With established tech and a dual-product vertical in one of the world’s fastest growing sectors, Z2U is looking to scale in both domestic and global markets.

Logistics technology platform Zoom2U Technologies (ASX:Z2U) joined the ASX last September with a barnstorming IPO, which saw the stock price more than double on its first day of trade.

The successful listing gave the company a strong platform to accelerate its global growth plans, in line with the broader demand for improved delivery solutions accompanying the growth in ecommerce.

Stockhead caught up recently with company CEO Steve Orenstein, for some history on the company and some detail on its near-term operational targets.

 

The phone call

Orenstein founded Z2U back in 2014 after selling his first startup, the tradie scheduling service Connect2Field.

The inspiration to start the business began with a phone call (more specifically; multiple phone calls).

“I was sitting with an investor having coffee, and my phone kept ringing but I couldn’t work out who was calling,” he said.

“It turned out to be a courier who was trying to deliver furniture. They were super annoyed and ended up leaving me an angry voicemail.”

“And it made me think – this is a problem that good tech can solve. Because in that situation, it’s a bad experience for the customer but also for the driver.”

“So I thought; why not try and use technology to connect two people together where both parties benefit.”

 

Australia’s delivery market

Orenstein says that due to the growth in ecommerce, Australia’s packaging and delivery sector is currently “about a $5bn market”.

“So it’s already very large, but the key point to note is that a significant portion of that is either next-day delivery or slower,” he said.

“Often when customers go through the checkout process in ecommerce, they don’t know exactly when that parcel will be delivered,” Orenstein said.

In that context, the natural evolution is for a shift to same-day delivery.

“Right now, same-day delivery is still a small segment of what broadly is still a fast-growing market,” he said.

“But I think it will become a significant part of the overall market to where, in the coming years, it will almost become the norm.”

“And that’s exactly how we’ve established our model to benefit from that shift.”

 

Flexibility is key

Zoom2u established traction through  its tech-based courier platform that allowed individual drivers to make deliveries, once they’d cleared a vetting and accreditation process.

Early backers of the platform included the fund manager, Perennial Value Management.

“For any ecommerce business or retailer, it gives them the ability to have a highly flexible network of drivers on their platform,” Orenstein said.

“Drivers have an app on their phone, they can choose which booking they accept and we can send them a booking that’s really relevant and close by.”

“We have a large pool of drivers, and which we can utilise to meet spikes in demand.  Using our tech, we can do these things really efficiently.”

Orenstein said centralised dispatch models (with humans dispatching the work) are still common in traditional courier business.

Instead, Zoom2u’s platform is governed by an algorithm which organises high volumes and automates the ability for drivers to choose the booking that suit them best.

“Then from the customer’s point of view, they get a live traffic link via an SMS which gives them location data and they can also communicate directly with the driver,” Orenstein said.

 

Global opportunity

Through the success of its courier platform, Zoom2u also uncovered a new market opportunity for a SaaS-based model that allows customers to manage their own driver fleets.

The result was Locate2u, an additional vertical that’s growing fast and gives the company an opportunity to leverage its proprietary technology.

“It’s designed for anyone that’s running their own fleet of own drivers. It allows them to manage their bookings and provide the same live-tracking service that Zoom2u offers,” Orenstein said.

Locate2u gives the company access to global markets with the capacity to scale up recurring revenues.

“We’ve been able to hit the ground running with this product and I think that’s one thing some investors might not fully see yet, is that Locate2u will become a significant part of this business in the future,” Orenstein said.

As an example of its early traction, Locate2u onboarded national homewares retailer Amart Furniture in September last year.

Highlighting the global opportunity, Orenstein said the platform already has customers in around 10 countries and recently hired its first sales rep in the US.

“So the strength of that model is really through those recurring SaaS revenues, and customers typically sign up for 12 or 24 month contracts which adds to the stickiness of those revenue streams,” he said.

Domestically, Z2U client suite includes companies such as Nespresso, Telstra, retail chain Bing Lee and logistics company DHL.

“These days, we know every ecommerce business is thinking about delivery,” Orenstein says.

“They need to figure out how to compete and with the technology we developed, we think Zoom2u and Locate2u offer the best solutions to help them do that.”

This article was developed in collaboration with Zoom2u, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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