Last Mile Delivery: The Startup Catalysing Iraq’s Logistics Revolution
Logistics, or delivery as we commonly know it, is at the core of a successful supply chain; but for Iraqi businesses, it is often an afterthought. Sandoog, Iraq’s last mile delivery startup, plans to change this. Combining technology, experience and a vigour to change the game, for the benefit of the private sector and Iraq as a whole, Sandoog aspires to be the cornerstone for a new ecosystem of businesses in Iraq.
Sandoog started its delivery service in April 2018 to address a gap in the Iraqi logistics market. The founders, Mustafa Al Obaidi and Ahmed Malik, saw an opportunity to solve fundamental problems in the logistics sector including increasing costs, inefficiencies and the stunting of economic progress.
Mustafa says that Sandoog’s goal is to “simplify the process of handling goods and delivery between businesses and their customers – within cities and between cities. But we don’t stop at that. Our aim is to empower businesses to elevate their operations, upskill their manpower and upsell their products at a higher quality and quantity. We want Iraqi businesses to move away from the mindset of surviving to a mindset of thriving.”
The Iraqi Logistics Web
Iraq’s ranking in the World Bank’s Logistics Performance Index was 147 out of 160 countries in 2018. In 2014, it was 141. Rather than improving in a post-ISIS Iraq, the performance has only declined.
Iraq is a part of resource-rich countries like Angola, Gabon and Turkmenistan that underperformed amongst their income group peers. The graph below sheds some light on Iraq being an underperformer in its income group (GDP per capita) compared to countries like China, Indonesia and Thailand.
Iraq’s rebuilding process has been slow and steady and logistics, as an industry, is coming up as a crucial one. Sandoog identified a gap in the broken delivery and logistics value chain after decades of war, sanctions and regulatory impediments in Iraq. “Technology could be the key differentiator and we realised it’s not just a business problem. We would be solving a major problem for the broader society and people in the country. We wanted to operate in the sweet spot of connectivity, technology and logistics” says Mustafa.
Mustafa and Ahmed teamed up in the summer of 2017 after Ahmed, a distinguished software developer, birthed the idea from having worked as a lead engineer at a unicorn delivery startup. He brought in the tech expertise that Sandoog needed to retrofit global best practices onto the logistics landscape of Iraq, whilst Mustafa brought his experience in product management and marketing strategy from both governmental and commercial organisations in the UK and UAE.
Many Iraqi businesses saw and still see delivery and logistics from the lens of Survivalism – do it as and when necessary, don’t plan long-term. Sandoog started with the idea of using technology to bring about a cultural shift in the Iraqi business ecosystem. This shift would then propel general businesses to efficiency and boost the economy. “People want to progress and business is a great catalyst for positive social change. We wanted to be a part of that story since we recognise logistics as being the backbone for growth of an economy and thus the country” says Mustafa.
Their first product in 2018 was an internal platform for self-managing their own operations called Sandoog Spider. The team then identified merchants to service, and launched the Sandoog Center platform that caters to a set of customers classified into three categories:
- Level 1: Home Business or Micro Enterprises
- Run by a single person from their home or with a few workers, often selling items via Facebook or Instagram
- They have a just-get-it-done attitude towards delivery
- Sandoog offers cash handling and returns processes for these businesses and has built a community network of such entrepreneurs
- Level 2 – SME Businesses and Ecommerce Platforms
- They are looking for efficiencies in logistics and Sandoog provides a tech based solution for it
- These business appreciate the data and reporting aspect that analytics at Sandoog provide
- Level 3 – MNCs and Large Businesses
- These businesses have an understanding of technology and large operations
- They expect advanced product handling and order fulfilment support
- Sandoog provides efficiency and accuracy in logistics and data about where to sell and how much to sell
- There are also requests for integrating the Sandoog platform with their in-house systems
“In 2018 we focussed on research and development and began with direct marketing – going shop to shop and talking to businesses to understand their pain points. We wanted to raise awareness about the underlying effects of neglecting delivery as an integral part of their value chain” explains Mustafa.
Iraq has a complex ecosystem – one cannot separate business issues from political and social issues. Before Sandoog, Iraqi businesses either had fragmented customer relationship management (CRM), database management systems (DBMS) or a third-party partner for delivery. Last-mile delivery as a service was a very new concept. Although delivery companies were using limited technology, never had a delivery service provider made technology the core of their business.
The initial hurdle was to communicate the cultural change to businesses and convince them ‘you do not have to work in the traditional way! Your logistics performance can be improved. This will enable you to service your customer better and sell more.’ Businesses found it hard to get convinced that the situation in Iraq was conducive for a modern, tech-based approach in delivery. Combined with this was the issue of companies forcing their business model on Sandoog. “We had to stick to our guns and push-back on such attempts to keep our vision and core values intact”, says Mustafa.
In 2019 Sandoog started with promotions and PR activity and the founders put their name behind it to raise awareness and trust. They connected with Level 2, and more recently level 3, SME businesses, banks, offices and MNCs. The platform started seeing traction and consistent orders.
Now, with COVID-19 impacting every country, business and way of life, delivery has been catapulted into the limelight as an essential service to meet demands of quarantined customers. There have been many roadblocks and irregular road closures recently, especially in Baghdad. However, Sandoog has been adjusting and adapting its services. The constant communication and customer support for their merchants is also playing a crucial role during this phase.
The Technology and the Philosophy
The above message is the crux of the simplicity and clarity in the philosophy that Sandoog wants its customers to know and trust. Sandoog’s website encourages the businesses to “start or grow your business with Sandoog today”. The philosophy is visionary – it aims at not just fulfilling customer requirements but proposing a symbiotic relationship where the customer is more than just that, they are also a partner.
On the technology front, Sandoog provides an e-logistics platform as an app or web-based dashboard which allows merchants to send, track and manage their deliveries, invoices and customer base anywhere in Iraq. Sandoog uses Sandoog Spider and Sandoog Center along with Sandoog Mandoob to manage their operations.
Sandoog Mandoob is a driver dispatch application that uses interactive maps and spatial zoning to map routes for delivery-partner-drivers and optimise their routes real-time. They use Artificial Intelligence and Data Mapping for this. Sandoog Center provides documentation, invoicing and order verification features to allow merchants to easily locate their invoices at one place to keep track of their finances.
Sandoog doesn’t just provide delivery solutions to their merchants but also accounting, cash-on-delivery management and reverse logistics services. “This is a huge challenge for many delivery companies and e-commerce or online businesses in Iraq”, explains Mustafa. Sandoog’s platform is well equipped to manage accounts on behalf of the merchant. Another key cog in the machinery is reverse logistics efficiency – limiting the number of failed and returned orders and optimising pick-up, returns to merchant without damage and replacement for the customer. Workflows optimisation is used to achieve this.
Social and Business Ecosystem Impact
Sandoog made inroads in the Iraqi business ecosystem while keeping the sensitivities of Iraq in mind. “People said it’s a lost cause, such a model won’t work in Iraq. But we had confidence in our capabilities to bring about this change” says Mustafa. It was Behavioural Change they were aiming for. “I tip my hat to all entrepreneurs who are trying to make it in Iraq. They give us strength and purpose to keep pushing. I can confidently say that – if you can run a business in Iraq today, you can run a business anywhere.”.
Sandoog is shaping the conversation around logistics and business from the ground up. Mustafa even uses the startup as a case study in his workshops and seminars to engage young professionals and entrepreneurs in Iraq and other countries in finding innovative solutions and creating awareness where it matters – the youth who carry the hopes of a nation in their arms. Sandoog is very active on social media and frequently generates content around entrepreneurship and technology. The workshops specifically focus on upskilling entrepreneurs, mentorship, word-of-mouth marketing and creating an inclination towards innovation.
Empowerment through Employment
Sandoog crowdsources its drivers from taxis drivers and other sources as delivery partners. They are trained, upskilled and tracked real-time. This is not just providing them employment but providing them on-the-job training to get accustomed with new technology.
Women are another implicit focus area of Sandoog’s business model in many ways:
- Sandoog has a 40% women ratio in their office workforce so far which they plan to increase as they expand operations. Currently, they do not have women as driver-partners because this can be seen as unsafe or impractical in Iraq
- Secondly, women are often the Level 1 partners – mostly running small operations from their homes. An example of such a partner is Hili which sells local handmade accessories made by Iraqi women. They have now integrated with Sandoog’s service model.
- Women can operate from the comfort of their homes and do not have to go anywhere. Sandoog assists them without disrupting their lifestyle.
Achievements and Future plans
Sandoog currently works with over 2,000 merchants and have fulfilled over 200,000 orders since they officially launched in April 2018. “But those numbers should not make us complacent”, says Mustafa. Sandoog is continously activating its brand and services, and making the iraqi consumer market more accessible for both local and international businesses.
Sandoog is also making ripples in the startup space. It won the Iraq round of Arabnet’s Start-up Championship. “We expect that with such achievements people will start associating Iraq with innovation and the global startup culture. We can be on the forefront of this change.”
The biggest problem that Sandoog wants to solve is not delivery. It is a longer list –
- Management of delivery and customer trust
- Collection, sorting and distribution of orders
- Providing expert logistics so that merchants can focus on selling
Now as Sandoog enters the growth and scalability phase in its lifecycle its focus is on:
- Awareness and education – Although the tech infrastructure is not fully in place for Sandoog, the challenge is in convincing a larger set of customers to adopt their processes. This cultural change may be slower.
- Integration with businesses at all levels
- Make technology and logistics user-friendly and accessible
- Scale to an enterprise-level business model
- Bring international attention to the Iraqi consumer market, and bring forth logistics into the discussions surrounding renewable energy and telecoms
Sandoog’s motto used to be ‘from Baghdad to every corner of Iraq’. The team only worked with merchants from Baghdad and delivered across Iraq. Now they plan to serve merchants from all over Iraq and run multiple, simultaneous operations.
“My message to anyone reading this, whether it be an Iraqi business or an international company coming to Iraq, is that Iraq as a business space is developing and there is a huge market that you can cater to. Sandoog is a reliable option that you can partner with to reach customers nationwide unlike before” says Mustafa.
Sandoog is not only leading the innovation and tech change in the Iraqi ecosystem but more importantly it’s providing Thought Leadership to their partners and other startups. This kind of leadership is what separates them from others.
Tom Peters, a management guru, says “leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to have both toilet paper and bullets at the right place at the right time. In other words, you must win through superior logistics.”
Sandoog is bringing this to life in Iraq.