When Jack Ma pointed out the areas that still presented opportunities in Africa, logistics was among them. This is because of the broken logistics system across the African continent.
In the end, not only does it drive up the cost of e-commerce, it makes it impossible sometimes. Godel, a logistics startup based in Uganda, wants to fix this. Starting with the last mile.
However much e-commerce has been on an upward trend in Uganda, last mile deliveries are still a huge challenge. A problem faced by both emerging and already established companies.
For example, Transtel is a Ugandan authorized distributor of Samsung, Beko and Skyworth products. Yet, they couldn’t find an efficient way to fulfill their logistics needs. Hence, the creation of an internal logistics arm.
“We [Transtel] have to distribute products,” Anuj Thakrar, Godel’s Managing Director said. “We [thus] need an organized logistics network.”
He added; “That's why we launched into Godel because within our existing companies, we already have a logistics need.” Godel was, thus, born out of necessity.
Early this year, it spun out as an independent startup. With the aim of fixing the last mile delivery problem not only for Transtel but other businesses.
Currently, they serve clients ranging from Jumia, Prudential, Orient Bank and more. “I would say we work with over 20 large customers that we are servicing,” Anuj pointed out.
The startup operates two models.
They can deliver the parcels on your behalf. “[If] you have a package you need to deliver, we charge you on a per package model,” Anuj says. Or, you can hire their bikes and vehicles. This applies to banks and insurance companies with sensitive deliveries.
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Currently, one can access them through the website. “That's the per package model where you put in your respective dimensions and our pricing algorithm computes based on weight,” Anuj says. Though, the same platform supports those looking to hire their bikes and cars.
The Godel team sits at over 20 full-time staff and around 80 distributed agents. The agents are for circumstances where it wouldn’t make economic sense for the startup to do it by itself.
“If you have one package and we've only got one package going to Mbarara, I cannot send my own truck,” he points out. Adding that, “through our agency network, we are able to use what we call third-party logistics providers to move our cargo.”
The startups’ main competition is two multinationals; German-based DHL and Aramex, the first Arab-based company to be listed on the NASDAQ. Apart from that, the country has a couple of other “informal players” that Anuj declined to point out.
While as the bigger and more established players like DHL have unrivaled service delivery, their high price rates are a turnoff. Yet, the much smaller informal ones with a great pricing are inefficient.
“A lot of the smaller players are using manual processes,” he says. “Yet companies want affordable service without compromising on the level of service.” Godel wants to position itself between the high-end players and the informal players.
Given that they were spun out of an existing company, the startup already had existing clients. They also enjoyed the financial backing from Transtel. Which implies that they didn't need any external funding, and are not looking to do that anytime soon.
Except, when the time for expansion comes. At that point, Anuj thinks that there’s a lot they will be able to learn from VCs and PEs. Especially scaling to new markets.
“More than being from the financial perspective I would say you know the expertise that some investors can bring to scale the business that would be more of my focus.”
This article was written with contribution from Mutabazi Godfrey.