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Shutl promises to revolutionise e-commerce by solving issues around delivery and providing customers and retailers with same day and named hour delivery options.
The company's official launch will be announced at LeWeb today by founder and CEO Tom Allason, who also founded eCourier in 2003.
I spoke to Tom last week about how Shutl works, and why Tom thinks it will be a game changer for e-commerce...
What is Shutl?
Something I know from my work at eCourier is that the same-day delivery market has been in decline for the last ten years, as people are sending fewer documents by courier. This prompted me to start looking for other markets, and so I looked at e-commerce, and had the idea of combining online shopping with same-day delivery services.
Having talked to retailers like Amazon, one major issue I came across was that pure-plays tend to have warehouses that are in the middle of nowhere, which makes the cost of same-day delivery prohibitively expensive, except in those instances when either the value of the item or the customer need for it justifies the cost.
However, same-day couriers can be more cost-effective for certain types of deliveries, when the items are within five or ten miles of the customer, and can be delivered directly by one courier, which saves the time and expense of sending multiple vans and staff to collect and deliver items.
I decided to try to find a way to leverage this efficiency over short distances for the e-commerce market, by finding multichannel retailers with stores within ten miles of the customer, from which couriers can pick up and deliver goods efficiently.
How does it work?
What Shutl does is to aggregate same day capacity across couriers offering that are offering these services. We also have a web service that plugs into multichannel retailers and enables them to offer either a same-day delivery option or a one hour time slot, both of which are far more convenient for customers than traditional methods.
Couriers tell us about the types of vehicles they have, the products they can deliver, their hours of operation and prices, as well as the postcode areas they can deliver to, so when a customer adds an item to their basket on an e-commerce site, then we can provide a list of relevant couriers, the postcodes they deliver to, and the prices offered.
We then weigh this against how well the courier has performed and pick the best match of price and quality. The retailer can then decide whether to pass the price onto the consumer directly, or add their cut, or discount for the shopper.
If the customer selects this delivery option, then the order is sent via our API to the courier. Once the delivery is completed, another API takes this information out of the courier's management system.
This is then compared against the SLAs, and the courier's quality rating will go up or down depending on the level of service. So, a higher rating will mean that courier will receive more business in future and will be able to command a higher price.
The big benefit of Shutl to retailers with a local presence is that it enables them to leverage the one thing that Amazon and other pure plays don't have, local stock. They can't compete with these big online retailers on price and product diversity, but we allow them to leverage their high street presence to provide the customer with a compelling proposition; a cost-effective, immediate delivery option.
We think this is a significant game changer for e-commerce, as it shifts power back to multichannel retailers by providing a service that they cannot offer.
E-commerce has come a long way since the 1994 when the first online purchase was made, a Sting CD which took two days to be delivered. E-commerce websites have improved in many ways since then, but most customers still have to wait days for delivery, and at a time which suits the courier's schedule, not the customer's.
Tell me about the funding, will you be looking to raise more?
Simon Murdoch is in as non-executive chairman. I funded it initially for the first year, and the team all put a little bit into it, then we had an investment round with Simon, Paul Birch, Big Bang Ventures and others.
We now have a strong team of investors and managers on board, which reflects the quality of the concept and their confidence in it. We'll also be looking at a more venture funding around the middle of next year to speed up out growth and enable us to expand into other markets.
How have couriers responded to your business model?
The courier companies love it, as it gives them access to a market that they cannot serve themselves alone, as they are not big enough individually to deal with the peaks and troughs of consumer demand.
The same day delivery market has 50m transcation a year in the UK and is in decline, but the market for e-commerce deliveries has 820m transactions, and is growing at 20% a year.
What are the benefits for retailers?
I read some stats recently that said that 50% of customers abandon baskets and checkouts as a result of delivery issues. The options either aren't convenient enough, or are too expensive. Also, same-day options are normally expensive, but our model brings these costs down.
If shoppers can get their goods the same-day, or at a specified time, then this removes some of the barriers to purchase and should help retailers improve their conversion rates.
Have any other companies tried this delivery model?
A company in the US tried something similar but failed. The mistake they made was to try and aggregate the retailer's inventory and be the destination site. It's too difficult to do this.
Shutl is a pure web service, which consist of creating and managing the market; its a similar business model to Confused.com or Moneysupermarket.
Are you launching nationwide?
We're launching in London initially with five retailers on board, but the model will work anywhere where there are retailers and customers within ten miles of each other, which means we can cover 80% of the UK.
Do you have many clients so far?
We have one well known high street retailer on board, who we will launch with in Q1, though we can't talk about that yet. We'll be launching the service around London with five small-ish retailers and will look to cover the rest of the country as quickly as possible.
What are your targets for the next 12 months?
It would surprise me if we didn't reach £5m turnover in the space of twelve months,and this isn't taking into account the high street retailer I mentoned. We expect that copycats will come along, but we have a year's start on everyone else and we plan to get as big as we can as quickly as we can before we have any derious competition.