Cabs as couriers is so obvious, surely somebody else has thought of it.
Taxis as a parcel delivery service? Not a bad idea, come to think of it. Not only do cabs use the bus lane, they deliver around the clock; and under fire from Uber, cabbies are keener than ever to pump up their income.
As entrepreneur Anthony Lechner tells it, cabs as couriers was one of those ideas that seemed so obvious at first that his next thought was “surely somebody else has thought of it”.
Apparently not. So the former Nestle executive developed the Taxi Lineup app. He launched this week in Sydney and Melbourne, having signed up 90 drivers in recent weeks, and he plans to go nationwide later this year.
Like Dominos Pizza, customers can track their deliveries live. Lechner says the fact that cabbies work 24 hours may give his business an edge. The most perplexing conundrum in the booming $5 billion-plus parcel delivery market is overcoming the challenge of the so-called “last mile”. That is, couriers typically work during office hours when others are also at work, so nobody is home to accept delivery.
When it comes to courier apps, there are plenty of proverbial cabs on the rank. Perhaps the closest to the pure Uber business form is Sherpa. Set up by Ben Nowlan, Mathieu Cornillon and Bastien Vetault in 2014, Sherpa connects private drivers with parcel delivery customers. It raised $500,000 in seed capital last year.
MeeMeep is another. Born in October 2011, this app allows you to compare the thousands of couriers on price and has struck partnerships with GraysOnline, eBay and AllBids.
Steve Orenstein’s Zoom2U was founded in 2014 and is another live-time delivery service. Zoom2U raised $850,000 in seed capital in 2015 and is backed by Tony Gandel (of Whizz fame) and James Packer’s Ellerston Capital. It has an interstate delivery deal with the Greyhound bus service.
Another marketplace business model, via which couriers bid for on jobs online, is PPost. PPost was also established in 2014 and raised $120,000 in seed funding.
Still another is Sendle. Funded with $1.8 million from NRMA, Sendle does same-day delivery of boxes up to 10kg door-to-door.
Rather than establishing a driver network like Sherpa, Lechner’s Taxi Lineup has cheekily bobbed along and aggregated the existing infrastructure of Australia’s taxi services.
Will the cab companies like it? Probably not, they crankily resisted cab booking apps such as Ingogo. But do they have a choice? How can they force their drivers to ignore extra business and still work for them? They have so far refused to engage at all with Taxi Lineup, Lechner says.
It is the courier companies – the big ones such as DHL and Ipec, and the emerging apps listed above – who will scream blue murder. After all, deploying cabs as couriers has the edge of exploiting bus lanes. Unlike cabs, couriers can’t use bus lanes during peak hour.
Doubtless there is plenty of space in the market for a number of players though. Online transactions are booming and will continue to grow. On eBay alone about 800,000 local pick-up items are listed each month.
Uber itself is now trialling parcel delivery overseas, something that Lechner doesn’t believe poses the same kind of menace as Uber has already posed to the taxi passenger market.
“I just don’t think the business model stacks up,” he told BusinessDay.
“Something which works when there are two very busy Uber drivers in town doesn’t work so well when there are 122.”
Uber’s growth has been sensational. From start-up to monolith in a few brief years, Uber doesn’t make a profit and doesn’t pay a dividend but has a purported value of $US63 billion ($84.87 billion).
Attracting drivers has been no problem yet but once the market is more mature, and drivers have to compete for proportionately less business, Uber may well have a growth challenge. And as Lechner wryly notes, “We plan to be paying tax in Australia”.
Besides the courier apps, there has been growth in pure taxi apps too, passenger apps that is, the likes of Ingogo, GoCatch and CabCue. The first two of these have raised millions in venture capital.
Ingogo was valued at $100 million (when it raised $12 million in a venture capital round last May) and has recently deferred its plans for a public float on the ASX until the second half of this year.
More than $28 million has been invested in Ingogo by the likes of UBS and Canaccord Genuity, and MYOB co-founders Chris Lee, Craig Winker and Brad Shofer are also backing the business.
For his part, Taxi Lineup’s Lechner already has his sights set on overseas markets and is in talks with venture capital players. The same model can work in the US and elsewhere, he reckons, but exploiting it would take a lot of capital.
Perhaps these are the sort of ideas with which the country’s biggest parcel delivery operation should be tinkering. Australia Post – its chief executive Ahmed Fahour paid $4.8 million and 20 of his executives on packages worth more than $500,000 – risk being picked off by a raft of small operators.
Taxis of course already deliver parcels but for some reason they still don’t spring to mind as a courier service. Perhaps there is a security issue, people not trusting cab drivers. An app sorts that out though, as everything is digitally tracked and recorded.
Taxi Lineup will face fierce opposition from rival interests, there is no doubt, but there is also no doubt that it makes the cab industry more viable and constitutes a welcome ”disruption” for customers who are more likely to be at home in the evenings and on weekends.