.svg){kind=spacer}
Singapore’s Delivery Startup Growth : Practical Playbook for Market Expansion (Deliver.sg)
Singapore's delivery startup scene is buzzing with energy and innovation, and it's not just your ordinary mail and parcel delivery anymore!
In the heart of one of the most technologically advanced cities in the world, startups like Qourier and Foodkit are revolutionizing how everything from hot meals to urgent documents is being whisked across the city.
Singapore is also exploding with a mix of fierce competitors from global giants to nimble local players. Companies like DB Schenker and FedEx are old news as they beef up their operations with drones and AI to keep up with local innovators.
But even in the bustling Singapore delivery scene, there's a niche that was largely untapped—safely transporting long-distance deliveries of food and pharmaceuticals.
Enter Deliver.sg, a rising star in the Singapore delivery startup landscape, quickly capturing this underserved market.
Launched in 2020 initially focusing on food delivery, Deliver.sg has since diversified its services to include transporting vaccines and pharmaceuticals, and even offering a subscription model for delivering infrastructure. Today, the company manages about 190 deliveries daily.
How did Deliver.sg seize the opportunity in the delivery market? What strategies did they use to expand their business both within and beyond Singapore?
Asia Tomorrow caught up with Krishnamani Kannan, the CEO behind Deliver.sg, to dive into the startup's business model, origin story, and expansion strategies.
Q. Hello. Could you introduce yourself first?
Pleasure. I am Krishnamani Kannan, the CEO of Deliver.sg. Deliver.sg started as a 'long-distance food delivery' service in 2020, delivering food to places outside the physical reach of traditional food delivery services. But over time, we realized that we shouldn't just focus on food, so now we're looking to expand into more categories to scale the platform and monetize it.
I am also the Vice President of SSACCI (Singapore South Asian Chamber of Commerce and Industry), where I get to meet different people in the business community helping them navigate the Singapore and Southeast Asian market. These days, I also enjoy mentoring, and I find happiness in sharing what I learn from running a business with young entrepreneurs and encouraging them.
Q.You founded your food delivery startup during the COVID-19 pandemic. I'd love to hear how you got started.
My wife opened a restaurant in Singapore at the time, and the person who worked in digital marketing there is now the co-founder of Deliver.sg. Turns out, he also had experience in logistics, which later became his specialty at Deliver.sg.
As a restaurant owner, I noticed that customers who live more than 4 kilometers away, which is where delivery doesn't go, also wanted to have their food delivered and ordered. Moreover, there were no competitors doing long-distance delivery, which meant that there was a need but no service. I figured that we could capture the market, so we started a long-distance food delivery service.
Q.The absence of competitors could mean that the market is small or difficult to penetrate. Why did you start a long-distance food delivery startup anyway?
It seems that competitors are not trying to do long-distance food delivery because they are trying to create value by taking multiple small orders.
But we recognized that if we can get a large order, even if it's farther away, we can cover it. In other words, we saw an opportunity where our competitors were not willing to go because they were afraid of the risk. Deliver.sg believed that 'what people want is the market'. We took a leap of faith and ventured into long-distance food delivery to prove that this business model is feasible.
Q.Your founding team seems to be a combination of former co-workers and family members.
Initially, there were three of us - myself, one co-founder, and a CS person. We were a small team, so we used our own personal funds as seed money. In addition, we were able to get support from the Singapore government during the pandemic. They offered 90% interest rate relief on bank loans to high-performing startups.
Business strategies for scaling a long-distance food delivery service
Q.You mentioned earlier that you had a hypothesis of not just delivering food. How did you go about expanding your services?
Deliver.sg started out as a long-distance food delivery service and is expanding into an overall on-demand delivery platform, with pharmaceutical and medical device delivery being our current focus.
In 2023, a medicine delivery project led by Singapore-based logistics giant YCH signed a subcontract with Deliver.sg. YCH is authorized by the government to store and deliver pharmaceuticals.
Over the next eight months, Deliver.sg obtained medicines, including vaccines, and medical equipment from YCH and delivered them to the National Hospital, National School, and the National Kidney Foundation.
The outcome was a success. It was a new challenge for our team, and the clients expressed their satisfaction. They keep entrusting us with more and more work. Crucially, YCH signed an extended contract with Deliver.sg as their main transportation partner.
Q.Is there a specific reason why Deliver.sg focuses on pharmaceutical and medical device delivery?
From Deliver.sg's perspective, long-distance delivery of pharmaceuticals and medical devices helps us scale as an on-demand delivery platform in the following contexts
1) The margins are good. Food delivery has some days where there are orders and some days where there aren't. With pharmaceuticals and medical devices, there is a definite need. They simply require transportation on a set day and time, which is perfect for long-distance on-demand delivery.
2) It's like we've entered a niche market. I think we've grown our presence in a sector where we've differentiated ourselves from our competitors and signed a major partnership with a company like YCH, so this is a huge opportunity for Deliver.sg right now.
Q.Your delivery service is a long-distance operation, and often involves products that need to be shipped and handled carefully. I'd like to hear about your business and operational know-how.
As we have grown in scale as an on-demand delivery service, the competitive pressure has also increased. It's a big market with a lot of potential, which means there are more competitors. That's why I thought Deliver.sg's brand was important. To strengthen our brand power, we are focusing on hiring delivery drivers (riders) directly as full-time employees as much as possible.
Q.What is the correlation between hiring riders full-time and branding?
Branding is all about customer experience. It means that neither the restaurant nor the rider should cancel an order against the will of the user (e.g. a customer ordering food). It also implies that the order should be delivered safely and flawlessly. When we provide such a quality customer experience, why not make the user remember our name and choose our service?
So we ramped up the number of full-time employees among the riders who carry the Deliver.sg name, and now 40% of all Deliver.sg riders are full-time and 60% are freelancers. I think we are unique in that most of our competitors rely 100% on freelancers.
Let me give you an example: freelance riders are overwhelmed and sometimes work 30+ hours. The more deliveries they make, the more money they make, and the more they sacrifice safety. If they're not safe, their families are at risk, and that's not healthy for the company, the restaurant, or the user.
On the other hand, full-time riders have the security of a steady paycheck. They understand that the company will cover the costs and insurance associated with the delivery, while also ensuring their safety.
Of course, the form of employment is up to the rider. If a rider says, "I still want to freelance to have more freedom with my time," or "I want to earn more by working on other services or platforms," then yes, it's possible to hire them as a freelance rider.
But I would tell them that (if they stay freelance) they are missing out on the opportunity to grow strongly with Deliver.sg. Our team is looking to establish a credible brand as a platform business and grow business-wise and organizationally.
Q.Your perspective is that hiring riders full-time can have an overall positive impact on the brand image.
This also works for our partner restaurants. (Since Deliver.sg manages the riders directly), from the restaurant's point of view, they get the experience of the identical rider coming on time, which makes them feel like;
'Oh, they're getting a 1:1 match between the restaurant and the rider.’
This allows Deliver.sg to confidently make a value proposition to restaurants that states,
"We'll take care of the delivery, so you can concentrate on running your restaurant".
It's also a smart way for Deliver.sg to increase trust through riders, which allows us to build a new business model - Delivery-as-a-Service (DaaS).
Principles of customer service & Delivery as a Service platforms
Q.Deliver.sg's delivery service is described as "providing 'DaaS' to each partner restaurant". Can you elaborate on the concept of DaaS?
Deliver.sg is expanding to become a 'platform' for long-distance delivery'. We are offering delivery services in 4 main categories.
1) On-demand delivery (real-time)
2) Fixed delivery
3) Delivery with a 30% commission
4) Delivery with no commission (SAAS based B2B)
SaaS based B2B (part of DaaS) operates on a monthly subscription model. There are three subscription plans (Silver, Gold, and Diamond). Restaurants that subscribe to the DaaS service can utilize these 4 categories of Deliver.sg as they wish. Restaurants that have not adopted the DaaS monthly subscription can only use 3) Delivery with a 30% burn-in fee.
- Silver : SGD 100 per month
- Gold: SGD 250 per month
- Diamond: SGD 400 per month
Furthermore, Deliver.sg offers various incentives for restaurants to adopt the subscription model. For instance, restaurants that subscribe to the Gold and Diamond plans get free marketing, free video, and more. Restaurants that subscribe to the Diamond plan can also receive advisories based on Deliver.sg's analytics of their order delivery data.
So Deliver.sg is not just a meal delivery service, but a tech startup that is creating new revenue streams by providing a platform as a 'delivery service'.
Q.What are the metrics that Deliver.sg considers important for the business?
In 2022~2023, Deliver.sg made 66,500 deliveries, which equates to an average of 182 deliveries per day. With 12 full-time riders and 50 freelance riders at the time, we believe we have demonstrated operational efficiency. Our revenue in 2023 was SGD 1.7 million.
In addition to this, there's another metric that Deliver.sg puts a lot of emphasis on. These are 'average order value' and 'repeated orders from the same customers'. The average order value is SGD 67 and the number of repeated orders is three, which means that on average, the same user reorders three times per week.
Q. You seem to place a lot of value on whether your customers use your service repeatedly. I was wondering how you deal with your customers to increase that metric.
As I mentioned earlier, we focus on customer service because customer experience is very significant in building a brand. To give you another example, for our long-distance food delivery service, we have two principles for customer service.
First, you need to make sure that you have clear contact points for customers to resolve any issues that arise.
For instance, what if a customer orders eight pieces of food and one of them is missing? The customer is bound to be 'hangry' and upset - food is such a sensitive item. If this happens, the customer can call Deliver.sg right away. We then give the customer two options: re-deliver the food or refund them straight away.
If they choose to request a refund, we take care of their needs within five to ten minutes. We approach the customer response process differently because our team's business philosophy is, "It's their money and it's valuable." We want them to be happy when we solve their problem, and when they're happy, they're more likely to recommend our brand to others.
Secondly, we need to anticipate issues and guide users in advance.
In Singapore, we have a lot of rainy days. On weekends, the traffic is very bad. To prepare for these mishaps, we ask customers who order in advance (since we do long distance delivery), 'Do you think you can wait for more than an hour?' If they say they can't, we don't take the delivery.
Of course, we've heard of other competitors saying, 'It'll only take 20 minutes!' But we don't believe in making false promises to customers, because it can negatively impact the customer experience.
How a Singapore delivery startup is expanding its footprint
Q.I read that Deliver.sg is planning to expand to India and other key nations in Southeast Asia, such as Vietnam, Cambodia and Malaysia. What criteria do you follow in choosing your service areas?
We don't prioritize big countries and cities as there are already big players there, so the competition will be fierce. Rather, we want to go to smaller countries and cities to establish ourselves as a dominant delivery service with a high market share (like a king👑). We expect that there is enough market (volume) in those areas to win the business.
We will also introduce DaaS in these markets to diversify the platform's revenue structure.
Q.In 2024, Deliver.sg acquired Busybee, an Indian delivery service. I'd like to learn what your plans are for the future.
If Deliver.sg were to enter a new market and start from scratch, it would probably take too long to grow. So strategically, we decided to acquire a company that is already positioned in the market.
Busybee is a delivery company that has been operating in India for the last four years with about 317 locations. The acquisition is now finalized. We've revamped the Busybee platform and we're running it in pilot mode. The brand will be called 'Busybee powered by Deliver.sg'.
Q.Deliver.sg is looking to broaden its product offerings beyond long-distance food delivery to include medicine, medical devices and grocery delivery. Can you tell us more about your expansion plans?
For pharmaceutical and medical device delivery, we have a separate team. It's a specialized area, so we've created a structure where we've hired a person who can deliver these products, and they get to keep the commission.
I would say that grocery delivery and home appliance repair will be similar to food delivery, and we are considering hiring individual riders or repairers to provide these services as full-time as possible.
Q.Finally, what are your plans and ambitions for Deliver.sg going forward?
First, we would like to properly embed artificial intelligence into the platform and make it useful for on-demand delivery.
We have a lot of ideas. For example, if two or three orders come together in a similar area, AI can automatically recognize the orders, location, riders, and deploy one rider to bundle them together for efficient delivery in one go.
In another scenario, AI could recognize that a particular user has ordered sandwiches multiple times and plan follow-up marketing actions. We can imagine offering restaurants who are Diamond members of our DaaS subscription an offer to promote their sandwiches with push notification ads in the Deliver.sg app.
Secondly, we're also keen to make a mark in medicine and medical device delivery services (as highlighted above). In the long term, Deliver.sg's goal is to become an industry leader in revolutionizing the delivery sector with AI, while providing fast and reliable services in untapped markets.
Interview by May Jang (Link)
Written by Jinny Kim (underdogs)
*Find out the rising Asian entrepreneurs with their vivid stories and business insights!
Inside the K-Beauty Explosion: How One South Korean Startup is Reshaping Global Cosmetic Market
This India startup aims to deliver healthy meal from home-chef to your door : Here’s how they did
Why this Bangladeshi founder built a mental care app for young generation
0 Comments