As the demand for online shopping continues to rise, it’s no surprise that merchants are increasingly expected to provide a fast and flexible delivery service to their customers. Coming to the rescue, the Instabox team has managed to successfully satisfy both consumer demands and retailers needs by offering a hassle-free, same-day delivery service through its smart parcel lockers.
Founded in 2015, in Stockholm, the company has been building its own systems and products from scratch, using modern technology to enable instant, 7-day-a-week smooth shipping service to more than six million Swedes. With the logistics industry rapidly digitizing, Instabox has gained momentum and recently secured a substantial funding round to further expand in their home country as well as internationally.
With all this in mind, we grabbed some time with the co-founder and CEO of Instabox, Alexis Priftis to deep dive into Instabox’s fast-growing innovative business idea and find out what differentiates them from their competition.
Hi Alexis, thank you for joining us and congratulations on launching in Norway and Denmark today! To begin with, could you briefly tell us what Instabox is and how you came up with this business idea?
Instabox is an e-commerce shipping service based on smart parcel lockers that combines low cost with great convenience and service for the consumers. We felt that a lot of the innovation in e-commerce shipping went into very high technical solutions (like drones for instance) that were not necessarily requested by the merchants or the consumers. Instead, we asked what people really wanted out of their delivery service. It turned out that they wanted cost-efficient, fast, care-free delivery, which is what we have created using smart parcel lockers.
Smart parcel lockers are becoming an increasingly popular solution nowadays. What main features does Instabox offer to its customers and consumers? How does your company differentiate itself from other last-mile delivery providers?
Smart parcel lockers are great for end-consumers but at the same time they can pose logistics challenges. They are great because it’s a smooth solution that can produce large cost savings, but they are very challenging because they are unforgiving for the provider – if we arrive with a parcel that is 1 mm too large, or 1 parcel too many, our delivery is going to fail and the user is going to have a bad experience.
What we have managed to do is to solve a lot of the problems associated with parcel lockers, for instance, we have a forecasting algorithm that calculates everything from how many parcels are going to arrive next Tuesday, to how big tomorrow’s parcels are going to be, to whether or not a single parcel will be picked up in the next couple of hours.
The result is that we can provide a better service at a lower cost. For example, we are able to promise an exact delivery time, like tonight at 20:15, already when you shop. We also transfer some of the cost savings to you as a user by investing in much faster deliveries, and also by investing a lot in customer service so that you can always reach us in 20 seconds when you need something.
What are the main advantages of smart parcel lockers compared to door-to-door shipment?
For the user, the main advantage is that you don’t have to plan your day around a parcel. Just do what you want – we’ll send you a text when your parcel is ready for pickup. No waiting, no hassle. We offer you flexibility and convenience in terms of time.
Then, of course, our service is much more friendly to the environment than home delivery. Imagine the difference if a car has to drive around to 50 addresses or if it just pulls up to our locker, makes the deliveries, and moves on.
Another advantage which might not be so obvious to the general user is that our service is less expensive to produce. This means that we can re-invest in added services such as same-day delivery or weekend deliveries, but also things like answering the phone immediately, or using fossil-free fuel instead of diesel.
Which sectors does Instabox currently serve?
We can handle parcels with maximum dimensions of 40x40x60 cm, which means basically all e-commerce categories except the obvious ones. Our best categories are beauty, pharma, fashion, and electronics. Overall, we have found that our best use case is for small parcels – it seems that the smaller the parcel is, the more likely a person is to prefer flexibility in terms of time rather than getting the parcel at the doorstep.
What are, in your opinion, the biggest challenges and opportunities facing the last mile sector?
I’m not sure, our core focus has always been and will continue to be centered around the needs of our consumers and our merchants. I think it is easy to lose track of yourself in industry predictions and large macro trends. We don’t do that, we just ask our users what they want from us and do everything we can to give it to them.
How has the COVID-19 pandemic impacted your business? Can you share some tips on how your team is dealing with the current crisis?
In the early days of the crisis, there was frantic activity to figure out what would happen and how we could work through it. We have spent countless hours preparing for all kinds of eventualities, including making changes to our service like allowing users with symptoms to request a drop-off at home instead, new operative procedures around cleanliness and hygiene, preparing for different financial scenarios and much more. I’m proud of how we have managed the situation as a team.
Business, as usual, doesn’t require a lot of management time, but navigating through a crisis does. This is actually one of the huge advantages of a startup versus established players. We are built for innovating and adapting quickly. So this is really our home turf.
Having said that, business-wise we have mostly been impacted positively where customers now more than ever are demanding smart, sustainable, and safe parcel pickups with minimum human interaction, which has lead to an increase in sales, but at the same time, our production cost has increased as well as a consequence of very strict policies around sick leaves.
Personally, one of my biggest responsibilities is to keep our staff safe, and since we have drivers and other production staff who are not able to work from home as the office staff, this has been a key focus.
So far, we are on the good side of this one, but we are very humble and try to stay on our toes as the landscape shifts and changes.
You’ve recently locked down a new financing round of €36 million. Beyond the two new market launches today, what are your plans for international expansion?
The majority of the funding will be invested to expand further in our home market Sweden, but we are looking carefully at a couple of other European markets. Fundamentally, I believe that our service will be very attractive in other markets as well. Our strategy is to partner up with one or a couple of really strong merchants in the markets we enter so that we are able to ensure that enough people can use our service. This means that we prefer to find the right partner before deciding which market to enter next.