The imminent arrival of Amazon in Australia has gotten retailers thinking about ways to improve their customer service, with delivery a common issue for those operating online.
As customers come to expect faster deliveries for less, Melbourne startup Passel looks to provide retailers with a cheaper option to the traditional delivery methods by tapping into a huge network: other shoppers and passers-by who live nearby and can deliver the goods on their way home, picking themselves up a gift voucher for their troubles.
With 20 years of experience in the freight and logistics space, founder Marshall Hughes said one of the biggest changes he saw over time was the increase in the number of home deliveries, with a key frustration for him being the inability of his industry to “deliver a delightful experience to everyone involved”.
“So a few years ago I started telling people, ‘the time will come when you are wandering around a store, and you’ll get a message on your phone saying, ‘Hey Marshall, Mr Jones, who lives around the corner from you, has just bought a shirt online. If you deliver it on your way home, we’ll give you a $10 voucher.’ Obviously, that hasn’t happened, so here we are,” he said.
Passel, then, is Hughes bringing that idea to life himself.
“Passel is a crowdsourced delivery service using regular people already near the local store to complete the final mile delivery,” he explained.
At it stands, the Passel service works by giving shoppers the option to have their purchase delivered through Passel in their shopping cart, with Passel offering three hour delivery. Once the item is collected, Passel will let the customer know who their delivery person – or ‘Passer’, as the startup calls them – will be, as well as their estimated time of arrival.
On the retailer side, once an order has been placed online, it will be made ready for pick up by the Passer in the closest physical store to the delivery address, letting Passel know when it is ready.
The Passer conducting the delivery will then receive details around what to collect and from where, along with delivery instructions. Once the item has been delivered, they will receive a $10 gift voucher to the store of their choice.
Passel’s target market, said Hughes, is “every omnichannel retailer” – that is, retailers with both an online and bricks and mortar presence – though he is steering away from alcohol, tobacco, and perishable goods.
“Getting them on board is a challenge. Overwhelmingly we have been told that, if this were an existing national service, retailers would be using it right now. There have only been one or two retailers who don’t think it suits their business model,” Hughes said.
The startup was originally set to launch with a small pilot in the Melbourne suburb of Frankston, however Hughes said he was convinced by Passel’s advisors and prospective customers to persist with a larger-scale launch to truly showcase the potential of the service.
As such, Passel will launch across Melbourne at the end of August, with retailer Motto Fashion on board. According to Hughes, the startup is also in negotiations with Myer for a trial.
Of course, as well as retailers, getting the Passers on board is crucial; it will be interesting to see whether the service eventually shifts to paying Passers $10 in cash for deliveries rather than vouchers.
With $10 to go to the Passers, the startup will charge retailers “more than $15” per delivery, Hughes said. Given many retailers charge similar prices for three to five day shipping, Hughes believes this price won’t be a problem.
The competition in this space is, of course, huge. Beyond giants like Australia Post are startups such as Sendle and Shippit, which just raised a $2.2 million Series A round.
Despite the cashed-up competition, Hughes believes Passel can provide greater flexibility and provide the end customer with more surety around delivery time as the Passer would already be heading in their direction.
“In direct contrast to the transport industry, Passel will be better equipped to deliver the busier the stores are,” Hughes added.
“For example, in the week before Christmas when couriers are hard to find, we will have tens of thousands of shoppers and people at work in shopping centres all ready and able to do a delivery for us and make $10 on their way home.”
Hughes last week made his way to Silicon Valley for the FounderX conference, a gathering of the top graduates of the Founder Institute programs around the world. As well as building a network, his goal was to learn how to speak to investors, and how to gauge what they expect and how to frame Passel in a way that properly showcased the potential Hughes believes it has.
With the August launch in mind, Hughes is looking to raise around $300,000 in seed funding to get the startup operating around Melbourne before looking Australia-wide.
Image: Marshall Hughes. Source: Supplied.