The Pitch: Delivery service Passel harnesses the power of passers-by
IN the next instalment of our ongoing series The Pitch, we discover a start-up that harnesses crowdsourcing to deliver online purchases, writes Claire Heaney.
Business
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AFTER many years working in freight, Marshall Hughes could see that, while the online economy was supported by delivery infrastructure, many retailers were falling between the cracks.
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His answer was Passel, an early start-up that harnesses the power of crowdsourcing.
Passel — a collective noun for a large group of people — is pitched at traditional retailers who have an online presence but have struggled to compete in the online space.
“Retail is Australia’s second biggest employer and, in many cases, provides employment to high school kids, mums and semi-retired people,” Mr Hughes said.
“Although the online economy has been great for the consumer, traditional retailers have struggled and have to compete on an unfair playing field where international distributors and extremely low-cost garage businesses have most of the advantages.”
Mr Hughes said one of the biggest changes he saw during his time in the freight industry was the increase in the number of home deliveries.
He said small and large retail businesses looking to provide prompt delivery could face fees of $35 to $40 for a courier. Passel, however, charges retailers a flat $15 fee and promises delivery within three hours.
Mr Hughes said the idea of Passel was to turn the “perceived disadvantage of expensive physical retail stores into an advantage by adapting each store to be a distribution centre for online sales”.
The crowdsourced delivery involves tapping into a wide network of workers, shoppers and passers-by who may be able to conveniently execute a delivery, for example, on their way home from work. Once a parcel reaches its destination, these “passers” receive either a $10 voucher for a range of businesses or the equivalent cash.
Mr Hughes said Passel was currently testing an app that would streamline the process.
Passers would receive a message saying a delivery was available for a destination near their home and they would have five minutes to accept.
Mr Hughes said the app, which should be up and running by April, would show Passel where the potential passers were located.
“Unlike drones, lockers, apps, couriers or any existing solution, Passel does not require fixed infrastructure or contracted drivers and is, therefore, more flexible, faster and cheaper,” he said.
Passel has been delivering for two businesses, sustainable giftware store Pookipoiga and organic babywear label Pure Baby, for some months.
Pure Baby’s Chadstone store signed up for Passel in the run up to Christmas last year and Mr Hughes said a willing group of passers had been found in and around the suburb.
The babywear retailer is now starting to expand its commitment to its other stores while Brauz, an app which helps people locate products, and buying group Frontline Services have also both signed on.
Mr Hughes said while there was competition, the bespoke nature of Passel had appeal. He said unlike Uber drivers, passers were not seeking to make a living out of the scheme. Rather, they might simply be looking to offset travel costs.
Like many start-ups, Mr Hughes said he and his business partner had bootstrapped with credit cards and savings but they were now receiving some angel investment.
JOHN DOWNES, Mentor — Medium-sized business
WELL done Marshall. The Passel offer of three-hour local delivery from shop to home within 15km for $15 using the share economy sounds like a great idea. And it is fantastic that you have been able to bootstrap the pilot operation and are following a business plan.
I have two concerns as to whether you can make it financially sustainable.
BUSINESS automation: There is a huge amount of cost to replicate a cut-down version of the Uber/Australia Post technology that reduces cost by automating the process to recruit drivers and customers, take delivery orders, seek drivers for the delivery route, accept and track the package pick-up and delivery, and run an invoicing engine and a driver payment process.
BREAKING even: What volume of parcels must be delivered at what margin (unit revenue less driver payment) to pay operating and amortising fixed costs just so the business breaks even? My guess is that a $5 margin needs to cover operations, administration, sales, marketing, IT support, customer support, job scheduling staff, ongoing web and app development, hosting and support, finance and legal/compliance support, not to mention, housing the business. Much of these are fixed costs, but I’m estimating that this operation needs to deliver a minimum of between 200,000 to 300,000 parcels per year.
VIVIAN VO, Melbourne Innovation Centre
MANY great ideas and businesses have come out of discovering and alleviating customers’ pain points. Passel might be one of those.
An expanding e-commerce market will test current courier services. To compete, creating an exceptional customer experience is critical. Passel identifies and fills a gap for an efficient and reliable delivery service, addressing a major frustration of online purchases. The business will be built on a foundation of trust, credibility and unique customer experiences. It will encourage feedback and reviews while rewarding customer referrals.
As part of the app development, consider mapping your customers’ discovery processes. This will help illustrate their experience using the app. Remember each segment will have different motivations and needs for using your service.
When it comes to analytics, ensure the app’s architecture is designed to enable you to easily use multiple or switch mobile analytic tools as needed.
As part of your mobile app strategy, consider setting key performance indicators, including customer acquisition and technology performance.
Use heatmaps to help you visualise which parts of your app are highly used. Be prepared to listen for users’ signals on how and when they use the app. Use these insights and data to continually improve the user experience. This is critical to Passel’s overall success.
BRUCE HALL, Mentor — Small Business Mentoring Service
MARSHALL and his team have tapped into something here. Many smaller retailers are struggling to compete online primarily due to the cost of shipping compared with larger and offshore players.
The value proposition of delivery in three hours is powerful and is something retailers can use as a point of difference in a world that demands immediacy. I might be able to get it cheaper offshore, but if I can satisfy my need today then I will buy.
My major concern is the return for the people making the delivery and I question how many will be prepared to give up their time — go out of their way — for $10 consistently. I suspect to make this great idea sustainable, the return for those delivering will need to be increased — with greater emphasis placed on immediacy: delivery in three hours.
To create greater awareness of their offering, it is important pages on the website be optimised for search. While a couple of good page Titles exist, the page content needs to be more tightly focused around the particular topic and phrase. The All in One SEO plug-in installed on the site can be used to ensure the pages are tightly focused.
As the value proposition is immediacy, I suggest a contact number be added to the site Header. Also, it is important that one Meta Heading 1 be used on each page. A terrific idea that has real potential.
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