Collection Points vs. Home Delivery: Not* the Next Frontier of Last Mile? #3
It’s easy to tell the story when everything’s going great, when all you have to give is good news. But not today.
The third part of this series highlights the struggle for so many startups. My wish is that you see your story in ours and feel inspired to keep going.
MEZIGO’s model has always been to charge KES100 bob — which is a third of normal courier rates, to deliver a parcel from 1 point to another.
Our model leveraged residential shop owners as parcel pick up and drop off points.
In this business model, MEZIGO would make about KES20 for every parcel delivered, after meeting the normal operating costs. Now, KES20 isn’t a small number if you have the VOLUMES to back it up. We estimated that over 1 million parcels are delivered daily in Kenya. Further investigation reveals that the Covid-19 pandemic is growing this number by almost 10% monthly.
So establishing MEZIGO isn’t a profit problem, it’s an operational problem unique to the individuals running the business. In order to secure your KES20 profit per parcel, you will need to set up shop where majority of your customers and competitors are, the Central Business District (CBD). This means renting a space and hiring a caretaker. Without this, the risk (as we experienced it) was a 70% churn of potential customers. Potential customers in the CBD who wanted to use MEZIGO services would be diverted by courier reps who hang around MEZIGO drop off locations. Likewise, with the high volume of traffic being directed to the CBD agent shop, it was very easy for the agent to start their own competing courier business. We didn’t have the time or money to manage a shop in the CBD.
What we realized though
The system of delivery connecting shop > to > courier > to > customer at an affordable rate is in demand. We realized what we were running is a tech savvy POSTA that works (cue: https://www.mpost.co.ke/)
An opportunity?
If we’re so good at building out this peer-to-peer technology but struggle managing couriers and shops, then would it be the wiser to sell our technology to a partner who already had the infrastructure in place, like POSTA?
It would be great to explore this opportunity by having a conversation with the relevant partners. We’ve so far identified POSTA, Pargo and EasyCoach.
