Paperfly Shuts Down: What Led to the Closure of the Promising Delivery Startup?

In 2023, Paperfly, a third-party logistics (TPL) service provider to e-commerce platforms, declared its shutdown. Last-mile delivery, or delivering goods to the customer’s doorstep, is vital to the nation’s e-commerce industry. Businesses like Paperfly have made significant contributions in this area. Thus, the nation’s e-commerce industry has suffered a severe hit with Paperfly’s collapse due to financial difficulty. We will discover all about this company’s rise and fall today.

Elevation and Decline

Four local entrepreneurs founded Paperfly in 2016. In 2021, Indian TPL Ecom Express invested Tk 100 crore in Paperfly’s shares, barely five years after it was founded. Following the funding, Paperfly grew its business by offering customer-level delivery and collection (pickup) services.

A memorable chapter of Paperfly’s rise and fall. | Photo collected.

They were promised an additional Tk 102 crore in April 2022 as part of their mission to turn courier services into smart logistics. However, they didn’t get that investment because of significant shifts in the global investment landscape. Following this significant investment, roughly 82 percent of Paperfly’s shares were acquired by the Indian business Ecom Express.

Over 35,000 merchants nationwide were connected with Paperfly before its closure. Foodpanda, Daraz, Singer, Grameenphone, Robi, Sajgoz, and Aarong were among their notable clients. The corporation operates from roughly 125 supply locations across 491 upazilas across the nation. Approximately 1,000 people worked at Paperfly prior to its collapse.

An analysis of the various reasons behind Paperfly’s closure. | Photo collected.

Several factors led to Paperfly’s demise. As an illustration, worldwide inflation caused a crisis in startup investment following the outbreak of the Russia-Ukraine war. RedX is once more the service provider for Daraz, the biggest e-commerce platform in the nation. To stay in the market, Paperfly has to contend with RedX. More than 70 million taka was also owed by Paperfly for logistics service costs from Evaly, an e-commerce site that was shut down because of fraud. Paperfly had to deal with issues as a result of not paying the debt.

Opinions of stakeholders

For some years, the nation has been dealing with a worldwide funding dilemma for numerous businesses. One aspect of that continuity is the shutdown of Paperfly’s operations. BDJobs Chief Executive Officer (CEO) AKM Fahim Mashroor stated that logistics firms such as Pathao and Steadfast used to charge 120-140 taka for goods deliveries outside of the capital to this effect. However, combative competitors like RedX and Paperfly have lowered delivery costs to 75–80 taka to cooperate with businesses like Daraz, which was established to attract clients.

Over the years, many of the country’s startups have faced a global funding crisis. | Photo collected.

Concurrently, the cost of delivering goods went up last year due to the increase in fuel prices. Mashroor stated that logistics companies continued to have less cash on hand since they were unable to raise their fees appropriately. In addition, Paperfly had issues with product-market fit, or matching the right product to the right market, according to Ehsanul Haque Md. Shamim, the former head of the company’s courier and cargo division. Because of this, the ambitious corporation had to pay a high price, even if there was a chance that it wouldn’t be able to have a long-lasting effect on the market.

Numerous fake organizations, such as Evaly and e-Orange, have caused significant harm to the nation’s e-commerce industry. Everyone is having to reconsider after it was announced that businesses like Paperfly would be closing because they couldn’t handle the shock. Whether the business model of these companies in the nation has any problems should be looked into.

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