The Entrepreneur Who Is Beating Amazon At Same-Day Delivery
Retailers
are worried about competing with Amazon, but the cofounder of a crowdsourced
same-day delivery service has figured out another way.
Before
Daphne Carmeli started Deliv with the intent to build a
same-day delivery service that would upend the standards of well-established
couriers, before spurring a 900% increase in consumer demand for their
purchases to be dispatched to their door in hours, before signing up more than
250 national and regional retailers, including Macy’s, Bloomingdale’s, Foot
Locker, Williams-Sonoma, and Banana Republic, and 800 malls across the country,
Carmeli was in what she calls "semi-retirement."
For
many of us, that would mean long hours spent soaking in the personal pursuit of
choice. Not so for Carmeli. She was coming off a successful run of launching,
growing, and selling an enterprise software company which she came to after serving as
vice president of marketing at Netscape/AOL.
Carmeli
was dealing with the demands of having two teenage children at home and didn’t
want to run another company, but discovering crowdsourcing changed her mind.
She spent more than two decades defining brand new categories for then-upstart technology companies. Why couldn’t
she build out a whole new business on the back of a recent innovation?
In
2012, she did just that. Deliv launched with a firm stance on what it was not
going to be: "I didn’t want to be the consumer site where you would come or download an
app," and get stuff you bought delivered, Carmeli maintains. She didn’t
have any interest in becoming an e-commerce company, either. That landscape was already
fraught with competition from the likes of Amazon on down to the small, independent shop with a web storefront on Etsy.
What
she’d learned in the time she spent away from the corner office is that it’s
difficult as a startup to build both the supply and the demand side of a consumer
business at the same time. But if you have a market and focus on the demand,
the supply will generally follow. Armed with that knowledge, she scouted for an
industry that was ripe for change and found it in retail.
Carmeli
argues that with all the fretting of Amazon’s ability to chew up smaller, or
less agile retailers, the companies themselves are missing a huge opportunity
to gobble up Amazon’s share of their market. "They have one thing Amazon
doesn’t," Carmeli contends, "their inventory is within five miles of
90% of the population."
So
while Amazon is scrambling to build distribution centers and pumping up
algorithms to
anticipate orders and deliver by drone, Carmeli says retailers have the power
to enable same-day delivery already.
The
fact that Amazon has made consumers expect such quick turnaround only works in
Deliv’s favor. Says Carmeli: "Jeff Bezos is my number one sales
person."
"The
speed and flexibility of fulfillment is the battleground, the beauty, and the
opportunity," she explains. With GPS-enabled smartphones, an entire labor pool can be deployed
on-demand for delivering purchases from stores to consumers in a few hours.
That makes the stores themselves, she says, like customer facing fulfillment
centers. The fact that Amazon has made consumers expect such quick turnaround
only works in Deliv’s favor. Says Carmeli: "Jeff Bezos is my number one
sales person."
It
seems so intuitive, yet Carmeli admits when she was floating the idea past a
few Silicon Valley veterans, the response was mixed. Some told her she was
crazy. Others within the fulfillment industry told her they’d tried it and
failed. Still others pointed to the demise of earlier businesses like Kozmo and
Webvan. She was unfazed. "One way you know you are on to something is when
you get polar opposite responses, that is a good sign you are on to something
disruptive."
A comScore survey from 2014 indicates that
40% of purchases are made between searching in store and purchasing online or vice
versa and 74% of shoppers wanted their packages delivered to their homes.
Indeed, now companies such as Instacart are expanding rapidly and snagging big
investments for their crowdsourced delivery of groceries. For its part, Deliv
raised over $12 million in three rounds of funding between 2012-2014.
"When
you have something disruptive there are going to be investors who see the
opportunity," she explains. That said, if someone isn’t biting on your
idea, she cautions, "Don’t try to change someone’s mind. You only need one
[who believes in your idea]."
She
convinced that if you stick to the data and get ready to fail fast and keep
iterating, it’s a path to success. "I am not about trying to get everyone
to agree," says Carmeli, whether they are a group of industry executives
or people on her staff.
"We
have a very open culture of communication," she says, admitting that she’s
quite outspoken both when she approves of something or if she feels like
something isn’t right.
She
prefers to manage by alignment, so joining the nascent, but fast-growing
startup requires a certain type of person, she says. "I look for people
who can stomach the ups and downs of a startup and have that passion to build
something significant," she maintains.
In
addition to a dedicated team, Carmeli attributes Deliv’s early traction like
the 100% increase in average order value to $150, (the largest single order was
$10,000) and an over 30% increase in average items per order to more than two
items per order across product segments, including wine, home goods, apparel,
jewelry, footwear, perishables, flowers, and electronics, is due to the fact that she’s not trying to
compete with the retailers or take any of their data.
"How
many national retailers sell through Amazon now?" she asks. The answer is
zero. Carmeli is referring to when the likes of department store chains set up
shop on the e-commerce platform a few years ago. "They kinda got
screwed," she asserts, because by letting Amazon be the middleman and
fulfill store orders, Amazon immediately got access their customers’ data.
Then, she says, it was a small sidestep for Amazon to go directly to the
manufacturer, order a supply of top sellers and sell them at a discount.
Deliv
isn’t taking any data and not monetizing searches, none of what makes a
purchase valuable to a retailer. "I am like the FedEx for the last
mile," Carmeli says, without a warehouse or any assets other than the
algorithms it uses to calculate the quickest and most efficient driver routes.
Even the delivery people are independent, much the way Lyft’s or TaskRabbit’s
pick up the work when it is available.
Bottom
line, Carmeli says, she’s betting on the thing that isn’t going to change:
people still want their stuff delivered cheaply and on a flexible schedule.
Retailers can then decide what to charge for that delivery. "You put all
retailers together in a network to leverage the economy of scale, then you say:
who is David and who is Goliath now?"
By Lydia
Dishman
http://www.fastcompany.com/3042207/strong-female-lead/the-entrepreneur-who-is-beating-amazon-at-same-day-delivery
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