The Doddle store in Finsbury Park, North London. Rob Price/BI
>London delivery startup Doddle is closing most of its high street stores after burning through tens of millions of pounds in investment funding.
>The company is laying off more than 100 people as it pivots its business model.
>In 2015 it lost £24 million ($31 million) on just £687,000 ($878,000) in revenue, across dozens of stores.
>Investors have sunk about £48 million ($61 million) into the company.
In August 2015, Doddle enlisted James Heptonstall, who creates viral videos of runners racing against public transport, to help the logistics startup launch a new feature — "Doddle Runner." With a tap of the Doddle Runner button in the Doddle app, customers could have their mail sent from any location via a human who would run through crowded city streets. No need to leave your house or workplace to visit the post office. A Doddle Runner would show up anywhere, like an on-demand competitor to the Royal Mail.
In the launch stunt, Heptonstall, on foot, raced three other people to deliver a package the short distance from Monument to Cannon Street during rush hour in London. One rode a bike, one went on a bus, and another took the London Underground. The whole thing was filmed for a YouTube video.
Heptonstall won easily — with a time of 1 minute and 23 seconds — in an apparent demonstration of the efficiency of runners in getting round London. The Tube user came second at 2:48, the cyclist came in third, with 3:32, and the bus was last, with a miserable 8:09 time.
But when Doddle Runner launched in real life, there was a catch: The runners weren't actually allowed to run.
"For health and safety reasons they're not allowed to run," Doddle CEO Tim Robinson told Business Insider. "They can walk briskly, is how we described it."
"To be fair, I think the most valuable thing they had is an Oyster card," he added, referring to London's ubiquitous public transport pass. "They spent most of their time on the bus."
Later that year, Doddle said it planned to expand Doddle Runner to new cities but the service was discontinued in 2016. Robinson described it to Business Insider as a "pilot," and said that was "always the plan."
Meanwhile, the company is grappling with bigger issues.
The parcel delivery startup is closing 17 of its retail stores across the country — most of its remaining stores. It is laying off more than 100 employees, and pivoting its business. It is nowhere near being profitable.
In 2015, its first full year of operation, it lost more than £24 million ($31 million) — while pulling in less than £700,000 (£894,000) in revenue across dozens of stores.
"Lots of members see us as the new Post Office — although I'm not allowed to say that," Robinson told City AM in early 2016.
For a fee, customers can receive or send packages at the stores. Won't be at home to receive a delivery and can't get it sent to work? Just get it delivered to Doddle instead, where "parcelistas" will take care of it until you can collect it. As e-commerce has boomed over the last decade, so too has click-and-collect, and Doddle — with its brick-and-mortar high street stores — is one of the most visible proponents of the model.
But conversations with former employees, Robinson himself, and accounts filed with Companies House paint a picture of a company in transformation. The three-year-old business is spending huge sums, sinking deeply into debt, and generating comparatively little revenue. Doddle is now changing direction, shelving its ambitious retail strategy as it moves away from standalone high street stores and shifts its business into kiosks in existing stores in an attempt to cut costs.
"I think we haven't got everything right, but I think we've got enough right to build a sustainable business," Robinson said in an interview at the company's East London headquarters. "It's just a sustainable business whose ambition is slightly different to what it was two and a half years ago."
A brief history of Doddle
Doddle's stores are hard to miss. They're big, bold, and purple.
Dotted around train stations and British high streets, they're emblazoned with bright purple signage on the outside, and have a minimalist white-lilac-purple design within.
Doddle was the idea of Tim Robinson, now the CEO. His original vision was to launch Doddle's stores in under-utilised spaces in or nearby rail stations across the UK. Stations, with heavy footfall, are an ideal place to pick up a package on your way to or from work, the logic went.
The company was launched as a joint venture between Network Rail and Lloyd Dorfman, the billionaire founder of Travelex, a currency exchange company best known for servicing tourists at airports. They initially invested £24 million between them, split equally, Robinson said. Their aim was to change how people send and receive parcels with a chain of high-profile high street stores.
There were plans to open stores at 300 stations, Sky News reported in 2014. But three years later only a sixth of that total are actually open — 57 shops, including concession desks inside larger stores. Just six are standalone stores. 17 sites are facing imminent closure.
Doddle is hemorrhaging cash
Doddle's public accounts from this time show the company generated very little revenue compared to its losses.
Doddle officially started trading in September 2014, and in the year ending December 21, 2014, it lost just under £11 million. During the same period, it booked just £16,779 in revenue.
In other words, in its first three months the business made less than the annual salary of a single employee working a 40-hour week on minimum wage (£6.50/hour in 2014, or £17,280/year). Doddle had 43 locations in operation during the period, according to its accounts.
Doddle's revenues grew in 2015, the most recent year accounts are available for publicly, as did its losses. The company lost £24.4 million throughout the year, with revenues of just £687,505. That means the 56 locations it operated were generating, on average, just over £12,000 each annually — less than the salary of a single full-time employee.
Meanwhile, the company was spending £8 million a year on staffing costs for its 336 staff.
So what happened?
From relatively early, Doddle faced difficulties enticing people into stores. "What we're finding is consumers are not prepared to walk far off the beaten track to collect their parcels," CEO Tim Robinson told the BBC in July 2015. "I think some of the assumptions we had in our original business model that we could be 100 yards to the right outside a railway station have not really played out."
Network Rail withdrew from the business in the Autumn of 2015, The Times of London reported at the time. The move was part of a broader sell-off of assets by the rail organisation after it was effectively renationalised by the UK government. (It is also selling off at least 18 stations.)
Dorfman, who serves as Doddle's chairman, bought out Network Rail's 44% stake for an undisclosed amount — giving him 90% of the company overall.
While the focus was on train stations, some stores were located nearby, rather than inside the station itself. "We learnt that it wasn't just railway stations that our services really worked in," the chief exec said to City AM in January 2016. "We've got six stores in universities now. Shopping centres work well … we'll have over 300 stores by 2017, but not all in railway stations."
"As you get further out into the provinces it's harder to find 1,500 sq ft on a railway station, so we look for retail units that are right in the eye-line," he also told Essential Retail. "We're either in the station or adjacent to it — within and around stations."