Parcel Delivery Company Tyltgo Reaches Profitability With Intelligent Route Optimization

Tyltgo is a fast-growing last-mile courier company making over 20,000 deliveries/month across 4 markets in Canada — Toronto, Vancouver, Ottawa, and Waterloo, Ontario.

The company offers affordable, customer-centric same-day and next-day shipping to small to medium businesses in Canada, and was founded in 2018 with the mission to serve local economies.

“We believe local merchants and the courier partners that serve them are the backbone of our community. We want to help them,” explained Tyltgo’s founder and CEO, Aaron Paul.  

The company is backed by YCombinator, venture capitalists, and serial entrepreneurs, and recently became profitable thanks to an investment in intelligent route optimization.

Free VRP solver vs. Routific

As the company expands, managing the company’s margins remains extremely important.

For years, TyltGo relied on a free and open-source vehicle routing problem solver, thinking that would save the company money. But free solvers don't create efficient, cost-saving routes.

Tyltgo’s leadership realized that efficiently optimized routes could have a significant impact on their margins.

So they tried Routific’s Engine API. 

“I don't know many things that can increase your bottom line by 30% and only take two days to do.” — Aaron Paul, Tyltgo

“When we compared with Routific, we saw a difference of 20-30% in route efficiency gains, which resulted in a 5% improvement in gross margins,” Aaron said.

How driver happiness affects the bottom line

A big problem with open-source solvers (and other competitive solvers) is that they optimize routes mathematically without any concern for the happiness and efficiency of drivers. Routes often overlap, zig-zag, and send drivers to far-flung regions. 

“I was getting a lot of complaints from couriers,” said Aaron. “It started to affect our margins. Our crews can see the jobs on offer before they accept them, and when they see these zigzagging, crisscrossing, inefficient routes, they turn them down. We had to increase our payment offers so couriers would take the routes, which hurt our margins.” 

Routific avoids tangled "spaghetti routes" and creates tightly packed clusters so drivers are happy and efficient. For example, in the competitor screenshot below, note all the olive-green stops in the area served mainly by the red route. You can also see how the driver of the orange route needs to go far out of their way to serve a handful of stops in the blue cluster.

The ROI of Routific

"Switching to Routific was the quickest way to improve my business' margins. Integration took only two days. There's nothing else I can do for my business that has such a significant impact on my bottom line,” said Aaron.

At current volumes, Routific’s integration saves $3,000/month. These savings will only grow as the company grows. Relative to the price of Routific, TyltGo realized a 6x ROI immediately.

TyltGo also no longer needs to worry about maintaining its own routing stack, freeing up engineering resources and mental overhead.

“For any business in the courier sector, you need to look at where your core value is,” said Aaron. “If routing is not part of that core value, leave it to somebody else. It looked easy to me at first, so we tried to build it in-house, but it became a nightmare.”

Since switching to Routific, TyltGo reached a major milestone: they achieved profitability.

Last-mile deliveries are growing

Global last-mile delivery is projected to grow from US $108 billion in 2020 to US $200 billion by 2027. 

There is a huge opportunity here, but there’s also a need to modernize the courier experience. Tyltgo is ready to do that with its commitment to affordable shipping and accountability to the end customer.