AxleHire, a last-mile solutions company that powers delivery for startups like HelloFresh, Deliverr, Freshly and Pet Food Express, has closed a $20 million Series B round aimed at increasing its sortation capabilities, expanding its network of hubs and continuing to expand into general ecommerce.
The funding round was led by Ajax Strategies with participation from Eclipse Ventures, Quiet Logistics, Bee Partners and Acorn Pacific Ventures. Representatives from Ajax, Eclipse and Greenfield Partners will join AxleHire’s board.
“Right now, our business mix is about 70% to 80% time-sensitive shipments like alcohol, prescriptions and food, with 20% to 30% being general ecommerce,” said founder Daniel Sokolovsky. “By the end of the year, it will be closer to 50/50.”
For the past year and a half, Sokolovsky said AxleHire has been working to expand into ecommerce in categories like electronics, apparel and general merchandise, from its roots in food and beverage delivery.
“We’ve started delivery with a number of regular dry goods retail merchants who own their customers and have existing high volume,” he said. “We’ve never done too much of that, starting in perishables six years ago when they were the only ones who cared about same-day delivery. In the past year, we’ve had talks with lots of retailers who are trying to figure out how make their operations work with us. The focus is on enterprise and mid-market, not SMB, because we were made for higher volume.”
He said AxleHire plans to use part of the funds to expand beyond its current base of operations in Dallas, Houston, Los Angeles, San Diego, San Francisco, New York, Phoenix, Portland and Seattle. By adding another 10 or so metro areas, the company aims to be able to provide same-day delivery of 80% of orders to end customers.
Carriers subcontracted by AxleHire bring shipments by line haul to one of its leased sortation centers, where it’s turned quickly for local delivery to end customers by courier partners, usually within 12 to 24 hours.
Sokolovsky envisions AxleHire becoming a sort of “national regional” carrier for its customers, providing a unified delivery experience from coast to coast. Domestic regional carriers have tried at various times to cobble together a national network to compete with the majors, but those efforts have never borne fruit.
He comes from a background in logistics, having worked for a family courier business where he witnessed firsthand the logistical inefficiencies. In 2015, with an applied mathematics degree from Berkeley in hand, he brought together a group of engineers to create a more effective coordination between carrier and courier throughout the logistics chain. Thus, AxleHire was born.
AxleHire, Sokolovsky said, aims to provide an alternative to delivery startups that can be margin killers for merchants, acting as middlemen between them and their customers. Its platform uses algorithms to drive more efficiency in routing, fleet management and inventory management, offering shippers a combination of same-day and next-day delivery.
Part of the funding will also be used to improve its sortation technology to “blur the lines” between next-day and same-day, he said.
“We need a plug-and-play model so customers of our next-day delivery can provide same-day without many operational changes,” Sokolovsky said. “That takes a lot of hardware and software automation to build and test and optimize, make sure the systems are faster and more accurate, and drivers get real-time information. We hope to have that in place by the beginning of 2021.”
AxleHire is also working to create clean energy partnerships with cities and local governments, such as its work with Santa Monica’s zero emission zone program. It is looking for delivery partners using electric vehicles wherever possible.
“Right now, we’re trying to provide a fair, sustainable ecosystem for retailers and consumers where everyone wins,” he said. “We really believe in a win/win/win model.”