Same-Day Delivery Startup Deliv Gets Funding Boost From UPS -- Update
24 Février 2016 - 4:27PM
Dow Jones News
By Greg Bensinger and Laura Stevens
Same-day delivery startup Deliv Inc. is getting a funding boost
from an unlikely source: United Parcel Service Inc.
The Palo Alto, Calif., company fetches goods from
brick-and-mortar retailers to bring them to customers' homes
nearby, one of a crop of such firms hoping to win the day in
so-called last-mile delivery, typically the priciest leg of an
order's journey.
Deliv announced the $28 million funding round, led by UPS, on
Wednesday with existing investors including Upfront Ventures, RPM
Ventures and mall operators General Growth Properties Inc. and
Simon Property Group Inc., among others. This round brings the
four-year-old company's total funding to $40.5 million, though a
valuation couldn't be learned.
Last-mile delivery has proven a hotly contested battleground,
with dozens of startups, the U.S. Postal Service and Amazon.com
Inc. all vying for accounts with retailers, restaurants and grocery
stores to bring goods to people's homes. Delivery is often within
one hour at a fee of around $5.
But it can be difficult to scratch out profit without high
volume. EBay Inc. tried a similar one-hour delivery service, but
killed the effort last summer after it failed to gain much traction
with customers seeking products like collectibles that the company
is known for. Deliv Chief Executive Daphne Carmeli said she avoids
cost overruns by bundling orders and delivering them at set times,
though the company is dependent on customers desiring the service
when shopping at other retailers.
Deliv works with mall operators to incorporate its software into
tenants' online checkout systems. The startup has struck delivery
deals with retailers like Kohl's Corp. and Macy's Inc. and Alphabet
Inc.'s Google Express service, as well as other young companies
like the meals-subscription service Plated. It counts about 4,000
retailers using its service, said Ms. Carmeli, who declined to
discuss revenue.
"UPS is the world's largest transportation carrier," said Ms.
Carmeli. "There has got to be something I can learn from them about
delivery."
The company, which relies on contract drivers to help keep costs
like insurance and health care down, charges retailers a fee,
averaging about $5, that is based on distance traveled from their
stores. The retailers typically pass that fee on to customers.
"Since you're fulfilling orders from local stores you can get it
to customers pretty quick," said Ms. Carmeli.
She said the company is profitable on a gross-margin basis in
some of its 17 geographic markets.
For UPS, which is gaining a Deliv board seat, the investment is
an opportunity to observe a marketplace and business model in which
it doesn't yet participate.
"We've had our eye on Deliv for quite a while," said Rimas
Kapeskas, head of UPS's Strategic Enterprise Fund, which made the
investment.
Specifically, UPS is interested in Deliv's software, which
allows the firm to connect directly with retailers' websites. The
investment will also help UPS to determine consumer demand for
same-day deliveries and learn about that behavior.
"I struggle to understand what it is that I need in less than a
few hours," said Mr. Kapeskas.
UPS and FedEx Corp., currently, offer same-day deliveries, but
focus primarily on high-margin sectors like health care. Instead,
they offer evening pickups from retailers, allowing for next-day
delivery.
As most online orders are placed in the evening after people get
home from work, both UPS and FedEx. have said there is more demand
on their networks for next-day deliveries than same day.
"I think you're seeing large e-commerce players move to offer
same-day delivery, and that sort of option would be of interest for
folks looking for capacity," said Jack Atkins, a transportation
analyst with Stephens Inc. "In sort of major population centers
where you have the density, you could absolutely see that gain some
traction."
Still, the demand for same-day deliveries is largely unknown,
Mr. Atkins said.
"If the demand is there, to what degree does cost play a role?
Am I willing to pay extra to make that happen? Or am I willing to
get it in two days through my [Amazon] Prime membership?"
Write to Greg Bensinger at greg.bensinger@wsj.com and Laura
Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
February 24, 2016 10:12 ET (15:12 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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