Target Overview

Last month, we announced our investment in Deliverr, a next-generation e-commerce fulfillment platform designed to optimize the warehousing and shipping processes for e-commerce marketplace sellers. Deliverr provides a user-friendly self-service platform that leverages advanced artificial intelligence and analytics to deliver an Amazon-grade fulfillment experience. By focusing on reducing fulfillment costs and ensuring that shipment times remain within two days or less, Deliverr stands out in a rapidly expanding market.

Deliverr aims to fill a significant gap in the fulfillment industry, which has been generally characterized by disorganized data management and inefficient processes. With a commitment to enhancing logistics and operational efficiency, Deliverr is poised to become a key player in transforming how e-commerce fulfillment is conducted.

Industry Overview

The fulfillment industry is substantial and continues to grow within the United States, with companies spending approximately $1.5 trillion on shipping costs in 2017 alone. Parcel delivery, a major component of fulfillment expenditures, accounts for around $99 billion annually and is projected to expand at a robust rate of 15% each year over the next two decades. Furthermore, global fulfillment figures indicate that the market potential is at least three times that of the American market.

Despite the significant growth, the fulfillment landscape is mired in inefficiencies, particularly outside of Amazon, which has effectively addressed many of these challenges. Data pools remain segmented, preventing many businesses in this extensive sector from making informed, data-driven decisions regarding freight placement, third-party logistics (3PL) warehouse selection, and carrier choice. For the most part, these decisions are made independently due to a highly fragmented market, leading to inconsistent and inefficient supply chains.

An apt comparison can be drawn with the taxi industry prior to the advent of services like Uber. In those times, each taxi company operated without shared data, resulting in service delays and inefficiencies. Similar pitfalls afflict the fulfillment sector today, where merchants, warehouses, and carriers operate in isolation, causing higher costs and longer shipment times to consumers.

Currently, Amazon dominates the fulfillment industry, employing a sophisticated e-commerce fulfillment engine fueled by extensive data analysis. Amazon optimizes the freight supply chain, segmenting inventory for efficient distribution while adapting to regional and temporal market demands. As a result, Amazon consistently outperforms competitors, evidenced by the stark contrast between its rapid growth and eBay's stagnation. With less than 5% of Walmart products eligible for two-day shipping, there is a clear opportunity for competitors to improve their logistics capabilities.

Rationale Behind the Deal

As venture investors, we seek sizable markets that are in dire need of reform. The fulfillment industry, particularly, shows great promise due to its lack of coordination and integration across its segments. The explosive growth of third-party marketplaces and e-commerce has created an ideal environment for innovative solutions like Deliverr's, which aims to offer enhanced logistics orchestration to streamline operations.

Deliverr's data-centric approach is particularly appealing to us. Founder Harish has amassed significant data related to transit times and demand patterns and has engaged with over 70 potential customers to validate the platform's principles. This depth of market research demonstrates Deliverr's commitment to developing valuable solutions from day one, mirroring our experience with data-driven ventures like Palantir.

Investor Information

As seasoned investors, we are impressed with the leadership team at Deliverr, which comprises experts with backgrounds at major firms such as Amazon and Google. This team blends technical expertise in software development with hands-on experience in e-commerce fulfillment, positioning them uniquely to tackle the industry's significant inefficiencies. Their focus on hiring intelligent, cooperative personnel fosters an innovative culture that is key to solving complex logistical challenges.

Deliverr's software is built around the premise that fulfillment is not merely a cost center. Instead, it is a fundamental revenue driver, as reflected in their ability to connect merchants with programs like Walmart's Free 2 Day Shipping and eBay's Guaranteed Delivery. This perspective allows Deliverr's clients to double their sales through improved fulfillment capabilities, laying the groundwork for lasting partnerships akin to an ecosystem that benefits all involved.

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We believe this investment in Deliverr could potentially be transformative for the fulfillment industry. The prevailing inefficiencies and fragmentation present a substantial opportunity for disruption, which Deliverr is well-equipped to address. The combination of their analytical prowess, intuitive self-service platform, and commitment to transparency positions them to become a leader in the logistics domain.

Deliverr's focus on the customer experience—from simplifying complex logistical processes to providing real-time tracking information—highlights a proactive approach to fulfilling merchant needs. This user-centric design is particularly compelling, as it may facilitate rapid scaling and enhanced client loyalty.

Moreover, the experienced team behind Deliverr, under Harish's leadership, is adept at navigating the complexities of this market. A robust, data-driven strategy, coupled with a cohesive and talented workforce, gives us confidence that Deliverr will successfully tackle the challenges within the fulfillment industry.

In conclusion, we are excited to engage with Deliverr and support their mission to address the inefficiencies that plague the fulfillment industry. The potential for growth and innovation in this sector is immense, and Deliverr has the right tools and vision to seize this opportunity.

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