Why you should care
Because now we can all be even lazier, and even more customer-satisfied!
It takes me more than two hours to reach the office of Mumbai-based startup Fynd, which sits about 10 miles from my house. As the car moves, inchworm-like, along roads turned into parking lots, I wonder about the millions who make these sorts of treks every day, here and in other packed Asian cities — Bangalore, Bangkok, Jakarta. I gaze thoughtfully at the many storefronts I drive by: sizable malls and high-end clothing shops, hole-in-the-wall tailors and fast-food joints. Practically every block has its mom-and-pop grocer. It would seem that in a city like Mumbai, one can find almost anything within grasping distance — fancy food, street food, fresh vegetables; retail outlets, electronics stores. Except that Mumbai has a tendency to turn a simple errand into a hair-tearing quest.
When I arrive (late) at Fynd to meet its CEO and founder Harsh Shah, he’s too polite to wave a giant, triumphant flag emblazoned I TOLD YOU SO. But it is exactly my experience that is fueling the growth Shah’s company and many like it. Fynd is one of many so-called “hyperlocal” delivery startups dotting the Asian landscape that’s ushering in a new luxury market, based on the principle that one never need leave home.
The idea: In sprawling urban areas that lack efficient public transit yet offer relatively inexpensive courier service, a rising middle class will pay a bit more for someone else to do the fetching. Partly because companies stock close to customers’ homes rather than relying on giant warehouses on the outskirts of town, such services are far cheaper than their counterparts in the West, like Google Shopping Express or Instacart, and they’re spreading across industries. Shah’s Fynd works in apparel and retail, and is launching kids’ and home furnishing goods soon. A number of apps will soon zoom groceries to your house, never mind the corner shop around the way.
One Bangkok-based startup, Zilingo, culls from thousands of local designers to deliver trendy clothes across Thailand, Singapore and, soon, Indonesia. Meanwhile, an entire cottage industry of logistics companies are springing up to make the startups themselves work. lndonesia’s Go-Jek brings the country’s longstanding motorbike deliverers into the 21st century by plugging them into an app linking them up with delivery clients. Bangalore-based Opinio provides access to a fleet for companies aspiring to enter the never-leave-your-house economy.
I talked with 24-year-old delivery guy Raj, who requested I not use his full name as he’s not authorized to speak to the press. Raj has his own scooter and wanted to study in college, until his mother fell sick. He took a job with a grocery delivery startup and is pleased with the work. He makes 10,000 rupees — about $150 — a month, about the rate of a maid in a nice part of town. From the way he talks, it’s clear he’s better educated and better off than the sort of kid who’d serve as a delivery boy for a newspaper vendor or a sabziwala (vegetable seller) down the road.
So, says Abhinav Chaturvedi of Accel Partners, which invests in Opinio, the hyperlocal trend has naturally taken off in the last year and a half. It’s expected to hit nearly $350 million in India alone by 2020. And Euromonitor research shows Asia has the fastest-growing food-delivery market in the world, with a 14 percent compound annual growth rate. (China’s market in food alone was worth $55 billion in 2015, Euromonitor shows.) “It has caught people’s imagination,” he says. An imagination that dreams of kicking back with the AC while the world is brought to you.
All of these startups, from the deliverers to the logistics companies, are profiting from a major arc in the tech world: One can go way, way online, with few paws embedded in the material world. Some of India’s bigger-name e-commerce companies store their merchandise — which means dealing with actual physical wares — but more and more, entrepreneurs are asking: Why bother? They can sell things without having to make them, store them or even ship them themselves. Fynd, for instance, sources from big-name retailers like Nike and Indian favorite FabIndia among their roughly 160 brands. Now startups are hopping on the business-to-business train, providing services to one another and using partnerships to keep costs low.
Rather than counting on just the clothes and delivery fees to make money, Fynd and Bangkok fashion startup Zilingo offer a distinct value proposition: software. It allows retailers that wouldn’t otherwise deliver to track inventory so that a courier can easily pick up merchandise and get it to a customer promptly. (Fynd’s delivery window runs between four hours and three days; Zilingo’s a little longer.) That software element also means workers don’t do the shopping for a customer, a la Instacart; instead, the store can have everything ready to go when the deliverer arrives. It’s quite a technical feat, requiring a major database that can integrate with preexisting companies’ systems, and giving startups an opportunity to focus on hiring great engineers rather than mastering a hefty, complicated supply chain.
Then there’s the local twist: Rising Asian cities have a hell of a lot of malls. In fact, 60 out of the top 104 largest malls in the world are in the Middle East and Asia, according to data from the International Council of Shopping Centers. Most are inside metro regions, unlike in America, where malls and outlets tend to exist outside the urban center. Mumbai, for instance, has about 12 major shopping districts, including store-lined thoroughfares and malls, each localized to a different neighborhood. For the hyperlocal startups, the urban malls function almost as warehouses.
Besides that, adds Mayank Kumar, founder of logistics startup Opinio, many Asian nations have an ingrained culture of scooter or motorbike use, which means that, similar to Uber, startups can hire couriers with their own wheels, folks trying to make a quick buck. That’s the model of Go-Jek in Indonesia (it did not respond to a request for comment). Ele.me, China’s largest food deliverer (the company couldn’t be reached because of language barriers), made its way by amassing a delivery fleet of light-blue-clothed employees. While Zilingo sometimes turns to international couriers like DHL, “it’s mostly best to rely on the local guys,” says founder Ankiti Bose. In Bangkok and Jakarta, after all, weaving through traffic on a two-wheeler is paramount to good service.
But does anyone really need all this? Walk down many a street in India and you can find a fruitwala (fruit vendor) or a stall vending chewing tobacco and chocolates alike. In Bandra, my own neighborhood, there are rumors of an elusive fellow named Deepak who swears to deliver even a single cigarette late at night. (He could not be reached for comment.) In fact, some of the most authentic food can’t even be found on these apps, which often emphasize Western fare. And then there are the famous Mumbai dabbawalas, a massive network of lunch-box deliverers whose logistical mastery of delivery inspired a Harvard Business Review case study.
Turns out many of the above original hyperlocalists are themselves using technology anew — especially foodies, for whom things have always been hyperlocal. The dabbawalas are online, for one. And the smaller fish, like Ranjit Pal, a sabziwala in Mahim, Mumbai, deliver to customers who call or ping them on WhatsApp. Pal says he still does most of his business from the cart, but in the hot or rainy summer months, delivery gives him and his clientele more options.
Ishaan Narang runs one of those corner stores in Bandra and is constantly fielding phone calls as his employees handle restocking of the shelves and deal with customers. While occasionally doling out change to a buyer in a desultory fashion, he turns most of his attention to the ringing mobile, answering quickly: “Hanh? Bolo. Daal? Duud? Aur kuch?” (“Yes, go ahead. Lentils? Milk? Anything else?”) He’s not troubled by the rise of these apps. People keep calling him, keep working with him. And when they’re walking down the street, they are drawn in by the bright colors and familiarity.
Arif Khan, who was picking through fruit at Narang’s stall, has used grocery apps and finds them annoying. He can’t always have things delivered when he’s home, and his maid isn’t always around to answer the door. He prefers to swing by and pick out his own stuff. If you live across the street from Pal or Narang or their ilk, and you trust them to pick out the best, least-bruised apple or the milk carton that doesn’t leak, why not rely on them? Why bother with this app-schmapp nonsense?
You might if you’re classy, upper middle-class and a bit more tech-savvy. Or if you want accountability with a company to angry-tweet at if service is weak. (My own fruitwala disappears from SMS reach for weeks on end, then resurfaces with a slew of emojis to signal he’s back.)
When Shah and I step into the air-conditioned clothing shop Cotton World, Vaishali Kamble, one of Cotton World’s employees, says Fynd’s technology made it easy for them to launch their deliveries about a month ago. (Eighteen Cotton Worlds are now live on Fynd.) She shows me the latest of the four orders they’ve completed today, using Fynd’s software. The inventory is well-organized, proving the point that mature brands that have a handle on their inventory can most successfully integrate Fynd’s software.
Zilingo, however, has gone a little more grassroots, explains CEO Bose. Her team has chosen shops around Bangkok that sell clothes you can’t get anywhere else, shops whose owners she says keep an eye on fashion weeks worldwide but add their own twists. They’re “on trend” but not high-end, she says. Sourcing requires humans to actively canvass stores; bots won’t do. Zilingo won’t hand-count inventory for proprietors but will train them to use their own software integration and app.
Both startups’ choice to avoid dealing with the true mom-and-pops are a sign that those genuine locals — Deepak the cig seller, the sabziwalas — are not in play despite their true claim to the word “local.” Opinio’s Kumar says “the economics just don’t work out” for working with the small fry; they tried helping smaller operations get delivery set up, but found it soon made no sense. For groceries, Accel’s Chaturvedi emphasizes, the small merchants can risk a “very bad customer experience” since they’re likelier to run out of stock.
And what of the challenge from the other end, the international behemoths like Amazon? Matrix Partner’s Rajinder Balaraman is unconcerned for the startups. “I’m a big believer in vertical rather than horizontal marketplaces,” he says, referring to specialized startups working solely in groceries or fashion rather than megacompanies that sell everything from retail to fresh produce. “Amazon’s supply chain is not built for delivering tomatoes — it’s for delivering goods.” (Amazon’s press team did not reply to request for comment.)
Which has Shah and others drooling over their own opportunity. The day I visited, Fynd had just launched in all 20,500 ZIP codes in India and — “Why not go well beyond India?” Shah was musing. But he’s not looking West. He’s sticking to the East — yet another sign that Asia can be in conversation with itself rather than striving for the Western world’s attention, which is, of course, what Rising Asia is all about.