Why 8VC invested in Deliverr

8VC invested in Deliverr to revolutionize the e-commerce fulfillment industry with a data-driven, self-serve platform. Deliverr optimizes logistics between merchants, warehouses, and carriers, providing Amazon-grade fulfillment capabilities and enabling faster shipping times.

About 8VC

8VC aims to transform the technology infrastructure behind many industries.

• San Francisco, California, United States
• 51-100
• Venture Capital
• Early Stage Venture, Late Stage Venture, Seed
• www.8vc.com

About Deliverr

Deliverr is a fulfillment service that facilitates shipping services for e-commerce businesses.

• San Francisco, California, United States
• 251-500
• deliverr.com

Key Learnings

The key learnings are:

• Addressing the Broken Fulfillment Industry:The fulfillment industry faces significant challenges due to fragmented segments and lack of integration across verticals. Deliverr addresses these issues by orchestrating logistics between merchants, warehouses, and carriers, ensuring network-level efficiencies and reducing economic friction. This approach parallels the transformation seen in the taxi industry with the advent of ride-sharing platforms like Uber and Lyft.
• Amazon’s Orchestrated Fulfillment Advantage:Amazon has set a high standard in e-commerce fulfillment by integrating end-to-end data analysis to optimize inventory placement and shipping decisions. Deliverr aims to provide similar capabilities to other e-commerce sellers, enabling them to compete with Amazon’s fast shipping times and efficient logistics.
• Deliverr’s Data-Driven Approach:Deliverr’s platform is built on a foundation of vast data collection and analysis. The team has meticulously gathered and analyzed millions of data points to inform their fulfillment strategies, ensuring that their solutions provide immediate value to customers. This data-centric approach aligns with 8VC’s belief in the power of data-driven smart enterprises.
•  Treating Fulfillment as a Revenue Driver:Deliverr’s thesis treats fulfillment as a revenue driver rather than a cost center. By enabling merchants to participate in fast shipping programs like Walmart Free 2-Day Shipping and eBay Guaranteed Delivery, Deliverr helps increase sales and customer satisfaction. This focus on revenue generation differentiates Deliverr from traditional fulfillment services.
•  Transparency and Efficiency:Deliverr was designed to provide extreme transparency in fulfillment processes. By offering clear insights into fulfillment costs and real-time shipment tracking, Deliverr empowers merchants to operate more efficiently and make informed decisions. This transparency addresses the common issue of low net promoter scores in the fulfillment industry.
•  Self-Service Platform for Ease of Use:Deliverr’s self-serve platform allows merchants to manage their fulfillment needs independently, without needing to engage with customer support. The intuitive user interface simplifies the complex process of coordinating fulfillment, making it accessible to any merchant. This self-service model facilitates scalability and user satisfaction.

Why 8VC invested in Deliverr

Last month we announced our investment in Deliverr, the next-generation e-commerce fulfillment platform. Deliverr provides e-commerce marketplace sellers with a simple self-serve platform to optimally warehouse their inventory and ship it efficiently to their customer.

Deliverr’s core focus is to use advanced AI and analytics to give sellers an Amazon-grade fulfillment technology, thereby reducing fulfillment costs and shipment times to 2-day (or less).

Since this is such a big and important space, I wanted to share why we invested in Deliverr and why we think it’s an important new platform.

The Broken State of the Fulfillment Industry

Fulfillment is a large and growing industry in the United States. Companies spent $1.5 Trillion in the US on shipping costs in 2017 alone. Parcel delivery, a component of fulfillment spending, is estimated to be $99B a year and it is growing at 15% annually — a rate likely to be sustained over the next 2 decades.

The global numbers are at least 3x these American figures.

It’s also very clear that except for Amazon, the fulfillment industry is broken. Sequestered data pools prevent most companies in this massive industry from making data-driven decisions.

Decisions on where to put freight, which 3PL warehouses to use, and which carrier to select for a given order are made in isolation because each market segment is fragmented and no players have integrated across the various verticals. Obscure, localized decision-making inevitably makes supply-chains inefficient.

A good analogy is taxis before the advent of Uber.

Each taxi company operated in a kind of informational vacuum. Consumers in San Francisco would wait for long times to get a taxi, but taxi drivers in Marin — just north of San Francisco — would sit idle trying to find a ride.

Uber and Lyft orchestrated demand and supply so folks in both San Francisco and Marin could more quickly flag rides and travel to their destinations.

Fulfillment today is like the taxi industry in the 2000s. Merchants, warehouses and carriers all suffer through grinding inefficiencies because no one is orchestrating demand and supply, and ultimately transfer the costs of economic friction to end-consumers in longer shipment times and higher fulfillment costs.

Amazon’s Orchestrated Fulfillment Advantage

To-date, Amazon is the only organization that has tackled this problem head on, and consequently Amazon has built the world’s most sophisticated e-commerce fulfillment engine.

All freight, 3PL, and shipping decisions employ end-to-end data analysis.

First, freight is shipped in from overseas and is segmented to be placed at warehouses (“integrated”) across the country.

Next, warehouse inventory is optimized to store goods closest to the consumers who will order them, varying on the time of year, regional tastes, the local language, etc.

Ultimately, these calculations reduce transit times and carrier costs. The cheapest and fastest carriers are selected to bring goods to your doorstep.

The results speak for themselves: Amazon is growing at a frenetic pace while eBay is stalling.

Consumers are feeling the difference.

Amazon delivers a large chunk of products under 2 days while the rest of the world is still stuck at 3–5 days. Less than 5% of Walmart’s products are enabled for 2 day shipping.

Amazon packages travel a fraction of miles to the end consumer from the warehouse compared to other marketplaces like eBay.

Amazon has over 2 million sellers who utilize their all-inclusive fulfillment services while the rest of the world must coordinate piecemeal with trucks, warehouses, and carriers to hold their delivery times and costs down.

Like most industries, the fulfillment industry needs to transform into a smart enterprise. The fragmented supply-chain is begging for a player that can orchestrate logistics between all three segments to ensure network-level efficiencies are achieved.

As venture investors, we look for large industries that need to be fixed, and it’s rare to find such a large industry which lacks a fundamental coordination layer.

New companies can often only be built when fundamental shifts occur to unearth new market opportunities.

The growth of 3rd-party marketplaces and e-commerce have created a prime opportunity for a new player like Deliverr to provide top-tier logistics orchestration to the fulfillment industry.

Deliverr’s approach appeals to us for multiple reasons:

Data driven

Harish has collected vast amounts of data from transit times to demand maps. He and his team have analyzed millions of data points to formulate their thesis, and then interviewed over 70 potential customers with fully detailed interview notes before writing the first piece of code.

We liked that a lot. It is obvious to us that the ethos of Deliverr is data and the founding team wants to build things are going to create value from day 1 for their customers.

As founders of Palantir we understand the value of data powered smart enterprise, which is exactly what is needed to repair this massively inefficient industry.

Revenue driver vs cost center

Deliverr’s thesis is that fulfillment is a revenue driver, but is rarely treated this way. They have built the entire software stack with this thesis in mind.

Today merchants can enable their items on fast shipping programs with both Walmart Free 2 Day Shipping and eBay Guaranteed Delivery, which is helping double their sales.

Extreme transparency

Like most industries with a low net promoter score (NPS), fulfillment is plagued by poor transparency. Deliverr was built from day one to shed light on merchants.

Whether the fulfillment costs or real-time location data on shipments, Deliverr’s data empowers merchants to run their businesses more efficiently.

Self-Service

Interestingly, Deliverr’s entire platform is “self-serve”. I watched them analyze their pilot users’ full stories to determine where users became confused, and make the user interface completely intuitive.

They took it upon themselves to make one of the hardest processes (sending physical products) accessible to any merchant, and today a merchant can sign up in a few minutes without talking to anyone.

Deliverr’s team constantly obsesses over every single frustrated user session to simplify the complex process of coordinating fulfillment. This big investment will pay off and allow Deliverr to scale easily.

As venture investors, we’d rather back entrepreneurs who think at scale. We only win when the companies we back are genuinely revolutionary.

Deliverr’s data centric approach and their focus on user experience convinced us that they will be able to fix the entire fulfillment industry.

Conclusion

As market dynamics shift, a good team will rapidly iterate on various solutions to the problems at hand. The team of seasoned engineers, data scientists, and fulfillment operations professionals that Harish and Michael have assembled could not be better suited to this massive challenge.

With hires from Amazon, Google, and other top companies, Deliverr’s team has both unique hands on e-commerce fulfillment experience and experience building large-scale, software platforms.

Harish’s modus operandi is to hire smart people with high self-esteem and low egos. We are impressed with how cohesive Harish’s team is, and the high degree of cooperation they exhibit.

We are very excited to partner with Deliverr to fix the fulfillment industry.

Want to keep reading?

You can read the rest of “Why we invested in” collection here:

See the collection