Innovative Companies with Sustainable Business Models: Coreorient

Company profile

Name: Coreorient Oy / PiggyBaggy (beta)
Founded: 2011
Founders: Harri Paloheimo and Heikki Waris
Industry
: Multiple industries / ICT-enabled services
Main services: 
PiggyBaggy crowdsourced ride-sharing for goods; Smart service system development and consulting
Sustainability: PiggyBaggy lowers emissions and resource consumption by providing access to already existing mobility, similar to car sharing.

Company history and idea in brief

Have you ever needed a particular tool to do some really small task, such as drilling a hole in a wall or tightening a loose screw in a bike, but didn’t have that tool available? And then had to either spend a lot of money to buy that tool or a lot of time finding someone who could lend it to you? Or have you ever spent half a day trying to get some mundane task done, such as delivering a book to a library or returning a broken MP3 player back to store?

I’m sure you have. And I bet you have some tool that you’ve only used a few times in your life, such as a power drill, lying around in your basement.

What if instead of owning expensive equipment, you could rent or borrow the tool you need, or pay someone else in your neighborhood to drill the hole for you? And how about if you didn’t always have to go to the library to borrow books, but could instead pay someone else to deliver the book, or use a library access point near your house?

What if you could live in a world with less stuff to take care of, less hassle over mundane things, and more time to do the things you really care for?

Moreover, what if in this world you could get things done by using less resources, less or no gasoline, and less energy. You would pay for services, instead of goods, and would have access to functionality and results, instead of having ownership of the damned power drill. And even if you do want to own your power drill, the rest of it sounds pretty good, right?

A Finnish company called Coreorient, is trying to build that world.

Founded in 2011 by several ex-Nokia experts, Coreorient is a company that has been involved in developing services and technologies that help people get everyday things done more efficiently and by using less time.

The company’s flagship service, PiggyBaggy, is a crowdsourced ride-sharing service for goods. This is how PiggyBaggy works: let’s say you need to deliver a broken laptop to an electronics store for a fix-up. Instead of going yourself, you can use PiggyBaggy to get someone in the PiggyBaggy community to deliver the laptop for you in return for a small payment. For example, someone might be commuting past your house and the electronics store and could therefore take your laptop on her way to work, giving you more time to do other things.

PiggyBaggy transporter picking up groceries for a customer.

PiggyBaggy transporter picking up groceries for a customer.

I was able to get in touch with one of the founders of Coreorient and PiggyBaggy, Harri Paloheimo, who shared his thoughts about the company. According to Paloheimo, the idea for crowdsourcing goods-delivery came to him when he was returning a broken microwave back to store. As he didn’t own a car, the journey to return the microwave involved taking several buses and a train.

“When I spent half a day returning a broken microwave back to store, I remember thinking at one point that this doesn’t make any sense, and that there has to be a more efficient way to get this done.”

Paloheimo began tinkering with an idea of a crowdsourced ride-sharing service for goods and even tried to get Nokia to do a collaboration with several existing ride-sharing companies. In the end, however, Paloheimo didn’t get the required support from headquarters and finally he left Nokia in 2012 to lead Coreorient. The company had already been founded on paper in 2011 by his college, Heikki Waris. Although the men were taking a leap from a big corporation to run a small startup, being an entrepreneur felt oddly familiar to Paloheimo:

“I had been acting as an intrapreneur at Nokia for years before starting my own business. I had imagined that things would work in a more rational way outside big corporations, but I soon realized that the same pitching theater and power point circus that I was used to continued in the “real world”.”

Power points and pitching weren’t the only thing familiar to Paloheimo. He was also very used to facing failure:

“They say that you can’t have success before going bankrupt a few times. Well, I hadn’t gone bankrupt, but I had experienced some big failures in Nokia. For example, having to disband a team you’ve lead feels a lot like going bankrupt to me.”

After initial difficulties, PiggyBaggy began gaining momentum and today the service has over 1800 users and between 800-900 items delivered so far.

Value for whole society

Aside from PiggyBaggy, Coreorient is also constantly experimenting with new concept and service development and wants to take part in developing a Sharing Economy. However, Paloheimo makes it clear that the company wants to avoid becoming similar to Uber:

“We want to frame ourselves as a second wave Sharing Economy startup. The first wave consisted of companies like Uber, which maximized value solely for their end users. We, however, think about Sharing Economy and our business from a broader perspective. We want to maximize value for the whole society and all interest groups involved in our business, not just for ourselves or our customers.”

Paloheimo explicitly emphasizes that Coreorient wants to take part in developing business models and win-win-win structures that maximize value for both consumers, the company itself, and the society at large. As an example of this, Paloheimo talks about Coreorient’s collaboration with the city of Tampere:

“We have applied for funding from the European Social Fund to find ways to activate youngsters that are in danger of becoming marginalized. We are now trying to find ways to use crowdsourcing as a medium for involving young people in society and to help them find a job. Although we use crowdsourcing as our main tool, it doesn’t necessarily involve PiggyBaggy or ride-sharing”, says Paloheimo.

According to Paloheimo, Coreorient has been involved in many similar projects all around Finland. The different experiments have also enabled Coreorient to test different assumptions about the markets and their customers, which helps the company to refine its ideas and services. Armed with this experience, Coreorient is now looking outside Finland to Europe and beyond.

“The experiments we’ve conducted in Lahti, Jyväskylä, Helsinki, and Espoo for novel concepts regarding social impact and circular economy have confirmed us that our systems and main concepts work. However, now the time for experiments is over and we need to make decisions about where and with whom we want to go on with this. Finland is too small and slow for us, and we’re potentially looking to expand to Denmark, or maybe India.”

First groceries being delivered

First groceries being delivered

Paloheimo and Coreorient are not only looking to expand as a company, but to also change the Finnish operating environment. In Paloheimo’s view, this is exactly what differentiates Coreorient from the first wave sharing economy companies.

“Even so called impact investors advised me two years ago to head out of Finland as, according to them, nothing truly innovative can succeed here due to tight regulation and small size of the market. I decided to address at least half of the problem and help change the operating environment. Since then we have conducted several projects with the ministry of transport and the public sector assisting in what I would call mindful deregulation.”

At the moment Coreorient is looking for partners and collaborators to make these changes happen, while also continuing to develop their core service concepts.

PiggyBaggy Business Model: Sharing Platform

Value proposition:  “Ride-sharing for goods. Convenient. Sustainable. Secure.”
Main customers: 1) People who need help in getting items delivered. 2) Businesses that need low-cost options for purchase delivery.
Revenue generation logic: Two options: 1) Subvention-based: online businesses will pay PiggyBaggy for using it in purchase delivery, 2) Transaction-based: end customers of second-hand online marketplaces will pay PiggyBaggy for using it in purchase delivery.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, PiggyBaggy has a sharing platform business model. A sharing platform is either an online or physical platform that facilitates the sharing of resources and decreases the overcapacity of assets. In PiggyBaggy’s case, the excess capacity is people’s time and mobility. PiggyBaggy enables individuals and businesses to tap into the existing mobility  in order to get items delivered.

Accenture's (2014) 5 Business Models for a Circular Economy.

Accenture’s (2014) 5 Business Models for a Circular Economy.

PiggyBaggy is an excellent example of the power of IT and the internet to create new ways of organizing human action. What PiggyBaggy actually does is that it uses the internet to provide access for tapping into excess mobility and time – something that would have been near impossible to do 20 or 30 years ago. By creating the PiggyBaggy platform, Coreorient has essentially created a new marketplace where the supply and demand of mobility and time can meet.

For example, I might need a book delivered to the library, but I don’t have enough time or I’m otherwise unable to go to the library myself (lack of time and mobility). However, there are hundreds of people going past my house and the library every day, many of whom could pick up my book and return it without making a major detour (overcapacity of time and mobility). PiggyBaggy therefore creates a platform where the supply and demand of time and mobility can meet.

According to Harri Paloheimo, Coreorient has at least two potential business models for PiggyBaggy. One is based on a subvention model, where PiggyBaggy would essentially enable businesses that do home delivery to lower their costs by using the PiggyBaggy community to deliver customer purchases. Paloheimo elaborates:

“In EU and in Finland it costs approximately 15 euros to deliver a product to a customer. At the same time customers are on average only willing to pay 5 euros for the delivery. This means that businesses lose 10 euros on average per every packet delivered to consumers. Our idea is that we could lower these costs and get paid for doing so.”

The other option would be to use a transaction fee –based business model, where the customers would be individuals shopping at second-hand marketplaces. Usually in second-hand shops the end users arrange the delivery of items themselves, but by using PiggyBaggy they could use crowdsourcing to get their items delivered. PiggyBaggy would charge the transporter around 15-20 per cent of the fee he or she received from the customer.

In both business models PiggyBaggy lowers the costs of transportation while also reducing emissions and pollutions from cars by decreasing the overall number of car trips. Moreover, PiggyBaggy also provides people more time by helping delegate transportation of goods from busy people to individuals who are already on the road.

Smart container in action.

Smart container in action.

But PiggyBaggy is not the only service that Coreorient has been developing. The company has been experimenting on a concept called smart containers. A smart container is a ship container that is used as an access point for different services and resources. For example, the smart containers in Kalasatama, Helsinki have been equipped with library services, organic food services, recycling services and electric car charge points. Furthermore, the containers can be used as PiggyBaggy delivery points.

Smart container in action.

How are PiggyBaggy and the Smart Containers connected? Paloheimo shares a vision of a global network of community-run smart service points, connected by crowdsourced goods delivery. According to Paloheimo, this kind of network of services and crowdsourced transportation represents a viable alternative for today’s centralized mass manufacturing and transportation.

Thanks for reading! To find out more about sharing economy or circular economy, I suggest checking out the following resources:

  • Peers Inc, a book about platforms and the collaborative economy by the owner of Zipcar, Robin Chase. Check out her TED talk here.
  • What’s Mine is Yours, a book about the sharing economy by Rachel Botsman. Check out her TED talk here.
  • Ellen MacArthur Foundation website is an excellent source for information on circular economy.
  • Also take a look at European Commission circular economy strategy.
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