Food and medicine delivery company Orderin plans to raise another $10m (R150m) this year to further boost its offering for both big companies and SMEs set up and manage their e-commerce platforms.
The company announced last month it had raised R70m to expand its delivery-as-a-service software technology platform and related products to the small and mid-sized enterprise (SME) market.
Launched in 2013 by former Goldman Sachs banker Dinesh Patel and former Groupon COO Heini Booysen, who have since left the company, Orderin is shifting its focus from delivering meals from restaurants bought through its platform to helping big companies such as McDonald’s, KFC and Pick n Pay with their delivery services.
Orderin integrates its software into its clients’ backend system and runs their delivery services, including the monitoring and tracking of drivers.
It is also adding SMEs to its platform to help them set up their e-commerce and delivery systems.
Orderin chair Lutz Mieschke, who is also a shareholder, says there is a gap in the market to help SMEs that do not have the capabilities to establish their own e-commerce channels.
We were either prescient or lucky to have stumbled into food delivery as a sector but our biggest mistake was underestimating how big the sector could be, which resulted in us not being aggressive enough in fundraising
— Lutz Mieschke
Orderin software will enable SMEs to schedule and track deliveries seamlessly and run their operations such as payments and stock handling. The system will run on mobile devices.
Mieschke said the R70m raised recently would allow Orderin to scale up infrastructure and enhance last-mile delivery, which continues to be a pain point for many businesses, especially SMEs.
Last-mile delivery is the transport of goods from a distribution hub, store or merchant to the final delivery destination — the customer’s door.
“The goal of last-mile delivery logistics is to deliver the packages as affordably, within the required [or] promised time, and accurately, as possible. Normally in cities within a range of 5km- 10km perimeter maximum,” says Mieschke.
Orderin head of finance Vulnavia Gura says digital technologies such as artificial intelligence and data science can help by finding the best routes to avoid traffic and achieve fuel efficiencies, and can even predict demand and labour requirements.
“These technologies play a crucial role in enabling dynamic predictive models which permit our customers to circumvent these challenges at the speed needed for successful delivery. However, it is costly,” she says.
Orderin employs 120 people and has created delivery opportunities for a further 2,000 people. The funding announced last month will allow it to grow the headcount to 200 and expand the delivery platform and delivery partners to 3,000.
Mieschke says the effort to raise the extra funds “in the region of $10m” is to boost its strategy further. He expects the business to break even by 2024.
E-commerce and the home and office delivery industry have grown over the past two years, boosted by the pandemic. According to one of the industry’s biggest players, UberEats, the online meal delivery segment is growing at 50%-60% a year.
Orderin was one of the first to enter the market in SA, which was in its infancy 10 years ago.
“We were either prescient or lucky to have stumbled into food delivery as a sector but our biggest mistake was underestimating how big the sector could be, which resulted in us not being aggressive enough in fundraising — which, to be clear, we did a lot of too,” Mieschke says.
Orderin has raised a total of R303m since its inception. But compared with its rivals it was running on a shoestring, says Mieschke. He admits that Orderin went from leading the market at one point to being overtaken by competitors that were heavily funded and could draw on global experience.
“But in that battle we recognised that there was a new opportunity emerging, which our competitors would struggle to enter, as a result of their focus on B2C [business to consumers], and that opportunity was B2B [business to business],” he says.
“We knew that large brands and SMEs would face the same pain as we did once they saw how the aggregators were eating their margin and would need to fight back. And once they realised that, they would need the technology and logistics to accelerate their defence and in fact put them on the offence.
“And so as early as 2016, we pivoted our focus to building towards that new future while we wound down our Orderin consumer app.”
We knew that large brands and SMEs would face the same pain as we did once they saw how the aggregators were eating their margin and would need to fight back. And once they realised that, they would need the technology and logistics to accelerate their defence and in fact put them on the offence
— Orderin chair Lutz Mieschke
According to a recent report by World Wide Worx, SA’s online retail market has more than doubled in the two years of the pandemic.
E-commerce grew 66% in 2020, when online sales reached R30.2bn. The online sales figure for 2021, which will be released in mid-year, is projected to top R40bn.
Mieschke says the local e-commerce landscape has changed materially since Orderin launched.
“Back then, so much infrastructure just didn't exist. Payments, for instance, were a nightmare. We had more than 40% failed payments when we initially launched and offered no COD [cash on delivery],” he says.
“Combined with minimal online traffic, this was really challenging. Today, instant online payments are table stakes. Today, launching an online business is infinitely easier and cheaper, but equally the competition is dramatically higher.”
