Interview with Khaled Naim CEO of Onfleet on the state of Last Mile Delivery and Fleet Management

TRANSCRIPT:

Darius 0:02
Welcome to the retail tech podcast. My name is Darius Vasefi, producer and host. And today I am speaking with Khaled Naim as CEO of a company called Onfleet, which is in the last mile delivery business. And this interview is being recorded on clubhouse. And we'll take audience questions after the first set of conversations with with the guests. How are you today Khalid?

Khaled Naim 0:32
I'm doing well. Thanks, Darius. How are you?

Darius 0:34
Awesome. Thank you. I hope I pronounced your name correctly, or close enough?

Khaled Naim 0:41
As I pronounce it.

Darius 0:42
Okay. All right. Cool. Well, thanks for joining me today. Yeah, I mean, last mile delivery is what every retailer is probably thinking about. So I was really interested to learn more about what you are doing at arm's length, and maybe start with a quick background on yourself. How did you come about to start this company?

Khaled Naim 1:08
Sure. Yeah, so quick background about myself. I grew up in the Middle East and Dubai for most of my life, and then moved out to the US for undergrad, went to Michigan where I studied computer engineering, and then moved to DC for a couple years before moving out to to California, where I did my MBA down at Stanford.

And that's, that's really where we got started. My co founders and I connected down there, I met David, he was setting because he was doing his master's in computer science at the time. And I put my other co founder mackell. I've known since high school, actually from from Dubai. And so the three of us started working together on different projects, we just kind of started hacking away at a couple of a couple of projects. I had, I had some ideas that that I kind of wanted to see through and, you know, we work together to launch some products, and one of them kind of got a little bit of traction. At the time, it was called Addie, short for address, but it was really focusing on location communication.

So it was kind of tackling this problem that exists in many emerging markets, which is that street addresses don't really exist. And in many cases, and if they do, sometimes they're not really functional, or just ineffective and inefficient. It's actually the case in in the West as well, you know, street addresses are pretty old, standard, and they're not universal. They don't, you know, they're they're kind of cumbersome to communicate, especially for, you know, for machines to read them, you have to geocode an address into a coordinate. And so there are a lot of difficulties that that sort of the traditional addressing system presents, especially in this day and age. And so we sort of set out to solve that problem, we developed a simple web application that allowed anyone in the world to create a URL that represents a physical location.

So it was kind of like a bitly link for, for your address. And we worked on that for a couple of years. So really the majority of my MBA, I was kind of working on Addie. And that's what got us into logistics. Funnily enough, you know, a lot of the companies that we were talking to, sort of trying to sell, sell this, the service to on the b2b side, or delivery companies, obviously, you know, a lot of the difficulties that exist around addressing in emerging markets focus on on delivery, and logistics.

So we were talking to a lot of the, you know, ecommerce companies, couriers delivery services, and trying to sort of offer them an easier way to, to find locations in these in these places. And, and along the way, just sort of identified a really interesting kind of gap in in last mile logistics, which is that most of it was being done manually. So a lot of pen and paper chat apps, text messages, spreadsheets, phone calls, you know, this is how businesses were managing fleets of drivers.

And we just saw this as a really inefficient way to do things. And you know, at the same time, we saw a lot of interesting companies around us in you know, at the time in Palo Alto that were sort of emerging, effectively just using smartphones to better manage fleets of drivers. And, you know, we sort of saw a lot of reinventing of the wheel happening there, and saw that this opportunity to build the infrastructure layer, this sort of technology, foundation for, you know, any retailer to be able to manage a fleet of drivers more efficiently and effectively and sort of scale a local delivery. operation and this is around the time where, you know, the consumer shift was starting to be apparent, you know, it was clear that consumer expectations were on the rise, and retailers needed to figure this out. Obviously, this was, you know, this is 2015 2014. So much before COVID. And then, you know, obviously, over the last couple of years, it has really accelerated and so that's Yeah, that's, that's kind of the complete history in a nutshell.

Darius 5:32
Also, so the company started in 2012, officially, is that the date?

Khaled Naim 5:40
So that's what we incorporated at the time, Addy, originally actually tiny adder that was before we rebranded to Addy, but that was 2012. Yeah, and then, you know, for a couple of years we were working on, on the addressing on the addressing system. And then and then in 2015, we've launched on fleet, so we effectively pivoted to more of an end to end sort of last mile delivery management software.

Darius 6:06
Okay. So I mean, this this topic and the technology for last mile delivery. It I mean, it seems simple on the user end, but just having a little bit of a, you know, back back end experience, I'm sure it's pretty complex on the back end. Let's talk a little bit about how, what does the actual the solution or the product do for customers?

Khaled Naim 6:36
Yeah, and that's a great point, you know, when we first got started, that was sort of the lens through which we were looking at this space was really through the consumer experience. So we saw the consumer expectations rising, and this real time kind of, you know, on demand, sort of same day delivery experience. You know, we started from that, that experience for the consumer, and then sort of worked our way backwards into the operations of the business and kind of built the tool out to support that sort of customer experience. And so what it looks like from the business side is, you know, there's a simple kind of modern web based dispatch dashboard, so runs in a modern web browser, and allows the business to see exactly what's going on out on the road in real time. They can optimize routes, dispatch, their deliveries to drivers, they can also, they basically can see, you know, it's a bird's eye view is kind of a command center. So the business like operations manager or dispatchers are, you know, really spending the majority of their day in this tool. And then the drivers are running our mobile app on their iOS or Android device. So we have native iOS and Android apps. The top rated apps have this, you know, in this category on both on both app stores, and the drivers, you know, it really serves to track the drivers location, so we know where they are. And we can surface that to the business as well as to the end consumer. And it also serves to send those to send that work out to the drivers. So you know, when when a task is assigned to a driver, you know, they get a push notification, and they can see all the information for that specific task and their app. And then they kind of go about their day starting and completing those tasks through the app. And when they completed delivery, they can collect proof of delivery from the app as well. So they can scan barcodes, take photos, collect signatures, verify age, all through the app, and you know, every step of the way, every action that they perform, or even automatically, when they enter, say, a geo fence near the destination of the delivery, the business is informed and can sort of see exactly what's going on in real time. So all the status updates and everything is, is being pushed back to our back end, which goes you know, then pushes to our to our web app. And that's, you know, so that's kind of what happens on the on the on the business side. And all of that obviously goes to enable this delightful customer experience.

Darius 9:12
So, so customers use the on fleet app, they don't actually integrate on fleet into their own apps. So for the on the driver side, you mean? Well, I guess let's talk about all the sites, whatever it is.

Khaled Naim 9:30
Yeah, so the typical, typically the integration point is with a client's point of sale or online ordering system. So you know, wherever the consumer is placing the order, sometimes it could be like a mobile app that the the the business owns, right. So if they have their own customer facing app, and the consumer places an order through that app that will generally hit our API and create a task or multiple tasks on our own. And then the business sort of manages the deliveries from there through on fleet either through, you know, our web dashboard or through our API. So basically everything that can be done through our dashboard can also be done programmatically through our API. So most of our kind of larger, more sophisticated clients will have a fairly robust integration with our API. So they're creating tasks, they're they're sort of looking up data, maybe pushing data into their own systems, through our API, the drivers are generally you know, pretty, pretty much always running the on fleet driver app. So, you know, hundreds of 1000s of drivers have downloaded this driver app and are executing the work through the fleet app, we have recently started offering an SDK. So Mobile SDK is that our customers can use an embed in their own driver app. So if they want to build, you know, their own branded driver app, maybe with their own workflows, they can actually do that now through our SDK as well. And on the on the consumer facing side, so if you know, if you're a customer, and you're ordering, you're ordering something from one of our clients, then, you know, you, you'll typically get a notification saying, you know, your deliveries on Route, there might be a link there that lets you track that drivers location through a web view, all of that can be embedded in our customers, mobile apps, as well. So they can actually either use our API to create their own tracking experience, or they can embed our embed our tracking experience through a WebView and their own app. So it can be pretty embedded. It's pretty white label. So you know, for the consumers kind of invisible that, that on fleet is supporting this delivery operation. But, but that's sort of that's typically the way that our product is integrated with our customers.

Darius 11:51
Okay, so on the under part of the actual customer, let's say retailer, they typically either integrate, use your API, and now the SDK as it's been released, or they can just log into and use your dashboard. That's how they manage their work. The drivers use the on fleet mobile app, and then the shoppers or the consumers pretty much interface with like text messaging and email, right? Or is it just text?

Khaled Naim 12:27
Yeah, that's a great yeah, so so the consumer experience, obviously, they're interacting with our, you know, with our clients, so they're, you know, maybe they're shopping at like, sweet green.com. And they're ordering their food that way, or they're, you know, they're getting their prescription medication from Aalto or capsule. So they're, they're interacting with whatever front end, our clients have built for the consumer side, when it comes to the actual sort of last mile like communication. So the text, it's, it's a mess out of the box. You know, when the drivers on Route, they get a text message saying your drivers on Route, maybe there's an ETA and that that's all completely customizable by our customers. So they can go into the dashboard and configure exactly what triggers will send out the notification, what that what that notification is going to say. And if they're going to have any merge tags in there, like an ETA or the drivers name, they can do that as well. And then they can also include a tracking link, so the recipient can, can just tap on that and see their drivers location in real time, and actually communicate with the driver too. So through that tracking experience, the customer can call the driver, they can message them, the business can choose where to route that call or message so they can actually route it to their own support number, for instance. So it's a very kind of flexible and customized customer experience that you know, our clients. So the business can also actually trigger email notifications, they can trigger push notifications, through web hooks. So we also offer web hooks through our API, which can allow the business to to customize this.

Darius 13:59
Okay, yeah, I just wanted to, I guess, say all of these different pieces, because, again, it for people who are not in the in the business, they may not appreciate the complexity of all the different sides of this business.

Khaled Naim 14:15
Yeah, there are a lot of moving parts. And you know, from from on fleets perspective, we really, you know, out of the box, a business can sort of create an account, start using honestly, within a matter of minutes, have, you know, the driver app downloaded on their phone and start doing deliveries, you know, without much complexity, it's really once you start, you know, managing a large operation, when you're doing hundreds or 1000s of deliveries a day, you know, then then, you know, the deeper integrations start to make more sense. And we work with customers doing, you know, 10s of 1000s of deliveries a day. And those can be you know, fairly complex operations and typically have, you know, fairly comprehensive integrations with our API. And those can take, you know, weeks or sometimes even months to build out.

Darius 15:03
Okay, yeah, I'm looking at the, the pricing and the different plans on the website and looks like you have some really easy to start options to get people started and familiar with the, with the tools and different things. And is it? Is it just is it like a software as a service SaaS model plus usage? Yeah,

Khaled Naim 15:25
that's exactly right. Yeah. So, you know, if it's a fairly sort of small operation, they don't need all the bells and whistles, they can get started for 149 a month. And that'll include kind of the core functionality, that's all included in that starter plan, they want to build more of a custom API integration, they want to take advantage of some of the more advanced features like route optimization, then, you know, they'll certainly start moving up the tiers, they'll be in the basic tier, which, you know, 349 a month, so still quite affordable. Those tiers include a certain volume of tasks or deliveries. So you know, the basic, they have 2500 tasks included. And then if they exceed that threshold, then they just pay an additional per task rate. So in that tier, it's 16 cents a task. So that per task grade will typically range anywhere from you know, 12 to 20 cents per delivery.

Darius 16:15
Okay, and the task is pretty much a delivery, right? Or is there more to it? Yeah.

Khaled Naim 16:22
Yeah, it's usually a delivery, it can be a pickup as well. So a task, the way you know, it's sort of the core unit of measure, we think of it as a single sort of work that needs to be done at a specific destination. So so if you know, if there's a bunch of items to be picked up at a single destination, that can be one task. And if there are, you know, two things that need to be dropped off at two different locations, that will be two tasks.

Darius 16:49
Okay. Also, if, if there so it's by, so let's say if a driver picks up two separate packages from a restaurant and delivers them to the same location, that's two tasks. That's right. What How do you track that? Because Do you track? each package is gonna have its own like barcode?

Khaled Naim 17:14
Yeah, exactly. It could be Yeah, it's super, it's really very flexible. So really depends on the needs of the business. So we support a lot of different use cases. So you know, a scheduled kind of long delivery route for a company like imperfect foods will look very different than, you know, a very hyper on demand delivery, like a restaurant delivery, or delivery from one of the quick commerce, folks like Flink or deja, right. So we support all of it. And we've kind of broken down the problems into you know, tasks and drivers effectively, and they can tasks can be created and assigned to workers and linked together in different ways to support you know, basically any type of delivery model. So, you know, if there's multiple, if there are multiple items that need to be picked up from the same store, then you know, those can be created as one task with multiple kind of line items, multiple barcodes. Or they can be two separate tasks as well. So it really depends on how the how the business wants to handle it.

Darius 18:16
Okay. All right. So just to be clear, on fleet does not provide the drivers, right, you just provide the software and the infrastructure. That's

Khaled Naim 18:26
right. That's right. Yeah, we don't we don't provide drivers However, we do have a number of delivery service providers in our network that we can always connect our retailers to so if a customer, you know, if a company comes to us and says hey, we you know, we want to start offering same day deliveries to our customers in Manhattan, you know, we can we can put them in touch with one of our partners in Manhattan, who can actually fulfill deliveries for them. And through on fleet, a retailer can connect with those delivery service providers, and kind of manage everything in one place, even if they're connecting with different many different third parties. And so, you know, we kind of act as a collaboration hub for those for retailers in those scenarios. So they're creating the work, you know, they're creating the tasks in on fleet, and delegating them to the third party for execution. And then that, you know, courier is getting those those orders through on fleet as well. And then they're going out there assigning that work to the drivers, they might be optimizing routes that contain tasks for multiple clients of theirs, and then the drivers are going out and completing those tasks for different clients. And all the while, you know, the consumer is getting the experience that the retailer has configured. So you know, if even if the driver has many different tasks for many different retailers, each of those customers will automatically get the experience that the retailer has configured. The retailer, you know, sees in one place and their dashboard, exactly what's happening with all of their different deliveries across all of their different query. And then, you know, each courier can see, you know, in one place all the different clients orders, and all of their drivers out on the road. So we we fully support a third party use case as well as an in house use case. But we don't have our own drivers. We never, you know, we don't hire drivers directly ourselves.

Darius 20:20
Okay. Yeah, I see that you have a pretty, pretty extensive partner list on the website. Everything from platforms to service providers to? Yeah, I mean, there's a lot of names that I know, personally, that is so. So this is great, because that's like one of the strains of really any, any technology company, especially like Software as a Service tool like this, is the strength of the partner network is really important. Yeah,

Khaled Naim 20:53
yeah, that's absolutely right. I mean, you know, we are part of a bigger ecosystem. And so you know, from the very beginning, we've we've sort of focused a lot on our API's so that those integrations can be, you know, rapidly deployed and are easy to build. We have a sort of certification program where we certify integrations. And we connect, you know, we have integrations from point of sale and online ordering to delivery, third, party orchestration, driver, analytics, insurance, hardware. So you know, we have companies like integrated communications that can provision mobile devices, mobile device management, really, yeah, I mean, driver sourcing, you name it, we have partnerships and integrations across pretty much every segment and every sort of, kind of corner of the logistics stack.

Darius 21:49
Okay. Well, as you can see, I'm asking a lot of like, really detailed questions, maybe a little bit selfish thing, because I'm actually going through the same process for my company. So we're trying to figure out what we're going to do for delivery. So Oh, cool. Well, you should you should talk to our sales team. Yeah. Yeah, so I'm definitely going to dive in and learn more. But I mean, you know, in general, this is, what I find myself is that a lot of times, you know, people don't really understand the details of an integration like this with a partner enough to plan correctly. So that's, that's another reason that I'm actually doing this podcast from 2016 is to bring out some of the implementation details, so that when a retailer or somebody listens, they can actually understand more than just the marketing talk, for example, or just an overview of something. Anyway, I hope. Yeah, I hope that's helpful for people. I think we can, you know, probably go into more on the business side. So delivery itself is like really moving fast. But I probably I'm sure, I don't know the level of how fast it's changing. Can you give me some, some information as far as like, what parts of delivery are really like, being innovated fast? Or faster than other parts of it? Yeah, yeah.

Khaled Naim 23:27
I mean, yeah, over the last, you know, really, since the beginning of the pandemic, and April in May, of 2020, we onboard and hundreds of new accounts. So we had about 200, more than 200 customers kind of come in and start using auto fleet and our existing customers obviously, saw a huge spike in demand. And this happened across the board. I mean, this was everything from grocery and restaurant, alcohol, to cannabis, you know, you name it really, every, every segment with a couple of exceptions, obviously, the b2b segments, catering, for instance, dry cleaning, also, you know, they saw that, but, but really, the majority of delivery centric businesses have huge surge. And that's, that's continued. So you know, even over just since the start of this year, we've we've already grown almost 50% in delivery volume, so you know, the growth is continuing. It wasn't just sort of a one time thing and and it's happening across the board. And some of those other segments that b2b segments are starting to come back, although not, you know, not nearly as strong as they were pre COVID. What we've seen Interesting, interesting trends, sort of in 2021, we've seen this kind of rapid, rapid growth of the quick commerce and kind of micro fulfillment, dark store, grocery segments. So there have been you know, there's obviously in the US there's companies like gopath, and in Europe, a lot of them have kind of emerged in Europe and the UK and Europe. Many companies like Flink and deja and zap, and Jiffy, there's all kinds of interesting, interesting things going on in that, you know, in that space. And we've been, you know, really lucky to support a lot of these companies get to market very quickly and scale very quickly. And these are companies that are really innovating. I mean, they're delivering goods to consumers within 1015 minutes. There's one out here in San Francisco called food rocket, there are some in New York. So it's, it's really an interesting, it's been an interesting sort of space to watch and to be a part of. And now, you know, we've, we just announced last last month that we powered our 100 million deliveries since our launch. So we and we're now doing, you know, about a million a week, so we're, you know, continuing to, to grow quite rapidly, even in 2021.

Darius 25:59
Yeah, that's, that's pretty impressive. I mean, it's, I think, you know, you can look at things. It's almost like the BC, ad before Christ on Africa, ISIS, like before pandemic, and after pandemic. Everything is different, a lot of things are significantly different. One question I ask, you know, usually is, do you think that what we're saying after the pennant and after pandemic, some of the changes are just like temporary, and we're going to go back to previous patterns, or you think most of the changes are going to be permanent?

Khaled Naim 26:45
I think I mean, I definitely think some of them are temporary. I mean, we've already started to see some, especially in restaurants, some restaurants kind of start shutting off their delivery program, as people have started to come back into the restaurant, and they don't have the kitchen capacity to actually serve the additional demand from deliveries. So just like a couple of weeks ago, I experienced this, you know, I tried ordering from a restaurant that I used to ordered order from, and they, you know, they stopped doing delivery, during their peak hours. So that's been interesting to see, you know, I think that some of the restaurant delivery will roll back, but I think the consumer side of things is here to stay. And so you'll have other things like dark kitchens, or, you know, cloud kitchens, continuing to kind of grow and serve that additional demand. Right. So I think, you know, for the most part, we'll continue to to see growth in most of these delivery categories, I think consumers have, this really accelerated the trends that, you know, otherwise would have probably taken about five or six years, but they, they were accelerated over the course of 12 months. So I think, if you look at it from that lens, you know, consider like, the the growth and the percentage of consumers that have engaged have ordered groceries online, or have ordered food online, has grown substantially. And I don't think you know, will, will see this sort of growth that we saw, like mid last year, again, but we're gonna see sustained continued growth for for a very long time to come.

Darius 28:25
Yeah, I mean, this is the, the big question a lot of people have in retail is that, what is this really like a pendulum effect, and the pendulum is going to, you know, swing back to a certain point and the markets are seeing, like, you know, the retail sales went down, actually in, I think, in July, a little bit from what they had gone up to. So.

Khaled Naim 28:54
Yeah, it's Yeah, I think, you know, when, when it comes to like, retail, you know, like, there's, I think retailers are going to be thinking a lot about delivery, curbside pickup, and also, you know, how can they differentiate in terms of the experience in the store? I think, you know, delivery is going to continue growing. I mean, it's, it's not slowing down. And we're so read, you know, retailers are, we're seeing a lot of new segments of retail that we didn't see, you know, pre pandemic, that are starting to transition to sort of really thinking about delivery strategically. And part of it is from you know, from a cost standpoint, you know, a lot of these carriers have restricted supply and so they, you know, they've, they've kind of blocked additional, you know, new clients from coming on board. Some of them have rejected even in you know, in the peak of the holiday season last year, we had a huge surcharges from the carriers and, and so a lot of them are starting to want to take things more into their own hands and have more control and that's exactly what we are Thank you.

Darius 30:02
Okay. Now from a, from a customer point of view, when when they start searching for this type of a delivery management system, what do you think? The, you know, if you were to advise somebody? What are the main factors they should really think about and consider for selecting their partner? Because I think you can't typically can can a company actually have two delivery management software? It doesn't make sense to have multiple, right?

Khaled Naim 30:40
No, no, it probably doesn't make sense to have multiple, they might have like, a transportation visibility solution, which is more for kind of shipping via USPS, FedEx ups, they might have a tool like a ship or something for for managing carrier integrations. And then they might, you know, if they have their own fleet, they'll use more of a delivery management software, like on fleet. They might also have a fleet management software or sort of platform in place, which does more of the asset tracking the vehicle maintenance, they might have OBD, two devices, which they actually plug into the vehicle to kind of connect and sort of read the data from the, from the from the computer and in their trucks. That's not, you know, on fleet doesn't do that. And we really help more with the operational logistics. So the routing and the dispatching, so really, the routing and dispatching will be, you know, will be a single software platform. And that's where that's what honestly helps with.

Darius 31:46
Okay, yeah, I mean, it seems like just from what you were saying is that there's, there is a, actually a specific stack of tools that companies need to manage the entire delivery. solution that they provide, right? Yeah, depending on the size of the customer, of course, yeah.

Khaled Naim 32:07
And typically, you know, and we have partnerships as well. So if a company needs, you know, for instance, the telematics systems in place, we partner with some some providers there like azuga, for sort of safety, telematics and, you know, dash cams, OBD devices, things like that. So we have partnerships there. And we often kind of consult with our clients, and sort of refer them to these different these different partners of ours.

Darius 32:39
What about drone? And robot delivery? Does that matter to you, as I guess from from your software, does it matter? What being or entity is actually doing the delivery? Yeah, that's great question. We,

Khaled Naim 32:56
it's not really, I guess, I mean, right now, our driver app is really designed to be used by a human being. So you know, they start and complete the work through the app. And it's not, you know, but But that said, we, you know, from the very beginning, have always known that the eventually things will be carried out, the executer of the work will potentially be an autonomous vehicle, you know, a sidewalk robot, perhaps, or a drone. And so really, the driver app is just a basic set of instructions, which could be, in theory, interpreted by a computer and carried out by a computer as well, obviously, there's going to be some additional technology built around it. But you know, the Mobile SDK is, we're already we are already in touch with some sidewalk robot companies about integration. So as we think about, you know, the next five to 10 years, you know, we see on fleet sort of emerging as like a hub for all things delivery and having these types of integrations with different, you know, different autonomous networks as well as non autonomous networks.

Darius 34:06
Yeah, that's probably one of the biggest unknowns. Well, we kind of know, it's going to happen. I mean, I just, you know, I can't imagine like, how it how life is going to be like, with all these drones, in the air around you.

Khaled Naim 34:22
Yeah. You know, I think I think, yeah, it's fascinating to think about, I think, I think it'll be a little while before regulation really catches up and allows, you know, these things to happen. There is also some infrastructure that might need to be built, especially in urban environments. I think drones are really interesting and kind of suburban environments where they can, you know, land easily and things like that. I think in urban areas, I imagine you know, there being some sort of new infrastructure on on roofs of buildings or something like that, or outside windows where drones can land and drop things off. But I think, you know, we're At least, you know, six or seven, maybe even more years away from something like that.

Darius 35:06
Yeah, I just actually heard about this company called mana, which they're in Europe, in Ireland. And they do drone delivery as a service. Yeah, it's it's pretty. I mean, so China also is doing a lot more drone delivery. A lot of the I guess the utilization of drones is going to be based on specific country regulations. And I think us is behind in having like, really good rather than regulations, and probably not clear enough so that companies are not trying or experimenting enough here. But in Europe, it seems like they are, you know, this company that you know, is doing something I'm sure there are more. So, it just makes sense, on on several ends to have, you know, like autonomous vehicles do this, of course, there's going to be an impact to the gig economy, if, you know, people don't have delivery jobs anymore. So. But that's always a trade off of technology and automation. I don't know if we can avoid it.

Khaled Naim 36:23
Yeah, I mean, yeah, I think, like, it'll probably be a while before, it really impacts the gig workforce. And, you know, there's always going to be other things that you'll need humans for. But I think the drug like drones are really interesting, great for certain use cases, mostly sort of small, like light goods. But at least for now, but But still, I think, you know, issues with like noise and things like that are still there. But yeah, I do think it's primarily going to be a regulation thing. You know, the US things tend to move a little bit more slowly than other places.

Darius 37:00
So what's the what are what are some, I guess, product innovations or developments in the company that you can share over the next 12 months?

Khaled Naim 37:12
Yeah, we're now spending a lot of time and energy in, in automation, actually, so and, you know, automated dispatching, we're starting to, you know, we've collected a lot of high precision data since we launched the product. Really, since we've launched, we've been collecting data. And we're starting to do interesting things with that data. So we've started building a data science team and sort of training machine learning models on that data, in order to do some interesting things around eta prediction, service time prediction. So you know, how long is this specific driver going to spend at the specific destination. So that we can predict eta is very accurately and surface those to the consumer, obviously, providing a better experience for the customer. But also, when you have accurate ETS, it improves efficiencies, surprisingly, because the driver may not need to spend as much time on site because the customer is ready, when they arrive. So they can receive that package, maybe they need to sign for it. Maybe the business has a mandate to actually hand goods off specifically to a recipient so that they reduce Miss delivery attempts, things like that. So improving the ETA S will enhance that customer experience and efficiency, thereby reducing the cost for the business. Right. So this is it's really a business all about reducing costs. So So that's, you know, that we're spending a lot of effort on that kind of thing. And obviously, the more accurate the ETA, the better our optimization can be all of our sort of auto dispatching can be, you know, they sort of rely on accurate eta is to, you know, to precisely optimize routes. So, there's a lot being, you know, going into that. There are other, you know, other things that we can't talk as much about that we're working on some pretty exciting things that we'll be announcing, you know, early next year, and some things even before the end of the year. So, yeah, just stay tuned.

Darius 39:21
Sure. Well, I'm sure we're gonna, you know, hear it in the news. I know there is a couple of people, I don't know if anybody has any questions that they want to ask, feel free to raise your hand. Otherwise, I'll just maybe ask a couple more questions. I mean, so that the company is funded, and I'm interested to see how that funding process has evolved for you. Maybe we can touch on that while I bring Daniel up.

Khaled Naim 39:53
Sure, yeah. We have raised some funding. So pre COVID, we, you know, we were fairly bootstrap I'd say we, you know, we raised some early capital quite a few years ago when we were kind of getting started. And then really, you know, knew that we could build a business that could really stand on its own two legs and not kind of be reliant on external funding and raise tons and tons of venture capital. So we, you know, we got there, we had breakeven, we were kind of growing our headcount in line with our revenue growth. And then COVID sort of changed everything for us. And we actually went out and raised our first institutional round, which happened very quickly, there was a lot of demand, given the growth trajectory. During COVID. We had, you know, multiple term sheets and move quite quickly to close that round, and started growing the team after that. So So yeah, I mean, it's things things have changed considerably for for us and really, for logistics in general. I mean, the last year and a half, you've seen a tremendous amount of activity in the space from VCs as well as private equity and growth equity firms alike.

Darius 41:01
Okay. All right, let's see if we can see what Daniel has, is thinking about. Hey, Daniel.

Unknown Speaker 41:09
Well, thanks for thanks for having me on. I guess questions related mostly to grocery delivery. So it sounds like you're sort of a white label in between the merchant and this service provider? Correct. You've got you have independent delivery services in specific areas.

Khaled Naim 41:40
Yeah, that's right. So I'd say we're a white label in between the merchant and either their own in house fleet or the service provider if they're outsourcing to a service provider. So in many cases, our client, who is the merchant has their own fleet of drivers. And sometimes they're outsourcing to a third party, you know, like doordash, or a roadie or Uber or whatever. And they'd be doing that off platform. And then they'd be using on fleet to manage their own fleet of drivers or a local delivery provider that is kind of within our network. So by that, meaning, they're using our software and in groceries growing through the supermarket groceries growing Yeah, absolutely. Yeah, one of our fastest growing segments, is most of your delivery work. And groceries point to point are you running around, it's very much both, actually, two of our top 10 customers, one of them is a route, very long scheduled delivery routes of grocery fresh produce. And then another one is, you know, hyper on demand point to point from micro fulfillment centers to consumers. So very different models, both, you know, grocery. And we, you know, we support both, and we're seeing both models grow very rapidly.

Unknown Speaker 43:07
I mean, as the, as things change, and as markets look at the expense of running instacart and the cost to the, to the customer, where they're giving away pickup, but they're charging a lot more for for delivery, it seems like there's there's opportunities because the shopper is already in the stores to break the delivery apart from from the shopping.

Unknown Speaker 43:37
Yeah,

Khaled Naim 43:38
yeah, potentially. I mean, that's that's definitely an interesting area, curbside as well as not not something we really do. Right now. We work with a partner and we work with them fly by, in that, in that regard, and have an integration with them. But But yeah, I think there's definitely a lot of opportunity there.

Unknown Speaker 43:56
So with the, with the, with the routes with the customer running around, are they running box trucks or smaller vehicles?

Khaled Naim 44:05
Both usually box trucks when they're running routes they're usually running with, with sort of, yeah, with with box trucks are sprinter vans, but they're the reverse. They're sorry, what are their reefer vans? Are they refrigerated? I mean, I don't know. Exactly. They could be I'm sure some of them or not. It really depends. And it's Yeah, I mean, it's some of them I mean it for so for the for the routes, most of them, I imagine would be but for the on demand sort of point to point a lot of them aren't and I know that there are some regulation elements there. So like, if it's not refrigerated bands, you know, they'll need to be delivered items will need to be delivered within two hours, I believe is the threshold and a lot of times they'll just pack the box with with Nice pack. Those are you know, those are so yeah, each each, each client of ours will do it slightly differently. But we don't really get involved in that sort of thing. So it's kind of up to up to them how they how they're going to handle that.

Unknown Speaker 45:15
It's completely on the on the market, are you going to be the delivery showing in Philadelphia next month by chance?

Khaled Naim 45:23
We are not know the home delivery world, we I don't think we are sending anyone to that one. I think what we are going to be at grocery shop. I think also that's next month. But yeah, we went to home delivery world for a few years and decided not to do it this year.

Unknown Speaker 45:41
It's just, it's all changing so quickly. And I've been working on a book. But it's, it's more than a book. And it's really interesting to see how the different different markets and different platforms handle things and seeing where the country's going, at least for the next three years. And the way transportation is changing all of this delivery work, all this last mile work needs to be done without fossil fuels very, very quickly. And I think we're gonna start to see, it sounds crazy, but I think we're gonna start to see the last mile get tacked. And the companies are doing it without fossil fuels need to pay some sort of tax to replace the amount of funds that go into maintaining the roads. And when it's at the scale of Amazon, that's a whole lot of money that the states are going to lose. So all of a sudden, we are talking about that. Maybe not for consumers yet. But absolutely for for for delivery vehicles, you know that trucks aren't quite there yet, but they're really not very far off. It's, it's, it's going to happen pretty pretty quickly. And the immediate opportunity is with with with smaller vehicles and addressing that is it's largely a case of refrigeration, how do you keep stuff cold over the over the course? Of course Oh, routes? Yeah,

Khaled Naim 47:12
yeah, for sure. I totally agree. I think I mean, I hope you know, I hope things move quickly there. I'm definitely you know, we've been doing some work and offsetting specifically. So you know, for for folks using on fleet, they can, with a click of a button offset all of their emissions by buying carbon credits. So we partnered with the trauma. We announced that earlier this year, actually. So we just launched that program. That's super exciting. And so yeah, you know, if a fleet doesn't have full, you know, Evie, vehicles, then they can they can offset whatever emissions they are emitting we a lot of our customers are using EBS, especially, you know, for the smaller deliveries. And some of them are doing their own offsetting. A lot of them are using bicycles as well, or cargo by you know, kind of electric electric bikes. Yep. Especially in urban areas. So we're seeing we're definitely seeing a lot of interesting activity there. But yeah, for those that, you know, don't have EBS, we, we do allow them now to offset by opting into this, what we call on to the offset program where, you know, we purchase a carbon credits at $8 per metric ton, and we actually split the cost with our customers. Very cool.

Darius 48:28
Thank you for doing that. Yeah. Thanks for the question. Great. Thanks, Daniel. Great questions. Thank you. So, yeah, I mean, actually, one question that came up holiday is, what percentage of the deliveries Do you see that are non food related? So like, maybe apparel or things like that?

Khaled Naim 48:54
Yeah, yeah. For us, non food. So food and beverage are close to half of our business today. And then the other half is non food and that is everything from pharmacy and cannabis to furniture and flowers. Retail e commerce, you name it, really, you know, laundry, dry cleaning, like all the segments that you might imagine that are moving goods around locally. Anytime a business is moving goods from A to B, you know, typically within like a say 10 mile range. that's usually where on fleek can can help.

Darius 49:30
About about half of our businesses affiliated business. Okay. Awesome. Well, thank you so much. I know you've got you know, a ton of other things, important things to do. So I won't keep you longer than this, but I really appreciate you joining and educating us on consular Yeah, my pleasure. Thanks for having me. darious. Best of luck and hope to see you, you know with great news soon. Thank you continue writing Yes, thank you so much. Thank you. All right. All right. Well, thanks a lot. I am closing the room now. Have a great day.

Interview with Khaled Naim CEO of Onfleet on the state of Last Mile Delivery and Fleet Management

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