While FedEx Chairman Fred Smith recently took a swipe at ride and delivery service Uber – and by extension other services like it offering same-day delivery – the founder of crowdsourcing delivery service Deliv said Smith’s remarks underestimated the impact of new services and models.
“I think where the shoe fits, there’s certainly some demand for moving a package across town, and Uber or Lyft or the taxi services that have been in business for a long time have been able to do that or some of the local same-day businesses,” Smith told the Wall Street Journal.
But, Smith continued, the same-day model runs counter to the rhythm of how most people live in their 8 a.m. – 5 p.m. worlds. Thus, he reasoned, they prefer to order online after they’re home, leading to greater demand for orders processed and shipped the following day over long distances.
He said it’s an “urban mythology” that apps can somehow disrupt the long-established economics and operating principles of the logistics industry. “So great company, great concept, but I don’t think it’s … likely to be a major player in the logistics business,” Smith said.
“First of all, it’s not an app that’s disrupting his industry,” said Daphne Carmeli, founder and CEO of Deliv. “To say an app is changing his industry is the same as saying the browser changed retail. But it wasn’t the browser but an acknowledged innovation, and behind it an entire technology stack tech that enabled ecommerce and let Amazon and everyone else come in and disrupt the retail segment.”
In the same way, Carmeli said, startups providing same-day delivery like Deliv, Uber, Roadie and Lyft are engaging a huge new pool of under-utilized capacity. “That is the beginning of disruption,” she said. “Look at Uber, the largest taxi company in the world – with no taxis. That is disruptive. The technology is accessing people, information and content, and is able to connect them in new ways.”
The differentiator for Deliv and others like it, Carmeli said, is the fact that they’re not asset-based companies with capital-intensive burdens like vehicles or buildings.
“We’ll never buy DCs or inventory or trucks, and we don’t have a staff of drivers,” she said. “We’re picking up inventory from collection points in malls, our DC is the retail store, and our drivers are on demand. We pay them when they deliver and don’t when they don’t. It’s absolutely the most efficient model for the last mile.”
She said Deliv’s use of a pool of crowdsourced drivers, who have 10-20 hours per week of available time, completely disrupts the economics of retail delivery. “It’s about access under-utilized assets and not capitalizing them,” Carmeli said. “We don’t have to buy inventory, trucks or DCs.”
Deliv’s algorithm for drivers is ratings based, “so the cream rises to the top.”
“In our world, the top drivers get the jobs,” Carmeli said. “And the drivers are pros, people like grad students, Realtors, writers, teacher and pastors.”
Deliv currently works with more than 200 retailers in eight metropolitan areas, including Foot Locker, Macy’s, Bloomingdales and 800 flowers. Other retailers and location will be coming online soon, she said. The company has partnerships with four major mall ownership groups (Simon Property Group, General Growth Properties, Macerich and Westfield), which are also investors; together they represent nearly 800 malls nationwide.