Skydrop—the “Uber” of instant deliveries in LatAm
A marketplace that connects local, independent delivery agents with small businesses that need pickup or delivery services.
Skydrop (www.skydrop.co) is a marketplace that connects local, independent delivery agents with small businesses that need pickup or delivery services. In essence, Skydrop is the “Uber” for instant courier services. The company was founded a little over a year ago and operates from Monterrey, Mexico. It is currently focusing its marketing efforts to attract restaurant businesses that want to replace, grow or launch delivery services.
Business Model
On the one hand, Skydrop creates value for business owners (i.e. restaurants) by simplifying their operations. The company eliminates the need for businesses to purchase and provide maintenance to motorcycles, as well to hire delivery agents and pay for their insurance. On the other hand, Skydrop creates value for delivery agents by drastically increasing their utilization (defined by a deliveries-per-day metric). In doing so, delivery agents earn on average 50% more than what they would otherwise earn.
Skydrop charges a fixed fee for every delivery they arrange. Deliveries are subject to territorial boundaries. The fee amount depends on two factors: expected volume of deliveries and required speed. On average, the company has charged US$2 in the last 12 months.
Operating Model
Skydrop does not own motorcycles (or any transport vehicle). Rather, delivery agents use their own and are responsible for their maintenance and insurance. To recruit agents, the company posts ads in local newspaper listings. As prospects contact Skydrop, the recruitment team runs basic background checks on those interested and evaluates the transport vehicle to be used. As a prerequisite, delivery agents must own a smartphone that operates on either Android or iOS.
On the agent’s smartphone, Skydrop installs an application that integrates into their internal software. This software is designed to visually map demand (point A and point B of a delivery order) with supply (delivery agents). It is operated by a Skydrop executive whose main purpose is to maximize efficiency by minimizing time per order. Although somewhat uncommon, the software allows pooling of orders, matching deliveries that are headed towards a similar direction. When agents are not delivering an item, Skydrops suggests optimal parking spots according to past demand patterns. Delivery agents are paid a fixed fee for every delivery they complete.
Currently, Skydrop’s main customer acquisition channel is its outgoing internal call center that focuses on selling the service to restaurant businesses.
Why Skydrop is a Winner
Customers want a fast delivery at a low price. Skydrop’s whole operation is designed to maximize utilization of delivery agents, which accomplishes both customer demands. Skydrop incentivizes delivery agents to maximize orders per hour by paying them a fixed fee for delivery (tipping amplifies such effect). The company also relies on a roubust IT platform to facilitate logistics and manages delivery angents’ schedule to best match demand with supply.
Furthermore, the pricing model incentivizes increased volume and smoother demand. Since increased volume translates into more agents on the road, Skydrop becomes increasingly better positioned to absorb unexpected demand peaks that would otherwise deteriorate its value proposition of speed.
Sources:
Company visit and interview with Tavo Zambrano, Founder and CEO (May 2015).
Company teaser (December 2015).
This is a very innovative business that meets an unmet customer need through an innovative value proposition. I like the fact that the company is asset light and only provides a software solution to solve the customer value proposition. My only concern is that, customer service is an essential part of delivery. If a delivery agent is rude or in any way diminishes the customer service experience, how does Skydrop prevent that? Skydrop only incentivizes the quantity of deliveries, not the quality?
Bernardo, congrats for the post. I think you laid out pretty well how the company integrates its business model with its operational model. Going a little deeper, the business model is very innovative and takes advantage of the new trend of sharing economy, matching supply of small independent delivery agents with demand for its service.
After reading the post however, some doubts remained. How does the company ensure quality to its service, and still ensure quantity of agents? Why does the company prices its service with a fixed fee? The cost of delivery varies with the distance run and size of the package. Does it have any competitor in the market?? I think that the market for food delivery is perhaps pretty narrow if you compare with the market for documents delivery for example.
Best
David
I was excited to read about this business concept and how it works. I think SkyDrop has a ton of potential and I have heard from friends in the U.S. trucking & logistics industry that the uber idea has been slowly gaining popularity. I agree with all the points you laid out as to why the business model is successfully supported by the operating model. The one major concern I would have with expansion into the rest of Central America is around safety and the insurance cost to guarantee the successful and safe delivery of high value goods. How are they going to guarantee trustworthy drivers through only basic background checks? And how are they going to insure against hijackers? I would imagine this insurance is quite costly. I would want to see these numbers before agreeing that this company has a winning strategy. Overall, great analysis! I have no doubt someone will figure out how to make this idea work.