Podcast: Getting Logistics Right In The Sharing Economy

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We spoke to James Middleton from Street Stream about the future of logistics and delivering everything from charcuterie and artisanal coffee to electronics hardware.

Chaz:    I feel especially lucky today to be talking to James, only because the logistics market in London is quite a scary one, but anyway, welcome James. How are you?

James:        I’m fine. Thank you.

Chaz:    Let’s jump straight in, so first of all just ever so briefly, just maybe introduce yourself to our listeners. Who is James Middleton? What do you do? Where are you from?

James:    I’m from London. My name’s James Middleton. I’m the CEO and founder of Street Stream. Street Stream is an on-demand/same-day delivery network that’s based around a website for customers and an app for couriers. So what happens is that customers who want a delivery will put their job on the website and that will send an alert out to all the couriers with the app, who can then quote on jobs. So it’s very much a marketplace for individual couriers that want to work for themselves.

Chaz:    Great. That brings me on to very quickly talking about how is the logistics market, in your eyes, evolved particularly in London over the past five years?

James: There are several big trends going on. First of all, there’s huge growth in the e-commerce market, which is measured in different ways, but it’s in tens of billions. The figure I see is £80 billion. That’s growing at about 15% a year, so it’s a very fast-growing market, the b2c market, which is now complementing the traditional uses of couriers, the b2b market. One very powerful trend is towards more timely and more precise delivery. So the days of having to wait in all day for someone to deliver I think are increasingly numbered. People are increasingly demanding quite narrow delivery windows. So we offer 20-minute delivery slots. I’ve seen research that says people will pay twice for a two-hour window what they’d pay for a four-hour window.

Chaz:    The question that I have, James is around the competitiveness of the market and what you see going on there. Certainly food delivery is one aspect, but that’s certainly not all that the delivery market has to offer, right?

James:    No. Not at all. We’re not involved in takeaway food at all really. In takeaway food, it’s a particularly crowded delivery space with the likes of Uber Eats and Deliveroo and the Gins and QuickApps of this world. We’re not really involved in that. I would really characterise that as the bottom end of the market. That’s where margins are very low because the items being delivered are extremely low value. I think that’s the area which is particularly susceptible to a shake out of some of the existing companies. Also, in the long run, it’s a sector which is particularly vulnerable to the couriers being replaced by driverless vehicles and suchlike.

Chaz:    I think a lot of people wonder around this drone delivery. There’s all this hype around drone delivery now. How serious are you about drone delivery?

James:    I think drones themselves, aerial drones that is, are not likely to have a major role in London for quite a considerable amount of time. Aerial drones are great for open spaces. The basic problem is at the moment that each drone has to be flown by an individual, and that individual is going to be no cheaper than a driver, and probably actually more expensive. So the economics aren’t there. Going ten years or fifteen years into the future with a certain amount of artificial intelligence, these drones can fly themselves and avoid colliding with each other, you can potentially see the future of tens of thousands of these things crisscrossing London, but even then there are issues like do people really want to have to come out of their house in the rain for a drone to come down and hand to them?

Chaz:    That’s one that certainly always scares me. I’m just not sure whether I’d do that, and I certainly wouldn’t like to open my window and maybe have it land in my bedroom. It really depends on the size. You’ve obviously done fantastically well with Street Stream, but how do you stay ahead in such a capital-intensive market as well?

James:    We have a particular USP. I think we are unique in this respect, in that our customers are able to pick individual couriers. Like book an individual who quotes on the network, and why that’s important is that a lot of our customers like to be able to book the same couriers again and again because they’re reliable, or they get to know the couriers and they get to know which ones are reliable and likeable and polite. That’s actually turned out to be the most important USP we have. It was almost by an accident. That’s really important to a lot of our customers. It also creates a virtuous circle because couriers that know they do a good job for a company effectively it becomes their customer as well as our customer, and it creates a virtuous circle, so good couriers get more work, which really then creates better behaviour. Bad couriers quickly get eliminated from the network.

Chaz:    Something that I’ve always wondered is how you get around this problem of let’s say someone is looking to pick up a laptop from PC World and PC World closes at 5:30 but they’re at work and they’re not getting back til 8 pm. How do you get around that problem?

James:    On Street Stream, the customer is able to specify a pick-up window and a delivery window. In many cases, people might specify a pick-up window that’s based around the closing time of a shop where something’s got to be picked up, and they specify a delivery window which is convenient to them. So when they’re going to be home. A lot of our customers are actually more the other way around so that PC World is not a customer but we have similar types of businesses where they specify the pick-up window and they base the delivery window on when they know their customer’s going to be in. We’ve now got an API which allows integration into online e-commerce sites where those hours are effectively built-in to the pick-up window.

Chaz:    Fantastic. That was my next question around how you take something like this and really scale it. Can we dig into the API in a little bit more detail there? Can you maybe give us an example of the onboarding process of a client looking to use the API and what that would look like?

James:    Yes. So the API, it’s a public API. Anyone that’s interested I can give them the developer docs. It’s a fairly straightforward process to add-in to an e-commerce website. Effectively, what it is, it gives you an extra delivery option at the checkout basket. So as well as offering standard Royal Mail or next-day delivery, you’ve now got this option of your customers being able to select quite narrow precise windows, which some customers are really keen to pay up for, and on a same-day basis. So it’s a powerful competitive advantage for our customers to offer that.

Chaz:    Let’s go a bit broader then in terms of how did Street Stream come about? How does someone decide to start a logistics business?

James:    Well, I came from a completely different background. I was working in the city and was getting frankly a little bit bored of that. At the same time, I’m a very keen cyclist so I was cycling in and out of the city and just seeing all the cycle couriers’ crisscrossing the sort of bank intersection using technology from 1989 as if it was still 1989. A lot of the incumbent courier companies at the time were not offering necessarily a great service, hadn’t really kept times with the technology, and it looked very like the minicab industry before Uber came along. It was easy to see that really this industry could be blown apart by new technology. That’s what we’ve seen. There’s us and other insurgent companies that have used technology to allow couriers to work in a different way, to allow customers to book in a much more democratic process.

Chaz:    Fantastic. You actually have another secret weapon under your belt with Kerby. So what is Kerby, to start with?

James:    Kerby is a side project of ours. Basically, it’s an app for cyclists who get a puncture and in the future, it will be other repairs as well, so we obviously have a network of bike couriers, and bike couriers are extremely good at fixing punctures, through necessity and practice. In addition, we’re in the process of onboarding bike mechanics. So the way Kerby works is that if you get a puncture, you can just pull out the Kerby app and choose the inner tube type you need, and it automatically locates where you are, sends an alert out to anyone that’s got the receiving app, which is the Street Stream app, which is both for couriers and bike mechanics, and you can get a quote for someone to come to you and fix your puncture at the kerbside.

Chaz:     Fantastic. On a personal level, I could seriously have taken use of that quite a bit. I know you touched on it earlier about your prior role of your prior job was city-based. Fat Lama, as well as the podcast, we are very interested in everyone that’s taken the leap. How did that come about and what advice I think would you give to other people that are currently working in city roles may be toying with an idea?

James:    I actually in a sense was lucky in I got made redundant. I’d been thinking vaguely about making the move to do something entrepreneurial for some time and like a lot of people in the city, you get kind of trapped because the city has a way of keeping you there by dangling another bonus in front of your head and there’s all the stock and everything like that. Stock options and stuff like that. So it’s expensive to walk away. So in a sense, I was lucky in that I was pushed into making the psychological leap. All the redundancy money and options and stuff came to me and so I had the capital to go and build this. In terms of anyone that’s thinking actively of the leap, I would say that research your idea, research your market and be prepared for it to take longer than you think it would, both the building of the technology but also just the process of marketing and getting a business rolling takes more money and more effort than you ever thought it would. If you think you work hard in the city now, you don’t, compared to a start-up entrepreneur.

Chaz:    I honestly couldn’t agree more.  To finalise, James, we really wanted to talk about a more broader sharing economy style question now. I’m sure you’ve seen that the World Economic Forum released a video that contained certain statements, and one of the statements was around people moving away from ownership and people moving towards renting and still being happy. As a global trend, what are your thoughts on that?

James:    I think it’ll certainly go so far. Effectively, what Fat Lama does and other similar type sharing economy companies is effectively extends your neighbours, as it were. So back in the day, people might borrow the lawnmower from the neighbour. In a city like London that doesn’t really happen because people don’t talk to their neighbours, but also, the person you need to borrow from might be the other side of town. Your sort of product and similar products effectively enable that and negates the need for ownership of certain things. So yes, I don’t particularly want to own a three-tier ladder but I had to borrow one recently. That said, speaking for myself, even though it makes no economic sense whatsoever, I still like owning my car, and I don’t necessarily want to be renting a car, but maybe I’m just old. Maybe a millennial would have a very different take on that.

Chaz:    Talk to me a little bit about Street Stream and what your customer base looks like. What is your ideal customer?

James:    Well, I’m not sure we really have an ideal customer. A very typical customer is someone that is sending a prestige good. So we’re not in the takeaway food game really. For example, a lot of our customers are sending reasonably high-value items, where they want really polite and reliable punctual drivers and riders. So we do an awful lot of stuff with artisanal foods. So a lot of charcuterie. We work for coffee roasters, micro breweries, wine merchants. We do a lot of, for example, on-demand delivery of champagne, particularly on Fridays. On Mondays, we do deliveries of detox juices. So we do the tox and then we do the detox. In addition to that, there’s a lot of stuff which is time-critical, so, for example, we do a fair amount of work for companies that specialise in phone or laptop repair. You know what a nightmare it is if you break your phone or your laptop. You want it back as soon as possible. So they’re very interested in same-day delivery.

Chaz:    Talking about again driverless cars, obviously there’s this huge trend, it’s almost trendy to talk about driverless cars. Where in reality do you see that going?

James:    I think the first area to be affected by it will be what you might think of as the bottom end of the market, deliveries of curries or fish and chips or whatever, pizzas, and you already see a trial. There’s a company called Starship Technologies in Greenwich which has these little R2-D2 like things which are delivering takeaway food. I think that will continue. The next stage beyond that would be things which are a bit more tank-like where it’s a vehicle that drives along, it’s got a series of lockers and each customer has an app to open the locker. It can only go so far because there are certain customers that will always want a more personal touch. They want a courier to present an item. Then in the b2b market, delivery is often actually about finding a way around loading bays and in the bowels of some office building and it’s not ideal for a robot to be doing that, at least not for a considerable amount of time.

Chaz:    Thank you very much for coming in. It’s been particularly interesting to hear about you and the logistics market. James Middleton, thank you very much.  

James:    Thank you.

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