Going national, the Fastway

Fastway Couriers, an award-winning franchise that originated in New Zealand in 1983

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Fastway Couriers, an award-winning franchise that originated in New Zealand in 1983, has been a dominant player in the New Zealand and Australian markets. Currently operating in Australia, New Zealand, Ireland and South Africa, the group continues to experience year-on-year growth, thanks, in part, to their unique business model.

“Before my two partners and I decided to launch Fastway Couriers in South Africa, we visited Fastway’s operations in Ireland and Australia. We analysed the South African courier and franchise markets and found there were challenges that we believed presented great opportunities for the entry of the Fastway business model,” says Richard Robinson, the founder-shareholder and Chief Executive Officer of Fastway Couriers, South Africa.

Among the challenges facing the courier industry were high charges; courier companies that were difficult to deal with; a dysfunctional post office; and a shortage of low-cost franchises, where most were not professionally operated.

“It was clear that no one was focusing on the small parcel B2B and B2C last-mile delivery, which is core to Fastway’s business. Understandably, this is challenging work and courier companies tend to avoid it. We believed that businesses that send out individual parcels constitute a substantial part of the economy and could be better serviced. Also, with the anticipated growth of the online retailers, this segment would grow. Fastway’s operational model would position us ideally to exploit this opportunity.

“And, when we decided to launch Fastway in South Africa, we had three objectives—disrupt the courier industry, disrupt the franchise industry and create a new national player in the small parcel space. We wanted to be an innovative, recognised, national brand and last-mile delivery experts. Nine years later, I believe we have achieved those objectives,” he enthuses.

Robinson and his partners acquired the National Master license for Fastway Couriers in South Africa in 2007, and their launch team spent most of 2008 living and working in Sydney, Australia, to learn the business. Their first courier franchisees were on the road in Pretoria on 16 January 2009.

“Nine years later, we have 15 regional operations around South Africa with approximately 300 franchisees and 250-plus employees. Last year, we performed over 5 000 000 freight movements, and we aim to grow that by 20% this year,” Robinson says.

“We achieved this with simple maxims: stick to the model, work hard, stay below the radar screen and build a secure national network. Our company name, “Isicabucabu” is the Zulu word for spider, and our rollout plan was informed by the hunting behaviour of the spider,” he adds.

According to Robinson, their growth has been so rapid that they re-visit their strategy every four months. Equally impressive is the fact that the company boasts the lowest theft and damage rates, with only 68 claims to have gone to their insurers.

“Key to our success is the franchisee, because they know their area, their customers, and building good relationships with their customer is in their best interests. This is just one of the reasons we are now the last-mile delivery experts, and we have gone from nowhere to national in nine years, developing a small parcel delivery company in a country where there wasn’t one,” he says.

Fastway’s operational model is simple. The franchise provides the courier franchisees with all the additional support functions that they require—IT, sales, customer services and administration, leaving their couriers to focus on picking up and delivering parcels and growing sales.

“We are very unique in our two main streams of activity—franchising and courier operations,” he says.

The cost of entry to becoming a courier franchisee is low and the company provides a comprehensive training programme that rapidly skills up their franchisees. Franchise agreements are in perpetuity (so they are not required to rebuy their franchise every five years) and couriers do not pay any franchise levies or marketing fees.

“As an affordable, simple-to-operate franchise, we have created 300-odd businesses of which 74% are in the hands of HDIs, and 29% are female-owned. We are proud of this achievement. Furthermore, we have made it easy to become a customer. We are a prepaid service that doesn’t require credit applications, and once a customer has a pack of our bar-coded labels in their hands, they have immediate access to our national distribution network,” Robinson says.

This gives all Fastway customers a national reach for their products, which enables them to instantly expand their businesses. Importantly, there are also no hidden or additional costs—what you pay for the label is what you pay for the service.

“This means no fuel surcharges, admin fees, waybills fees, etc. This empowers our customers to control and manage their courier costs without any surprises,” he says.

Because of their technology, Fastway also has access to an unlimited target market. They are able to service all customers—large and small—and handle high volume with ease. Both eBay and Amazon use Fastway’s technology in Australia, and Avon, Mr Price and many other household names use it locally.

“Being a first-mover in this space, we have quickly established a national network. As a high-volume, low-margin business with over 35 000 customers countrywide, we now have substantial parcel volume, and this has lowered the delivery cost per parcel. We pass these savings onto our customers with low prices. I believe this is our key competitive advantage. Our operating model delivers great service, but at a low cost.

We also only move parcels within our network and do not use third parties. Being fully-franchised, we are able to flex our delivery capability during busy periods without compromising service or having to take on additional overheads.

“In addition, all customers, large and small, are able to use our world-class technology for free,” Robinson explains.

Over the years, Robinson has enjoyed watching their customers’ businesses grow. He sees it is a great affirmation of their business model when customers tell them how much they have saved on courier costs, ultimately helping them to expand their businesses. Furthermore, they now receive tender requests from large companies instead of having to source the business.

“At the franchise level, we have a number of courier franchisees who have retired on their earnings from Fastway, in addition to those who are still with us, making a good living supporting their families,” he says.

Robinson, a qualified attorney with a BA Llb (Natal); BCL (Oxon) and an MBA from London Business School, spent 10 years in law focused on commercial and corporate transactions before going into private equity for another eight years, heading up a sub-Saharan fund.

“The education, skills and experience from being a commercial lawyer have been invaluable for our business. Moreover, the private equity knowledge gained from valuing, overseeing and exiting businesses drives my focus on doing those things, which create shareholder value at every turn.

“Included in these valuable skills would be handling transactions, negotiations, agreements and making difficult decisions. My experience with tax structuring has also been beneficial,” he says.

Placing a high value on his experiences from his time in private equity, where he saw both the good and bad, Robinson paid careful attention to what worked and what didn’t work.

“I was determined not to make the same mistakes. A lot of start-ups don’t have a fully-established financial department and doing their books is often the last thing on their mind. Not wanting to fall into that same trap, we have operated the Fastway financial function like a private equity fund from day one,” he says.

In his role, Robinson personally oversees the pipeline of new and innovative technology solutions to drive growth.

“At a national level, I have entrenched a culture of self-analysis—as Directors, we communicate regularly and will interrogate each other’s viewpoints and critique ourselves to test whether our decision-making is informed. We ask our staff what they think. We talk regularly to our couriers and listen to the coalface,” he says.

As CEO, he sees his key role as guiding Fastway’s strategic outlook and direction. He pays close attention to what is going on in the courier/logistics industries across the world, particularly the rapid developments in IT and the solutions they offer.

“I lead and often initiate all our IT projects as I believe they are our future. I strive to put us ahead of our competitors by understanding our customers’ stress points and finding solutions for them. I also scout for new market segments that can be serviced effectively by suitable tech.

“We currently have a healthy pipeline of some very exciting IT initiatives, which will be coming on stream quite soon. A couple of these will be game-changers for this country,” he concludes. 

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