For those who are not familiar with ParcelPal Technology Inc.'s (PKG:CSE) story, could you walk us through the company and fill the readers in on how you have built this firm into what it is today, shed some light on your core competency, and what lies ahead for the future?
Sure, I would love to. I'll start from the very beginning. I started ParcelPal in late 2016 with the idea of simply having anyone be able to call a courier and have items delivered anywhere in city in under an hour for a reasonable price. After having some initial success with this model, I began to ask, how can we offer more to consumers, businesses and those who are delivering our packages for us?
We began to develop various arms of technology and flipped this previous model on its head. I thought, how about we start driving consumer traffic to local businesses, this way any consumer could get anything they wanted in under an hour from any business that they want that is local. This model has really transformed our technology into a more modern way for consumers to shop, purchase products and have goods delivered to them in an hour or less from local businesses that are on our platform.
Our platform now supports restaurant/food delivery, retail, alcohol and medical marijuana and, pending legalization, recreational marijuana. Our mission really is to put a delivery service in everyone's pocket where they can get anything they want delivered to them in an hour or less. In essence we are no longer only an on-demand delivery provider in under an hour; we are a marketplace that allows consumers to find, buy and get anything they want from any vendor in under an hour, so long as it's legal.
How would you compare or differentiate yourself from an industry leader and first mover in the on-demand economy, such as Uber?
I think the fact that we are a technology company all together makes us stand out from the traditional courier companies and that business model altogether. The courier industry is still quite antiquated with their current fulfillment processes and technology that they use. With our technology, we've actually automated the entire fulfillment process and taken it a step further by actually connecting consumers to more businesses through our platform.
So we don't just simply ship items from A to B; we make any businesses inventory available and accessible for all local consumers and by doing so we drive up demand for their products. Think of us as the largest warehouse in the city without owning any warehouses. As we move forward, we will vertically integrate the company and begin working as fulfillment partners for a lot of these businesses by taking care of their entire last mile supply chain.
Our services don't require a warehouse facility, or any other capital expense to get started, so businesses can actually fulfill from any location they want. A lot of business don't have the technical know-how to bring themselves online or don't have the infrastructure for a delivery service. With ParcelPal they have that ability to bring themselves online, fulfill orders faster and reach a larger audience that they didn't have before for a very minimal investment.
We want to give businesses the power of our technology so they can reach that larger audience, not just deliver items A to B like traditional courier companies. Consumers often want their products right now. Our technology lets us deliver products within an hour or less, which is often a tough feat for traditional courier companies.
ParcelPal is in a unique position and has several catalysts for growth. What is your revenue model and when are you forecasting to be cash flow positive?
We take marginal fees from both the consumer and the business only when an order has been requested. Depending on the vertical, we take anywhere from 15–30% of the total cost of goods of the order from the business and approximately 9% from the consumer, plus a delivery charge. We are aiming to be cash-flow positive in Q2–Q3 this year.
With the launch of your full version of your Android App, when or if do you plan to launch an IOS version?
We have both versions fully live. You can download the iOS version here.
You can download the Android version, which was recently launched, here.
With cannabis booming in Canada, thanks to the legalization of adult use, how will you leverage this vertical for growth?
It's no secret the cannabis space is the one of the largest growing markets in Canada. Looking at the landscape, we are looking to form additional partnerships with LPs, dispensary chains and eCommerce stores. With a fragmented supply chain, we see a large opportunity for LPs to be able to get into additional markets that they would not operate in. Licenses are very expensive and difficult to come by. With us, they do not need to have a storefront. With our average delivery time of 37 minutes, it will take a consumer less time to order from us and have it delivered than it would be to go to a store.
As far as competition, there aren't any major players in Canada with the technology that we have. There are a couple players in the U.S. that are starting to gain market share in the legalized states. The barriers to entry are quite high in OnDemand delivery. We've aimed ourselves at the medical space to start, and we're now taking the proper steps to position ourselves for the opportunities that are present within the recreational space.
From a market perspective, I believe the focus has been on cannabis producers and I think the market will switch to looking at ancillary businesses that support production and distribution.
What does your distribution agreement with Choom look like? Are there any other LPs that you are targeting for distribution contracts?
Our agreement with Choom is to fulfill from each of its dispensaries across Canada. It has over 50 licenses and just entered an LOI to purchase a retail license with one of the 25 cannabis store applicants in Ontario. Choom is a very innovative retail partner for us. It is always looking at different ways to create the best possible customer experience, and our platform falls into this category. For our customers, we will be doing some very innovative things moving forward. We are aiming to handle all fulfillment requirements for Choom; we will have more news about this in the future.
On other LPs, we are aiming to partner up with one of the major LPs in Canada. We have had conversations with a few players, but I cannot comment further than that.
How big of a growth driver do you expect cannabis to be for the firm? Are there any plans to service the cannabis vertical in the United States as well?
Anytime I enter a new market, to lower capex, I always wish to have partnerships within that region. The cannabis market needs a reliable and innovative distribution partner, so are expecting this to be a large growth catalyst for our national expansion strategy.
The United States has fragmented regulations, which pose a very big opportunity for ParcelPal moving forward. We have started our expansion across the West Coast, and have entered Everett, Washington, in this process. We plan to keep this expansion paralleled with Canada. California has very big opportunities for us; keep an eye out for news.
Although the company is well capitalized, are there any plans to raise capital in the next few quarters and scale into new markets?
We do not have any plans to raise capital in the near future. As I move into new markets, our strategy is to mitigate any spending on unnecessary marketing by forming strategic partnerships.
We have been able to enter a new city with approximately $250,000 in capex so far. Our competition in the food delivery space spends millions when expanding. As a major shareholder in the company, I treat shareholders' money as my own. I run ParcelPal on lean principles to ensure every dollar spent will see a return.
Is Everrett, Washington, the only U.S. jurisdiction you are currently operating in? What other U.S. markets are you currently targeting?
We plan to make entry across various U.S. cities and states in the near future. As we expand east in Canada, we plan to do so in parallel in the U.S. We will follow the same lean principles of expansion as I explained before, where we will leverage existing and create new partnerships for each new city we expand to.
Anthony Varrell is managing director of StoneBridge Partners LLC.[NLINSERT]
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