Even as Amazon and Walmart are expanding overnight delivery to their customers, overnight delivery is no longer fast enough. Consumers are demanding same-day delivery, which marries the convenience of online shopping with the instant gratification of purchasing at a brick and mortar store. Same-day delivery market revenue could reach $9.9 billion globally by 2025, according to Adroit Market Research, and Research and Markets estimates that the U.S. market could grow at a compound annual rate of 23% between 2018 and 2022.
But same-day delivery is too slow for many, and now ParcelPal Technology Inc. (PKG:CSE; PTNYF:OTCQB; PT0:FSE) has gone one step further by guaranteeing one-hour delivery in the areas it serves. Beginning in Vancouver, ParcelPal has expanded into Calgary, Saskatoon and Everett, Washington, and plans to add other Canadian and U.S. cities.
The company also took a major step forward when on June 17 it announced a major integration with Shopify, the online shopping platform that is used by more than 600,000 merchants and has generated more than $40 billion worth of sales. Shopify gives retailers the tools they need to build and operate a successful online store.
Kelly Abbott, ParcelPal's cofounder and CEO, explained that ParcelPal was started in late 2016 "with the idea of simply having anyone be able to call a courier and have items delivered anywhere in city in under an hour for a reasonable price. After having some initial success with this model, I began to ask, how can we offer more to consumers, businesses and those who are delivering our packages for us?"
That led to the development of an app that connects consumers with local businesses, allowing consumers to get anything they want from local businesses in under an hour. "This model has really transformed our technology into a more modern way for consumers to shop, purchase products and have goods delivered to them in an hour or less from local businesses that are on our platform," Abbott noted.
"Our mission really is to put a delivery service in everyone's pocket where they can get anything they want delivered to them in an hour or less," Abbott explained. "In essence we are no longer only an on-demand delivery provider in under an hour; we are a marketplace that allows consumers to find, buy and get anything they want from any vendor in under an hour."
The app features restaurants, liquor stores, grocery stores, pharmacies, dispensaries and other retail outlets. Customers can also track the order in real time.
The integration with Shopify means that businesses of any kind, including cannabis merchants, "will be able to integrate their Shopify eCommerce store nearly instantly with ParcelPal's platform. These merchants will enable their customers to tap into ParcelPal’s network and have their products delivered in an hour or less."
The delivery service is particularly attractive to cannabis companies, and ParcelPal currently has delivery arrangements with Choom and Kiaro, and expects to expand further into that industry.
"This integration and offering on the Shopify platform will allow for any cannabis business, as well as other businesses, to instantly integrate with our technology. Instead of lengthy and expensive integrations with current and potential partners, this will cut it down time dramatically," Abbott explained.
In addition to the merchant model, ParcelPal has partnered with Amazon to deliver packages, delivering thousands a day for the world's largest online retailer. In 2018, the company hit the milestone of delivering over two million packages.
Abbott noted that ParcelPal has "gone from a company with no meaningful existence in 2017, to being a commercially viable one in 2018. We've grown our operations from a pilot project to a company that has operations across regions in Canada. Now the model has been commercially proven and it's viable, we envision that we'll be able to scale ourselves even further than that; we're confident that we'll be able to end the year 2019 up both three times, with over nine cities in Canada and the U.S."
Technical analyst Clive Maund in February wrote that ParcelPal "is setting up to do to the package delivery industry (FedEx, UPS ,et al.) what Uber did to the taxi industry. Where FedEx and UPS are big lumbering companies with expensive infrastructure, ParcelPal is light and relatively fleet of foot, using economies of scale and flexibility to give it the edge."
ParcelPal's merchant model generates revenue from both the consumer and the business. Consumers pay a 9% transaction fee and a 5% delivery fee, while the merchant pays a 15% transaction fee. This means that on a $100 order, ParcelPal receives $29 in revenue.
In an early May investor call, Abbott stated that he anticipated the company becoming cash flow positive in the second half of 2019. Revenue in 2018 was up 825% from 2017, with the company reporting EBITDA of $1.3 million and gross profits of $802,000. The run rate is expected to be between $10 million and $15 million in 2019.
"We're very pleased that we were able to attract existing and new investors for financing throughout the year. This has resulted in $3.5 million net cash flow and proceeds from financing activities to close the year with a healthy working capital position of about $2.7 million," Abbott explained.
"Our vision for the company is to be not only in Canada but also expand ourselves further into the United States," Abbott stated. "We will continue to push the business in our current market and strive to engage new markets within the year. Our core operations are stable and contributing to our overall strategic initiatives. We remain well capitalized and well positioned to achieve our goals of expansion and addition of new delivery verticals for the next 12 months."
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