ShutlShutl 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.