’” notes Khandelwal.
The challenge for them has been the need to do this at distance. “That has led to an evolution of something very different, which fundamentally is going to change the way software implementation [is done] specifically for supply chain logistics. The way we used to implement our solutions was a very, very physical approach. We would go on the ground, sit with our customers do workshops, visit warehouses, and all of that has completely gone away. We've actually rolled out the solutions to over 25 different customers, small medium enterprises, large enterprises across the world all virtually. We never thought that that was possible.”
On-demand warehousing, fulfillment, and logistics services provider Flexe has also looked to change its approach to customers. “We've sort of softened up our stance and gotten a little bit closer to the customer,” says Adrian Grigg VP, Business Development for Flexe, so they are “trying to kind of tighten up the communication loop to help them be responsive to what they're seeing with their within their businesses, as well as on the warehousing partner side of our business. We've been seeing quite an increased level of activity over the last several months.”
We had to really pivot and refocus quickly to how we're going to generate revenue, to sustain our own business and not rely on investors
Flexibility is a watchword for David Scheffrahn, Vice President of Sales for Plus One Robotics, which has had to scale alongside customer demands in this tricky environment. “One thing I think that gives us kind of a good, solid base with our customers is how flexible our system is in terms of working alongside people. So, when they have these training conditions while operating, basically, at peak levels of throughput at this time of year, our technology is very capable of working alongside people, adding additional users, adding additional robots, adding additional people. So, that's allowed them to be a lot more flexible with their operations and meet some of these fairly excessive demands that the companies have had.”
However, this increase in demand, though fortuitous, comes against a backdrop of more difficult searches for funding. “The biggest change for us was in terms of focus,” notes Daniel Santos, CEO of Evotrux. “Prior to COVID taking hold, we were looking to raise a fairly substantial early funding round. That was going to be focused on growth, sort of following the blitzscaling model, if you will, with revenue kind of being an afterthought, but not the major focus. However, when COVID hit funding didn't seem like it was really going to be available at that time anymore. So, we had to really pivot and refocus quickly to how we're going to generate revenue, to sustain our own business and not rely on investors.”
It is therefore a challenging but exciting time for start-ups positioned close to their customers and able to provide them with the smart technology to succeed.
For more insights from the frontlines of e-commerce, logistics and supply chains, sign up to our webinars:
Now or Never for Retail: Digitizing Your Supply Chain to Enhance Your Customer Experience
Thursday, June 11, 2020
COVID-19 & the Last Mile: Rethinking the Approach to Demand Fluctuations
Friday, June 19, 2020