The logistics industry is riding a digitization and automation wave – decisions like delivery routes, fleet selection, ETA determination are already automated now and in the future would automate deliveries with driverless vehicles and drones”- Dhruvil Sanghvi, CEO & Co-Founder, LogiNext
By: Prahaladh V Hariharan, Research Analyst Level II, Ken Research Private Limited
The Fleet Management Industry in India is at a nascent stage with nearly 95% of the market untapped, offering an enormous opportunity for companies that exist in this industry. Track n Trace Solutions is widely used, majorly for compliance purpose and advanced analytics services offered remain largely unused. Fleet Heavy Industries such as Transportation & Logistics, Oil & Gas and Retail sectors use Fleet Management Solutions but not to its full potential.
The Indian Trucking Industry is a highly unorganized one, with more than 70% being captured by the Small Fleet Operators and Individual Truck Owners, thereby making the market a highly price sensitive market. The future of Telematics and fleet management solution lies in the indigenously manufactured products, Investment into R & D and Potential Partnerships with OEMs. Fleet Management Companies should also enter into the Two Wheelers and Electric Vehicles space, which will require Telematics and Fleet Management solutions in the future.
Since 2015, there has been an increase in the number of start ups entering the space and investments have been constantly flowing in. As disrupting Tech Play in Logistics keeps penetrating, the focus has slowly shifted towards automation of Supply chain process, Telematics and Fleet Management Solutions to be much more effective and efficient. With global investors planning to invest more into the space, we caught up with Mr. Dhruvil Sanghvi, CEO & Co Founder, LogiNext to understand his take on the Industry and how LogiNext has grown since its inception.
Here are some edited excerpts of the Interview
How did the idea of LogiNext come up? Why Fleet Management?
Manisha and I met in Carnegie Mellon University way back in 2010. During that time machine learning and AI were the buzz words and no one was actually aware of what it is and what the scope is. So Manisha and I ended up doing a research on that. Between 2010 and2015, we saw a lot of old school retail companies getting disrupted by online e commerce players and there was increasing focus on making the delivery eco system faster, cheaper and more efficient. The whole supply chain ecosystem was getting automated and we realized there was a huge scope in the space. We wanted to automate transportation end to end through a platform mainly for old school retail companies.
How has the journey been so far?
We spent close to two years building and developing the product and the first 18 months we concentrated on getting a market ready product which could solve the challenges of the real world. The initial investors pitched in during that time and gave us the full freedom to use that money just to build the platform and also helped us get our first few customers onboard. So the journey has been extremely rewarding, challenging and at the same time extremely fulfilling I would say.
Do you remember your first client and your first investor?
Like any other SaaS company, our initial product developed was driven a lot from the feedback from the lost customer before we got out first customer and it was a transportation company based out of Singapore. One of the earliest investors for LogiNext was Mr. Sanjay Mehta, who believed in the idea and the vision and invested even though we didn’t have a product and had no customers. He was betting on our knowledge and background and the fact that we had done our research & groundwork before building the platform.
Talking about fleet management solutions, do you manufacture your own hardware? Which country has the best hardware products for Fleet Management Solutions?
We are the only hardware agnostic company operating in this segment. We are a core tech company but we have around 200 hardware partners across the globe as of now. I think, China is far ahead than rest of the world in terms of manufacturing of hardware and the cost. Almost 80% of the hardware is manufactured in china. Indian market is still at a nascent stage but there is a huge scope of manufacturing and development of hardware products from India.
How much have you scaled as an organization?
We are currently a 150 people organization. The current phase of hiring is affected because of the coronavirus but we are looking to double our size by the year end. We are present in 3 regions India, South East Asia and North America. Our revenues have grown by 200% since 2017 and we are investing a lot into R & D to take the company to the next phase of growth.
What has been your pricing strategy to differentiate yourself in this industry?
One of the key things is that we have a single price for our platform with no hidden costs or any on boarding charges and our pricing model is based on the volume of vehicle. We charge the customers per vehicle and that includes integrations, after sales support, upgrades, customer service and any other tech related issue.
Who are your major clients in India right now?
We have majorly focused only on transportation and the retail sector. Majority of our clients have an average fleet size of 1000 trucks. Our focus has always been catering to old school retailers and helping them upgrade and our major clients in India are DMart, Mahindra Logistics, GPI, Jubilant Foodworks and Myntra.
How much have your customers been able to save? Could you give us a rough idea?
Our focus has always been towards optimizing the supply chain i.e. not just reducing cost but making the supply chain much more efficient and effective. We have been able to increase the on time deliveries from about 75% to about 90%-95% within 12 months of using our platform and saving nearly about 20%-25% of the costs.
The most buzzing question that is often asked to start ups, have you turned profitable yet?
Being a core tech company, we invest a lot on research and developmental activities. Nearly half of our revenue goes towards R & D. If we do not invest in R & D, then as of date, we would be 20% profitable. We are still growing, and investing in R & D is extremely important, hence it will be a few years before we turn profitable with the kind of R & D we require.
Where does the future lie for LogiNext? Geographical expansion or Domain Expansion?
We are a growing company and we are still learning every single day. Since we are already present in India, South East Asia and North America, we will be looking at industry wise expansion by building domain specific software or customizing our core platform to suit the needs of the industry.