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Posted at: Dec 6, 2017, 12:41 AM; last updated: Dec 6, 2017, 12:41 AM (IST)ON START-UP PITCH

Value augmentation

Investment needed for prototype

  • The start-up can raise between $50k -$120k for developing the App prototype, marketing, and customer validation. Funds can be raised from Popular AR accelerators like BoostVC, Rothenberg Ventures or ViveX.
Value augmentation

Abhishek Singh

This week’s start-up idea is to develop an Augmented Reality-based solution for streamlining the warehousing process in logistics and e-commerce industry. As per the DHL Logistics Trend Radar Report published in 2016, AR will find multiple use cases in the logistics industry in the next five years.

Market definition

TMR estimates that the global e-commerce logistics market is expected to surpass $781 billion by 2024, up from its valuation of $122.2 billion in 2014. With the growth in e-commerce logistics market, the inefficiencies associated with the industry will also multiply. One of the main problems  plaguing the logistics and e-commerce industry are mispicks.

The National Retail Federation is projecting losses exceeding $333 million due to shipping mishaps just during the 2017 holiday season. A further $1.5 billion in future revenue loss predicted as a result of consumer abandonment of sellers due to delivery issues.   

Competitor analysis

With the advancements in Computer Vision and Image Processing technologies, start-ups have started building products on this stack.

Picavi GmbH is one of the first companies to have developed order picking using smart glasses, the application uses the camera, scan engine, and microphone.

Picavi’s solutions are designed to communicate with most of the widely used ERPs and Warehouse Management Systems using standard protocol whose functions are optimsed to order picking, goods storage and inventory in the warehouse. They have already finished their first pilot with DHL successfully.  Another similar company is iTiZZiMO offering a simple platform called Simplifier, which can be customised to accelerate the adoption of mobile and wearable-based AR technologies into the existing ERPs and Warehouse Management Systems. Using this platform, one can configure sequentially parallel workflows. 

Pain point and target audience

The annual cost of mispicks for a single large warehouse is estimated to be around $500k. The mispick costs include wasted working hours, reverse logistics, blocked inventory cost, and the loss of customer goodwill. The potential losses only for reverse logistics (return to sender) can be more than $100 million annually for the entire industry.

Retailers and the logistics service providers can use the benefits of advancement in the technology to improve their operating margins boosting their bottom-line.

Value proposition

The proposed solution will help reduce the inconvenience and cost associated with the mispicks in the industry. It will also streamline the inventory sorting and tracking process bringing more efficiency and transparency to the logistics industry.

A pilot on a similar solution by DHL and Ricoh in the Netherlands delivered a 25 per cent increase in the efficiency as well as positive feedback from the users of the warehouse.

Business model

The proposed start-up will follow a subscription-based model with a one-time integration cost with the existing warehouse management systems and data tagging. The hardware cost will be charged at actuals. The startup can sell two tiers of subscriptions; one for Enterprises and another one for SMEs, based on the number of product scan required every month. The startup can add additional modules like navigation; voice and speech integration in the third plan after the pilot is completed. This way the customer will get used to base level services and start migrating to other services, which will give generate additional efficiency for the warehouse.

Way to market

The proposed startup will have to start with identifying small-scale warehouses for product refinement and market fitment. With continuous feedback, the app can be refined to work without any glitches with the existing software for warehouse management and the available hardware (Head Mounted Displays).

Team capability

The team will need a developer who has experience working with popular AR SDKs like Vuforia or Apple AR Kit amongst others. The other team members should have experience in IT solution selling to the logistics or e-commerce industry.

— The writer is the Founder & COO of YoStartups, a global startup Pre Accelerator.  

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