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Prime Mover Magazine


Sendle’s plan to revolutionise the parcel market

Sendle’s plan to revolutionise the parcel market

Fledgling start-up Sendle has set out to revolutionise the parcel delivery market by building a fully digital transport service. Without owning a single truck, it could lead Australian trucking into the age of the sharing economy.

Sydney-based satellite engineer-come-businessman, James Chin Moody, has had his fair share of media attention in 2015 – not just because of what he is doing, but who is he is trying to pinch market share from.

A 38-year-old with the CV of a seasoned statesman – the ex-Young Australian of the Year also served as an Executive Director at CSIRO and was a panel member of the ABC Television show The New Inventors before entering the business world – Moody is the man who decided to take on Australia Post with nothing but a cheeky idea: Unlocking delivery services for small businesses that are normally reserved for those at the corporate end of the market.

In early 2015, Moody raised $1.8 million in seed funding and launched Sendle, a start-up offering door-to-door parcel delivery for small and medium-sized enterprises at a flat rate by tapping into Australia’s existing metropolitan freight network.

Since then, his vision has earned him plenty of airtime, a deal with logistics giant Toll and a trademark infringement notice for using the tagline Post without the Office – issued by the very $5.8 billion institution he is trying to show how business should be done.

Prime Mover met the much talked-about CEO to find out just how Sendle is planning to familiarise Australian trucking with the sharing economy and how Moody’s first start-up, TuShare, helped pave the way for the Sendle hype.

Q: The concept behind TuShare is quite philanthropic in nature – by connecting used goods with new owners, you want to create a global sharing community. With Sendle, you are now moving into the delivery market and take on a long-standing corporate monolith. How does the move fit into the picture?
A: When launching TuShare, we soon realised that sharing is all about moving freight from A to B, so we needed to find a door-to-door logistics solution for the concept to work. You don’t want to share anything if sending it is too complex or expensive, so we were forced to really delve into the topic and learn everything about the parcel supply chain there was. As such, it was TuShare that taught us how to make logistics easy. Sendle was just the next logical step.

Q: When did you realise that Sendle was more than just an add-on to TuShare?
A: It was quite obvious from the start that it was probably just a question of scaling the TuShare concept up. To start with, TuShare taught us that a modern parcel service has to be door-to-door as people don’t want to line up anymore; and it has to be under $10 within the same city if you want to gain critical mass fast enough. So, we started talking to courier services that were previously only doing what you might call big B2C work – sending lots of e-commerce stuff one-way into the suburbs of Australia. Our proposal was to pick up small freight on the return trip to the depot and redistribute it from there – effectively helping them bump up their vehicle utilisation. In doing so, we also realised there was a huge and widely untapped small business logistics market out there; and that we had the right kind of technology in place to help delivery businesses access it.

Q: What does that 100 per cent solution look like?
A: It’s simple – a simple, beautiful solution for a certain part of the market that has no interest in the nuts and bolts of transport. We hide away a lot of the stuff that you don’t need to know about if you’re a small consumer, like cubic kilogram calculations for example. We just define the size – for example shoebox, hand luggage or check-in baggage – tell you the weight limit and that’s it.

Q: So it’s also been a design challenge for you?
A: Yes, from the very start. We think a lot about what the minimum amount of information is we need to do something with the least possible friction. That’s why you don’t need to start an account if you don’t want to – we’re not going to harvest all your details if you choose not to share them. Of course that means we might lose some customers, but we improve the experience for those 20 per cent of the market we target.

Q: In how far is that kind of approach different to what has been done before?
A: Maybe there’s is a difference between a software company doing logistics and a logistics company doing software. In some ways it’s a bit like the difference between, say, BMW and Tesla. Here you have a long-standing car specialist adding software to an existing model, and there’s one trying to wrap a car around a mobile phone. To us, the tech and design aspect of it was always a top priority. What do they say? If you’re building a fence, do you paint both sides or just one? We’re the folk who will paint the inside too.

Q: Sendle, the Tesla of transport.
A: Yes, somewhat. We are a software company and we see things as a software company. We’re all about transparency and tracking the whereabouts of each parcel. If something is off the ‘golden path’, as we call it, we’ll try to get it back onto it. In that sense we’re more proactive than many in the business, but I think that’s the sort of thing you think about when you’re a software company as opposed to a transport firm.

Q: Let’s build on that thought. What is Sendle? A tech start-up? A transport company without a fleet? A hybrid?
A: It’s a good question. Some think we’re like Uber, because what it does is wrap a software and service layer around existing infrastructure without actually owning any of the assets they use. I admit that’s in some ways what we’re doing. But I like to think we’re actually more like Skype. Don’t you love how they tapped into a different set of infrastructure to provide the same service in a cheaper and more efficient way? Instead of using the classic telecom infrastructure, Skype used the existing Internet infrastructure to make cheap calls a reality. Same outcome, different infrastructure. That’s what we’re really doing – leveraging all that big business, e-commerce infrastructure and make it work for individual consumers in the same way Skype basically made VOIP available to everyone.

Q: Let’s stay with the Uber analogy for a moment. In the US, Uber is now moving into the road transport space too – what’s the difference to the Sendle model?
A: There’s a significant difference because Uber is providing a point-to-point service – which is a highly contested market segment by the way. A point-to-point service, where the same person or company is responsible for pick up and delivery, is useful to send things like legal documents, perishable items or organs, for example, but not your average parcel. When you use Sendle, there could be different parties involved during the process, depending on who’s currently out there and has space left on the back.

Q: A result of your 20 per cent theory...
A: Correct. It’s like the difference between taking a cab and public transport. In a cab, the driver is responsible for getting the cargo from the pick-up location to its final destination. When you use public transport, you hop on a train that goes to a hub, the central station, and then make your way from there. In our model, each delivery agent has a zone that they are responsible for, much like a regular train service. They’ll pick up the package in that zone and take all to the central station. From there it all goes back out. That’s how you create flat rates, too.

Q: With the added value that you’re trying to bring the station as close to the package as possible.
A: Yes. The service levels, like train schedules, are fairly consistent in capital cities already, which means the system is actually more efficient than a point-to-point one. Think of it, you’ve got 100 packages on a single vehicle rather than one, like a train full of people compared to a single person in a taxi. The downside is that we can’t deliver something within two hours; but if a parcel is picked up in the morning, it will still be delivered on the same day if it’s in the same city.

Q: But compared to Uber it’s professionals carrying Sendle freight.
A: Yes. While Uber’s point-to-point service may be easier to crowd-source – just because all you need is somebody with a car or truck or bike and the willingness to earn a buck. At Sendle we work with experienced and accredited companies like Toll. We’re part of a working eco-system.

Q: The Toll Group must have thought the same way when signing a deal with you in July, basically giving you access to its national transport network.
A: For Toll it’s a good value proposition because we have this very strong focus on a small part of the market, which is hard for them to reproduce. What Toll is great at – just like Fastway and Couriers Please, our other service partners – is getting parcels from A to B. What we’re great at is removing friction from the process and make it all very simple with a national flat rate model – which, by the way, have been designed so everyone involved can make a margin. We just add the ‘easiness’ to it.

Q: Since the Toll announcement, some argue that you are forming a national coalition to take on the Australia Post monopoly…
A: Why not? Australia Post has that huge, yet largely invisible monopoly in the small business market, so we said, ‘let’s finally create an alternative for small businesses and customers that is fair and easy’. Sendle is a small business too so we know what the challenges are. After a while, you start realising if you’re going to the post office every day or twice a week or whatever it might be, that’s time not spent building your business. We are taking out those pain points one by one.

Q: How did Australia Post react when you entered the scene?
A: There has been no direct comment as yet. It’s mostly customers we hear from, and most often it’s a simple thank you. But it’s only the beginning and Australia Post is a very powerful opponent to choose.

Q: As an Australian, doesn’t it feel odd taking on and possibly damaging such a national icon?
A: I don’t think we’re going to do any damage to them. I have worked for a national icon myself, CSIRO, and I loved it. These institutions are actually a really important part of our national history and our national identity; but I don’t think a bit of competition will be bad for them. Competition is good for consumers, and with the whole parcel space growing, we might all benefit from it down the track.

Q: In how far does your professional background as an engineer help you in that David vs. Goliath situation?
A: I’ve done a lot of interesting stuff in my time, but at the core I’m still a total nerd – maybe that’s a helpful character trait in the digital economy. For me it’s all about building stuff, and I love infrastructure. There is something special about building infrastructure and the human development that goes along with it, because it’s always a collective action problem. And problem-solving is fun.

Q: Which would bring us back to TuShare, where it all began…
A: Yes. TuShare is a marketplace wrapped in a social network and as such dependent on logistics to function. We quickly realised that the logistics element of it was the most ‘broken’ and therefore the most interesting one to try to work out.

Q: You are wearing an Apple watch – does it mean you are always on the bleeding edge?
A: Yes, as I said, I am a total nerd. I’m fascinated by technology.

Q: How important is it to be up to date with technology like that in the start-up space?
A: It’s crucial for someone like me. I see a lot of folk who start businesses where they’re not the first consumer, and my strong recommendation is you have to be the first consumer of your own business to truly understand it. It’s the thing that keeps you going, right?

Q: In line with that, is there enough support for start-ups like Sendle in Australia?
A: I don’t think we’re quite there yet. I think New York is the place to be right now, especially when design is important to you. Here in Australia, it’s much harder to raise capital; but then again, I think the market conditions are great for a business like us. There are a whole lot of things that make it great doing stuff in Australia. We’re pretty happy to build our business here and then see what we’re going to do overseas.

The full story has appeared in the October edition of Prime Mover. To get your copy, click here.

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