Deliv CEO: ‘We’re Selling the Picks and Shovels’ for Brick-and-Mortar Gold Rush
Deliv, which recently landed $28 million in Series B funding from UPS, powers the same-day and next-day delivery options available on a host of retail websites, including ecommerce companies, omnichannel retail giants like Macy’s and Bloomingdale’s, and even floral and recipe subscription services.
Street Fight recently caught up with Deliv CEO and Founder Daphne Carmeli — who will be a speaker at Street Fight Summit West tomorrow in San Francisco — to talk about the company’s origins, what sets today’s delivery startups apart from their fallen predecessors, and the relationship between delivery startups and brick-and-mortar retailers.
Tell me a little about where the idea for Deliv came from.
We were founded four years ago, and one of the things that most distinguishes us from anybody else is we ourselves are not a marketplace. We don’t sell anything. We are a B2B service. So when you go online to a national omnichannel retailer such as Macy’s and Bloomingdale’s and Best Buy and Kohl’s … When you go shop on their app and you go shop online on their website and you go and checkout, we’re the ones powering the same-day option on their site. We do that not only for the omnichannel guys, but we also power many of the ecommerce guys. The reason why that makes sense is every single one of those guys really has two jobs in life. They need to attract new customers, and they need to build a delivery network, and it makes no sense if everyone builds their own delivery network in the same city. So we’re the business model where you just plug into us.
In the original Internet boom there were a number of delivery and logistics companies — like Kozmo, for example — that didn’t make it. What is different about this wave of delivery companies?
I think there’s three fundamental differences. One is where is the demand coming from? The demand is coming from Amazon. Amazon has completely changed the shape of retail. In the last 24 months, Amazon has declared the battleground is the speed of fulfillment, so whether it’s Prime Now, whether it’s Amazon same-day, you can get what you want the same day, and it’s pretty much free. If you’re in the business of selling physical goods, Amazon has almost singlehandedly made same-day the new standard shipping.
Items two and three have to do with technology that wasn’t around a decade ago. There’s technology that powers the demand side of the marketplace and the supply side. On the demand side, it’s the retailers, and what’s critically important for the retailers to have us plug into them is they need need to have visibility into their inventory in real time. So when you shop online, pick up, and store, there are some very critical things that the retailer needs to have invested in. Technically, it’s distributed auto-management system. What the distributed auto-management system allows them to do is to be able to identify inventory at a skew level, at a store level. So when you put a specific skew in your basket, and you’ve got a destination zip code, they can identify which store or stores have that available in real time, and that technology didn’t exist.
Point three is the tech that allows you to mobilize an on-demand driver pool based on a whole host of factors. First among them is where they are. The fact that everyone has a GPS-enabled smartphone in their pocket gives us the ability to power the supply that you need in order to provide this service.
With the rise of ecommerce companies (like Amazon, etc.), a lot of brick-and-mortar businesses have found it hard to compete — but it seems like on-demand delivery might be a tool that could help them level the playing field. Talk a little about that tension, and some of the big-picture things you see happening.
In our world of retail, on-demand is when you demand it, and typically when you demand it in retail could be three, four, five hours from when you order it, and you might even have ordered something at night for delivery the next day. The reason that completely changes the economics is because now you’ve got longer routes, you’ve got visibility later in the day, and the number-one way you drop the cost of delivery in a route is you add more stops in the route.
And delivery absolutely is a way for brick-and-mortar to fight back. It’s an area where brick-and-mortar has an advantage over Amazon. Amazon’s Achilles’ Heel — believe it or not, they actually have one — is they are still finding ways to move the inventory to be close to the purchasing population. When it comes to brick-and-mortar stores, they don’t have that problem, because 90 percent of their inventory is within five miles of the population. What they’re doing is they’re flipping their stores to become forward-facing distribution centers, so they’re advantaged over Amazon when it comes to the last mile.
Do you think faster delivery alone is enough to make a consumer order from a small business nearby? And is this pull of delivery specific to certain kinds of items?
It depends on the category. If it’s your Starbucks or Taco Bell, then yes, speed matters. If it’s a retail product, what’s more important than speed is predictability. Being able to have what’s called in the logistics world a time-definite delivery is a much higher value proposition than speed, so it really depends on what the category is. When it comes to your order from Macy’s or Bloomingdale’s, it comes to predictability and time-definite deliveries and the ability for you to change it if your plans change.
Do you think that fast delivery will ultimately continue to sustain standalone companies, or is delivery a feature that everyone will expect from all retailers and stores in the future?
For a company in the food delivery space, fast delivery, the reason they can afford to do that, is they’re getting more than just a delivery fee. They’re getting a cut of the gross sales of the order, and they’re getting a cut from the restaurant. I’m not an expert, but I would say for them to be successful, they have to be able to have enough restaurants that are going to pay the fees, and when the drivers show up, they have to try to pool as many orders at any one time.
As for if everybody will have to have delivery: absolutely. Look at what happened with Prime. Amazon Prime came out however many years ago and declared that two-day delivery was now available, and now there’s not an ecommerce vendor, there’s not a brick-and-mortar, there’s not anybody that sells physical goods that doesn’t have a two-day option, and the same thing is happening with same-day. Amazon has now declared that it’s a same-day war, and same-day has become the expectation. The question if you’re brick-and-mortar is, “Am I going to build my own delivery network?” Hell no. No one has the density; no one can support that cost. So you have to build a network that you can plug into, and that’s what we’re doing. We’re selling the picks and shovels in the gold rush.
Joe Zappa is Street fight’s news editor. This interview has been edited for length and clarity.
Hear more from Deliv’s Daphne Carmeli at Street Fight Summit West tomorrow in San Francisco. Click on the icon below for tickets!