How did the same-day delivery startup ZITICITY manage to grow their revenue 8-fold and add 1500+ clients during the pandemic? We asked ZITICITYs CEO and co-founder Laimonas Noreika about their journey so far as well as tips for founders still in the early days of their entrepreneurial path.
ZITICITY’s mission is to provide affordable delivery service so local businesses could stay competitive at the age of tech giants like Amazon. Since launching in Lithuania in 2017, they have expanded to Estonia and France and are planning to add two more countries this year. The founders won our heart already at the very first Salto Growth Camp in 2019 in Tbilisi (remember those times when we still flew to places?), where they were voted both the favourite of the mentors and startups.
Continue reading the interview with Laimonas to find out:
What inspired you to go into the delivery business and start ZITICITY back in 2017?
In fact, none of our three co-founders had any logistics experience – we come from software development, product management, and marketing fields. So, we decided to start the company not because we were good at logistics but because we were mad at how bad the online shopping experience was before ZITICITY. In markets where we operate most of the time you are buying an item which is in the same city but somehow it takes 2 or 3 business days before a courier arrives at your door at random times. We felt there should be ways to improve it.
Now that we’re scaling the company, we are still building products from the customer’s point of view – how they would like to shop online. Not from the point of view of how warehouses and trucks operate, which is what traditional logistics companies do.
How much has your business idea changed over time?
Our first product was similar to many food delivery apps, only with more verticals like groceries, pharmacy products, pet supplies, etc. We wanted to deliver anything. But after a few months, we realized that 95% of people were still buying a pizza from a nearby restaurant, which was a bit disappointing as we didn't want to build another food delivery app.
At the same time we had already over 100 couriers on our platform and a lot of businesses started asking if they could use our couriers without the app. So, we created a simple dashboard where they could enter a pickup point A and a delivery point B, which was mainly used by flower shops and bakeries. We liked this positioning much better, shut down our B2C app, and fully focused on B2B segments.
Today you can integrate ZITICITY delivery option into your store checkout and while some other delivery option takes 2-3 business days, we’ll deliver the order on the same day and also with better pricing. It’s a key priority for us to make the service affordable because it’s very easy to create an expensive white-glove concierge service, but not many people need it at those price points.
How are you able to beat big logistic companies in their game?
We do it by creating a network of urban hubs in the cities. A typical logistics company would have a massive 10,000 m² warehouse outside the city, somewhere near the airport. Instead, we open 100-200 m² urban hubs in the sleeping districts of the city where people actually live and deliver from there. So, the distances are much shorter; our couriers can do 4 to 6 deliveries per hour. This way we can offer same-day delivery at cheaper rates compared to traditional courier companies. And also do it by eco-friendly transport: more and more of our deliveries are done using bicycles, cargo bicycles and other electric solutions.
ZITICITY participated at the first-ever Salto Growth Camp in Tbilisi in 2019, where you were chosen the favourite of mentors and other teams. What was your experience at Salto Camp like?
At the time, all the co-founders were living in Paris because we were launching in the Paris market. Only the three of us attended the camp, so flying to Tbilisi was also like a team-building exercise for co-founders – it’s good to switch locations and be together. Our goal at the camp was to create a process for generating business leads in France through website improvements and growth hacking strategies - how to get traffic to the website and optimize certain things. So, we had a very specific goal, specific KPIs, and specific questions to mentors, and during the camp executed to the fullest.
At the time we were 10 employees and now we are 65. However, I’d still like to participate even at later stages of our company and include not just co-founders, but also marketing, sales, maybe UX design. It's a really cool team-building exercise to work on something slightly different and have a sprint to accomplish a specific goal.
What do you remember about the other participants and mentors?
Before Salto Camp we had participated in two hackathons (both of which we won), and we really liked the community around it. It's not just cool to have focus time to build something in 48 or 72 hours but also to be in a different environment and meet curious people who want to build something instead of spending their hours watching Netflix, for instance. Plus we saw it as a good opportunity to network with investors before our fundraising round.
A lot of cool startups participated at Salto Camp – the quality benchmark was very high – and the mentors’ list was really impressive. All the super experienced guys from Bolt, Skype, Transferwise – you do want to get a second opinion from them and it helped us a lot. We built good relationships and continue to chat and help each other.
Do you have any tips on how to choose mentors and work with them? Have you also received advice that didn't work for you?
The most important thing is to look at the mentor profile and think about how they can help you. Then explain your situation as short as possible, maximum of three sentences, and have a specific question for them. Before Salto Camp, we even sent the questions beforehand, so mentors could prepare. You need to make it easy for mentors to help you.
At the same time, you cannot expect their feedback to be like silver bullets which will immediately solve all your problems. Basically, you're getting a second opinion but the final decision is yours. The mentors will give you a lot of great advice but you are the one who needs to execute it, so you have to pick. You won't be able to use all the brilliant ideas but what is important for you is to build a network. You never know which mentor might be working for you in the future once you become big, need his know-how and get him on board.
To sum up, you need to help mentors to help you – be very specific and highlight the pain point you’d like to solve. And you need to understand that some of the feedback will be extremely relevant, some will be somewhat relevant and some will simply be a second opinion. For example, one of our mentors suggested that delivering flowers is not profitable and we should instead be delivering blood samples and organs to hospitals.
The year 2020 messed up plans for nearly all of us. For ZITICITY, 2020 was a massive success – you completed a funding round of €2.2 million and saw an 8-fold increase in your revenue. How did you do it?
Indeed, if you zoom out, the outcome was very successful but the journey itself was definitely not easy-peasy. Our fundraising round happened during the first wave of Covid-19 when investors had high levels of uncertainty, and the process was quite stressful, though in the end we completed it extremely successfully and found the right investors we are very happy about. Also, the restaurant sector, one of our two big customer verticals, was very much affected and our volumes from restaurants decreased. At the same time, e-commerce increased, so we repositioned our product and implemented many new features for e-shops to start using ZITICITY at scale.
While most people are working remotely, we are transporting physical goods, which means someone needs to be in the hubs, meet the couriers, etc. So we need to organize the work in the safest possible manner at a time when the demand is increasing by 50% or even 80% a month. We had to make decisions really quickly and scale the organisation in a very dynamic environment. For example, we had to open new massive hubs when the volumes went through the roof in the Christmas period.
It’s definitely an interesting challenge to build a company in these times. To understand how to best work remotely, how to best onboard people, how to make sure they have the right tools to show their true potential, etc. We are way stronger now and it’s good to see everyone adapting to the new reality. At the same time, I hope we can go back to normal lives sooner than later.
What are ZITICITYs plans for this year?
We have just launched Latvia and will be launching Poland shortly plus adding more cities in the markets we already operate in – France, Lithuania, and Estonia. But apart from geographical expansion, we’ll be moving towards becoming the best solution for home delivery more broadly, not limited to same-day delivery. We will be adding solutions for next-day delivery and delivery between cities, which is a big change for us.
We are also piloting urban fulfillment in Lithuania, where we store best-selling items of e-shops in our urban hubs and pick, pack and deliver them. This is also something our customers have asked, as e-shops right now have a pain point of using third-party warehouses and it takes 1-2 days just to prepare an item for delivery.
And we’ll also be building more tools for shoppers. At the moment you can track delivery in real-time but we want to give you remote control over your packages so that, for example, you could change the delivery time or delivery address if you leave the town for the weekend. We position ourselves more and more as a shopping experience brand and not simply a logistics brand. Right now we are fixing the delivery experience, but there are more ways how we can make it better.
Finally, what advice would you give to founders who are starting out and possibly also dream of disrupting a sector they don’t have former experience in?
The first thing is to just start. You'll be sure to encounter a lot of problems. Prioritize the problems and fix them one by one. When you actually go into the details and try to build something, you understand it's not as easy as it may look at first sight. The deeper into the woods you go, the more trees there are. When facing an obstacle, think about how to solve it. Should you break it or should you go around it? Should you dig a tunnel beneath it?
Along the way, you'll change your direction and product positioning. But instead of doing this in your head, start building stuff, selling it, and getting real-life feedback. It will take multiple iterations to find the right product-market fit. In general, the product-market fit is a moving target. You always need to be innovating and looking at how to be most relevant in the business at the highest possible scale, in order not to be just a niche product. But first, you need to start. By taking the first step you have already completed half of the journey.
Salto Growth Camp is an ultra intensive growth bootcamp for early-stage startups with existing products.