I am excited about my first investment with Upfront Ventures, leading a $6.85mm Series A financing in Deliv which was announced today. Based in Palo Alto and founded by Daphne Carmeli, Deliv is a crowdsourced scheduled same-day ecommerce delivery service targeting large national multichannel retailers. By integrating into a retailer’s ecommerce platform and leveraging specific omnichannel inventory management capabilities, Deliv enables real-time routing, scheduling and parcel pickup with managed local contracted and dedicated drivers to fulfill deliveries to consumers.
My early focus at Upfront Ventures has been focused on “retail innovation” with a significant interest on how the offline retail world is made better when fully integrated with the online experience. The delivery and fulfillment experience around ecommerce is a great example of a segment of the market with large changes happening now.
Why Deliv and the Scheduled Same-Day Delivery Thesis
A few things we believe to be true………
1) If given the opportunity, at an attractive price consumers will gravitate towards a scheduled, same-day shipping opportunity with expanded delivery time option for ecommerce purchases. Whatever the category (entertainment, electronics, gifts, groceries, home goods, shoes, etc) who wouldn’t want to take advantage of getting that desk ordered from Ikea delivered to your home any time you want (say Sunday morning) for a lower price than UPS or Fed Ex charged for 2 or 3 day delivery? Crowdsourced point-to-point delivery makes affordable same-day delivery possible.
Speaking of Amazon (I am playing both sides of the table), I am reminded of a Jeff Bezos quote that has been recirculated recently.
….I almost never get the question: ‘What’s not going to change in the next 10 years?’ … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.
2) So long-term, retailers MUST try and “out Amazon Amazon.” They simply cannot try and replicate the Amazon model, but instead must leverage existing assets and skill-sets to make their models work in retail environment. In order to do this, retailers must work together and pool resources to effectively compete long-term. For example, in the US alone, the Top 100 retailers have well north of 150,000 unique points of distribution. In the old days, we called them stores. Today this real estate footprint also act as strategic transactional points used for consideration (trial), purchase and shipping (fulfillment). In addition, within the next few years, it will be table stakes for successful omnichannel retailers to have “buy online, pick up in store” (BOPIS) and/or “buy online, ship from store” (BOSS) capabilities. Currently, this number is closer to 50%. If a retailer has can enable BOPIS or BOSS, they can ship to consumers same-day.
3) In order for a same-day shipping service to be attractive for, and utilized by, retailers it MUST be a) enterprise grade, b) vertically focused and c) relatively unbranded to the consumer. I love the missions of the likes of Uber, Instacart and Postmates, but in the eyes of top retailers, these services need to be dedicated and focused on specific business partners, similar to how they view their current relationships with Fed Ex, UPS and USPS. In addition, this has to be done in a cost effective and scaleable way. What retailers cannot do is offer a value-added service to consumers and then take it away or dramatically change the costs because the long-term economics are upside down (see Kozmo, Webvan, etc).
Early Moves by Competitors and Different Approaches
Some would say while this could be a large market, it is already crowded with competitors. Of today’s $70B delivery market, same-day is estimated to be just ~$500M. Regardless, as consumers begin to experience cost-effective scheduled same-day delivery, and the retailers seek to leverage their recently built omnichannel capabilities while increasing brand perception and customer experience, the market will grow rapidly. By combining a dedicated and retail specific crowdsourced delivery network and the collective aggregation of retail locations, Deliv is quickly being positioned to become the enterprise grade industry platform for scheduled same-day delivery. By partnering early with a top mall developer and owner like GGP, they are well on their way building the blue-print for long-term success.
Deliv’s advantage lies in unique combination of a one-sided market (direct integration into retailers’ ecommerce experience) and mobile-enabled contracted deliverers (vs. expensive couriers). We argue this provides superior economics (no margin-on-margin with couriers), greater appeal to retailers (own their data and experience), and faster ability to scale (only need to ramp up deliverer network).
All-in all, get ready for a wild ride. It won’t be long before same-day delivery is available to you as an option when you check-out from your favorite retail ecommerce site (especially, if you live in Chicago or the San Francisco Bay Area). It won’t be long before you see your local mall and commercial retail super-center doubling as a localized ecommerce distribution center. It won’t be long until you vehicles marked with the Deliv logo dropping off packages in your neighborhood.
Special thanks to my Upfront Ventures colleague Glenn Poppe for helping with this deal.
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