Repackaging delivery services: VCJ


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There’s no better cautionary tale of high-tech delivery service than Kozmo.com.

Founded in 1998, it promised free one-hour delivery of everything from a Snicker’s bar to a ballpoint pen. It raised $280 million in venture capital. But in 2001, it crashed and burned and a lot of VCs lost money.

But investors are once more betting on express-delivery services. Deliv, a startup that enables retailers and mall operators to offer same-day delivery to customers, raised $12 million in funding led by RPM Ventures.

Meanwhile, Parcel recently secured $1 million in seed funding for a service that takes delivery of items you’ve ordered online, then drops them off at your place in a one-hour window of your choosing.

WunWun, a new startup that is currently raising a venture round, is hoping to raise the bar higher. The company is promising “whatever you need whenever you need,” by employing real people who will buy and deliver anything you want for a $15 fee, provided it’s small enough to be carried on a bicycle.

Another up-and-coming startup is Curbside, which just raised $9.5 million from Index Ventures. The company allows users to order from its retail partners (including Target), then drive by and pick up the merchandise at a curbside kiosk or inside the store.

A variety of food-delivery startups have also received investment, including Munchery with $28 million and DoorDash with $17 million.

But express delivery investments are not just helping consumers receive items at their doorstep, but ship them as well. Case in point is Shyp, which raised $9.2 million in Series A funding from investors, including Homebrew and SherpaVentures. Shyp targets senders, offering to pick up items, pack them and ship them anywhere in the world.

And then there is Flirtey, which raised $2.1 million in venture capital to become the world’s first drone delivery service—but for now just in New Zealand, where drone regulations are more laxed. It is also ready for takeoff in the U.S. market, pending FAA clearance.

This time around, however, investors are confident the delivery companies are different. Similar idea, new package.

Tony Grover, managing director at RPM Ventures, said that the resurgent interest in the delivery space is driven by a confluence of events: smartphones, convenience and the sharing economy.”

Grover said that Deliv is leveraging all these trends. So far, it has announced Macy’s, Bloomingdale’s and a number of malls as partners. It pools inventory at central pick-up points, such as shopping malls, and its network of delivery drivers works on a freelance basis, similar to the network of Uber drivers.

“The question we ask is, will a soccer mom in Kansas buy it? If you hit a price where a Walmart shopper is willing to have something delivered the same day to their door, then you’ve hit on something,” Grover said.

It’s not all smooth sailing, of course. There are risks for these new delivery companies, the big one being the long lead sales cycle in signing on large retailers.

Another is hiring and keeping employees who will provide customers with a pleasant experience. Deliv, for example, must hire drivers who represent Bloomingdale’s and give shoppers a Bloomingdale’s-like experience.

Shyp, meanwhile, is aimed the sending of the package and its entry into the delivery system. Its drivers, or “heroes,” as Shyp calls them, show up at customers’ door, pick items and whisk it off for packaging, then ship it via the lowest-cost option. No more boxes, tape or bubble wrap. No more driving to the Post Office.

“Shyp takes the friction out of the process,” said SherpaVentures Managing Partner Scott Stanford. “You just open the Shyp app and snap a picture of the item you’d like to be sent away. Then the picture is sent out to Shyp’s network of contracted employees, any of whom can elect to pick up the package.”

This story first appeared in affiliate magazine Venture Capital Journal, which is published by Buyouts Insider. Subscribers can read the full story and a table of select venture-backed startups providing instant delivery of food and other goods by clicking here. To subscribe to VCJ, click here for the Marketplace.

Photo illustration from Shutterstock.