[THE INVESTOR] Algorithm-based transport management system and data learning technologies are crucial for last-mile delivery service in the growing e-commerce market, head of an IT logistics firm said.
“We call it the AlphaGo of logistics,” said Rhyu Jung-bum, CEO of IT logistics startup Mesh Korea, in an interview with The Korea Herald. “High technology is really needed in order to address a vicious cycle in the current delivery service market.”
Mesh Korea CEO Rhyu Jung-bum poses at his office in Samseong-dong, southern Seoul, on Feb. 27. Park Hyun-koo/The Korea Herald
The company, better known for Vroong here, is a provider of an algorithm-based last-mile delivery service. The algorithm is named Vroong Engine designed for high logistics efficiency for clients by applying mathematics to the costs and risks of delivery services.
According to the founder, middlemen are essential to providing high-quality, on-time delivery services at reasonable costs.
“While deliverymen are struggling to get paid more, cargo owners intend to pay as little as possible,” he said. “The number of delivery orders is a new variable here that determines both cost and quality.”
The Vroong algorithm enables multi-loading of parcels with different destinations in accordance with deliverymen’s capacity and incomes they want to earn.
Currently, Mesh Korea has about 1,000 motorcycle riders for the delivery service, who are working as freelancers. The company’s clients include McDonald’s, Burger King and E-mart. The CEO aims to secure up to 3,000 riders as he eyes on the growing mobile commerce.
“Until the order density rises to a certain level, directly hiring riders would be money-losing as seen in the case of Coupang’s Rocket Delivery service,” he said. “Small, but high-tech is the key.”
Rhyu’s ultimate goal is to develop the current solution as a logistical platform that operates on its own, like the giant web portal Naver.
“We hope to make Vroong as a platform,” he said. “What riders need to do is just download the Vroong app, register as a rider, take orders at their needs, complete the delivery and take money from the platform as well.”
After successful launches in Korea and Singapore last year, Rhyu is spurring efforts to expand the local service to Japan and Turkey.
As part of globalization efforts, the company recently announced the establishment of a joint venture with network equipment provider Humax and scouted Choi Ji-hyun, an experienced outbound business strategist, as CEO of the new firm. Choi oversaw global businesses at SK Telecom, SK Planet and other large businesses.
Rhyu plans to export the Vroong TMS solution to overseas countries with high demand for on-time, one-day delivery service.
“There are similar TMS businesses in the US and Canada, but their solutions are not suitable to Korea and other Asian countries,” he said. “Japan has a similar e-commerce market to Korea’s, considering mobile penetration, high population density and complex city divisions. There is high demand among one-person households for timely delivery.”
Japan will be the first overseas target this year. After making a successful reference in Japan, Rhyu also hopes to reach Turkey, Italy and Spain.
By Song Su-hyun/The Korea Herald (firstname.lastname@example.org)