When Shadowfax decided it wanted a ‘Big Money Day’ this year, akin to one of e-commerce giant Flipkart’s Big Billion Days sale, it wasn’t simply hopping on to a fad. The hyperlocal third-player logistics (3PL) startup wanted to make a point. 

Held on 24 July, the “one-day dhamaka” offered gig workers a chance to book delivery slots in advance and deliver orders for a higher-than-normal payout. Bikers got a flat Rs 100 ($1.33) per order, while cyclists got Rs 70 ($0.93)—nearly 3X higher than what the company normally pays. It was a day that Shadowfax could use to tell its clients: whether you need to handle a one-day surge in orders or strategically drive growth, we can deliver it to you. 

This was Shadowfax’s first Big Money Day; the app saw over 70,000 riders logging in that day across the country, handling orders across food delivery, grocery delivery, and e-commerce segments. On an average day, it sees about 40,000 workers log in to handle over 500,000 orders; it has about 100,000 active partners overall.

When Shadowfax was founded in 2015, last-mile, hyperlocal delivery was an unprofitable conundrum for startups in India. Everyone wanted their packages delivered in less than an hour, but no one really wanted to pay for it, leaving it to the startups to figure out the cost economics. Some, like food delivery app Zomato, invested invested YourStory Zomato invests in food delivery startups Grab and Pickingo, also partners with Delhivery Read more in 3PL startups such as Grab. Others, like Flipkart, took a more local route. In Mumbai, the firm partnered partnered The Hindu Flipkart partners with Mumbai Dabbawalas for last-mile delivery Read more  with the dabbawalas, the city’s decades-old lunch delivery service that catered to office-goers. 

Shadowfax knew it could bridge this demand with India’s massive supply of gig workers, and offered 3PL services such as order tracking and customer insights in the hyperlocal space—one of the very few to do so back then. Its tech-enabled proposition paid off so well that it managed to achieve a double-digit profit margin off every last-mile delivery as early as 2018. Hyperlocal concierge service Dunzo, in comparison, loses Rs 18 to Rs 22 per order ($0.24-$0.29), according according The Ken Takes two to Dunzo: Kabeer Biswas trusts popularity to drive profitability Read more  to its chief executive Kabeer Biswas.  

AUTHOR

Aayush Agarwal

Aayush covers businesses that are primarily Internet for The Ken. In his previous stint at Goldman Sachs, he spent slightly more than a year analysing investment opportunities in the China Internet space. A science graduate, he completed his postgraduate from the Indian Institute of Management, Kozhikode. Write to him if, among other things, you wish to talk about e-businesses, journalism or just offbeat career choices.

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