Startups Clamor To Meet Demand For Same-Day Delivery

With so many people confined to their homes due to the coronavirus pandemic, it’s only logical that companies providing delivery services are suddenly seeing a big bump in demand. This is particularly true for groceries, food and other essentials such as pharmaceuticals.

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Emeryville, California-based AxleHire is a 5-year-old software-enabled logistics provider for same day or next day ecommerce and retail fulfillment. In other words, it does deliveries on behalf of about two dozen clients such as HelloFresh, Freshly and Pet Food Express.

“Because we are so heavily involved in essential goods, demand for our services–along with the goods we deliver–has been skyrocketing,” CEO Daniel Sokolovsky told Crunchbase News. “Same-day delivery has grown 800 to 900 percent in less than a month.”

But it’s not all about more business for the company. In light of the COVID-19 crisis, AxleHire has now committed to deliver free meals to hospital workers every Monday.

On demand

AxleHire has raised a known $15.4 million since its 2015 inception. Its most recent funding round, an  $11 million Series A from Eclipse Ventures and Bee Partners, closed last May.

“We’ve been primarily focused on delivering things to people who want them faster than they can typically get it, or want it at a definite time,” Sokolovsky said.

AxleHire uses vendors such as trucking companies to bring items to its facilities. It also works with delivery service providers–some of which Sokolovsky said are “leaving Amazon” to work for AxleHire, or working for both companies.

The company is also working to provide a touchless delivery experience. Customers can interact with the company digitally to give it proper access to buildings and dictate exactly where packages are to be left. For those deliveries requiring signatures, AxleHire has made it possible for recipients to sign on their own mobile phone rather than on a driver’s device.

Bee Partners’ Garrett Goldberg, who sits on the startup’s board, believes that AxleHire’s ability to provide flexible scalability and de-scalability to its customers is “a huge advantage in times like these, and if and when the demand peak passes.”

Nontraditional methods of delivery are also becoming more popular. Nuro, a developer of robot delivery vans, said it too is seeing an uptick in interest.

“Many locals are using Nuro as a safe way to get their groceries and other essential needs without having to drive to the store,” a spokesperson wrote me via email. “Times like these reinforce the need for autonomous delivery services like Nuro, and how they can benefit communities.”

In February of 2019, Nuro raised $940 million in financing from the SoftBank Vision Fund.

Prioritizing profitability

Austin-based Dropoff has also seen an increase in business as the pandemic has escalated. The 6-year-old startup is also focused on same-day delivery on demand.

The health care sector made up the largest percentage of Dropoff’s revenue even before the coronavirus crisis led to people all over the world staying home. But now, health care-related demand has spiked, according to CEO and co-founder Sean Spector.

“We’re seeing this with medical supplies and pharmaceuticals being requested to go straight to homes instead of drugstores, for example,” he told Crunchbase News.

At the same time, the company has also seen a decrease in other areas such as blood drives being canceled or on pause. Pre-COVID, Dropoff did a lot of work for the American Red Cross, as well.

Businesses in general, Spector said, are looking at alternative methods of delivery.

“Some are used to rolling big trucks to move stuff, but that’s more difficult now, so they’re looking for more nimble solutions such as ours,” he said.

Dropoff currently operates in 40 cities across 21 states. It’s seen a lot of city growth in the last 18 months, adding new locales such as Denver, Chicago, Philadelphia, Charleston and Salt Lake City.

Dropoff, which has raised $17.2 million in known funding since its 2014 inception, should be profitable this year, according to Spector. (We reported on its $8.5 million Series B in May of 2017.)

“We’re emphasizing profitability over growth at all costs,” he told Crunchbase News.

Hiring

AxleHire and Dropoff aren’t the only delivery companies seeing increased demand.

There’s also Shipt, a same-day delivery company acquired by Target for $550 million in 2017 (which still operates as an independent brand.) As more people have stayed home over the past month, Shipt has been hiring like crazy. According to the Austin Business Journal, as of last week it was looking to hire about 5,000 “shoppers” in Texas alone.

The company is also encouraging its shoppers to practice social distancing by implementing “no-contact” deliveries, or door drop-offs. The Birmingham, Alabama-based company had raised $65.2 million in funding before it got scooped up by the giant retailer.

Shipt competes with the likes of Austin-based Favor, a startup which was acquired by HE Butt Grocery in 2018 after raising a total of $34 million in venture funding.

Illustration: Li-Anne Dias