I run engineering at Deliverr. Happy to answer any questions.
Isn’t this what selling 3rd party on Amazon is? They handle fulfillment and delivery? I think it’s a good idea since I don’t think eBay or Walmart offer this service (?), and I’m continually hearing how Amazon is screwing over their 3rd party sellers (Amazon basic to replace 3rd party products that sell well, etc). What would you happen to you guys if say Walmart started offering 3rd party fulfillment? Think they could do it well?
I’m am ecommerce seller; why Deliverr inatead of Shipmonk, Shipbob, Easy Post?
Do you have clear and transparent pricing?
The article talks mostly about Wal-Mart, eBay, and other very large retailers, but I noticed that they also have options for small businesses.
We use "AWS" :)
I was interested, so I dug a little. Here is my conclusion: While Amazon continues to lower the cost of fulfillment through management and the development of new technology that is driving operational efficiencies, Deliverr tries to lower fulfillment cost by gaining access to excess warehouse capacity for pennies on the dollar.
The below pricing shows that Deliverr is able to drive value by offering competitive pricing on the fastest shipping times over other third party logistics providers (3PL). They claim they are able to achieve this cost savings through their "machine learning and predictive intelligence" which they use to determine which of its warehouses to store its client’s goods. However, they go on to say they typically only store the good's in 3-5 warehouses. This means any 3PL should be able to compete on pricing for "2 days shipping" by having 3-5 properly placed warehouses.
It seems the key cost saver for Deliverr is their outsourcing of the fulfillment to the excess capacity of the third party fulfillment centers. Using a similar model as Uber.
According to this article that states the amount of warehouse space that goes unused on any given day is 4 billion square feet, or roughly 30 percent of total warehousing: https://www.pymnts.com/matchmakers/2017/warehouse-space-matc.... If deliver is able to unlock only 1.7% of this space for pennies on the dollar, they will achieve FBA warehousing scale (77 million square feet: https://archpaper.com/2017/08/architecture-fulfillment-cente...) and FBA pricing.
In determining if they will be able to gain access to the 1.7% of excess warehousing and maintain SLA's, it is interesting to see what the current warehousing market is in the US. According to this report: https://www.logisticsmgmt.com/article/cbre_research_shows_th..., it seems the majority of this excess warehouse space is most likely not well suited to efficiently deliver on the type of fulfillment Deliverr is advertising. "In data analysis for 56 major U.S. markets, a key finding from CBRE showed that the majority of facilities built before the mid-2000s have certain limitations that hinder e-commerce distribution usage, including low ceilings, small footprints, uneven floors, and inadequate docking."
The article goes on to mention that only 11% of total warehousing in the US (1 billion square-feet) was built within the past 10 years. It does not mention how much of this space is not being occupied on a daily basis. It would seem Deliverr will need to access about 7% of this warehousing, at a fraction of it's 3PL rate, to reach FBA scale.
Unlike Uber drivers, let's hope Deliverr's fulfillment partners are pricing their excess capacity appropriately so as to be able to afford to pay their employees a living wage.
Deliverr pricing example for an iMac: https://deliverr.com/fulfillment-cost/B071G2S8LZ/apple-imac-...
Amazon Multi-channel:
Standard: $29.07
3 Day: $30.07
2 Day: $30.07
Deliverr:
Standard: $26.73
3 Day: $29.70
2 Day: $29.86
Typical 3PL:
Standard: $19.74
3 Day: $83.29
2 Day: $83.29
Cool Company! I am going to reach out now!
Commenting only on the title here (I haven't RTFA yet or heard of Deliverr before)...
Amazon is a logistics powerhouse. $7M probably wouldn't even cover the capital investment of a fraction of their equipment in just one of their warehouses. Claiming a series A startup is going to compete with that is a surefire way to discredit it.
Any company who uses Deliverr is going to quickly figure out that they have placed their most important business process in the hands of a third party, and that they have very little control over it.
eBay, Wal-Mart, and Shopify are in the business of delivering products. They don't make the products, they make them available to the consumer. Delivery is like 90% of that. This is why amazon runs their own fulfillment centers, it's the most important part of their process.
It would be better for eBay, Wal-Mart and Shopify to merge and compete against amazon as one, rather than fighting over the table scraps that amazon leaves them.