A local start-up which leverages on the sharing economy to offer on-demand delivery services has netted $1 million in funding.
Launched two years ago, CarPal taps a pool of freelance drivers to deliver small items for businesses such as fresh food suppliers, bakeries and florists.
CarPal's Dutch founder Maarten Hemmes, 30, told The Straits Times this week it closed its first round of funding in December, and raised $1 million from an investor, a Singaporean entrepreneur who did not want to be named.
CarPal is believed to be the first local delivery start-up to secure external funding. Its local rival Zap Delivery has a paid-up capital of about $400,000 and is still funded internally, while another local start-up, Zyllem, declined to comment on its funding.
But CarPal's funding pales in comparison with that of two Hong Kong delivery start-ups operating here - GoGoVan and lalamove - which have larger funding of US$26.5 million (S$37 million) and US$20 million, respectively .
The challenge for these start-ups is to ensure a critical mass of delivery drivers so that jobs can be fulfilled on demand, said Professor Costas Courcoubetis of the Singapore University of Technology and Design, an expert on the sharing economy.
"Also, there must be ample demand from customers so these drivers can make an income," he said, noting that another issue is whether the start-ups can upscale to courier more high-value items, such as valuable documents.
Over at CarPal, Mr Hemmes wants to use the fresh funds to double his staff strength to 12 and launch a mobile app version of CarPal - customers now place orders via a website.
The app will be aimed more at consumers who may need to move an item at short notice, and allows them to chat directly with the driver instead of via the CarPal office.
This adds to the company's new "purchase" option, which allows customers to ask drivers to buy anything from fast food to computers and deliver these at an extra charge, currently pegged at $10 on top of the delivery fee.
"It's a bit of a concierge service. What we feel CarPal should be (about) is doing things for you... It makes sense, because we have all these drivers out there and they can pick up on your task.
"This model is the ultimate sharing economy. Everybody does what is most efficient at that point in time," said Mr Hemmes.
While CarPal is working with 300 businesses, the consumer segment is one which Mr Hemmes feels can grow to account for at least 10 per cent of his customers.
Already, some CarPal drivers have had requests from consumers to buy and deliver things from Korean fried chicken to headphones, and even gifts to a loved one, with instructions to the driver to handwrite a note, he said.
About 6,000 drivers have signed up with CarPal, but only 1,000 of them are active.
Some 700 of them take jobs for CarPal, the other 300 drive for a subsidiary called PetMate, which is an on-demand pet taxi service.
Mr Hemmes said that before drivers can start, they have to attend an hour-long training session. With the added funding, he said he can hire more staff to do the training at its new office in Anson Road.
Drivers keep about 70 to 80 per cent of the delivery charge which customers pay to CarPal. A typical delivery of an item like a cake costs between $15 and $25, depending on the distance.
Mr Hemmes said CarPal is also looking to improve the way drivers and jobs are matched, by taking in their preferences about when and where they want to operate.
Asked about the competition that CarPal faces, Mr Hemmes said: "It's a good sign. It means there's a growing demand for such delivery services."