Menu
Top

KAUST startup aims to disrupt last-mile delivery

Nov 19, 2020 Innovation

Originally published in Arab News

As e-commerce continues to spike worldwide, especially with the pandemic, the number of parcels delivered each day has dramatically increased. Customer expectations for speedy fulfillment have also been rising, however, leaving companies to grapple with multiple, last-mile delivery challenges.

Last-mile delivery is both the most expensive and the most time-consuming part of the shipping process. Most e-commerce retailers in Saudi Arabia struggle with last-mile delivery as delays, reduced success rate, and difficulty handling cash on delivery (COD), among many other challenges, plague the sector. One Jeddah-based startup has the solution.

Saee is a Saudi tech-logistical, last-mile delivery company that is looking to introduce a new concept into the local market to solve many of these last-mile challenges. Saee helps facilitate higher success rates and improved profit margins for companies and individuals, while alleviating the need for costly overhead such as cars and courier.

 

"The most important things that retail, e-commerce clients expect from last-mile shipping companies is a high success rate, and rapid refunds," Saee cofounder Tariq Alturkestani told Arab News.

Saee was founded with the support of KAUST to be the local solution for Saudi e-commerce platforms. They offer specialized services designed to meet retailers' needs, such as guaranteed fast Cash-on-Delivery (COD) consolidation, and the facilitation of smart, flexible dispatch to freelancers, active customer service, and warehouse management.

COD services are being adopted by online retail companies to gain customers trust, and to encourage them to try new products. However, CODs have high associated costs, which drives up costs in a country where around 95 percent of packages are COD.

"I believe that e-commerce has a big dilemma called cash on delivery," Saee cofounder Eihab Nassier told Arab News, "the end-user or the buyer is not obligated to take whatever they picked from the internet. Accordingly, the success rate for the shipments is 70 percent; since only seven out of 10 shipments get received by clients; meaning that e-commerce retailers are enduring about 30 percent of the cost with no actual revenue."

The other side of the COD problem is the slow cash flow, especially for SMEs, "As an e-commerce platform, the cycle means that I should send the shipment and get it delivered and then collect the money, transfer it, and then deposit it into my account which takes anywhere from 10 to 20 days. So we're talking about a cash gap of 20 days in the best-case scenario. But it often reaches three months."

One of the solutions that Saee is offering for this problem is a new concept in the market called Cash Before Delivery (CBD), "We give the clients the cash before the shipment is delivered with a very a small percentage just to endure the cost," said Nassier, "we do a transfer every week for our clients, and we have dedicated teams as well as an in-house developed technology to give our clients updated reports constantly."

Saee delivers last-mile shipments in more than 120 cities and towns using 13 dispatch centers across the Kingdom and is working on expanding their reach further. "By the end of this year, we hope to be covering the entire Kingdom," said Alturkestani.

Another factor that distinguishes Saee from other companies in the field is their reliance on a fleet of freelancers, which means they only recruit couriers according to demand.

"On average we dispatch around 5,000 shipments per day around the Kingdom, during peak seasons such as last Ramadan. In that time period we dispatched around 12,000 shipments per day with a success rate of around 80 to 85 percent of the received packages," he added.

During the COVID-19 lockdown, shipment companies scrambled to meet increased demand for residential deliveries, particularly with the many imposed controls and safety protocols. Alturkestani said, however, that given the easy scalability of their business model, they were able to fulfill dispatch times.

"Next month during the Black Friday season, we hope that we will be able to reach 15,000 deliver shipments per day," he said.

According to Alturkestani, their unique elastic model and being among the highest delivery success rate in the Kingdom has made major e-commerce companies prefer the Saudi startup Saee over other major courier companies in the Kingdom.

Moreover, unlike other companies in the field, Saee's business model has liberated them from the payrolls for curriers, gasoline, and vehicles' insurance costs, as well as off-seasons financial damage. At the same time, it offered clients more efficient solutions that match their needs and offered locals opportunities to increase their income.

Furthermore, Saee's fleet of freelancers guarantee their clients a better performance; their agents are not obliged to work within a specific timeframe and deliver a certain amount of shipments per day, so they are less pressured and have the time to focus.

Nassier explained, "the average amount of shipments with other companies goes from 50 to maybe 90 or even a hundred where our agents deliver around a 20."

The KAUST partnership with the Human Resources Development Fund (HRDF) in the 9\10th accelerator program allowed Nassier and Alturkestani to meet and start their collaboration in 2016.

Before Saee, Nassier worked as a lecturer at the university of business and technology in Jeddah. Leaving his job to begin a startup company needed courage and a fair counteroffer, and KAUST gave him what he needed.

"I believe once you are serious about having your own business, you should quit your job and focus on your idea," Nassier said, "The good thing about KAUST that they gave us a good offer and took care of us."

While Alturkestani's journey with KAUST began since the university was at an infancy stage, he was sponsored by KAUST to study computer science abroad before returning to complete his master's and Ph.D. degrees in computer science.

"One of the best things about KAUST is that it brings people from the outside community who want to build startups and are looking for technical cofounders or want to have more in-depth research or training; so they come here to join the incubation center, and that's where I met Eihab, and it's been a fun roller coaster ride since 2016."

The company first began to reduce the unemployment rate for females in Saudi Arabia. They came up with the solution of carpooling women to work, and were subsidized by the government program Wusul. However, after the Royal Decree that allowed women to drive, Saee gradually pivoted the model and moved to dispatch of e-commerce packages.

"In the eyes of all shipping companies, we are a disrupting company," said Nassier, "because during the last decades, this business has been functioning the same way. So to come and change the concept to freelancing is not easy to accept."

Nassier added they were told by many that their business would not work, "However, we see them now doing the same thing after we started."

Saee began working with big companies in Saudi Arabia. After having obtained a great exposure from working with huge enterprises, Saee began targeting smaller companies with services that match their demand.

"We just started two service products for small enterprises, even those who have one shipment per month only … we wanted to give them more options and to create an impact," Nassier said.

For Nassier, success is determined by two things; creating a positive social impact and making excellent performance. "that's our purpose, and it's in our company profile. I look at the success of Saee as taking it from a company to a market leader."

Saee cofounders believe that each region in the country is different; therefore, it is better served by its own locals, so they see hiring freelance locals in each city as an efficient answer to the market challenges. Nassier emphasized that Saee will continue to play the role of national hero by reducing youth's unemployment rate by depending on freelancers and enabling Saudis to work.

"We have good potential to create the difference and bring a solution for the COD Market in Saudi Arabia. Who knows, maybe for the world after that," he added, "We want to be the number one company for e-commerce shipping in five years."

Related stories