Anton Konovalov lists the greyest markets in Russia: “Drugs, prostitution and haulage; our markets come third in the level of illegal revenue.” In 2010, Konovalov teamed up with Ivan Plastun, Alexei Kozlov and Dmitry Krivoruchko to revolutionize the Russia’s haulage industry. Their objective was to increase transparency by making their shipping process as direct as possible, moving straight from A to B. And so their company Vezet Vsem - meaning “delivering to everyone” but also “everyone gets lucky” in Russian - was conceived.
Six years after its inception, Vezet Vsem became the largest shipping marketplace in Russia for business and personal use. In 2015 company revenue reached 500 million roubles ($7.6 million) with 20% of Russian shipping companies and private contractors registered with the website. Secretmag took a closer look at how the Rostov team that changed the face of Russian shipping.
Anton Konovalov met his future business partners thanks to a remote control car used in a venture expo in Rostov-on-Don in 2010. He, Ivan Plastun and Dmitry Krivoruchko hoped to attract an investor by loading the car with brochures. The project’s starting capital of 300,000 roubles ($4,600) was earned from selling Kozlov’s car in what was essentially an online auction, only instead of listing goods for sale, clients listed goods to transport, and the lowest bid offered by a shipping contractor won. The entrepreneurs wanted to create a rival to bulletin boards, the standard practice for finding a shipping company at the time. In the first month, 150 transporters joined the service in its initial form.
“A classic ‘garage Google’ tale,” Konovalov is slightly nostalgic when describing the project’s first year after he joined the team. “Four people, a whole bunch of ideas and theories, and a market that no one really understands.”
It took him three days to hammer out the details with his future partners following that fateful meeting at the expo. In fact, he was entertaining the idea of a similar startup for a while. He abandoned his transport and logistics company Liros and, along with his new team, invested 15 million roubles ($230,000) in the new project.
But Vezet Vsem did not bring any money in its first year. The company was testing the auction system trying to understand whether the service is something private cargo shipment services required. The main challenge was the creation of a database of trusted contractors. Due to a low market entry threshold - a cargo van costs as little as 250,000 roubles, or $3,800 - it was chaotic. Vezet Vsem aimed to change that by imposing strict requirements: service companies and private contractors had to input their information and licenses to the website’s database. User ratings were closely monitored, inappropriate users were removed. By the end of the first year the website had a database of 5,000 transporters. After 2,000 orders were conducted through the website it was time to monetize the service.
An odd request was posted on Vezet Vsem in 2013 in the form of a “disassembled airplane to be shipped to Yakutsk”. The job paid one million roubles, and the website’s cut was 3%. The company could have missed this opportunity if it stuck to the initial plan of a flat-rate subscription fee.
“Someone shipped a sofa once and paid us 1,000 roubles ($15). Others regularly shipped commercial goods, also for 1,000 roubles.” Konovalov explains.
In a month the company changed its pricing policy to adjustable commission from 3 to 12%.
“Our niche was private shipments. In a year we thought – just go for it!” Kozlov adds.
The company wanted to make money on each deal made on the website as clients rarely ship something more than once. Since SEO and context ads were the main method for attracting traffic, Vezet Vsem had to offer to ship something expensive, otherwise the revenue was no greater than cost of advertisement. That’s when Vezet Vsem decided to branch out to delivering cars. Within six months, car deliveries amounted to 50% of company revenue.
But the company soon realized that they were losing money each month as transporters paid commission only after delivery.
“By the end of the month we had millions of virtual roubles, but we could use only about half of that amount,” Konovalov stressed.
Sometimes users would cancel the order, sometimes they paid the transporter directly and avoided commission, sometimes transporters didn’t want to pay the commission for shipments that were scheduled three months ahead. The only choice was advance payments – but Vezet Vsem was concerned that clients would pay for a delayed service. Konovalov says that the idea was truly considered only after the story shared by the founder of a travel startup at the Clouds NN competition: the entrepreneur tested out his service in a Moscow underground pedestrian walkway – passersby paid him even though his service wasn’t even operational.
Ivan Plastun defines the life of his startup by hard times and very hard times. Changing monetization system belongs in the latter category.
“We debated advance payments for a long time; no one else wanted them. But then Alex went to Naberezhnye Chelny for a startup competition and won. He came back, slammed his fist on the table and said “it’s all good, let’s just go for it!””
And so Vezet Vsem started taking advance payments from clients in commission set at 8-15%.
Although Vladimir Batishev, founder of Perevezi.rf, believes this model isn’t entirely effective as it puts more strain on clients, Vezet Vsem claims that it was precisely this that allowed them to thrive. By the end of 2013 the company was in the black. Different delivery types such as motorcycle, watercraft, commercial and even animals and people were growing in correlation. “We ship anything, anywhere, any time” was the company slogan in the first few years, which has since become, “It’s easy to save on shipments.” Vezet Vsem promises savings of up 72%.
A New Threshold
After building up a reliable database, Vezet Vsem focused on customer service. The website launched tracking and insurance, developed mobile apps for both transporters and clients and took a hands-on-approach towards business. Many tools were developed in-house, including SEO, dispatch mailing, ads and analytics and Vezet Vsem even attracted major Russian shipping companies such as PEK, Rail Continent, JDE, Vozovoz.
At the same time the team continued seeking investment. In December 2015 they secured a deal with Russia Partners Technology Fund, which bought 40% of the company for an undisclosed price.
The influx of capital went towards realizing long-standing goals. One project was B2B shipping, which could not be automated due to legal issues. Businesses were interested in document flow and guarantees. Another aspiration was partnering up with auto dealers and real estate websites.
“You don’t really know how much it costs to ship a car from Moscow to Rostov, so you limit your geography,” explains Kozlov. “We say, “buy a car in Moscow for 100,000 roubles ($1500) less and pay 20,000 ($300) for shipping” the savings are substantial!
“This year we really want to become the Aviasales of cargo shipments.”
Investments helped deal with Perevezi.rf - the company’s only direct competitor. Vezet Vsem bought them out in January. A source from the Kommersant newspaper, close to the venture market, claimed that Perevezi.rf was not growing as fast as expected, and the buyout deal could be in the range of $1 million.
“Every business should be developed with plans for selling it,” Vladimir Batishev notes. “I and my partner Grigory Rudanov have always considered this possibility. The offer made by Vezet Vsem was lucrative and the timing was right.”
The teams of the two companies merged and while Perevezi.rf is still working as a standalone service, it will eventually merge to the Vezet Vsem brand name. Today the database has 160,000 shipping contractors and companies and over half a million clients. The two services made 500 million roubles ($7.6 million) in 2015, with 80% being earned by Vezet Vsem.
The Future of a Volatile Market
Konovalov believes Vezet Vsem “are on the verge of revolutionizing the shipping market” and that the market is going through the same transformation that the taxi market went through 3 or 4 years ago. In several years transport companies will be forced to unite and partially operate within the framework of service aggregators and prices will decrease due to organized competition and transparency.
There are certain challenges which set shipping apart from taxi services. Internet penetration among transporter contractors is lower in comparison with taxi drivers and clients – they need to be brought on board. But it is a lucrative market. In 2015 the volume of automotive shipping was estimated at 570 billion roubles ($8.7 billion), compared to 441 billion roubles ($6.7 billion) for taxis. Vezet Vsem estimates the volume of automotive shipping - of both legal and illegal parts - to be around 1.3 trillion roubles ($20 billion).
Companies such as CanDeliver, Gruzopoisk, Tona represent an increase in competitors who have popped up to fight for their share of the market.
“You need to consider start-ups and find effective means to compete with them. Large transport companies will likely eventually join the fight in the shipping app market as well,” says Vladimir Batishev.
Ivan Plastun, however, claims that they do not fear competition.
“There are around 50 startups, but they as a whole have a smaller market share than we. Some are too ‘hipster’ and really can’t connect with the average transport driver; others have no idea how online business works,” he says.
Ivan Tsybaev, founder of Trucker Path, a leading shipping platform in the United States, believes that “the Russian market is too chaotic” and “needs time to get organized.” Trucker Path do not see Vezet Vsem as a potential competitor, on the contrary, they may become an international partner for overseas shipments.
“It’s a good project, maybe with a lacking focus, but it’s somewhat of a necessary evil to increase market share at this time,” Tsybaev says. “The Russian market is smaller than the American, and it’s a good idea to expand in CIS and East Europe.”
Vezet Vsem is currently based only in Russia, but occasionally trips abroad pop up, like a shipping job from Nice to Hamburg. Konovalov admits that there are no plans to expand to other markets yet - “We have our work cut out for us in Russia, we don’t want to spread ourselves too thin,” he says.
The company post a ‘shipment of the day’ on their social networks, highlighting the strangest shipments they come across like bees, a tank, a trampoline complex, a yacht and even 15 tons of ice cream. With such an eclectic mix of cargo, they could have more work than they think.
Author: Victoria Charochkina