Inspired by the likes of Silicon Valley startups Instacart (a grocery delivery service) and Postmates (an urban logistics and on-demand delivery platform), Maarten Hemmes set up CarPal, a venture that provides on-demand same-day courier services in Singapore.
The business started in 2014 with Hemmes launching a website. After that, the Dutchman drew up a list of businesses, specifically bakeries and cake shops, which had potential use for courier services provided by basically anyone who has a car and is on CarPal’s platform. Then, he made calls to them.
“We found out that all these bakeries were having trouble with their deliveries. The cake is fragile and needs to go from Point A to Point B fast,” says Hemmes, who proceeds to explain a key difference between CarPal and traditional couriers.
“The more classic courier services have their own fleet, which means that those drivers have their own routes everyday so they cannot fly from one end of the island to another end to deliver a cake very quickly,” says Hemmes. “For us, with the shared economy model, we have drivers everywhere and you can get a driver right now to do it [a job] for you.”
Among its early customers are 12 Cupcakes, Emicakes, Cedele and Grain. While these businesses usually also have their own fleet of delivery vehicles and personnel, their resources are sometimes stretched and that is where CarPal can be useful, Hemmes explains.
“They have a few of their own runners but the overflow [of orders] goes to us,” says Hemmes, who adds that the company recently closed a S$1 million (US$700,000) pre-Series A round with a private investor.
Amongst the pool of 6,000 drivers on its platform, says Hemmes, are those who also ply the roads for ride-sharing apps Uber and GrabTaxi, and those with flexible schedules such as real estate agents and sales agents. These groups of people form 70 per cent of CarPal drivers.
Retirees (15 per cent) and students (15 per cent) form the remainder of CarPal’s driver population.
These drivers are tasked with delivering personal and legal documents as well, so there is a degree of trust that users place in and demand from them. As such, the startup has a mechanism of checks in place, including an initial interview before the driver joins the network, to weed out drivers who cannot be relied on to deliver.
“The second stage is, if you are doing your first delivery as a new driver, we will track what you are doing [on CarPal]. We will check in with the customer and with you,” says Hemmes. He adds that the company is considering integrating a system for rating the drivers within its website, which is the medium through which the consumer can request a delivery job. An app for consumers is slated for launch early this year. For drivers, on the other hand, CarPal has developed an app to view and procure jobs.
CarPal’s app for the drivers is tailored to reward those who react fastest to job postings. The app also has an algorithm that pushes jobs to drivers who are most likely to accept them based on their present location, their direction of travel, whether they have scheduled jobs and how the pickup and drop-off locations of those jobs tie in with new jobs, and preferred areas and times to drive in.
“Everybody [the drivers on the CarPal platform] can see it [the job]. If you open the app, go in there and scroll through it, you can see all the jobs unless you are blocked,” says Hemmes. “But the driver who comes up tops in the algorithm gets the [push] notification first.”
Pricing model has been profitable
The drivers who successfully obtain jobs stand to receive up to 70 to 80 per cent of the fees received for the ride — which is typically between S$15 (US$10.50) and S$25 (US$17.50) if the consumer requests for the delivery to be immediate, or S$8 (US$5.60) to S$10 (US$7) if the timing is more flexible and can be, for example, anytime in the afternoon.
“We tend to adjust the rate based on whether it [the delivery request] is last minute, if it’s a very hard location, or if we can’t find any drivers. The 20 to 30 per cent [of the fee received for each ride] has been profitable for us,” says Hemmes, who declined to reveal revenue or profit figures.
From courier to concierge
While CarPal is largely a courier service for now, Hemmes has plans to turn it into something more.
“When you talk about a concierge, you do a little bit more than just bringing stuff from A to B. As a concierge, you listen to the consumer and say, ‘What do you need? What is it you want?’ It’s more than just driving around,” says Hemmes.
Going down this path of a concierge service is to cater to the consumer market, says the former lawyer.
“For example, you can ask the driver to go to 4 Fingers [a fast food outlet popular for its fried chicken] at Orchard Ion [a shopping mall in Singapore], stand in line for 20 minutes, buy the chicken and bring it back to your home so you can eat it,” says Hemmes.
The ability to understand the needs of consumers and alleviate pain points for them helps startups to find some measure of success. In this regard, Hemmes has already displayed such an ability, which has led to the creation of CarPal’s sister company.
PetMate is the result of enquiries that CarPal has received about pet transportation services from grooming stores.
“We started talking to these [pet] grooming stores, helped them transport pets from the store to the [pet] owner, and found out that it’s actually very hard to get around with a pet,” says Hemmes. “We also started talking to consumers who have dogs. They call a cab, it shows up, and then [the taxi drivers] say they are not going to take the dog in the cab.”
So, before launching PetMate in October last year, what Hemmes did was to survey amongst CarPal’s pool of drivers to assess if there were enough of them who would offer pet transportation services. Drivers who offer to provide pet taxi services would not be allowed to take on deliveries, which involve food, to adhere to local regulations.
Hemmes claims that PetMate, which is available as an app for both driver and consumer, has notched between 2,000 and 3,000 downloads in four months, with an average of 10 to 20 rides per day.
Though PetMate charges a premium for its rides (a single trip starts from S$27 while a round trip starts from S$49 with no extra charges for multiple human and pet passengers as long as they fit into the vehicle), Hemmes is banking on the convenience it provides to pet owners to gain traction.
“If you want a cheap ride, it’s probably better if you negotiate with a cab driver. But if you want a ride that you can book in advance, bring you to Sentosa where you can spend the day at the beach [with a pet], then have the same driver pick you up and drive you back, PetMate can provide that service,” says Hemmes.
While, to the casual observer, it might seem like a distraction to be running two businesses at once, Hemmes has a different perspective.
“I never intended to launch two businesses. We did that [adopt different names for the two services] for marketing purposes but, from our perspective, PetMate’s [part of] the same business because it’s [running from] exactly the same backend. The CarPal team can also deal with the PetMate operations,” says Hemmes.
The capability of CarPal’s (simultaneously PetMate’s) team — currently five strong, with plans to double by the end of 2016 — is essential to an early-stage startup in delivering service excellence and retaining customers, especially the bigger merchants.
“We work with customers like Grain, which deal with high volume [of orders]. For them, it’s important that deliveries happen on time. Sometimes, things will go wrong but you earn the trust from the customer by solving them [through CarPal’s support team],” says Hemmes.
Illustrating the point, the former lawyer shared an anecdote relating to the delivery of a wedding cake by a CarPal driver.
“The cake was supposed to be delivered at 6 PM. He [the CarPal driver] called me at 5:30 PM saying that his car broke down and that he was waiting for a tow truck,” says Hemmes. “We only had 30 minutes to fix it. One of our support team members was very hands on. He said, ‘I’m going to do it,’ and jumped into his car.”