This eCommerce startup idea from the 1001 Startup Ideas collection of YoStartups is about establishing Smart Lockers for eCommerce companies in the GCC region. The startup will deploy smart lockers in various localities, and e-commerce companies can deliver the goods to those lockers, and such goods can be received by the customers by using a lock code which is sent to the customer. This startup aims at solving the problem of last-mile delivery, and save the delivery cost for the seller and buyer.
Market Definition For Smart Lockers for eCommerce Companies In The GCC Region
According to a report on gulfnews.com, Internet spending in the Middle East is booming with GCC countries expecting a 40 percent growth in e-commerce by 2020 to touch $41.5 billion, which will be one of the highest growth across the industry worldwide.
EffectiveMeasure.com completed a survey on E-commerce usage in GCC in Aug-Oct 2016 with 3363 respondents. It states that 44% of the respondents plan to shop online over the next year. It also highlights the top three concerns among the online buyers in the region, being the inability to touch and see the product, credit card frauds and trouble in returning any item. The proposed startup can easily address the later two concerns with the smart locker with integrated payment and goods return system.
According to Mckinsey, Last-mile delivery, especially of parcels, has recently received lots of attention in the media and from investors. The cost of global parcel delivery, excluding pickup, line-haul, and sorting, amounts to about €70 billion, with China, Germany, and the United States accounting for more than 40 percent of the market. It also goes on to state that the biggest driver of this growth, not surprisingly, is e-commerce, which has shifted market share from the B2B to the B2C segment. It is expected to be no different for GCC, and the early advancement in the last mile delivery systems can save e-commerce companies from incurring losses.
Competitor Analysis for Smart Lockers for eCommerce Companies In The GCC Region
There are various companies that are trying to solve the problem of last-mile delivery. Some companies have come out with applications that use GPS to track the exact location. One such startup is Fetchr which headquartered in Dubai. Founded in Nov 2012, the startup has raised more than $50 million in total investments. The startup helps local merchants and global brands, launch and grow a profitable e-commerce business with an easy to use proprietary shipping and logistics solution.
Smartbox and QikPod, on the other hand, are Indian startups which are working on the same lines and have provided smart lockers at various locations in India and has tied up with e-commerce companies for the delivery of products. There is also Boxz Lockers in Hong Kong which does the same. Amazon has set up its smart lockers in various countries.
Pain Point & Target Audience for Smart Lockers for eCommerce Companies In The GCC Region
The target customer market for this business is the “e-commerce platforms and online selling brands looking to improve their last mile delivery efficiency.” One report quoted on Bringg.com estimates that 28% of the total delivery cost to a business comes from the last-mile.
Cash on delivery is the most popular payment mode for online buyers and based on a survey, 70% of buyers in GCC prefer COD over the other payment methods. Online sellers have no other option but to keep COD option even though it adds extra cost to their transaction, and at times leading unpaid return goods.
On the buyer side, they often find themselves helpless in the case of returning any fraud or damaged item back to the company. Firstly it costs them courier fees to send back and second there is no proper tracking.
Value Proposition for this eCommerce Business Idea
The startup will facilitate the last mile delivery facilitating both buyers and sellers. Sellers will reduce their cost for delivery by eliminating the need for last mile runner boys. It will also help sellers to remove their additional cost incurred towards COD by availing the digital payment option at the smart locker.
Sellers can provide the option of returning any damaged or incorrectly delivered goods to their buyers at the smart locker. This option will further help sellers instill confidence in their buyers improving credibility.
Business Model for this eCommerce Business Idea
The startup will tie up with online retailers and e-commerce platforms in a way that their customers can choose their products to be delivered to a particular smart locker setup by the startup in various localities. The startup can charge per product delivery for its services.
It needs to be noted that a smart locker costs about USD 2000-USD 2500 on Alibaba.com. If a smart locker receives 50 products every day and it charges 20 cents per product delivery. Then the revenue received from one smart locker will be USD 3650 in one year. This makes the business highly scalable. In future, the startup can rent these lockers from various companies and individuals and share the revenue to make the business asset-light and scalable.
Way to market for this eCommerce Business Idea
The first step for the startup would be to tie up with e-commerce retailers for this service. Since the big e-commerce companies have the in-house delivery mechanism. It would be more feasible to tie-up with the smaller niche e-commerce retailers rather than going for the big names in starting. The startup needs to ensure that the customers of the online retailers find it more feasible to have goods delivered to smart lockers and hence, it will have to keep its services free very competitive.
Milestones for this eCommerce Business Idea
The startup offeting Smart Lockers for Ecommerce Companies in the GCC Region, should start with one of the major city in the region, demonstrate its success story and then further expand from city to city. It should target receiving at least 200 product deliveries in the first six months showcasing its traction.
Investment Needed For Prototyping this eCommerce Business Idea
Smart lockers are not very expensive. There are various options of smart lockers available on Alibaba.com which start from USD 1500 and go up to USD 5000. A decent smart lockers costs around USD 2000-2500. The startup would need to start with at least 25-30 smart lockers so it should target raising at least USD 75-100K from angel investors or incubators. DPD launched an accelerator dedicated to the delivery industry by the name of ‘Last Mile Labs.’ It offers GBP 12,500 as initial funding and access to GBP 100,000 at the end of its programs to selected startups and hence, seems to be the best fit for making an application.
Team Capability for Smart Lockers for Ecommerce Companies In The GCC Region
To build a start up that does Smart Lockers for Ecommerce Companies in the GCC Region, You would need to have a supply chain professional and a tech expert on your team to devise a great product which combines supply chain with technology.
Investors / Expert Take for this eCommerce Business Idea
E-commerce is booming across the globe, and it is only expected to rise. It needs the sufficient infrastructure as support and Investors recognize that; hence, they are keen on investing in technologies and great scalable businesses which solve the delivery problems for online retailers. In case you need any help in building a startup around this idea, please do drop us a note at yostartups.com and we will be more than happy to help you.
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