Deliverr raises $7M to help e-commerce businesses compete with Amazon Prime | Industry
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When Amazon rolled out its membership-based two-day shipping service in 2005, e-commerce and customer expectations around fulfillment speed changed forever.
Today, more than 100 million people use Amazon Prime. That means, 100 million people are fully accustomed to two-day shipping and if they can’t have it, they shop elsewhere. As The Wall Street Journal’s Christopher Mims recently put it: “Alongside life, liberty and the pursuit of happiness, you can now add another inalienable right: two-day shipping on practically everything.”
Only recently have Amazon’s competitors begun to offer similar fast delivery options. About two years ago, Walmart launched its own free two-day delivery service for its owned-inventory; eBay followed suit, establishing a three-day or less delivery guaranteed option for shoppers in March 2017.
To power these Prime-like delivery options, Walmart, eBay and the Canadian e-commerce business Shopify are relying on a little upstart.
One-year-old Deliverr helps businesses offer rapid delivery experiences to their customers. Today, the company is announcing a $7.1 million Series A led by Joe Lonsdale’s 8VC, with participation from Zola founder Shan-Lyn Ma, Flexport chief executive officer Ryan Peterson and others.
The San Francisco-based startup uses machine learning and predictive intelligence to determine which of its warehouses to store its client’s goods.
Currently, Deliverr operates out of more than 10 warehouses in Texas, Missouri, Pennsylvania, Ohio and New Jersey, among other states, though co-founder Michael Krakaris says that number is growing every week. Its customers typically store inventory in three to five different locations based on Deliverr’s predictive algorithms.
Unlike Amazon, which owns more than 75 fulfillment centers, Deliverr doesn’t own its warehouses. Krakaris describes the company’s strategy as a sort of Uber for fulfillment.
“Uber didn’t change the physical infrastructure of cars. They didn’t build their own taxis. What they did was create software that could connect excess capacity drivers,” Krakaris told TechCrunch. “Most warehouses aren’t going to be full. We are going in and filling that extra space they wouldn’t otherwise fill.”
One of the startup’s tricks is to use brand-neutral packaging so any and all marketplaces could theoretically power fulfillment through Deliverr. Amazon, of course, sticks a Prime sticker on all its outgoing packages. And because Amazon’s fulfillment service is used by some eBay sellers, eBay items are known to show up at customers’ homes in Amazon-branded packaging. Not a great look for eBay.
“You need an independent fulfillment service that can handle all these different fulfillment channels and be neutral,” Krakaris said.
Deliverr plans to use the investment to scale its team and ink partnerships with additional online retailers.