Logistify AI: On-demand warehousing and fulfilment in Africa

August 05, 2020 00:10:40
Logistify AI: On-demand warehousing and fulfilment in Africa
Built in Africa
Logistify AI: On-demand warehousing and fulfilment in Africa
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Hosted By

Emmanuel Paul

Show Notes


FULL TRANSCRIPT

Narrator: Growing up in rural Uganda, Daniel Emaasit and Tobias Tukei helped their parents operate their family warehouse and farm.

For more than 20 years they struggled to maintain constant income from their warehouse, due to how demand for storage of agricultural produce fluctuated. 

Male voice actor 1: “Our parents decided to focus more on farming than warehousing. This took a toll on their health. Our mom had a stroke at the farm and our dad developed chronic back pain. If our parents had focused more on warehousing, maybe their health would’ve been better,” 

[Narrator] Daniel laments

In this episode of Built In Africa Podcast, we’ll be taking a look at how Ugandan startup, Logistify AI, is helping businesses find flexible storage for their inventory.

Narrator: Driven by the warehouse challenge, the brothers were determined to find a solution to help their parents. After graduating from the university, Tobias went on to become a professional logistics and supply manager, working in different logistics companies in the space of six years. Daniel, on the other hand, is an AI researcher and PhD data scientist in the US.

During Tobias’ career in the logistics and supply chain management in Uganda, he noticed that many warehouse owners were looking to rent out their vacant spaces. At the same time, he received requests from shippers looking for storage space.

As a middleman, Tobias took the initiative and started matching warehouse owners and shippers. Being a ‘one-man’ team, he spent weeks negotiating contracts between any two parties. This led to a lot of back and forth that included emailing requirements, faxing invoices, and many phone conversations.

Male voice actor 2: “This was a pain. It would take a shipper weeks to get a final quote. Moreover, each warehouse would send me quotes with extremely varying prices and fees. There was no standardisation in pricing,” 

[Narrator] Tobias recalls.

Narrator: In July 2019, Daniel proposed that he and Tobias solve this problem. How? By creating a marketplace for warehouses in Africa so people could easily find and book them.

Three weeks later, the brothers had a minimum viable product (MVP).

Male voice actor 1: “We onboarded our parents’ warehouse first,” [Narrator] Daniel recalls enthusiastically. “Then Tobias reached out to his former clients and showed them the MVP. They were so excited because a tech solution could scale and was more efficient than relying on Tobias to be the middleman. We onboarded them immediately.”

Narrator: In August, with the help of Daniel’s friend, Cristian Arteaga, the brothers founded Logistify AI. Daniel acts as the startup’s CEO while Tobias and Cristian act as COO and CTO respectively.

Based in Uganda, Logistify AI is a marketplace of warehouses to help businesses find flexible storage for their inventory.

According to the CEO, the startup’s value proposition is to offer flexible warehousing at low prices for businesses of all sizes.  Also, the startup helps warehouse owners earn extra income from their vacant spaces.

The storage duration of Logistify’s warehouses is flexible as those looking to use them can book for a day, a month, several months, or even a year.

As the platform began to catch on, suppliers asked the startup to add an offering: a transportation service to move their inventory from warehouse to final customers. 

Male voice actor 1: “Suppliers begged us to provide transportation for their inventory. So we built a fulfilment product that provides pick, pack and shipping,” 

[Narrator] Daniel explains

Narrator: The logistics startup boasts of serving the largest fish-feed distributors in Africa. Egyptian-based Aqua Fish and Ugandan SON Fish are some of its biggest clients on the demand side. On the supply side, it has on-boarded large modern warehouses like Rafiki Property Services and East African Investments.

Logistify AI charges its warehouse partners a 5% service fee, while for suppliers in its marketplace, it stands at 10%. This has placed the startup’s gross merchandise value (GMV) at more than $10,000 and revenue at almost $3,000 within the last 18 months.

According to Tobias, the platform’s flexibility, low prices, easy invoicing, and transparency are the reasons their customers keep coming back. And in the past three months, these users have increased by 120% month-on-month, the COO says.

Having bootstrapped with savings of $20,000, Logistify AI is not profitable yet but Daniel believes it is only a matter of time.

Male voice actor 1: “We’re about to close more than 10 enterprise sales leads and there are 50 more enterprise sales leads after that in our pipeline. This will bring the company to profitability.”

Narrator: In Uganda, Daniel explains, the need for solutions like Logistify AI became more evident during the pandemic.

Male voice actor 1: “The warehousing and storage industry has not seen any technology revolution at all. Meanwhile, the behaviour of suppliers and retailers has evolved and there’s a growing number of suppliers needing “pop-up” storage space.”

Narrator: A Bloomberg article titled Uganda Has Nowhere to Store Tea as Virus Causes Stock to Pile Up seems to back up Daniel’s point. According to the article, Africa’s second-largest tea manufacturer struggled to find stores during the pandemic. Also, there have been other concerns in Uganda about the shortage of agricultural produce.

Sensing an opportunity, Logistify AI began helping suppliers of essential items such as food, soap, sanitisers, and other protective equipment to find warehouses this period.

While this looked like a brilliant business decision, the startup faced the same challenges it had always encountered. 

Tobias explains

Male voice actor 2: “One major challenge we’ve had is a distribution channel for offline customers. It’s challenging to reach out to the many warehouse owners who are not online. Some are located deep in our rural communities.

“To solve this, we’re partnering with local unions and associations, for example, the Uganda Tea Association (UTA), to reach some of their members who are offline,”

Narrator: In the long run, Logistify AI has plans to expand to other countries. Fellow East African countries like Kenya, Tanzania, and Rwanda remain the top priority.

Also, the company is making an effort to see that its customer base in both demand and supply sides is more robust. For the demand side, it hopes to serve businesses in eCommerce and retail. And for the supply end, 

Male voice actor 1: “Our customers will be anybody with vacant storage space like a garage, a shop, a depot, a residential house, or an outlet,” 

Thank you for listening to the Built In Africa podcast.

Besides the narrator, the voices you heard in this episode are simulated, and not of the Logistify AI founders.

This script was adapted by Muyiwa Matuluko

Research and interview by Heritage Kene-Okafor

Sound design by Oghenekaro Obrutu

This is a production of Techpoint Africa

I am Heritage Kene-Okafor

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For more stories on startups and innovation in Africa, please visit Techpoint.africa

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