A New Breed of Rapid-Delivery Apps Cuts Through Urban Congestion
In São Paulo, startup Loggi has an app that makes life easier and more lucrative for package-toting couriers, while customers get their goods faster.
Traffic on 23 de Maio Avenue in Sao Paulo. PHOTO: ISTOCK
SÃO PAULO, Brazil—Last year, Natanael do Nascimento was barely getting by as a motorcycle courier. Zipping through the streets of São Paulo on orders radioed from local dispatchers, he earned less than the real equivalent of $500 a month delivering paperwork and small packages between companies.
Today, the 24-year-old courier makes almost three times as much, thanks to a smartphone application called Loggi. When online retailers, businesses and other shippers request a pickup electronically, the software can tell if he’s nearby. It pings him if he has enough space in his standard-size trunk, based on the other packages it knows he’s carrying. The delivery cost and route are calculated automatically. All he needs to do is accept the job and fetch the package.
Loggi, which started in 2013 in São Paulo, is one of the earliest of a crop of technology startups popping up around the world that aim to connect independent couriers and drivers with same-day delivery gigs, and address what retailers believe is a demand for faster delivery service.
In the U.S., companies such as Silicon Valley startup Deliv are starting to be used for same-day deliveries for retailers, including Macy’s Inc. San Francisco-based odd-job platform TaskRabbit says same-day deliveries ordered through its platform in a number of U.S. cities have more than doubled over the last year. Uber Technologies Inc. offers same-day cargo service in Hong Kong.
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If the shipper and customer are in the same metropolitan area, these companies offer the option to have packages taken directly from a retailer’s warehouse to the customer in less than a day—rather than to the hub of a carrier such as UPS, FedEx, the postal service, or in Brazil, SEDEX, where the package would then be sorted and routed to its destination.
Venture capital funds are taking interest in the fledgling industry.
Loggi raised 10 million reais ($3.3 million) in its latest funding round last year, including from Qualcomm Inc.’s investment arm, Qualcomm Ventures. Loggi CEO and co-founder Fabien Mendez said the company had $3.3 million in revenue operating only in São Paulo in 2014 and expects to earn seven times as much this year. The company is not yet profitable.
Because users can opt to hire Loggi couriers through an application, the service resembles popular ride-sharing apps such as Uber. But Mr. Mendez says Loggi operates very differently from ride-sharing or taxi-hailing apps. Delivering goods is more complex than linking passengers with drivers, he says, because routes can include many stops and multiple shippers. Loggi has to track couriers on their routes and arrange for payment. The firm works with retailers to integrate its services into their websites.
There are benefits to being in this part of the delivery industry: cargo apps face less government resistance in Brazil than passenger apps because they’re not seen as a threat to drivers’ jobs. They do, however, compete with traditional small dispatch agencies that pay a smaller share of delivery fees, Mr. Mendez says.
By providing faster shipping at a lower price and higher compensation for couriers, such companies are “creating a level of efficiency for both customers and the couriers,” said John Manners-Bell, CEO of U.K.-based logistics research firm Transport Intelligence Ltd. Many companies have come under fire in traditional markets because of the very low rates they pay subcontractors, he said. “There could well be an enormous market for these companies.”
Similar services have popped up around the world, including another in Brazil called Rapiddo. Uber itself is testing a cargo service in Hong Kong. Larger logistics companies may integrate such technology into their own businesses, too. More competition and, perhaps, some consolidation are likely in future.
In São Paulo, the heart of business in Brazil, couriers are part of a thriving and largely informal industry that arose in response to the city’s heavy traffic and a specifically Brazilian phenomenon: the high volumes of paperwork required by the country’s notoriously complex bureaucracy. Some 20,000 delivery vans and 200,000 motorcycle couriers, known locally as “motoboys,” are an integral part of the cityscape, according transport and union officials. They are also increasingly using smartphones.
Requesting a courier typically took about two hours through a dispatcher, which then would radio motoboys and arrange to have a package picked up. Now, motoboys connected to Loggi on their phones arrive for pick-up in an average of seven minutes, according to the company. This is despite having only about 1,000 couriers registered for its application so far.
The company started with motorcycles and plans to incorporate delivery vans into its network this year. It eventually wants to offer its services to independent truck drivers.
All Loggi couriers must be licensed, with specialized insurance and motorcycles that meet local government standards. Upgrades can cost hundreds of dollars, but Mr. Nascimento said the expense is worth it. Loggi takes just 20% of the shipping cost from couriers compared to 55% claimed by traditional dispatchers.
The couriers’ routes, including added stops along the way, are mapped using the GPS on their smartphones, providing transparency to waiting customers. If they deviate from that route or take too long to get to their destination, Loggi staff are notified.
Some are skeptical of the model. “It’s amazing that these private equity firms…are writing checks thinking they’re going to disrupt the e-commerce delivery mechanism,” said Satish Jindel, president of SJ Consulting Group Inc., who helped establish U.S. small-package carrier Roadway Package System, or RPS, which was acquired in 1998 by FedEx Corp.
But in São Paulo, Loggi’s couriers like the extra work, delivering everything from documents to fresh flowers without having to return to dispatch bases and wait in long lines. “I’ve been doing this for 15 years,” said Vanderlei Lino Teodoro, a 38-year-old motorcycle courier who doesn’t miss the tedious queues. With a bigger cut of the delivery revenue, he’s earning more than twice what he pulled in before starting to use the app. “We should have had a system like this a long, long time ago.”
