Delivering On DeliverySMB Retail by Angela Diffly
The Delivery Dilemma
There are countless technology companies spending millions to help SMB retailers compete with the big guys. Even big-fish stores are treading water when it comes to apex predator Amazon circling below the surface of the retail sea. From the biggest whale to the smallest minnow, everyone is struggling with the “last mile” ecommerce dilemma—delivery—with Amazon being a thorn in the side of nearly every retailer on the planet. No matter the size or scale of delivery needed, one company has invested in an on-demand technology model that truly delivers on delivery. In my opinion, Deliv is one of the most significant disrupters in retail technology to date. Here’s why.
Daphne Carmeli is not your typical founder and CEO. She strikes me as having even more fire and unstoppable drive than most. With a an impressive background that spans being a founding member of WebMD, heading up ecommerce for Netscape/AOL and building and selling a price optimization company, Carmeli is not one to shy away from a challenge. She was looking for her next big entrepreneurial move when she came up with idea for Deliv, a service that takes the power and efficiency of crowdsourcing, bottles it up, and pairs it with the insatiable demand for ecommerce delivery. Carmeli reversed into the idea of Deliv by thinking about what she didn’t want to do. “I didn’t want to be a consumer destination. I didn’t want to be the app you downloaded, or the website you went to. I didn’t want to be the one selling anything. The reason for that is, in the world of ecommerce, it’s really, really hard to build up both the demand and supply side of a transaction,” she told us.
This early-on decision – not to be a marketplace – is one of Deliv’s massive differentiators, and a key factor in its success. When it comes to supply and demand, Carmeli believes that one side of the equation matters more: the demand side. “If there’s someone who wants to buy something, someone will show up to sell it,” she said. So she decided to plug into a ready-made demand stream. “What if, whether you go onto Macys.com or the smaller retail websites, I could become the option for shipping just like you’re familiar with PayPal as your payments option. I would just have to bring the supply side. The customers are already there.” So that’s exactly what she did.
Crucial to the idea of Deliv was the here and now, simply the timing of it. “Amazon has changed the customer experience. You can get things fast and cheap, and you can get them today. Whether you’re a big retailer or a small retailer, if you’re selling physical goods, you have to have an answer for that,” she asserted. In addition to good timing, technology is also a huge factor in Deliv’s success. On the demand side, in order for Deliv to do what they do, a retailer must have store- and SKU-level inventory visibility.
The technology that enables inventory to be granularly visible, including solutions from Manhattan Associates, Demandware and IBM, allows customers to buy online and pick-up in-store. Carmeli’s simple logic? If she could buy it online and pick it up in the store, she could also buy something online and have someone else pick it up and deliver it. The supply-side technology that made Deliv possible is GPS on smartphones. You can mobilize a labor pool in a flash by knowing where that labor pool is at all times.
One of Deliv’s earliest partnerships was with mall operators. Since driving to a mall, parking your car and walking around takes time, in the age of always-on commerce, mall shopping is on the decline. But since mall operators make their money based on lease payments and retail tenant sell-through, it made sense for them to find a way for mall stores to fulfill online orders and get credit for those sales. Mall operators pay Deliv for the delivery infrastructure to sell more products through tenants. Thus, instead of having product shipped from a distribution center, the stores themselves have their own distribution networks through Deliv.
Neutrality For All
Deliv stuck to its core business model and never became a marketplace. “How many retailers sell through Amazon? Zero. But they used to, so I asked them why they don’t anymore. They all had their stories, but they all basically said they got screwed. As soon as Amazon gets your transaction data, they know what’s selling. They can go to the manufacturer, buy the goods and undercut you on their own marketplace. That’s what happened.” The idea of Deliv being a B2B service is a core differentiator in this regard. “We’re not a marketplace. We’ll never compete with a retailer. We’ll never monetize their data and we’ll never compete with them,” stated Carmeli. This mindset allows retailers to preserve the integrity of a transaction, she explained.
The non-competitive core business value benefitted Deliv more as it began to branch out to ecommerce on-demand companies, like Google Shopping Express, Plated, Blue Apron, Bouqs, Urban Stems, FarFetch, BloomThat, etc. “Why in the world would they use a delivery partner that’s also a marketplace in competition for that transaction? They’re not going to. They want to partner with us because we’re Switzerland. We’re selling the picks and shovels in the last-mile delivery market.” The way Carmeli explained it, Deliv is agnostic, laying down the piping across the country, and making it inherently cooperative. The more people use it, the better it is for all, she explained.
The beauty of Deliv? It has democratized retail delivery. Among its 4,000 retail customers, it serves them all – from the largest to the smallest. “We have retailers that have one store, 50 stores, and 100 stores. The important thing is you need visibility into your inventory system,” Carmeli told us. Among Deliv’s advantages:
- Deliveries On-Demand: Small businesses can go to a website and schedule deliveries anytime, without direct API integration.
- Inventory Balancing: The service works well for inventory balancing, or moving product from one store to the other.
- Returns / Reverse Logistics: Deliv can pick a return up from a customer’s house and take it back to the store, or to UPS.
- Scalability and Affordability: Retailers can schedule three deliveries a week, or 30 deliveries a week –only paying for the deliveries they need. In addition, the service can scale. You can offer free delivery from only one store or from 10 stores. There are no minimum requirements.
Timing Is Everything
Deliv works so well with retail because they focus on what Carmeli calls a “time-definite delivery” – a scheduled window when you want something delivered. Maybe you don’t need that wedding gift from Amazon in an hour. Maybe what’s more important is that you’re home when it gets there. “People don’t want to come home and see that yellow sticker on their door. We’ve found that predictability trumps speed,” said Carmeli. With Deliv, you can schedule the exact window of time, when you’re home, and when it’s most convenient.
From a logistics point of view, time-definite delivery makes Deliv’s business model not only possible, but also profitable. They have the ability to define the most efficient routes, optimize deliveries, and lower costs to make their service highly competitive. “We’re most like UPS, but the difference is we’re completely asset-free. I don’t have warehouses or trucks to pay for, I don’t store any inventory anywhere. I don’t have a cost line until I have a revenue line. We’re a purely on-demand labor model. The cost of what we charge retailers is competitive with what they pay for ground shipping.”
Solving the complexities of real-time optimization lives in Carmeli’s professional DNA. She did not intend to build a routing technology, but none of them were doing what Deliv set out to do. “We wanted to create real-time routes,” she explained. “The only way you can do that is by breaking up the concept of delivery into tasks. We can reshuffle and reorder these tasks. We also wanted to take into consideration the rating of the driver, and the size of the delivery.” Since there was so much functionality that needed to be built into the routing, they built it themselves.
Unlike the Uber model, Deliv’s time-definite delivery mandates how they schedule tasks. Drivers block off time in advance for the times they want to work, and are scheduled accordingly. They also have on-call reserve drivers, and they can accept or decline the tasks scheduled. “This is how we’ve made it through four Mother’s Days and four Valentine’s Days, and huge surges. If I ran this like Uber, I would inherit the risk that no one may accept the tasks. That would not work for us.”
Delivering On Success
Since Deliv is a private company, hard numbers are not disclosed. However, Carmeli divulged that, unlike so many other startups that burn through high-stakes funding on a dime, Deliv was built with only $10 million – the bulk fueling its technology infrastructure. By plugging into an already existing demand and not putting up major capital assets, the company has played it smart. In February, it announced $28 million in funding led by none other than like-company UPS, which brings the four-year-old company’s total funding to $40.5 million, according to a Wall Street Journal article. The same article stated UPS was interested in Deliv’s software, which allows the firm to connect directly to retailer’s websites.
That idea Carmeli had early on to become the shipping option on retail websites? She’s well on her way. And for SMB retailers looking to survive and thrive in the age of Amazon? Deliv delivers for all, large or small, on-demand and on time. Big time.
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