UPS Invests In Deliv To Boost Last-Mile Capability

The company, which relies on contract drivers to help keep costs like insurance and health care down, charges retailers a fee, averaging about $5, that is based on distance traveled from their stores.

Nasdaq.com
Headquartered in Menlo Park, Calif., Deliv works with to offer delivery through a network of independent contractors.
Headquartered in Menlo Park, Calif., Deliv works with to offer delivery through a network of independent contractors.

Same-day delivery startup Deliv Inc. is getting a funding boost from an unlikely source: United Parcel Service Inc. (UPS), according to Nasdaq.

The Palo Alto, Calif., company fetches goods from brick-and-mortar retailers to bring them to customers' homes nearby, one of a crop of such firms hoping to win the day in so-called last-mile delivery, typically the priciest leg of an order's journey.

Last-mile delivery has proven a hotly contested battleground, with dozens of startups, the U.S. Postal Service and Amazon.com Inc. all vying for accounts with retailers, restaurants and grocery stores to bring goods to people's homes. Delivery is often within one hour at a fee of around $5.

But it can be difficult to scratch out profit without high volume. EBay Inc. tried a similar one-hour delivery service, but killed the effort last summer after it failed to gain much traction with customers seeking products like collectibles that the company is known for.

Deliv works with mall operators to incorporate its software into tenants' online checkout systems. The startup has struck delivery deals with retailers like Kohl's Corp. and Macy's Inc. and Alphabet Inc.'s Google Express service, as well as other young companies like the meals-subscription service Plated. It counts about 4,000 retailers using its service, said Ms. Carmeli, who declined to discuss revenue.

The company, which relies on contract drivers to help keep costs like insurance and health care down, charges retailers a fee, averaging about $5, that is based on distance traveled from their stores. The retailers typically pass that fee on to customers.

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Editors Insight: This UPS investment will strike some observers as strange, seeing that Deliv could be a UPS competitor for last-mile delivery, but it demonstrates the extent of the challenge that last-mile delivery poses in the still-nascent e-commerce industry. According to today’s report, UPS is interested in learning more about consumer demand for same-day deliveries.

The food industry is not leading the charge in same-day delivery since the ticket size is low compared to other products, but delivery companies recognize that food is an important category due to the opportunity to establish customer loyalty and repeat business.

Deliv is one of the more active delivery services in the food industry, delivering for Plated, the meals-subscription service.

Same-day delivery is a convenience that customers are looking for more and more. As e-commerce grows, so will the demand for same day delivery. 2-24-16 By Elliot Maras

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