National Post (National Edition)

Shop Local platform helps small firms compete with e-commerce giants

Routific optimizes deliveries

- ALEKSANDRA SAGAN

VANCOUVER • One day earlier in the pandemic, Suzanne Ma sat in Vancouver scouring the internet for a bakery in Toronto that could deliver locally made, artisan bread to her parents there. Ma, co-founder of software startup Routific, discovered that what seemed a simple request was surprising­ly hard to fulfil. “People want to shop local, but it’s just not that easy to do,” said her husband and co-founder Marc Kuo.

The couple saw a way to help. Routific makes software that optimizes delivery routes, and the company’s clients are mostly small- and medium-sized businesses. Last week, it launched an online hub for Vancouveri­tes to discover restaurant­s, florists, pet stores and other companies that deliver in their area. While the initial goal is to help boost Vancouver’s business community, Routific plans to roll out Shop Local platforms across other Canadian cities and integrate it into its existing route-optimizati­on platform.

Routific’s new hub showcases Vancouver businesses with in-house delivery services rather than those that rely on couriers, like UPS, or third-party apps, like DoorDash. Visitors can browse more than a dozen categories — alcohol, education, clothing and books, for example — or by Google star ratings. There is no listing fee or cost for businesses, though many are already Routific clients. “Primarily, the real mission is just to help businesses, small businesses,” said Kuo, who is also the company’s CEO.

For Routific, this makes sense. Its mission is to support local businesses by giving them a delivery solution to counter behemoths like Amazon, Kuo said.

Ma, Kuo and two others co-founded Routific in 2012, but the company launched its first product in 2015. That same year, it participat­ed in a Techstars program in Chicago that culminated in a demo day where the company raised some of its first investor money outside of the friends-and-family circuit. Routific, which calls itself “largely bootstrapp­ed,” has raised US$2.5 million to date, said Kuo, as well as a $1.75-million grant from Sustainabl­e Developmen­t Technology Canada. Investors include FireStarte­r Fund, Axiom Zen and Scott Lake, a Shopify co-founder. It’s not actively seeking more funding, but is open to speaking with like-minded investors. Kuo declined to comment on the company’s valuation.

Chris Bissonnett­e, managing partner of Pallasite Ventures, is among Routific’s first investors, and believes the firm can continue to grow by targeting small- and medium-sized businesses as its clients, especially in the context of the pandemic. “I see more and more products and services being delivery-based in the future, which will continue to grow this market,” he said.

Many people want to shop local, Kuo said. In recent years, but especially during the pandemic, the narrative grew around supporting local businesses over large tech companies such as Amazon and third-party delivery apps. Torontonia­n Ali Haberstroh started a website she named Not Amazon during the pandemic “to hopefully move the needle just slightly in terms of how people think about shopping.” It offers a directory of Toronto, Halifax, Calgary and Vancouver businesses.

Despite this desire to support local businesses, consumers still tend to turn to Amazon, said Kuo, because it is more convenient, with an easy-to-navigate shopping experience and quick delivery. Even if small businesses want to replicate that for their customers, they don’t necessaril­y have the tools to do so. Plus, customers may not even know they exist. Routific formed to fill that need in the industry. The vast majority of its clients are small- and medium-sized businesses, Kuo said, and it claims to save these clients up to 40 per cent in operating costs. “We’re just making the Amazon logistics technology or the UPS-like routing technology available to the masses, so that every small business can — overnight or within a couple days — set up a delivery business and provide an Uber-like experience to the end consumer.” Now, the Shop Local platform, he reasoned, can help customers discover their products, too.

What’s good for its clients, of course, is also good for Routific. The company said its clientele more than doubled in the past year. At the end of 2019, Routific had 514 customers. That grew nearly 145 per cent to 1,259 clients by the end of 2020.

“It’s definitely pandemic,” said Kuo, when asked what led to the uptick. In the beginning of 2020, the company powered about one million deliveries each month. That’s roughly quadrupled to more than four million deliveries now. Put simply: COVID-19 prompted people to shop online and pushed retailers into the e-commerce game — a forced innovation, if you will. In March, during the first wave of lockdowns in Canada, retail sales fell for the first time in months, but online sales soared to 4.8 per cent of the total, according to Statistics Canada. E-commerce figures continued to be strong. In November 2020, according to the agency’s most recent figures, online sales made up 7.4 per cent of all retail trade, which was the largest proportion since May. With the sudden but sustained spike in demand for online shopping and delivery, “more and more people need technology to manage that,” said Kuo. Rather than manually planning routes, they’re looking for software for efficiency gains.

Farther down the line, Kuo can see more benefits stemming from the Shop Local initiative. “We do have longterm ideas where we might want to integrate this with the core Routific product,” he said. Kuo imagines customers placing orders through the Shop Local platform and the software will present them with several delivery windows — ones that work best for the seller, taking into account other upcoming deliveries in the area. It could incentiviz­e customers with a discount to ensure they select the most optimal drop-off time, but still save the seller money on labour, gas and other overhead costs.

Routific plans to roll out versions of the platform across Canada and eventually the U.S., but Kuo declined to provide a timeframe, saying the company is focused on the success of Friday’s launch.

Kuo, for the most part, prefers not to make prediction­s about where the business is headed, citing his experience as a former banker and equity trader: “Every prediction you make is a false one.”

For more news about the innovation economy visit www.thelogic.co

 ?? COURTESY ROUTIFIC ?? Suzanne Ma and her husband Marc Kuo are two of the co-founders of the software startup Routific.
COURTESY ROUTIFIC Suzanne Ma and her husband Marc Kuo are two of the co-founders of the software startup Routific.

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