How Rivigo can teach us that old ideas can still be the best ingredient for creative business opportunities
I lately came across an Indian startup that caught my attention. The company’s name is Rivigo and has been around since 2014. It is basically a young technology-enabled company based in India with the ambitious plan to disrupt the logistics industry and especially the transportation through trucks. What makes this company so fascinating is that they’ve made use of an entirely old idea that’s been around since the 17th century to solve a pressing issue in the logistics sector by adding modern technology.
The logistics problem in India in short
With the logistics sector in India continuously growing, about one million new drivers are needed annually for the $ 300 billion industry. The sector struggles to attract high numbers of truck drivers because truck they not only have low marriage prospects due to their week-long drives through the subcontinent and because the truck drivers experience significant negative impact on venereal and back health as they often have to sleep in narrow driver’s caps. For this reason, logistic companies have to pay wages as high as for white-collar workers (around 40,000 rupees or $ 610 per month) to keep attracting enough truck drivers.
The simple, but genius idea behind Rivigo
The idea is simple: the company created a huge network of pit stops to work as a relay system. With 70 interlaced pit stops across the whole country and a distance of between 200 and 300 km between each pit stop, this network covers the entire country of India. A pilot, which is how the company calls their drivers, starts his daily route from his home station near his home to the next station in the network. From there he returns to his home station in another vehicle while another colleague continues to drive the vehicle to the next station.
The thing that’s so great about the idea is that it actually is not new at all. Relay systems for transportation and mail coaches were already used in the 17th century to increase the average speed of transportation. With the emergence of railroads, horse drawn carriages within a big network of relays became obsolete. Reintroducing this old idea and combining it with modern information systems and software while accumulating a high volume of assets in order to radically disrupt the logistics industry in India is a quite bold approach.
The benefits for the driver are obvious. As completing the two routes only takes the driver around eight to ten hours, the driver is able to have a normal private life and his chances to start a family are not diminished by long business travels. Also the health risks that emerged through having to sleep in unhealthy positions in the cramped cap are no longer a problem. Considering that in India there are around a million new truck drivers employed each year, Rivigo implemented a solution to a significant social problem. The relay approach incorporates the potential to improve the lives of millions of truck drivers across India. Additionally, this process allows Rivigo to reduce transit times by up to 70%.
It is a bold move, but Rivigo has proved the business model to work. Today the company has a headcount of around 2,000, and that only four years after they started their operation. On top of that, just few months ago the start-up received $50m in funding, bringing its valuation up to $945 million.
Reinventing this old approach and adjusting it to today’s circumstances and opportunities is the core of Rivigo’s product and process innovation and, in my opinion, makes the case of Rivigo so fascinating.
Going even further: Using Big Data to get ahead
Now, the company wants to take it to the next level by starting to address the toughest problems in the logistics industry using data. To achieve this, the company has recently hired another 40 engineers specialized in artificial intelligence and big data analytics. The plan is to double its fleet to 5,000 trucks in only one year by improving its efficiency. I order to achieve this the company has started to deeply understand all the data it has been collecting over the last three years and use it to optimise resources and improve productivity.
How it works, is that each truck has built-in sensors which track fuel usage and monitor the trucks location at all times. The amount of data these sensors collect is huge when you take into account that millions of shipments have been made since they started.
Amongst others this way Rivigo hopes to predict demand, the reliability of the company’s shipments, pricing, and routing, besides managing fuel costs, improving routing, and optimising inventory management. For instance, if a customer is to use Rivigo for transporting fragile shipments, the company wants to allocate its most reliable handler in the warehouse and then deploy its more reliable driver to manage such shipments. This way is can be ensured that no shipment gets damaged. Another example of how they expect to improve efficiency, is by using data to study how to best club different goods in a single shipment. By studying their “loading patterns”, it will know how to place goods in the most efficient manner in a truck. For instance, a truck can then carry multiple goods, including fragile ones, without causing any damage, and ensuring maximum products can be transported together.
Conclusion: Old ideas CAN drive new Innovations
Too often, we assume innovative ideas and meaningful changes require a blank slate. However, new creative business opportunities are rarely the result of completely re-imagining of the world. The main take-away from this article should be that innovation has many forms, it does not always have to be something that we have never seen or heard before. An idea just has to work and provide better and/or cheaper products or services. That is the point of innovation. The case of Rivigo is just a great example of the idea that inspiration for an innovation may come from older refurbished concepts that may become even more efficient in the data-driven digital age.
Anika Ley, Media Mastermind