Growing up in rural Uganda, Daniel Emaasit and Tobias Tukei helped their parents operate their family warehouse and farm.
For more than 20 years they struggled to maintain constant income from their warehouse and consequently, they focused on the farm.
This decision stemmed from the underutilisation of their warehouse, which Emaasit says was because of how the demand for storage of agricultural produce fluctuated. Despite doing what was best for the family, it affected their parents’ health.
“They decided to focus more on farming than warehousing. This took a toll on their health. Our mom had a stroke at the farm and our dad developed chronic back pain. If our parents had focused more on warehousing, maybe their health would’ve been better,” Emaasit says to Techpoint.
Driven by the warehouse challenge, the brothers were determined to find a solution to help their parents. After graduating from the university, Tukei went on to become a professional logistics and supply manager, working in different logistics companies in the space of six years. Emaasit, on the other hand, is an AI researcher and PhD data scientist in the US.
Launching the warehouse marketplace startup
During Tukei’s career in the logistics and supply chain management in Uganda, he noticed that many warehouse owners were looking to rent out their vacant spaces. At the same time, he received requests from shippers looking for storage space.
As a middleman, Tukei took the initiative and started matching warehouse owners and shippers. Being a ‘one-man’ team, Tobias spent weeks negotiating contracts between any two parties. This led to a lot of back and forth that included emailing requirements, faxing invoices, and many phone conversations.
“This was a pain. It would take a shipper weeks to get a final quote. Moreover, each warehouse would send me quotes with extremely varying prices and fees. There was no standardisation in pricing,” Tukei says.
In July 2019, Emaasit proposed that he and Tukei solve this problem. How? By creating a marketplace for warehouses in Africa so people could easily find and book them.
Three weeks later, the brothers had a minimum viable product (MVP).
“We onboarded our parents’ warehouse first,” Emaasit says enthusiastically. “Then Tobias reached out to his former clients and showed them the MVP. They were so excited because a tech solution could scale and was more efficient than relying on Tobias to be the middleman. We onboarded them immediately.”
In August, with the help of Emaasit’s friend, Cristian Arteaga, the brothers founded Logistify AI. Emaasit acts as the startup’s CEO while Tukei and Arteaga act as COO and CTO respectively.
Value proposition and business model
Based in Uganda, Logistify AI is a marketplace of warehouses to help businesses find flexible storage for their inventory.
According to the CEO, the startup’s value proposition is to offer flexible warehousing at low prices for businesses of all sizes. Also, the startup helps warehouse owners earn extra income from their vacant spaces.
The storage duration of Logistify’s warehouses is flexible as those looking to use them can book for a day, a month, several months, or even a year.
As the platform began to catch on, suppliers asked the startup to add an offering: a transportation service to move their inventory from warehouse to final customers. Emaasit says the startup listened and now offers a fulfilment service to provide suppliers with the inventory management and shipping services they need.
“Suppliers begged us to provide transportation for their inventory. So we built a fulfilment product that provides pick, pack and shipping.”
According to Tukei, this, alongside the platform’s flexibility, low prices, easy invoicing, and transparency are the reasons their customers keep coming back. And in the past three months, these users have increased by 120% month-on-month, the COO says.
The logistics startup claims it serves the largest fish-feeds distributors in Africa. Egyptian-based Aqua Fish and Ugandan SON Fish are one of the startup’s biggest clients on the demand side. On the supply side, it has onboarded large modern warehouses like Rafiki Property Services and East African Investments.
Logistify AI charges its warehouse partners a 5% service fee, while for suppliers in its marketplace, it stands at 10%. This has placed the startup’s gross merchandise value (GMV) at more than $10,000 and revenue at almost $3,000 within the last 18 months.
Having bootstrapped with savings of $20,000, Logistify AI is not profitable yet but Emaasit believes it is only a matter of time.
“We’re about to close more than 10 enterprise sales leads and there are 50 more enterprise sales leads after that in our pipeline. This will bring the company to profitability.”
Three-man team with big goals
In Uganda, Emaasit says the need for solutions like Logistify AI became more evident during the pandemic.
“The warehousing and storage industry has not seen any technology revolution at all. Meanwhile, the behaviour of suppliers and retailers has evolved and there’s a growing number of suppliers needing “pop-up” storage space.”
A Bloomberg article on Uganda’s tea storage problem seems to back up Emaasit’s point. It shows how Africa’s second-largest tea manufacturer has struggled to find stores during the pandemic. Also, there have been other concerns in Uganda about the shortage of agricultural produce.
Sensing an opportunity, Logistify AI began helping suppliers of essential items such as food, soap, sanitisers, and masks to find warehouses this period.
While this looked like a brilliant business decision, the startup faced the same challenges it had always encountered.
“One major challenge we’ve had is a distribution channel for offline customers. It’s challenging to reach out to the many warehouse owners who are not online. Some are located deep in our rural communities.
“To solve this, we’re partnering with local unions and associations, for example, the Uganda Tea Association (UTA), to reach some of their members who are offline,” Tukei says.
In the long run, Logistify AI has plans to expand to other countries. Fellow East African countries like Kenya, Tanzania, and Rwanda remain the top priority.
Also, the company is making an effort to see that its customer base in both demand and supply sides is more robust. For the demand side, it hopes to serve businesses in eCommerce and retail. And for the supply end, “our customers will be anybody with vacant storage space like a garage, a shop, a depot, a residential house, or an outlet,” says Emaasit.
Nigerian startups raised $55.4m in Q1 2020; over 99% of which came from foreign sources. Find out more when you download the full report.
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This content was originally published here.
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