Kushal Nahata Of FarEye On The Supply Chain And The Future Of Retail

Aspart of our series about the future of retail, I had the pleasure of interviewing Kushal Nahata, CEO at FarEye.

A dynamic leader and CEO, Kushal drives the culture of ‘customer-first’ at FarEye which enables the team to deliver value to FarEye’s 150+ clients globally. He is an effervescent thinker who is passionate about enabling digital transformation in the logistics industry and making it customer-centric. He is constantly working towards empowering companies to champion operational efficiency and customer experience. Under his leadership, FarEye achieved an impressive growth rate with rapid geographical expansion. Kushal enjoys training budding entrepreneurs and guiding them through their journey. He has been mentioned in the coveted 40 under 40 list by Business World and The Top 25 Software CEOs of Asia for 2020 by The Software Report.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

Ithas always been my passion and goal to solve real-life problems and create an impact. There was one incident when I was a kid in school which I believe had a strong influence on my career. I couldn’t take one of my exams as I didn’t receive my admission card. After a few days I found out that it was delivered to the wrong address, and that made me wonder how logistics worked. Later, during my time at the engineering school, I learned that technology can automate and optimise a lot of manual tasks, especially as the e-commerce growth became the catalyst to drive the change.

Relating this to where I am today, retail logistics is at a real crossroad. Globally, as a sector, retail is still suffering a monster hangover from COVID, and this year other political and economic situations around the world have exacerbated the situation. Supply chains are stretched beyond belief, wage inflation is through the roof, good people are hard to come by and energy prices have (hopefully) peaked. All of this puts immense pressure on the retail supply chain, and I am driven to try and ease the burden for the retail sector by improving the customer experience and finding efficiencies within the supply chain.

Can you share the most interesting story that happened to you since you started your career?

Every day has its own story, and it’s definitely been a rollercoaster ride. However, there is one particular story I’d like to share. We were working with a logistics company in a non-English speaking country. I was spending time with the dispatch manager and drivers, and it was proving difficult to understand them as I didn’t know Thai, and they didn’t know English. However, they were very happy with the product and kept saying ‘thank you’. Despite the fact that I couldn’t understand the speaking language, I was able to understand their body language and that we were meeting their needs.

It was an incredible feeling to realise the ability for our product to solve problems for people we can’t even speak to and improve their everyday life despite the barriers, and it’s something I will never forget.

Are you working on any new exciting projects now? How do you think that might help people?

AI and automation fascinate me. One of our recent initiatives is around using previous logistics operations data to predict the exceptions and automate the solution flow, which will significantly ease the everyday life of logistics leaders and improve customer experience. We’ve launched an array of solutions oriented to key areas in the order-to-door delivery journey — Ship, Track, Route, Execute and Experience — as we believe it’s no longer just about delivery, but the entire experience, from placing the order to doorstep delivery. Our new solutions help companies transform their last-mile strategy by driving value whilst reducing costs, increasing brand loyalty and repeat purchases.

We have also recently launched Last-mile Technology Buyer’s Guide which helps companies understand how technology platforms can address their last-mile delivery challenges and meet their business objectives.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

There were a lot of people who helped me along the way. My co-founders and I launched FarEye straight after engineering school, and we learned a lot by meeting different people and sharing their experiences and knowledge. I feel most privileged that everyday for me is not only a day to lead but also learn from my team and customers.

But perhaps one of the most memorable mentorship opportunities we had was at the beginning of our journey, the pre-product market fit stage, where FarEye was just an idea that we were trying to validate. One of our early customers, who was a big player in the industry, called us for a meeting and encouraged us to specifically get into the last-mile category of the industry, as at that point it was a very unknown market. We all knew there were challenges getting deliveries to their final destinations, especially in India, however there was no insight for the global market. He was the influencing figure who predicted that companies at some point will be looking for a technology vendor to solve this problem, so he steered us towards that direction.

In addition, we were looking to set up a licensing model, but he advised us to instead adopt a SaaS-based model and charge per transaction or shipment instead of having a subscription-style pricing. That allowed us to grow together with our customers as they were expanding their operations globally, and we managed to grow into other markets in Europe, Middle East and part of America. The reason why it was important is because if you charge on a monthly/yearly basis, it’s much harder to grow the businesses and raise prices. However, charging per transaction means as your client’s business grows, so does the number of transactions and shipments they are doing per set time, which means naturally your profits start to grow with them.

So, thanks to this person, who you can call our mentor, we learned invaluable business lessons early on, and that allowed us to become the success we are today.

How have you used your success to bring goodness to the world?

Logistics is life, and there’s no life without logistics. However, with the increased customer demand it’s just getting more complex every day. We have a vision to improve every delivery in the world and make it simple, convenient and affordable to get anything that people need at the time and place they need. If we could solve the problem of simplifying and optimising logistics, it’ll improve everyone’s life.

We also work towards improving the lives of drivers and on-ground staff. In tough situations across the globe like the pandemic and rising costs of living, we made our technology available and free for small businesses bringing essential goods to their customers to optimise and deliver more.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

In just two years, COVID-19 has accelerated digital transformation of the retail industry, with retailers as well as customers forced to embrace omnichannel fulfilment and delivery. As lockdowns and social distancing policies came into force, many consumers were forced to switch to online shopping, more frequently opting for either contactless deliveries or picking their groceries up from the storefront. This has dramatically increased the volume of doorstep deliveries, at the same time sparking a boom in curbside pickups. According to a Digital Commerce 360 report in 2020, close to 44% of the top 245 retailers in the U.S. offered curbside pick-up to their customers.

Whilst multiple physical stores suffered unrecoverable losses during the pandemic, companies like Deliveroo and Uber thrived, tapping into the needs of customers isolating in their homes. At the same time, a boom in rapid delivery start-ups such as Gorillas, Doordash and Getir showed a clear need for stores to invest in their own in-store and online inventories technology. Multiple UK supermarkets today have big partnerships in place to help them deliver groceries within a few hours — a great example is Morrisons and Amazon Prime delivery, and this is something that we now see as a given, forgetting that just a few years ago technology like this wasn’t widely available.

And I guess this is the main pinpoint of the pandemic — having the right technology in place to allow retailers to operate according to customers’ needs. During the pandemic we’ve seen labour shortages and limited operating times, but actually, it showed retailers how they can optimise their store operations in order to cut costs whilst increasing revenues at the same time. With the accurate, real-time inventory technology that keeps managers and customers informed of product availability and potential delays, stores are able to manage inventories during peak-times and optimise their fulfilments. And finally, we’ve seen a huge shift to mobile payments, as card limits were increased in order to encourage people to ditch cash. This has dramatically improved waiting times, creating a seamless experience in-store, and we have seen how today there are multiple dedicated areas where checkouts are performed through card-only operations or using the self-scanning technology, for example, in Waitrose.

The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?

We are seeing lately that the traditional mode of supply chain operation collapsed in the face of rising shipment volumes leaving retailers with rising costs and frustrated customers.

With continued supply chain issues, many retailers had to embrace new processes to kickstart their last-mile operations. For example, in the U.S., several retailers tied up with delivery companies to make faster deliveries — Staples and Best Buy joined forces with Instacart, Raley’s announced a partnership with delivery platform DoorDash for making on-demand deliveries.

Many retailers chose to bring delivery capabilities in-house to cut out the middleman. For example, Target acquired grocery delivery firm Shipt for nearly $550 million to speed up deliveries. Costco bought Innovel, a last-mile logistics company for $1 billion in cash to strengthen the delivery of big and bulky items like appliances, furniture, televisions, and fitness equipment. In the U.K., Sainsbury, the country’s second-largest supermarket chain has joined forces with Körber, a warehouse management technology provider to optimise its logistics and fulfilment centres. These are just a few examples of how retail giants had to create a more agile and resilient supply chain.

Essentially, retail outlets needed visibility to allow them to optimise their operations and provide the best customer experience. This called for heavy technology investment, automated supply chains, use of machine learning and AI for more customer-centric and streamlined processes.

Unfortunately, trying to meet the demand during the pandemic has forced many retailers to overstock their inventories as insurance. Given the current state of the world with the energy crisis and rising costs of living, we are seeing the drop in demand as customers shifted their spend to essentials. This forces many retailers to slash prices in order to get rid of the excess stock, which is damaging their already battered profits.

How do you think we should reimagine our supply chain to prevent this from happening again in the future?

To avoid issues going forward, supply chains need to become more automated, digitised and visible. One of the biggest issues facing the logistics industry is rising customer delivery expectations, and I don’t mean simply providing things such as two-day or same-day shipping. Customers are increasingly demanding their own visibility into the shipping and delivery process, for example, real-time ETA updates or delivery window selection.

Companies need to be able to spot problems before they occur and make adjustments in real life. This would save them not only their employees’ time but also dramatically cut costs. Few companies have complete visibility and even fewer have digital ecosystems built within their supply chains to allow them to operate more efficiently. Losing customers due to inefficiencies in logistics is simply not an option for successful companies, especially when the tools, like FarEye, exist to rectify this.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

Absolutely, in-store shopping is a pleasurable experience for consumers, and it’s not going anywhere. In fact, the majority of customers prefer to shop for Christmas gifts in physical stores according to a survey in 2021, which shows that despite the shift to mobile shopping and contactless delivery during the pandemic, nothing can beat the experience you get when shopping in-store. Essentially, it’s a guaranteed same-day delivery, if you will, and this is why we’ve seen companies such as Amazon open their first digital stores in the USA.

However, it’s important to understand that retailers must blend physical and digital experiences if they want to continue trading for many years. Therefore, digitalisation is crucial for the survival of physical stores as it can give consumers full visibility of inventory and, most importantly, it will provide them with choice in how they want to receive (or return) their products.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

As I mentioned before, many retailers are simply trying to cut out various middlemen to optimise their operations, cut costs and boost revenue, and these Direct-to-Consumer (DTC) companies are no different. One of the other opportunities of DTC experience is drop-shipping, where sellers don’t stock their products, instead relying on fulfilment warehouses and companies handle it for them.

Retailers can do the same by streamlining their supply chain operations and building efficiency, where possible. Whilst DTC might result in product prices being more competitive compared to our standard retailers, nothing can beat delightful customer experience. Besides, many of the foreign DTC brands have long delivery timelines due to the distance products must travel, which means local retailers have a leg up by offering same-day deliveries. In addition, most DTC companies can’t offer visibility, which means customers are given standard “5–7 working days” delivery notions, which is not a great customer experience.

My particular experience is in the grocery retail industry, and I’m passionate about addressing food deserts and addressing food insecurity. Can you please share a few things that can be done by the retail industry to address the problem of food insecurity?

This is definitely one of the main themes of this interview, but better supply chain management is one of the main priorities that will benefit retailers. Automating demand planning and forecasting will help them perfect inventory levels and meet demand during peak times, therefore reducing waste during quiet periods.

By having technology that can allow more visibility and better communication between farmers, suppliers, retailers and consumers, we can achieve perfect harmony in food supply and reduce the drastic effects of food insecurity. For example, it can allow for greater flexibility on food deliveries, by retailers being able to pause or redirect their products, if certain food categories are not moving that fast compared to others.

It’s also quite inspiring to see many retailers working with charities to donate their surplus products, for example, Too Good To Go company in Europe.