FROM MAGAZINE - XpressBees All Set to be the Largest Cross-Border Player

In the wake of the recent investment from Alibaba Group, Amitava Saha, the Co-Founder and CEO, XpressBees, an e-commerce specialized logistics’ company, discusses plans for positioning itself as the leader in e-commerce logistics, in a tête-à-tête with Nahida Jafferi. XpressBees spun out of FirstCry- an online baby products portal, in 2015, and saw 150 percent growth in 2017 while being 4X more capital efficient compared to its competitors, and how. Edited Excerpts:

Post investment from Alibaba, what are the growth plans and initiatives of XpressBees?
Alibaba infused around $100 million in XpressBees, which is a mix of primary and secondary investment. Our aim is to grow 5X in next two years. The capital will be utilized to consolidate our leadership position in the current vertical, and expanding our warehousing and cross-border logistics capability. Our investment focus shall continue to be technology, since it plays a major role in optimizing business operations. We plan to expand without burning a lot of money.

Will the Alibaba funded companies use XpressBees for its 3PL business?
We will be the primary 3PL partner for most Alibaba funded companies. Simultaneously, we will be working with other companies in the ecosystem as an independent player. Even today, the total business that we have from any of the Alibaba group companies is not more than 15 percent-20 percent. Alibaba is expected to route a major share of the logistics business in India through XpressBees.

With a total funding of $120 million till date, how do you have a competitive edge in the e-commerce logistics sector?
Till date, we have been over 3.5X to 4X more capital efficient than our competition. In the pin codes we service, we carry a bigger portion of the load compared to our competitors. Before the Alibaba deal, most of our developments were carried out with the $20 million initial investment, compared to the over $100-$200 million raised by our peers. We have an operating expenses (OPEX) driven variable model while a lot of our competition has a capital expenditure (CAPEX) driven fixed cost model.

What is the infrastructure support that XpressBees provides the ecommerce industry in terms of cross-border trade, fulfillment centres and tailored software solutions?
XpressBees aims to be the largest cross-border player in India in the next few months. We plan to have an end-to-end cross-border supply chain solution. XpressBees will operate fulfillment centers across different parts of China to begin with, and later expand to South East Asia and Middle East. We have 500 last-mile delivery centres in India. We do not plan to open FCs in China. We will work with Cainiao (Alibaba owned logistics company) that operates 200 FCs in China.
We will also be developing software to enable faster goods clearance through the ports. Through API integration technology, we will be able to deliver order details to the customs. This will allow to receive a proper view of what the bag and air cargo container contains, in order to ensure faster clearance.

Is XpressBees planning to go global?
We will venture into South East Asia first. Alibaba has made investments in companies across the globe to set up logistics infrastructure. As an Alibaba Group company, we can take advantage of that infrastructure support and set up our presence everywhere.

Does this mean you will serve overseas e-commerce players or only fulfill the sourcing needs of the Indian e-commerce players?
Both ways. We can empower Indian companies to sell in South East Asia possibly through Lazada, an Alibaba-owned online shopping company network. India remains to be the primary focus. There has been talks of FirstCry- an online baby products store, going global due to its overseas demand. The bigger play would be to help Indian companies source from outside as the Indian customers have a good appetite for imported goods.

In 2016, XpressBees handled over 1 lac packages per day, while covering 3000 pin codes. What is the figure this year?
Today, we deliver over 2.5 lakh + packages daily over 4500+ pin codes. With our aggressive expansion, we aim to reach to 8000+ pin codes in the next 3 months. We work with over 250+ clients that includes large e-commerce players across the country.

How much did XpressBees rake in last year? What percentage growth have you witnessed in terms of logistics revenues?
We grew by over 150% in the last financial year without using too much capital. In 2017, we did close to INR 200 crores against INR 75 crores in only 7-8 months of operation in 2016. XpressBees is only two and a half years old company and e-commerce delivery has been around for 7-8 years.
What percentage of shipments that you handle is routed through air cargo?
35 percent of the shipments are routed through air and the remaining 65 percent shipped on surface.

In what better ways can air cargo deliver to the e-commerce industry for cross-border trade and express delivery?
Cross-border will be the fastest growing segment in e-commerce for the coming years. We expect the air cargo industry to invest in technology where transparency on space availability is much higher for booking it couple of hours in advance. It is not always the space that is a constraint. Despite the space availability, the technology issues do not allow to schedule things appropriately. Once you offload you cannot make it to the next flight since re-routing takes time. Sometimes, it is routed in a sub-optimal manner. The connecting flight for Delhi to Bangalore would have a stopover at Goa, which is not the most desirable route. While we try to put the cargo through a particular flight, it usually turns out to be overbooked. Despite another flight scheduled half an hour away, it goes to a flight which would depart in 3 hours because of the long cargo handling procedures.

What kind of technology are you working on? Is predictive analytics a part of the plan?
We will invest in technology in a major way. We have plans to venture into machine learning and data science technology-backed product development. Right now, we do not use predictive analytics technology. Our clients may want us to hold some of their inventory closer to the door of their customers; (pre-stocking) based on predictive analytics. Being the last-mile and first-mile solutions provider, it could deliver optimum results for our customers. XpressBees is the only delivery partner for Xiaomi, a Chinese electronics company that is offering one-day and four hour delivery to its customers. Our last-mile and warehouse management system is completely managed In-house.

What has been the industry response for XpressBees Try & Buy service? Is it viable or demand driven in the Indian scenario?
Try & Buy service is primarily used by Fashion e-tailers and also by established horizontal players for launching new category/ product offering. Try & Buy is an open delivery model that helps to build customer trust and reduce the brand’s marketing cost. What it proves is that we have the technology to give specialized on-demand services to our clients within a certain territory as well as category.

How can the cost be minimized on return logistics?
We have started a new service which enables doorstep QC in reverse logistics. This helps in picking up the right product along with providing faster resolution to the customer. Technology helps the delivery personnel know exactly what to check in the product and confirm with the market player, which allows real-time customer issue redressal.

There are lot of peaks and troughs in the ecommerce business. What would you do with the built-up resources later?
During peak period, we add temporary resources. We outsource and insource, or increase the headcount for a month or two. We mechanize our fulfillment centres and hubs to handle that capacity. Booking temporary space and putting up temporary infrastructure works well, too.

Established in 2012, XpressBees spun out of FirstCry in 2015. What triggered the idea and how has been the journey?
I am an entrepreneur at heart. Prior to starting FirstCry, Supam (His business partner and CEO of FirstCry) and I came up with a successful venture. While contemplating about our next venture, we realized that babies could be a good sector since we frequently travelled abroad and brought for our children some gifts that are not available in India. We launched FirstCry, to offer variety in the baby products segment. At the initial stages of FirstCry’s launch, our Net Promoter Score (NPS) was very high. But later, the NPS score remained stagnant for a while because our delivery experience was not nice. Despite working with the best logistics players in the industry at that point of time, our customer satisfaction scores were always capping at a certain level. That is when we decided to start our own delivery service- XpressBees in 2012. In early 2015, we started working with other e-commerce companies after we had made a reputation in delivery. A few entrepreneur friends reached out to us for their product deliveries. We thought we would in the process optimize our field strength as well. No sooner, we realized there is a real business opportunity, especially as a technology company. Our clients came up to us and said that if we grow the business, then they would be happy to put up a bigger share of the pie.

Is the vertical e-commerce business like FirstCry more lucrative compared to logistics?
Today, FirstCry is a brand on its own. People come to buy from FirstCry and they do not necessarily come to buy a category brand. It is more of a brand play than a vertical play. Most of the traffic we get online is from people who come to FirstCry on their own. Just a FirstCry board does the trick. The e-commerce business is more lucrative.