How business veterans and entrepreneurial freshmen can benefit from one another
Before we understand what Upaya City Cargo really is, we first need to look at two key aspects of the Nepali market space. One, how big of a role logistics and cargo services play in our day-to-day lives from the groceries you buy at your local ‘tarkari pasal’ to the new hairdryer that you bought the other day being delivered at your doorstep. And two, the ongoing digital disruption of the Nepali business ecosystem. Put these two pieces of the puzzle together and you get Upaya City Cargo, an innovative tech startup seeking to disrupt and change how Nepal works with logistics. In barely over a year of operation, this trailblazing startup has managed to serve over 3500 clients and has formed partnerships with more than 500 drivers across Kathmandu. And here’s how they did it:
The birth of an idea
While Upaya City Cargo officially started only a year back, the idea behind it had been in the making for some time. Back when he was still a student in the US, Co-founder and COO of Upaya City Cargo, Amigo Khadka kept in touch with likeminded innovators and business veterans in Nepal. Khadka says that the mentorship and guidance he received was crucial in shaping the initial idea of the startup. “Even during vacations when I’d come to Nepal, I would meet them and talk with them and see how the market is evolving in Nepal,” he shares. Khadka goes on to mention, “We first started with an idea for an investment fund but realised that for Nepal rather that an investment fund, we needed a pipeline of good startups to invest in.”
With eyes set on incubating a proper startup, the team launched a company under the name of Upaya Services. At its core, Upaya Services is an aggregator-based platform that helps people easily deal with legal chores like getting their annual tax returns managed or helping businesses get registered.
While trying to expand into managing transportation related documents like drivers’ licenses and such, Khadka and his team came across the lackluster logistics system that was in practice in Nepal. This was an unpassable business opportunity for them. Nobody in Nepal had integrated logistics and cargo services into a scalable digital business yet. If they played their cards right, Upaya City Cargo had the chance to tap into a virgin market.
“If you look into the digital ecosystem in Nepal, we have e-commerce giants like Daraz and SastoDeal. We also have the ride-sharing industry which is a bloodbath of its own with companies like Pathao, Tootle, and Sarathi. If we look at e-payment we get Esewa, Khalti, IMEpay. And if we look at food delivery, we already had companies like Foodmandu, Bhojdeals and Foodmario,” narrates Khadka. He elaborates, “One fundamental thing was missing in this entire startup ecosystem, and that was logistics. Here, things need to move around in a seamless digital way. So, we thought why don’t we venture into this digital ecosystem and fill in that cornerstone that was missing.”
How it works
Even before Upaya City Cargo formally began, the team went through three months of extensive studying and analysing their venture. During this time, they came to realise a major gap in the market. Rahul Malla, the Head of Marketing at Upaya City Cargo, says that at the client end of things, there were several major issues. Clients had to bargain each time, face delays, put up with security risks and availability issues, while also lacking proper billing and records. The driver side of the equations also had its own issues. Khadka shares that for drivers the main problem is that they can’t find consistent customers and often just end up losing money on the down payments they made for their vehicles.
According to Khadka, “In Kathmandu there are about 32 hotspots where there is a relatively higher demand for cargo vehicles. These guys (drivers) go to these hotspots and lineup hoping that someone would come and maybe hire them for that one time.” This meant that while drivers had the ability to complete around six trips a day, they were only managing two or more trips.
Seeing this problem exist between the two parties, Upaya City Cargo was able to create a service with which they could optimise the market by playing with the demand and supply. This optimiaation, Malla shares, is done in three ways: availability, convenience and price. With over 500 driver-partners that are tracked across the city through GPS, the company ensures that customers get quick and efficient service. Pairing this with their mobile app and online billing system ensures convenience; you even have your VAT bill emailed to you.
Moreover, Upaya City Cargo’s algorithmic payment system ensures that both customers and drivers get a fair price. The Products & Development Head for Upaya City Cargo, Karan Basnet explains, “Given the nature of the services we offer, there are many more variables to consider, especially compared to a typical ride sharing platform. Distance, travel time, weight of goods, additional stops, estimated duration are standard variables used to calculate the trip fare.” However Basnet also note that more variables may come into play depending on the unique situations that might arise.
Fortunately, it seems that the company has managed to collect enough historical data to analyse and make adjustments where needed. Even things as minute as traffic times can soon be integrated into the system through driver-partner GPS data.
Why should Upaya City Cargo matter to you
Upaya City Cargo’s clientele could be distinguished into three varying categories: individuals, SMEs and corporate companies. The pandemic has certainly been a blow to all three of these. With traditional supply chains and logistics diving into chaos because of government sanctioned lockdowns, SMEs and suppliers have had to bear huge losses. This only goes to show how beneficial it is for a system like Upaya to be in place.
In an ever-growing digital era, where convenience triumphs over everything else, the process that Upaya City Cargo has engineered had helped it retain 83% of its former business even during the lockdown. With over 750 clients in Kathmandu and 500+ driver partners, the company appears to be maintaining a healthy 75 trips a day.
For individuals, a totally digital system would simply mean convenience. The ease and comfort of having a service at the tap of a button is a trait that has defined the internet age. For small and medium sized enterprises -perhaps one the larger markets for Upaya City Cargo – the competitive pricing and invoicing service is what makes the company so attractive. According to Khadka, these are people who have become weary of the constant bargaining with drivers for every single trip they had to take.
When it comes to bigger corporate clients, what allures them to Upaya City Cargo is the accountability they offer. Often times, independent drivers don’t provide legal taxable bills which is a big annoyance for big companies. However, with a registered and accountable company like Upaya handling their logistics, these companies can ensure that their ledgers are balanced without having to invest in their own fleet of cargo trucks. “For these companies, logistics is not at their core, it’s whatever their business is. And if they could even outsource it to someone instead of increasing liabilities through owning vehicles and having drivers, it would even be more profitable for them.” shares Khadka.
As for drivers, Upaya City Cargo goes beyond just being an extra source of income. Not only do these drivers get consistent, trackable and fairly paid work trips, Sandip Subedi, the Head of Logistics of the company, states, “There are plethora of opportunities for any driver partners to get enrolled in long term contracts with clients like Daraz, Sastodeal, DHL and so on, securing them with a monthly-based income for a long period of time. Furthermore, we support our driver partners with buying a new vehicle at a cheaper/discounted price and also with a lower interest rate for their monthly EMIs as we have a mutual understanding with various vehicle dealers and banks.” The company in fact currently has a partnership with Sipradi Trading, the distributors for Tata vehicles in Nepal.
The veteran-young blood recipe
The business landscape in Nepal is an interesting one. While tried and tested business veterans still run big businesses, there has been a rising generation of young entrepreneurs that want to make their mark in the Nepali market space. While the veterans have mastered their art through years of hit-and-trial, they lack the innovation that their freshmen counterparts have. And although the younger and hungrier entrepreneurs have made strides with their out-of-the-box ideas, they are missing out on the market knowledge and relations that the veterans possess. So what better way to maximise their probability for success than by bringing the best of both worlds into the venture?
“We have a board of directors and an execution team. The board is comprised of people who come from a background of consulting, legal, finance, etc. These people have been in the market for almost two decades, have an immense network, have access to funding, and they know the intricacies of doing business in Nepal. But they are all busy and obligated in their own professional lives.
Whereas people like me who had a stint abroad and are coming back, or people who just finished education and are young and want to prove themselves, have lots of energy and hunger. So their vision and experience matched really well with our enthusiasm and drive.” Khadka passionately shares. While the board helps out on a strategic level, the young team delivers in terms of day to day operations.
When asked how valuable having a veteran board was, Anish Pradhananga, the Tech Development Head and one of the youngest members and stakeholder of the Upaya City Cargo team shares that the experience has been a very rewarding learning opportunity for him. More often than not, entrepreneur and startup founders who want to market and expand their businesses are constantly dragged behind by unavoidable constraints like legal letters, lobbying for policies, regulations, finding seed investment and so much more. It seems that having a symbiotic relationship with their board has really allowed for the young company to differentiate between the two facets of their business. Chairman of the board, Suman Rayamajhi seconds this opinion. Rayamajhi who has made a name for himself through multiple ventures like BO2, Eos advisors and Smart Telecom, shares that having a veteran board brings invaluable assets such as a ground level market understanding, network connections for business development, and even a sense of credibility, trust and reputation to a young brand.
With a strong first year, Upaya City Cargo seems to have an ambitious set of goals for its future. In a recent press launch for their new app, the company expressed its desire tp establish itself as the “logistics backbone of a digital Nepal.” The company also announced their target to expand its services to ten major cities across the country within a year.
Basnet who deals with the product development of the company shares, “City Cargo is designed in such a fashion that it can scale and expand into other logistics sector or geographic regions. Our immediate plan is to scale with our intra-city model into other cities within the country.” He however also acknowledges that while theoretically the system only needs minor adjustments to adapt to new regions, the project requires a cohesive effort from all the teams in the company to actually be successful.
Upaya City Cargo also has a desire to expand beyond its intra-city cargo services. While the company’s sole focus right now is on expanding its intra-city network, it also plans on venturing into inter-city, agricultural, and e-commerce logistics markets in the country. As for now, with their cross country expansion currently underway, the company is focused on reaching the 500 trips a day milestone by the end of Asar 2078.