Chapter 1 counts “delivering value” as a key task for marketing and marketers. Pakistan’s distribution industry has made incredible progress over the last few years. Within delivery, Swyft Logistics has tried to overcome industry-level issues such as late deliveries, payment issues and lack of tracking by embedding technology in the very DNA of its ethos and its operations. This has included vendor facilitation, route optimization, geo-fencing, induction of digital payment gateways and more. To achieve its goals, Swyft has focused on training its employees to cope with modern data handling (Dr. Aamir Khan, Case Advisor).
After a long hectic day at work, Muhammad Uns, who worked as the Head of Growth Initiatives for a local quick commerce service provider, paced his office listlessly. He contemplated for the umpteenth time the new business idea which had been brewing up in his entrepreneurial mind for almost a year. Having seen the delivery issues, payment delays, and lack of accountability that plagued the logistics industry, Uns aspired to revolutionize the way business was done in a largely orthodox market through the inclusion of technology. However, he feared that his business proposition might not strike the right chord with norms that had been established and accepted industry wide. Uns knew that gaining technology acceptance was integral to his idea’s long-term sustainability, but he was not sure how he would go about garnering the trust of various stakeholders towards technology.
How it all began….
Hailing from a business-oriented family and having academic acumen, entrepreneurship came naturally to Uns. He had started his first business right after his undergraduate degree and after running two successful ventures in a span of six years, he decided to work for Cheetay to learn the tricks of quick commerce logistics. It was during this tenure that Uns was baffled to see the plethora of dilemmas that customers faced at the hands of their logistics partners, and he took it upon himself to develop a business idea that would work within the larger ambit of Cheetay, benefiting from the large pool of resources and expertise that the logistic giant provided. This move allowed Uns to leverage his own network to provide B2B logistic solutions to clients across multiple verticals. Swyft took off in October 2019 promising co-creation of value by ensuring safe, timely, and trackable delivery of items to the customer and a reliable outbound distribution solution for the manufacturer.
The Industry:
The logistics industry in Pakistan was measured by a few key metrics such as delivery ratio, lead times, and services while being characterized by seasonality and high competitiveness. A handful of old-school large players had been dominating the market. The sector contributed a mere 10% to the nation’s GDP. However, with progress being made on China–Pakistan Economic Corridor (CPEC) projects, it was expected that accessibility issues in the country would be resolved, and the sector would start playing a pivotal role in the nation’s growth.
At the same time, poor accessibility was only one aspect of the multifarious problems that were inhibiting the sector from thriving. Conventional courier companies were accustomed to not being paid timely as the market was primarily based on the cash-on-delivery system which favored the customer but created backlogs for both the manufacturer and the logistic partner. A lack of trackability and accountability resulted in riders blatantly lying about delivery attempts being made to customers which resulted in as many as 20% of the deliveries not making their way to the customer’s doorstep.
Moreover, the process of manually sorting and batching parcels was itself a very cumbersome task that was heavily dependent on human labor and susceptible to errors. Surprisingly, these problems weren’t unheard of when it came to Pakistan’s e-commerce users, thereby resulting in a small percentage of retail sales being made online even though smartphone penetration had grown relentlessly in recent years. Naturally, these experiences resulted in customer hesitation toward online shopping and impacted the e-commerce sector.
However, things were set to change with the onset of the COVID-19 pandemic which reduced the dependence of the Pakistani consumer on brick-and-mortar stores thereby opening a new realm of business opportunities for e-commerce logistic providers.
The Game Plans:
Uns and his team had studied the market closely and felt that they had a good understanding of the customer pain points. Uns knew that the answer to the conundrum of unimpressive growth of the logistics industry lay in the sector’s avoidance of, even alienation towards technology. However, he did not want to add the technological perspective to his business just as a gimmick that would gain him some traction in the short run. Uns had bigger plans and he wanted to embed technology in the very DNA of his venture. He envisioned that each step of the value creation chain would be powered digitally to ensure business longevity and customer delight.
Vendor facilitation:
Starting off with the lead generation process, the marketing team would digitally map out prospects that would be a good match for Swyft’s business. The vendor-side application was designed to be as user-friendly as possible and aimed at facilitating its user at each interaction, be it account creation or booking the parcel for pick up. The pickup request was designed to get digitally embedded into a vendor’s portal along with being integrated within a dedicated riders’ app. Upon the creation of a digital request, unique QR codes were generated by the system.
These QR codes were the backbone upon which the entire show transitioned smoothly as they would be used to sort and batch parcels within the warehouse and enable trackability of the package beyond the warehouse as well. Upon every successful delivery of a parcel to a customer, the cash-on-delivery payments were aggregated and transferred to the business owners twice a week. This saved the vendor from losing track of their financials. The vendor was also facilitated through a financial snapshot of his business through Swyft’s platform, giving it a reason to believe in Swyft’s capabilities to support his business endeavors.
Strategic Route Optimization and Geo-Fencing:
Uns had come to realize that the involvement of human labor had left the logistic operations compromised. Swyft’s ideology was to promote technology-backed decisions rather than relying on intuition-driven management. This resulted in the introduction of strategic route optimization which would enable the company to safely deliver more than two thousand parcels a day. Efficient stock movement between destinations ensured that critical and non-critical parcels were routed on a timely and cost-effective basis.
To improve upon the delivery dilemma, Swyft introduced the idea of Geo fencing its riders. While Uns was concerned about the hesitation of riders to be tracked in real-time, he did not want to leave any stone unturned in his efforts of delighting business owners and end customers. Therefore, a total of sixteen status updates were embedded in the system as a parcel moved downstream. The platform also required multiple proofs of delivery attempts, including screenshots of conversations with the end customer, pictures of the delivery locations, and precise pin location at the time of cancellation. These checks and balances were not welcomed by many riders, but they helped Uns develop a brigade of committed and responsible fleet members who would not go cold turkey on him.
Multiple payment gateways:
Among several other changes that COVID resulted in, the adoption of digital payment gateways saw astounding growth in Pakistan, with e-banking transactions surging by almost 31.1%. This indicated yet another change in the macro environment, which prompted Swyft logistics to think beyond the conventional cash-on-delivery payment system. To aid its customers, the venture started to bring in incremental changes and introduced interbank funds transfer (IBFT), cash deposits, and cheques as acceptable modes of payment, followed by plans to integrate contemporary payment gateways in the future. Also, flexible payment cycles to sync with vendor cash cycles were made a reality to further aid the vendor. The gradual change towards digitizing payment methods was done to test the waters before taking the big leap towards adopting fin-tech as part of its business operations.
Old habits die hard:
While things looked good on paper, the execution of a business idea that had technology at its backbone was a risky proposition in an emerging economy like Pakistan. Although the country did show promising trends toward technology adoption, there were still only a handful of early adopters who were willing to take the plunge. To gain traction among the masses, relying only on these early adopters did not make business sense. Thus, Swyft was on a two-pronged mission; to introduce a tech-based value proposition and then make sure that it gets the desired level of acceptability by internal and external stakeholders alike. To ensure that this would roll out the way it was envisioned by the brains behind the venture, a process of unlearning, changing, and learning was essential at all hierarchical levels within and outside the organization.
Realizing the essential role that the ground staff played for the business, in the first instance, Swyft logistics started an overhauling of its fleet members. Each staff member would be trained and familiarized with the IT platforms before every task was assigned. The software had been designed keeping in mind the intricacies of its users. The UI/UX was extremely user-friendly and would walk the user through each step. Regular refresher training sessions and video tutorials were introduced upon every update in the system. This helped the staff to understand, implement and address every technicality involved in the processes. Post-training quizzes and assessments would help the team leads gauge the staff’s level of comprehension of the system.
The relative advantage of using Swyft’s platform was apparent to its staff, as dependence and reliance on manual data maintenance were reduced significantly. Accurate and reliable data gave the much-needed boost to their confidence in carrying out their tasks. The cumbersome job of manual shipment counts which was expected of them by other industry players was now possible by a single ping that resulted in an error-free reconciliation. Automation of the historically tedious task of issue identification and resolution was a first for them and made them embrace the technology with arms wide open.
Swyft Logistics was cognizant of the fact that even though the technology was user-friendly, it might pose troubleshooting issues of all sorts. Thus, every department had a sub-team that would be working round the clock to facilitate matters pertaining to vendors and customers alike. On top of this, there was a dedicated IT and product development service for customers to help resolve technical glitches 24/7.
Despite the strides that Swyft made in terms of ensuring that their idea gets mass acceptance, there were hiccups along the way. The team observed that younger employees were more receptive to tech enablement. However, maintaining their loyalty to the company and keeping them anchored was a challenge. Although employees in the older age brackets were more loyal and stable in their career aspirations, they were far slower in adopting “winds of change”. What was more upsetting for the team was to see their operations and financial teams be wary of shifting towards automation. But since their roles were integral to the company’s success, added efforts had to be made to make this change possible.
Lastly, it was also observed that the acceptability of this idea varied across social income strata and academic backgrounds, with SEC C depicting a clear alienation towards the adoption. This did not come as a surprise for Swyft, but was a herculean challenge to overcome, considering that almost 45% of Pakistan’s population fell within the lower-income stratum and accounted for more than 70% of Swyft’s employee force. Hence, the change was first to be driven from within before it could ripple out to external players.
Swyft, holding its fort:
Within a short tenure of three years, Swyft had managed to redefine the ground rules of success in Pakistan’s last-mile logistics space. Its winning streak was fast becoming a business model blueprint for budding ventures to replicate and thrive in the market. However, now Uns had his eyes on scaling his venture by taking advantage of global e-commerce trends that were making inroads in the country. With a vision to follow the successful growth trajectory of international logistics giants, he wanted to automate Swyft’s vendor management system and establish fulfillment centers across the country. But a few pertinent questions remained in light of this- should he leverage stakeholder commitment towards this idea, and would the market be ready for this paradigm shift?
Questions to stimulate conversation on the case
- Looking at the case facts, elaborate upon the factors that propelled the digitization of the logistics industry, do you think the industry could sustain the changes in the longer run?
- Using the UTUAT model, elaborate upon the measures that Swyft logistics can take to ensure widespread acceptability of its technology driven model, both among employees and customers.
- Critically evaluate if the digitization had helped Swyft to create a blue ocean for itself.