Dive Brief:
- Three last-mile delivery services recently received a cash infusion from investors as consumers move to expect same-day or instant shipping services.
- Austin, TX-based same-day-delivery startup Dropoff received an equity infusion of $8.5 million in order to expand its network to 50 cities, DC Velocity reported. Similarly
- Meanwhile, last-mile food deliveries appear to be gaining traction, too, as parcel-delivery company Deliv launched grocery service Deliv Fresh with a $28 million backing by UPS, and meal-kit delivery company Sun Basket received $9 million in additional venture capital from Unilever.
Dive Insight:
Last-mile delivery is often referred to as the final frontier of logistics, and investors have apparently decided it's time to breach the market. Yet, parcel delivery companies (think UPS or FedEx), corner stores and restaurants (7-Eleven, Domino's) have long sought to address the cost-challenge of delivering products to residences on demand, so what changed?
For one, technology — mainly the proliferation of smartphones and apps — has allowed greater access between consumers and service providers. As stakeholders research the optimal balance between price and delivery speed, results have shown consumers are increasingly willing to pay for speed and convenience.
All three companies mentioned above fall into this category: Providing a sought-after service to your doorstep, for a small premium. Deliv brings groceries, Sun Basket delivers pre-prepared meals and Dropoff your retail product. The services, in turn, offer what appears to be free delivery by pricing costs into the service transaction — much as retailers input B2B shipping costs into their products while outlet stores do not.
Meanwhile, retailers themselves are investing into various options to help consumers fulfill the last mile themselves. Think of Buy Online, Pick Up In Store (BOPIS) initiatives, lockers or UPS Access Points, or offering free delivery for minimum purchase levels.
The capital infusion into the last-mile space companies by major players like UPS and Unilever shows its potential. Will the final frontier be conquered in the next five or ten years?
