Here's How Shadowfax Became The Go-to Company For a Multitude of O2O Businesses

Initial operational challenges demanded the young company to quickly work out an innovative approach.

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While working with one of the largest retailers of the world abroad, Co-founder of Shadowfax, Abhishek Bansal, came across the persisitng logistics problem of last-mile delivery due to the rise of O2O commerce. After retuning to India in 2014, he realized that organized retail was still not in place. It was the time when Foodpanda, Swiggy and others were trying to come up with an O2O model and that’s when it hit like a wave — “all of these platforms are going to face the common problem of delivery when the demand overflows,” as Bansal puts it.

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The solution, according to Bansal was to “create a horizontal platform where all of these entities get integrated and can be used on an on-demand basis to get stuff delivered to their nearby customers without impacting their obligations. We thought that this is a viable business idea.” With a keen focus on becoming the backbone of all these growth areas, and a vision of bringing down the last-mile delivery time from weeks, which was the norm around 2014, to same-day deliveries, Shadowfax was launched in April 2015.

“From a growth driven strategy,” Bansal shares, “we had to take a sustainable approach to our business. The biggest challenge was to create a very high ground efficiency.”

Initial operational challenges demanded the young company to quickly work out an innovative approach. Bansal shares, “We discovered that the trick to our business was to operate in different categories, each having a different peak time. So that, the same delivery boy can be used for multiple categories, which in turn would increase the efficiency.”

The company has a presence in over 80 Indian cities and towns. It aims to increase the number to 100 in the next three months. It is managing over 90,000 orders in a day for various sectors. Using a proprietary technology completely, Shadowfax, in a small period of time has managed to achieve the feat of being the go-to company for all the O2O businesses flourishing today. In January 2016, the company was at minus 35 percent margin, and by the end of the year it stood at 4 percent margin. In 2017, the company grew threefold. With pride Bansal says, “Every platform operating in the same-day delivery domain is using Shadowfax, there is not even a single company that is not working with us right now.” Understanding what is the most sustainable business and defining a product-market fit has helped Shadowfax achieve great entrepreneurial milestones in a short span of time. Bansal says, “Until and unless you’re making money per transaction on a unit level you don’t really know whether you have built the right product or not. Once you get that right, it just remains a matter of scaling in order to be successful.”

Within six month of operations, Shadowfax raised an angle round, and in the same year they raised $8.5 million from Eight Road Ventures in Series A. Eight Road Ventures again placed its faith in the company and infused another $10 million in 2016 in series B. The most recent round of investment came last month — $22 million from NGP Capital in which Qualcomm Ventures, Mirae Asset Financial Group and Eight Roads Ventures

This article was first published in the November 2018 issue of Entrepreneur Magazine. To subscribe, click here