How Porter Became a 8000 Crore Rs Logistics Company? (Startup Case Study)

00:00 Intro
01:26 Understanding the Problem
03:29 How Porter Started
05:51 Early Days
07:53 Things Turned Bad
09:37 Rebuilding Porter
12:31 Future for Porter

In FY-2023, India's logistics costs exceeded 14% of its GDP, significantly higher than China's 10%. This highlights the inefficiency and high expenses of India's supply chain compared to more efficient nations like Vietnam and Thailand. The Indian government has acknowledged this issue, launching a national logistics policy in 2022 aiming to reduce these costs to 8%, aligning with developed countries. However, government policies alone are insufficient; the private sector and startups must also contribute to addressing these inefficiencies.

One such startup, Porter, has emerged as a rapidly growing logistics company in India. Inspired by Uber's transformation of the taxi industry, Porter aims to revolutionize last-mile logistics in India, targeting a $200 billion market. To understand Porter's impact, it is essential to comprehend the problem it addresses: intracity logistics, which involves transporting goods within a city. Efficient logistics are crucial for economic productivity, and in India, 90% of the sector remains unorganized.

Porter was founded by Uttam Digga and Pranav Goel, two IIT Kharagpur alumni who identified the inefficiencies in the logistics sector, similar to those in the pre-Uber taxi industry. Small business owners faced challenges such as difficulty finding drivers, high costs, and unreliable delivery times. Inspired by Uber's success, Digga and Goel sought to create a marketplace connecting truck drivers with customers, improving vehicle utilization and reducing costs.

In 2013, while working as analysts at JP Morgan, Digga and Goel were inspired by Uber's use of technology to optimize the ride-hailing industry. They noticed numerous light commercial vehicles parked unused and realized the potential for a similar solution in logistics. They spoke with over 500 truck drivers and discovered the inefficiencies in their industry, with drivers averaging only 1-2 orders per day despite the capacity for 4-5. This led to the birth of Porter, aiming to replicate Uber's model for goods transportation.

Initially, Porter operated manually with Digga and Goel dividing responsibilities: Digga onboarded truck drivers, while Goel secured customers. Using just a phone and Google Sheets, they managed the operations without an app. As their customer base grew, they brought in Vikas Choudhary, a tech expert from IIT Kanpur, to develop their technology platform. By pitching their service as 20% cheaper, Porter quickly attracted over 500 business customers, processing 3,000 bookings monthly and generating significant revenue.

Porter's early success enabled them to raise $500,000 in seed funding and $5.5 million in a Series A round. However, growth brought challenges. In 2015, flush with funding, they prematurely expanded into intercity logistics, an already crowded market. This expansion strained their resources, leading to a temporary closure of the new vertical and layoffs. Additionally, their initial pricing strategy became less effective, necessitating a focus on improving service quality.

To enhance customer experience, Porter ensured timely driver arrivals and deliveries. They leveraged their app to track drivers via GPS, providing real-time updates to customers and reallocating drivers in case of delays. They also addressed inefficiencies at loading and unloading stations by introducing per-minute charges, and incentivizing punctuality among customers.

These improvements led to significant growth, with Porter ensuring that 80% of their drivers received return trip orders, increasing their earnings by 20-30%. This efficiency attracted attention, resulting in Mahindra Group merging their logistics platform, SmartShift, with Porter and investing $10 million.

In 2020, Porter expanded into two-wheeler parcel delivery, quickly surpassing established competitor Dunzo in Bengaluru. Their success continued, with a $100 million Series E funding round in 2021 and expansion to over 20 cities. By FY23, Porter achieved a revenue of ₹1,750 crore. Despite their scale, Porter maintained high service quality, reflected in their 4.8 rating on the Google Play Store from over 650,000 users.
Porter's future holds vast opportunities, particularly in the $40 billion intracity logistics market and the $200 billion intercity market. With cost-effectiveness and timely service as their USP, Porter aims to replicate their intracity success in intercity logistics. They are also incorporating electric vehicles into their fleet, reducing operational costs and environmental impact.
Additionally, drone deliveries present a potential growth avenue for Porter. While still in its early stages in India, successful drone delivery trials by other companies indicate its feasibility, especially in regions with poor road infrastructure.

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