Why We Think B2B Crowdsourced Logistics Will Be a Big Hit

Posted on Sep 19, 2013 | 18 comments

Why We Think B2B Crowdsourced Logistics Will Be a Big Hit

Six months ago Upfront Ventures announced its first Partner hire since 2007 – Greg Bettinelli. I wrote about him here.

Screen Shot 2013-09-18 at 10.59.11 PMMore importantly, he has just announced his first investment – he led a $7 million investment in Deliv – please read about it on Greg’s spiffy new blog.

It’s been a really exciting time for me personally to be able to see a partner come in with the energy, enthusiasm and new ideas that remind me of myself 6 years ago.

Greg immediately hit the ground running with a few themes that he had developed while the CMO at HauteLook, a successful eCommerce business that sold to Nordstrom for $270 million.

He immediately started meeting with every eCommerce business and has a few themes on where he thinks innovation at the brand level will come.

Another one of his big themes has been B2B crowd-sourcing and he had a company in mind already even before he joined – Deliv.

I talked about Deliv in my LeWeb keynote because I found their model fascinating.

The best take on this topic is to read directly what Greg has to say about it. Or what TechCrunch thinks.

But my take is this:

We know that B2C crowdsourcing of tasks and products has started to play a transformative role in our economy from everything from Uber to Airbnb to TaskRabbit to DogVacay.

We expect much more of this supply chain innovation to knock out inefficiencies in consumer storage, dry-cleaning and other services where you consumers need to have physical pick-up and drop-offs that are time consuming and unnecessary.

But we believe it is equally compelling to help existing businesses better compete with their online brethren.

Take for example retailers. On the one hand you can view their local stores as a competitive disadvantage because eCommerce companies can sell products with no physical retail stores.

On the other hand, you can view local physical stores as depot centers for same-day delivery.

But how to mobilize same-day deliver cost effectively?

That’s where Deliv comes in.

They have a crowd-sourced logistics model akin to Uber and Lyft but in their case it is specifically tailored to same-day delivery of physical goods.

It is differentiated from the service of picking up passengers and transporting them in that drivers have to have more specialization in picking up packages and driving them to consumers. You may have some drivers with larger cars and stronger bodies who transport white goods or TVs for example.

And I guess we’re not the only ones to think so. The company recently announced a partnership with General Growth Properties (GGP), one of the largest shopping mall operators in the U.S., to offer same-day delivery service for consumers to all GGP retailers nationwide.

Greg led this deal all the way but I had the pleasure of spending time with Daphne Carmeli during our investment analysis and was instantly sold. She has an impeccable background in the tech sector but also the perfect combination of “take no prisoners” competitive spirit delivered with a smile on her face.

The initial round was led by our friend Tim Connors at Pivot North, which is a bonus. Interestingly I wanted to link to his company website but it reverts back to the Twitter handle. I guess he’s one step ahead of the rest of us in being super lean.

Congrats to my partner Greg and the entire team at Deliv. We’re excited to see your continued progress.

  • Ryan

    This is a fascinating idea. My concern is that with limited monitoring, there is a significant margin for error: why will this succeed when TaskRabbit failed?

  • bobmonsour

    If you read Greg’s write-up, he says “Deliv’s advantage lies in unique combination of a one-sided market (direct integration into retailers’ ecommerce experience) and mobile-enabled contracted deliverers (vs. expensive couriers).” This is so very different than TaskRabbit, which is a consumer-driven generalized “do something for me” model.

  • http://byJess.net/ Jess Bachman

    Arnold, you need to stop putting the closing parenthesis in your awe.sm links as they break (for me at least). FYI.

  • http://arnoldwaldstein.com/ awaldstein

    This makes me smile. We know each other so well and not at all that you know my bad commenting habits.

    At least you are interested in my links.

    Thanks Jess!

  • http://byJess.net/ Jess Bachman

    There seems to be an undercurrent of startups where the model is the increasing have-nots serve the fanciful needs of the haves. To be fair, I know nothing about Deliv, but if their delivery is faster-but-more-expensive, I question the adoption outside SV or other affluent enclaves.

  • http://www.onetact.co/ Rishi

    Playing devil’s advocate here…The reason AirBnB, Lyft etc. have been successful because (in my opinion) there were existing assets (real-estate, time etc.) that were being underutilized; Uber has a slightly different model. Bottom-line — they are extracting value out of something that already exists. If I understand Deliv’s model correctly, they partnered with GGP and GGP provides “dedicated” drivers for delivery. Logistically, it makes great sense because of GGP’s network/reach. However, the moment I read “dedicated” I assume that they’re adding overhead to the model. Contrasting this model with something that Postmates has, I have a feeling that a B2C or a hybrid model might be more successful. I do still acknowledge that a B2B model has its own advantages in terms of integration w/ retailers and providing seamless experience to buyers, but not sure how the added costs (if any) compare.

  • Ryan

    So the direct integration potentially provides supply. I’m still really curious about the economics and also wondering who’s going to pick-up these packages and deliver them. More importantly, with ‘contracted deliverers’ (eg normal people looking for money), what happens when a product gets scratched / broken or otherwise damaged? Will a video interview provide enough vetting?

    Don’t get me wrong, this model looks fantastic if they can get it right and for $7M, it seems like many smart people are betting they will.

  • http://www.linkedin.com/profile/view?id=18847600&trk=tab_pro BillMcNeely

    It would be interesting if somebody could integrate a logistics/supply chain solution for Crowdfunding platforms. We all have heard the horror stories of late projects.

  • Orson

    Great. Enabling people, sorry consumers, to over-consume even more. Quicker delivery of more stuff they don’t need. Just keep shopping folks, move along, nothing to see here…

  • http://influitive.com/ Abdallah Al-Hakim

    I think that is a great point. The idea is very cool idea and would live to see how it works out.

  • http://www.linkedin.com/profile/view?id=18847600&trk=tab_pro BillMcNeely

    I think integrating with a large retailer to provide a B2B2C solution may make sense.

    Say you were shopping online at Target. You could elect to hire a Task Rabbit right from their site to go pick and pack at the store closest to you they could deliver it to you or you could select another Deliv to do that for you

  • http://www.linkedin.com/profile/view?id=18847600&trk=tab_pro BillMcNeely

    I am working at a local Target right now while looking for my next big thing. One thing that Target is rolling out is ordering online and picking up at the store. This means store employees pick the orders. Employees hate this idea.I could see where TaskRabit gets intergrated into a Target web site to pick and pack the order paid for by the customer and then it gets delivered by Deliv again paid for by the customer. Similar to airline fees.

  • Navneet Gosal

    I like the fact that you document these decisions and why you chose to invest. A few years from now if the company makes it or not, we will know what was right about these assumptions and what was wrong. We sometimes learn a lot more from when are wrong than when we are right. I wish more blogging VCs talked about the ones that failed and the wrong decisions than the big successes. Sometimes you just need to avoid a big mistake. With the lead in the 4th quarter, just run the football and don’t fumble.

  • http://www.startupmanagement.org/ William Mougayar

    E-commerce was one of the first promises of the Internet back in 1995, and it’s good to see a re-emergence of innovative investments in it.

  • http://www.linkedin.com/in/ethanranderson Ethan Anderson

    This is really smart. Delivery as a service, which can be implemented as an API or widget into tons of online products and services. A natural partnership would be something like Square Marketplace or Zaarly. Buy it online, and get it delivered same day.

    I like this model even more than Postmates. Economically, it makes sense since a lot of Lyft drivers and others who are ‘just driving around’ waiting for a passenger can easily be notified if there is a Deliv pickup nearby.

    I think the biggest risk, honestly, is that Uber is gunning for the same space with 44x the funding. But of course, I’m rooting for Deliv since they’re a fellow portfolio company! :)

  • http://www.justanentrepreneur.com Philip Sugar

    Other than its extra work is there another reason employees hate the idea.

  • http://www.linkedin.com/profile/view?id=18847600&trk=tab_pro BillMcNeely

    Space constraints. Currently the store I work at the space set aside is one over sized closet. If it takes off more space is needed. The other issue I see is when online stuff is returned to the store its simply marketed down 30% and put on a clearance end cap. Works great when its 1 or 2 items a week. When volume picks up you are going to have to consolidate this stuff somewhere to get better margins

  • adrian

    crowdsourcing logistics has been around in Germany for 15+ yrs. Here is another German model: crowdsourcing parking. You could rent your parking space while you are at work.