Want to move furniture to your new house? Have you started a packaged water business? In either case, you need to worry about logistics.

To address this demand, Mahindra & Mahindra has launched a digital marketplace for intra-city cargo movers. This will connect transporters with users through a platform similar to that used by taxi aggregators like Ola and Uber.

To begin with, the service will be restricted to light commercial vehicles (LCVs) used for cargo movement within a city. The Android app will help load givers receive bids from load takers. In addition, the business will be supported by a website and a call centre.

M&M’s 10-member team, which has been working on this project for a year, will roll out the service first in Mumbai this month, followed by a pan-India launch in later months.

 In a move that shows that the service is aimed at small transporters, the M&M team of SmartShift has developed the app in such a way that it can also run on a simple feature phone, apart from smartphones. It is also working on adding Hindi as a language option for greater ease. “You will be surprised by the ease with which transporters use their phones,” says M&M Executive Director Pawan Goenka.

For now, payments to the transporters will be made in cash because that’s the norm in the business. Moving forward M&M could be looking at tapping mobile wallets offered by Oxigen, Paytm, Mobikwik, and Citrus Pay, to name a few.

 Though he declines to disclose M&M’s investment in the venture and the projected rate of return, Goenka says: “Our income will be the margin we will make on every transaction. In a city like Mumbai, five million transactions a year will be considered optimum.” Seed funding up to Series-A will be done by the promoter company, after which the entity will be free to source funds from outside.

M&M is looking at a 29-30 city rollout, covering more than 80 per cent of the LCV cargo in the future. It will take a call on entering the medium and heavy commercial cargo or the passenger segment later.

The light cargo market is highly unorganised and fragmented, with inconsistent pricing levels. According to Kausalya Sreenivasan, chief executive, SmartShift, “The small cargo space has a host of logistics-related issues which are not core to the business and create inefficiencies in the process.” On many occasions, transporters decide to charge for goods on the spur of the moment.

 Many of the LCVs (under 3.5 tonne) like the Tata Ace, Ashok Leyland Dost and Mahindra Maxximo are run by the owners themselves who are self-employed businessmen and have bought the vehicle on loan, often on high interest rates. Around 70 per cent of these transporters take whatever load is offered, which means there is considerable uncertainty in their business. The LCV market suffers from inefficient and low capacity utilisation, with the drivers sometimes unable to get freight for days together. This affects their income.

 This is where M&M hopes its app will fit in. It is currently being piloted in Mumbai, which has about 55,000 LCVs and sees 6 -7 million transactions a month. The market sure is big. In the country, there are over 1.8 million vehicles available in the ecosystem. According to market estimates, the light cargo market is worth around $8 billion (Rs 52,000 crore).

While M&M has entered the segment now, the business model is not entirely new. More than half a dozen companies floated by Indian Institute of Technology (IIT) graduates and backed by venture capital and private equity are already in operation.

These start-ups, which go by names like Shippr, The Porter, Grofers, Moovo and Turant Delivery, have all logged impressive growth. Since they are start-ups, all of them have restricted themselves to certain regions of the country with the exception of The Porter, which is also the biggest of the lot.

 Many of these entities have already closed their first round of funding. The Porter, for instance, got Rs 35 crore in Series-A funding from Sequoia, Kae Capital and other investors in June. The investment is to be used for “geographical expansion and recruit new talent”, the company says.

The Porter was founded in August 2014 by Pranav Goel and Uttam Digga from IIT Kharagpur and Vikas Choudhary from IIT Kanpur. The Porter says it has 300 vehicles handling 10,000 transactions every month in Mumbai and the National Capital Region, with plans to ramp up to six cities in the next one year.

 Another start-up based out of Mumbai is Shippr, which delivers anything from furniture to home appliances and perishable goods and does 100 orders a day. It promises to make a vehicle available in 25 minutes. Snapdeal founders Kunal Bahl and Rohit Bansal have invested an undisclosed amount in the venture.

 However, not every start-up has been successful. According to Ankur Majumdar, the founder of Mumbai-based Turant Delivery, more than half a dozen of these start-ups have folded up in less than one year. “I know of seven start-ups that have closed their business in the last 7-8 months and all of them operated on per kilometer basis. That model is going down. We on the other hand have seen good growth. In fact, we are close to closing our first round of funding.”

 M&M knows that if it has to survive in this dynamic industry, it needs think like a start-up. The 10-member team it has appointed to take charge has a lot of young faces.

 “For this new venture to be successful, M&M will have to move like a start-up and not like a huge company. This is one of the many start-up ideas that we will launch from here on. We will treat ourselves as venture capitalists,” says M&M President (strategy) Anish Shah.

 Existing players consider M&M’s entry into the market more as an opportunity than a threat. “Its entry will bring the segment to the attention of more investors. This will also raise the bar amongst the existing players,” says an executive of a rival start-up.