This Roadrunnr delivers your food, too

It was his nearly two-year stint at cab aggregator Ola that gave Mohit Kumar the idea that he could attempt something similar with logistics. At Ola, he was involved in building the back-end, the technology platform on which the whole business moved.

Logistics, like the taxi market, is a problem where there are two characteristics, says Mohit. One, there is huge demand. Unfortunately, the taxi drivers were not happy as they were not making enough money and the consumers too were not happy as the services were unreliable. The issue was complicated from a demand-supply perspective. This was the case with logistics too.

The other was the nature of labour. Taxi drivers earned at the most ₹12,000 a month, and if they owned their vehicle, a good part of this went into paying off the loan, leaving them with very little in hand for household expenses.

“This was the problem in logistics as well,” says Mohit. “There are companies that are making money, there are consumers who are getting benefited. But the middle layer of people who are actually fulfilling the orders are getting exploited,” he adds.

The average salary of a delivery boy, the one who is actually fulfilling the order for both the merchant and the customer, remained more or less stagnant for nearly four years, at about ₹8,000. And, says Mohit, the salary just got increased, “probably because of us.”

Mohit, who had moved from Ola to Flipkart, where he was working on the seller platform, says his heart was in solving a real problem like logistics. That is why he teamed up with his Flipkart colleague Arpit Dave and launched hyper-local logistics company Roadrunnr in mid-April.

A computer science graduate from Bengaluru, Mohit was keen to build a technology platform that will solve logistics issues faced by both merchants and consumers. To do this, he realised that the question of how much a delivery boy took home would have to be addressed. That is what the duo attacked.

Mohit says he had worked for five years in various companies and had saved up some money. “I had ₹27 lakh in my bank account. I made an Excel sheet formula saying this is the monthly spend, this is the revenue model and for the next four months we won’t need any investment. This is how we will run the business. I did some cash-flow planning, some inventory planning.” But then reality struck hard. “…only to realise that running the business is much tougher.”

Roadrunnr raised a seed round of about ₹6.5 crore ($ 1 million) in April, shortly after it started, from Blume Ventures and Nexus Venture Partners. And, a couple of months after that, it raised about ₹65 crore ($10 million) from the existing investors and Sequoia Capital.

Mohit, CEO, Roadrunnr, feels the money will last them for two years as they expand their operations.

The toughest part was in actually convincing the merchants – most of them restaurant or fast food chains – that Roadrunnr could handle their delivery and that the merchants need not spend their money on employing delivery boys. Their first client was a restaurant in Koramangala in Bengaluru.

Mohit decided that they would build the technology needed to run and grow the business right at the beginning rather than after the venture takes off. “We started in April and got the product out in one week.”

Roadrunnr has developed a mobile platform that connects the merchants with delivery boys. “The engagement model with drivers or delivery boys is simple. They are the business partners and we are the service providers and they work with us on a contractual basis,” explains Mohit.

Roadrunnr gets its revenue – ₹40 per delivery – from merchants that include restaurants such as Mast Kalandar, Faaso’s, Ammi’s Biriyani and grocery stores. In the case of the larger e-commerce clients such as Flipkart, Amazon, Snapdeal and Myntra, for whom it does intra-city delivery, the revenue share is much higher.

Having kick-started the operations in Bengaluru, where the company is headquartered, Roadrunnr is now present in 11 cities, including Mumbai, Delhi-NCR, Pune, Chandigarh, Ahmedabad, Hyderabad and Indore.

According to Mohit, Roadrunnr has nearly 4,000 merchants on board and 5,000 delivery boys on its platform. And, who are these delivery boys? They are those who have worked with other delivery companies before. Most of them own their own vehicles –motorcycles and cycles – and some even deliver consignments by walk.

There are also students who do this part-time, to earn some money, and call-centre employees, who also do the delivery to earn some extra money. For the delivery boys, it is simple, says Mohit: download the app, install it on the mobile phone and then start working.

Nearly 60 per cent of the delivery boys have worked with other companies before and the remaining are those who are either call centre employees or are students, according to him.

A delivery boy on a motorcycle would earn in the range of ₹15,000-18,000 a month, one on a cycle would get ₹8,000-10,000 and the ones delivering by walk would take home ₹6,000-8,000. The call centre employees get an additional ₹6,000-7,000.

“As an engineer, the only satisfaction that you have is good work. This was a tough mathematical problem. Most of us being computer science engineers, we loved solving logistics,” says Mohit, who at 27 is among the oldest employees of Roadrunnr.

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