🛍️ Key Insights You Can Gain from This Article:
- In 2023, as e-commerce growth began to slow down, a same-day delivery service managed to increase its volume by more than three times compared to the previous year. This service is 'Ping Pong', operated by Binary Bridge. Founder Lim Eun-sun, who previously established FooDFly, a first-generation restaurant delivery platform, and sold it to Yogiyo in 2017, has now ventured into the same-day delivery market, a shift from his past endeavors.
- 'Ping Pong' operates two main services: a quick service that picks up and delivers orders from various individual and corporate clients, and a same-day delivery service that delivers orders received by 3 PM at a reasonable price before midnight. The latter is the flagship service of 'Ping Pong', and the article elaborates on how this pricing is made possible and the specific operational structure.
- 'Ping Pong' distinguishes itself with its proprietary transportation management system, especially its 'dynamic routing algorithm'. How this system sets 'Ping Pong's same-day delivery service apart from others is detailed, including examples of system utilization.
- 'Ping Pong' targets fashion, leisure, and lifestyle goods, digital, and appliance sellers and brands, with companies like the mid-range fashion brand Giordano utilizing its service for their online stores. Even small brands with lower volumes can access its same-day delivery service, differentiating 'Ping Pong' from large e-commerce platforms' fulfillment services. The article reveals how 'Ping Pong' has appealed to small brand customers and increased its volume.
A First-Generation Restaurant Delivery Platform Founder's New Challenge
Have you heard of BinaryBridge, a logistics startup now in its fifth year, running the same-day delivery service 'PingPong'? If that name doesn't ring a bell, you're probably familiar with 'Yogiyo', the second-largest delivery app in Korea. Those interested in the startup industry might remember 'FoodFly', a first-generation restaurant delivery platform sold to Yogiyo in 2017. Although it underwent several name changes, FoodFly eventually became the precursor to Yogiyo's own delivery service, now known as 'YogiDelivery'.
The founder and CEO of BinaryBridge, Lim Eun-sun, is the entrepreneur who led FoodFly. After selling Yogiyo, Lim also served for over a year as the Korean representative for the shared kitchen concept 'Cloud Kitchen'. Essentially, Lim has built a career around food delivery platforms and related markets.
Lim, along with the FoodFly management team, established BinaryBridge in March 2020, providing same-day delivery and courier services. In its first year, BinaryBridge was selected for the Ministry of SMEs and Startups' promising technology startup support program, TIPS. Last year, the company was awarded the POST-TIPS, given to TIPS graduates showing potential for business development and expansion within four years, along with a grant of 500 million won.
According to Lim, PingPong particularly achieved rapid growth in freight volume last year. From January to October 2023, the freight volume increased threefold compared to the same period the previous year, and since July, the volume has doubled each month.
Although the results are noteworthy, Lim's career shift intrigued me. Food delivery and same-day delivery share similarities in last-mile delivery, but they have long been distinct markets. While both primarily use motorcycles for transport, they differ in product handling, logistics operations, delivery distance, and rider identities.
So why did Lim Eun-sun, with extensive experience in the delivery platform market, decide to venture into same-day delivery? And how did PingPong, amid a slowdown in e-commerce growth last year, achieve a threefold increase in growth? CONNECTUS interviewed Lim Eun-sun, the CEO of BinaryBridge, for detailed insights.
Seeing Opportunities in Same-Day Delivery from Food Delivery
Lim noticed a growing demand for same-day delivery based on motorcycles and based this judgment on past experiences in the food delivery market. When Lim first founded FoodFly in 2011, free delivery was the norm in Korea. Now, it's unusual not to pay a delivery fee. Lim sees this irreversible change as an opportunity in the same-day delivery realm, where convincing sellers, the consignors, remains the only viable option to open the market. Once many consumers experience a 'one-day logistics living zone' through same-day delivery, Lim believes this market will grow into one where both sellers and buyers willingly pay fees.
Currently, Korea's last-mile logistics market is divided into two: food delivery and courier service. While the courier service rapidly established itself due to the explosive growth of e-commerce and the entry of large corporations, the food delivery market was different. When FoodFly started, there was little willingness to pay delivery fees from either restaurants or customers. Over a decade, this has changed, and delivery fees are now accepted as a service charge. Lim considers this a permanent change – delivery fees are unlikely to decrease, and the same will be true for same-day delivery services like PingPong. Although the market is in its infancy, and only sellers are willing to pay fees, it is expected to evolve into a market where everyone is willing to pay.
Lim also saw an opportunity in the slow digital transformation of the last-mile delivery industry. While the sales and purchasing phases of large e-commerce platforms rapidly adopted and developed digital technology, the delivery phase was still using methods from 20 years ago. BinaryBridge, therefore, built its PingPong service around its own Transportation Management System (TMS) and routing algorithm, catering to both sellers' and buyers' needs.
PingPong's Same-Day Delivery: Similar but Different
PingPong offers two services. One is same-day delivery, where orders collected by 3 PM are delivered by midnight at a relatively low cost. The other is a courier service, responding immediately to corporate or individual requests for pick-up and delivery. Currently, PingPong operates in all of Seoul and parts of Gyeonggi Province (Incheon, Bucheon, Seongnam, Suwon, Goyang, etc.).
The core business of PingPong is same-day delivery. It follows a 'Hub & Spoke' model used by courier companies. PingPong operates a main hub center in Seoul and two logistics centers. Daily, it collects consignors' freight at the hub, sorts it, and then moves it to about ten pick-up points in Seoul and Gyeonggi Province, where riders pick it up for final delivery.
This Hub & Spoke process, performed daily within the metropolitan area, increases efficiency as riders carry more cargo per trip compared to regular courier services. This is now a common method used by N-hour delivery companies offering services at courier price levels in Korea.
PingPong's distinction lies in its dynamic routing algorithm, which considers cargo type, destination, sorting and delivery order, load capacity, travel routes, and traffic conditions to maximize dispatch efficiency. The algorithm can respond agilely to changing delivery conditions and freight volumes up until the 3 PM order cutoff, even adapting to real-time courier service orders.
"Our TMS routes each order immediately. That's what sets us apart from other same-day delivery services and is our core competency. We predict daily volumes for each consignor and by day of the week, adding real-time volumes before the 3 PM cutoff to complete routing. This means some of PingPong's same-day delivery freight bypasses the main hub. For example, if a significant amount of cargo picked up in Incheon is also destined for Incheon, it would be inefficient to transport it to the Seoul hub for re-sorting and then back to Incheon. Our dynamic routing algorithm considers basic and same-day Incheon-originated and destined cargo, traffic conditions, and the availability and location of riders, optimizing delivery. While courier companies assign specific areas to drivers, making it difficult to handle sudden increases in volume, PingPong's TMS can distribute cargo flexibly without fixed area boundaries, using both permanent and crowdsourced riders for flexible delivery" - Lim Eun-sun, CEO of BinaryBridge
Additionally, PingPong's TMS is used to increase sorting efficiency at the hub center and pick-up points. If 10,000 parcels are divided into 120 bundles for dispatch, scanning a product at the hub reveals one of 120 designated numbers for sorting before transport to pick-up centers. Riders at these centers scan the designated bundle barcode in the PingPong app to immediately see their delivery route.
Affordable Same-Day Delivery at 2000 Won, Even with Limited Volume
By optimizing the entire delivery process through its TMS, PingPong can offer delivery, including pick-up fees, at an average cost in the mid-2000s won range. This allows PingPong to offer reasonable same-day delivery services to small consignors and brands focusing on brand experience, despite their lower sales volumes, with increasing collaboration examples.
"PingPong's consignors mainly deal with fashion and beauty categories, with a significant number being brand operators. They produce and sell their products, rather than being middle distributors. For instance, 'Giordano', one of PingPong's clients, generates a significant portion of its sales through fashion vertical platforms. Apart from this, it operates its own brand mall and has established a same-day delivery service through PingPong. Although customer demand may be higher on platforms, there's a distinct experience and value that brands want to convey, confirming a definite need for independent logistics services. This is particularly true for brands with physical spaces, and we believe it's key to activating same-day delivery" - Lim Eun-sun, CEO of BinaryBridge
According to BinaryBridge, some PingPong clients have been disappointed with fulfillment services for faster delivery, facing high logistics costs or poor treatment due to low sales volumes. "Logistics is ruled by volume," as they say.
However, small brands face constraints using fast delivery services provided by large e-commerce platforms. For example, Naver's arrival guarantee requires a contract with designated logistics companies, and Coupang's Rocket Fresh may require paying over 30-40% of sales in fees and logistics costs. Moreover, platform entry limits customer experience design for brand strengthening.
Focusing on these brands' concerns, PingPong is actively pursuing same-day delivery sales. Through PingPong, brand consignors can offer same-day delivery along with real-time location information, delivery communication, and pre- and post-delivery customer service. PingPong believes the added value of fast delivery justifies additional costs for more consignors.
Expanding Same-Day Delivery to Provinces: Will It Become Mainstream?
BinaryBridge reports that PingPong significantly increased its freight volume last year by expanding its service range to Gyeonggi Province. By the end of this year, it plans to expand to other provinces.
However, replicating the Hub & Spoke model in provinces is considered ineffective as most consignors' logistics centers are located on the outskirts of Gyeonggi Province. Therefore, BinaryBridge plans to introduce a new fulfillment-style same-day delivery model suitable for provincial expansion.
PingPong also sees fresh opportunities in expanding its courier service business, not only offering standard forward delivery but also exploring markets combining reverse logistics, particularly for various rental shops.
"Most specialized rental shops for clothing or electronics still rely on courier services for returns. Cheap courier services take too long, and rental shops lose money the longer inspection and return processes take. With PingPong's courier service, they can return items the same day at a relatively low cost. We include return locations in the rider's route, collect them at a joint depot, and then deliver them to consignors using vehicles like Damas. This is much cheaper than individual courier deliveries and definitely faster than postal services. Predictable delivery volumes and times also make reconditioning returned products more efficient. Some rental shop clients use PingPong's same-day delivery for customer deliveries and our courier service for returns." - Lim Eun-sun, CEO of BinaryBridge
PingPong aims to handle 1.5 to 2 million shipments this year, gradually expanding its volume and delivery range, focusing on small brands. Through this, BinaryBridge wants to create a new market ecosystem for same-day delivery, fostering mutual growth for consignors and logistics companies.
Lim also hopes to resolve challenges unaddressed during his time in the food delivery platform business through same-day delivery services. Will BinaryBridge's vision for the popularization of same-day delivery come true? We'll have more updates as PingPong expands into provinces this year. Stay tuned for more news, concluding with Lim Eun-sun's ambitions.
"In the food delivery market, we couldn't fully establish a symbiotic ecosystem. Restaurants always struggled with fees and delivery costs, and delivery riders were constantly angry. It was an environment where market participants couldn't work happily. Therefore, in the still-emerging same-day delivery market, we want to create a different structure. BinaryBridge is focusing on cooperation with small brands. Instead of relying on a few large consignors, we strive to offer essential services recognized by many small brands. We're not excluding or criticizing large e-commerce platforms or courier services. They provide great support to medium-sized distributors and high-volume sellers. However, brands that don't fit this sales and delivery model certainly exist. We want to be their alternative. If a variety of brands and products in the long tail gain logistics competitiveness, it will be highly beneficial to consumers and positively impact the entire market. BinaryBridge aims to be part of that logistics partnership" - Lim Eun-sun, CEO of BinaryBridge
Written by Shin seungyoon. He is currently working as an e-commerce logistics specialist journalist at BEYONDX(CONNECTUS).
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