Pack Pack Bootstrapped E Commerce Logistics
Contxto – No news is good news, they say. But, as a person who covers the news, I’d argue that the other way round works as well. Take Mexican e-commerce logistics solution, Pack&Pack.
They’ve been doing really well recently.
The startup has been growing at a rate of 45 percent, is billing more than MX$4 million (US$180,000), and is making more than 25,000 shipments, all of this on a monthly basis.
But, this isn’t a paid contribution, so what gives? Well, one thing did pique my interest:
Pack&Pack is a 100 percent bootstrapped operation in a sector that has famously been the death of many a promising company.
Yet, Poncho Garciga, Pack&Pack’s co-Founder, trusts that bootstrapping is what has put a sprint in the startup’s step. He said that it was this lack of external funding that pushed them to focus on seeking profitability from day one:
This opens up a new business path for emerging entrepreneurs and startups: You don’t need an investment round to achieve your goals.
Poncho Garciga, Pack&Pack co-Founder
E-commerce logistics valley of death
The optimism and growth is contagious. But we’ve been hurt before, haven’t we?
The ecosystem has seen how difficult it is to maintain an e-commerce-servicing logistics platform. And, worryingly, Pack&Pack is almost perfectly filling the market void left by the smoldering wreck that was Kichink.
Obviously both companies have different business models, but many will see “bootstrapping”, “logistics”, and “e-commerce” in the title and worry.
It could well be that the mistake was the past insistence on growth at all costs. Looking to grow too quickly, ignoring profitability, and getting killed by overheads before you can hit those coveted economies of scale.
The question is, will being profitable early save Pack&Pack, or is it perhaps doing too well for its own good? Just look at these eye-watering growth numbers:
Last year it invoiced MX$1.8 million (~US$82,000), yet is on course to closing 2020 at more than MX$25 million (~US$1.1M). That’s exponential growth, equivalent to 15X the value of the company, in only one year.
However, Garciga is confident that their early-stage profitability will be what boosts them over the death valley of poor unit economics.
Pack&Pack round: A logistical challenge?
After hearing all this talk of bootstrapping, it may come as a surprise that Pack&Pack has told us that they are now raising a round.
They are looking to scale and are exploring new business verticals, chiefly focused on macro and micro fulfillment.
Garciga says they are on their way to becoming the first Latam courrier completely designed to solve the logistics of e-commerce businesses.
Pack&Pack, e-commerce testing positive with Covid
My worries about e-commerce logistics are clearly founded in past trauma. Indeed, the world has changed beyond recognition since then.
Covid-19 has changed things massively and demand for home-delivered e-commerce solutions has skyrocketed. The pandemic gave Pack&Pack a 3X boost in growth, says Garciga.
But remember, to mop up this glut in demand, many previously existing startups have either cropped up, scaled to boost their services, or pivoted into the logistics game. So competition is getting ever fiercer even as the pandemic subsides.
Therefore, I end with a word of caution. Logistical solutions for e-commerce need to have a hell of a retention strategy for when the quarantined masses hit the streets to do their own shopping.
If not, we’ll have another logistics bloodbath on our hands.
-AG
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