Over the last five years, the logistics sector shifted focus from increasing asset utilization to becoming a key differentiating factor for retailers in improving the end-to-end shopping experience, Mircea Stan, CEO and founder of Postis, a Romanian logtech startup founded in 2016, tells The Recursive. He goes on to explain:
“This change happened together with the rise of e-commerce, fueled by the customer desire for convenience, and the surge created by the pandemic. These trends have pushed logistics to adopt digital technologies and then slowly move from low tech to deeper tech, including automation, machine learning, and AI.”
Automation and machine learning are front and center at Postis, which uses IT technologies to disrupt traditional ways of doing things in logistics, transportation and retail sectors. The startup already has more than 200 clients, a 3X revenue growth year-over-year, and a €2.3M investment, at a €15M evaluation.
With an Executive MBA and experience in the telecom industry, Mircea is a founder of two other startups. Hestarted working on Postis after being approached to work on an idea for last-mile delivery for B2C. Soon after, they realized there was a bigger opportunity in the B2B segment and refined the product into a software platform that brings together retailers and carriers.
The Recursive talked to Mircea about the key trends and opportunities in the logistics and retail industries, including:
• How convenience and other trends are driving new profit models;
• What is logtech and how these solutions, through tech, omnichannel models and systems integration, are making supply and distribution networks smarter and more resilient;
• How Postis helps retailers and logistics providers, and what are their plans for 2022.
The Recursive: The retail and logistics sectors took a hit during the pandemic. What are companies currently doing to increase resilience in the future?
Mircea Stan, CEO & Founder of Postis: Building resilience proved to be one of the most important abilities to have for any company that wants to be successful in the long run and thrive in uncertain circumstances.
In the early stages of the pandemic, the problems were related to difficulties to go to brick and mortar stores due to lockdowns, limited stocks for cleaning and health-related products, supply-chain disruptions caused by restrictions, and the health risks associated with human labor. Those who were already present in e-commerce or practiced omni-channel retail and had tech platforms in place were able to rapidly shift their business model and lead the market’s transition to the new reality. The others had to follow; many did not succeed.
Companies started to bring adaptability to the table, by establishing a flexible framework for doing business. They embraced the ability to respond in shorter times to customer needs when it comes to delivery and support, monitoring all internal and external business factors, and effectively taking the right decisions. Open platforms allowed companies to accelerate transformation, benefit from market best practices and meet their customers’ new expectations, as they changed during the pandemic.
Adopting technology (digital transformation and automation) is a key component of building resilience. In case of any unpredictable business environment, technology enables companies to optimize business processes, have improved flexibility and scalability, leading to efficiency, increased productivity, and ultimately to better business results (revenue, income, number of clients, sales, and so on).
As a logtech startup, how is Postis helping retailers, as well as logistics and transportation providers? What technologies are front and center in the Postis Platform?
Our core mission is to simplify and improve the way goods are transported from warehouses to stores to end-customers through advanced technology and automation. Therefore, our platform improves processes and creates seamless experiences for all parties involved in the logistics chain, including retailers, e-tailers, distributors, fulfillers, couriers, and transporters, but also end customers.
How does it work? The Postis Platform integrates with our clients’ IT systems, and connects all their sales channels (online shop, marketplace, physical stores, and so on) with all of the transport solutions used. Through process automation, data aggregation, and machine-learning algorithms, the end buyer will benefit from the best delivery option for each product type, destination, or preference.
The end-customers have clarity and control over their delivery process and will know where their orders are in real-time. Postis provides predictions on delivery times, the ability to give feedback to couriers, and improves the delivery process, so they are less likely by 20% to refuse an order. Therefore, companies can use all this information to make better business decisions, improve service quality, and increase customer satisfaction.
Specifically, the platform helps clients to set routing rules for orders, define locations, set courier price grids, and connect them to the delivery options. We provide fully customizable dashboards that offer actionable insights and a clear view of the performance across many different criteria: courier performance across different geography, on-time and return rates, NPS analysis, repayments status, and others.
How are incumbent logistics and transportation companies reacting to the rising number of logtech solutions?
The logtech sector had a slower start if we compare it to other categories such as fintech, edtech, or medtech. And, initially, the issues it had to address were related to the underutilization of assets in logistics, be it space or transport capacity.
But the initial purpose changed due to the shift in end-customers expectations. Given the rapid pace of technological advances and social transformation, expectations for outstanding customer service and experience are now being set by those outside the business. It is no longer enough to market product and price alone. While the quality of the product is still important, the point of differentiation between brands is now often dependent on their ability to market the service, deliver it, and provide convenience. Things like same day delivery, curbside pickup, and buy online/pick up in-store are must haves. Logistics processes lay the foundation for differentiating marketing.
In this context, incumbent logistics operators saw an opportunity to adjust their legacy systems and enhance their offerings. We see a lot of warehouse operators shifting to integrated fulfillment. We see many e-fulfillers emerging to aggregate the operations for smaller retail actors. We see classic transporters diversifying their fleets to accommodate any type of deliveries, from cargo and pallets to parcels. We see very many new carriers specialized to certain niches such as food, ultra-fresh products or flowers, as well as dedicated solely to sustainable means of transportation such as bicycles. Yet others are focused on particular customer journeys, such as express deliveries under 1 hour.
To manage in an efficient way such a diverse ecosystem that becomes even more complex with every passing day, and to be able to implement mass-customization strategies, retailers need systems integration, process automation and data-driven decisions. This is where platforms such as Postis bring their value.
To conclude, while at first we were perceived by legacy logistics providers as a competitor at best, or just as troublemakers in an industry set in stone, we soon became a valuable partner and an enabler for improved operations, with higher efficiency and profitability, by logistics, warehouse operators, transporters alike.
What traction did Postis achieve in the market so far? What were your key learnings?
Postis is the first Romanian LogTech startup, founded in 2016. Since then, we managed to reach €1M ARR (Ed.note Annual Recurring Revenue) at the end of 2021, we have enrolled over 150 delivery partners, we have more than 200 clients and 15 employees.
Until now, we received a €2.3M investment, at €15M Eur evaluation, as well as 3X growth in revenue year-over-year.
Using Postis, our clients are operating in countries such as Greece, Bulgaria, Hungary, Poland, Czech Republic, Germany, and France. Among our clients, we have big names such as Flanco, elefant.ro, Intersport, Dr. Max, Secom, Ikea, Auchan, Cora, Vivre, Noriel and more.
Looking in retrospect, the pandemics worked for Postis and our customers as a catalyst, as our digital technologies were in place, tested and ready to be deployed when it first hit in late-2019. Postis Platform allows retailers to adapt their operations fast, without significant costs, in an omni-channel or pure online environment.
At first, our technologies fixed the basics – improved efficiency, less errors, better visibility and predictability, smaller costs, higher flexibility, and scalability. But, once deployed, our technologies enabled retailers to focus on the key aspects of their activity: the customer relationship and brand loyalty.
What are Postis’ expansion plans in 2022?
At the end of February this year, we launched our operations in Poland, as we see an increasing demand for accelerating the digitization of the delivery processes at national level and cross-border across CEE, and ultimately to adopt the digital transformation of the retail and e-commerce companies.
Also, we are about to close a Series A investment round and we will continue to expand in the rest of the European region. We are looking to increase our team in all departments, including business development, product development, data science, marketing, or customer consulting, to launch new functionalities (we will soon launch a mobile app for the end customer), and to provide even better experiences for our partners and their customers.
What does the future of logistics look like?
Convenience is a shifting force for retail. At its very core, it is a human-centered experience that provides customers with a feeling of ease. While perception of convenience can range from “saves me time” to “meets all my needs in one place”, what many people are looking for is something that simplifies life, while delivering a positive experience. People want to “outsource” the work of getting products. Instead of focusing on the act of purchasing products, they want to focus on the act of using them.
Convenience was already modeling the retail sector before 2019, but the tidal shifts accelerated during pandemics and are here to stay. In this context, logistics will cease to play a supporting role for retail, and become an enabler and strategic lever. In the search to create value for consumers and stakeholders, while still capturing value for themselves and investors, many retailers are adopting new profit models that prioritize consumer choice and fulfill demand: subscriptions, marketplaces, fulfillment-as-a-service, web and cloud services, and more. Digital will drive the e-commerce engine, with personalized experiences and highly interactive engagement.
Omnichannel will be the retail model to successfully combine purchase convenience with the desire for customer experience. This business model increases the complexity of supply-chain processes to be handled and requires streamlined IT systems, fully integrated, capable to manage and analyze complex sets of data related to customer profiles and product inventory, and capable to deliver operations automation, interaction customizations, full visibility, predictability and transparency.
Supply and distribution networks will get smarter, with digital platforms playing a significant role in their transformation velocity. End-to-end visibility and the capability to quickly flex with changing demand. Advanced stock management, fast stock transfers between online and offline or between different physical locations, and smart, predictive replenishment scripts, become critical. The adoption of data and technology is allowing retailers to transform their supply chains with unprecedented visibility and insights from their processes and customer experience.
Understanding the power of platforms and data will be vital, as the supply chain will no longer be the central aggregator of business value. Already, what a company owns matters less than what it can connect. Putting opportunities with resources, using data to make it efficiently at scale is key. Not all retailers have the resources to develop their own platform models but that doesn’t mean they can’t participate. Due to the high risks of adapting core business models, traditional players will collaborate and form partnerships to drive efficiency.