Summary List Placement
In 2010, before Lyft was Lyft, before Doordash existed at all, before Wayfair went public, Divya Demato ran supply chain operations for One Kings Lane, then a flash deal site riding what turned out to be a short-lived e-commerce boom. Her job was to orchestrate flawless deliveries of high-end furniture and home goods. It was tough work.
Back then, Demato had to stitch together a network of regional carriers specializing in these deliveries. “I remember sitting with the COO of FedEx at the time and saying ‘Listen this is gonna blow up,'” she told Insider. For the big national carriers like UPS and FedEx, the work wasn’t worth the payback at 2010 e-commerce volumes.
More than a decade on, things are very different.
Now that the pandemic has broken any residual hesitancy on the part of consumers to buy online, shippers are tasked with wrangling skyrocketing volumes of furniture, backyard grills, ping pong tables, exercise equipment, and mattresses that need delivery service, either from a warehouse or a store.
FedEx did eventually embrace oversized deliveries — making hundreds of thousands every quarter — as did other major movers like XPO Logistics and J.B. Hunt. They don’t have this space to themselves, however.
A slew of gig economy companies have rushed into this red-hot space and in some ways, they’re overtaking the cautious big names in contract logistics. Gig economy delivery companies of all stripes continue to be big winners in the shift of consumer spending online, but large-format deliveries of the “big and bulky” variety present a minefield of expensive mistakes — and retailers are clamoring for more help.
“Before they just ignored it, and then COVID hit, and they saw this massive boost to e-commerce sales. And it was like: ‘Holy shit! I better get a program together,'” said Brad Rollo, CEO and cofounder of GoFor. Large-format deliveries are particularly challenging and therefore in need of innovation. Retailers are now all-in on the gig economy and gig economy players are all-in on retailers in bulky delivery and beyond.
Drivers with a truck, a good driving record, and the right insurance can choose from at least seven startups that can set them up with a virtually instantaneous delivery gig. Retailers are teaming up with these startups at an increasing clip, and VCs are coming in hot. Texas-based PICKUP announced $15 million in fresh funding Tuesday. Atlanta’s Roadie topped off its $62 million war chest with an investment from Home Depot in 2019. Several startups told Insider new funding announcements are imminent.
Why is gig such a good fit for big deliveries?
In many ways, gig companies are perfectly suited to move things like sofas. Take GoFor, a Canada-based startup currently raising a Series B. After starting out with a plan to deliver construction materials to job sites in 2016, GoFor now gets two-thirds of its business from retail in the US and Canada.
It’s not the only company of its ilk that changed its mission. Dolly, Bungii, and GoShare were founded as peer-to-peer moving services. Roadie, which works with vehicles of all sizes, started out helping airlines deliver lost baggage to passengers. Now, its drivers haul heavy loads for Tractor Supply Company, Home Depot, Big Lots, and Walmart. GoFor works with IKEA, Sherwin Williams, The Home Depot, and Hudson’s Bay. GoShare teams up with Costco, TJX, West Elm, and Bob’s Discount Furniture. Dolly works with The Container Store, Lowe’s, Costco, Crate & Barrel, and Big Lots. PICKUP has HomeGoods, World Market, buybuyBaby, and more.
Their key advantage is flexibility. Traditional delivery services for bulky items often come with waits of several days, large delivery windows for consumers, and little tracking or visibility. They often require delivery volume commitments in contracts. Retailers working with small local contractors or fleet operators might have to reach out to dozens of drivers before they book a delivery. Rollo said one GoFor client worked with 700 different delivery contractors across North America before hooking up with his company.
Most gig players can dispatch drivers within a few hours. GoShare says 30 minutes, Bungii promises 15. And all these deliveries happen almost immediately, in tight windows. Requesting a driver is generally simpler too, done through an app.
“The challenges of it are interesting because it’s a space where nobody’s doing great,” said Roadie CEO Marc Gorlin. “Most traditional carriers have this infrastructure in place, but it’s not particularly efficient for them.”
Traditional carriers often tend to be more expensive as well, said GoShare CEO Shaun Savage, whose company has been delivering furniture and bulky items since 2015. “A lot of them are really expensive — average delivery maybe was $150 to $160 or more and it would take five to 14 days to deliver.
“GoShare came in and said, ‘Look, we can do those same deliveries within two hours, or better, and at a fraction of the price and that was obviously very appealing to them.'”
Why is bulky delivery so hard?
For years, the stakes of big deliveries kept many logistics powerhouses out of the business. Correcting shipping errors or damage along the way with high-value, large items is expensive. The customer experience when a delivery team is entering a private home is key, and the possibility of error is high. That’s why many traditional carriers in the space market themselves as a “white glove service” — this kind of delivery is a speciality.
Customer experience is key, and the gig players moving into the business disagree on how to get the best result.
Roadie, for one, markets its platform as a community-based service where drivers make deliveries that are convenient to their lives — tacked onto trips they’re already taking and maybe to neighborhoods they know.” Even if you have your own box truck, this very easily can be a side hustle for your side hustle,” Gorlin, the CEO, said.
GoFor, GoShare, and others recruit drivers and small fleets with promises of near full-time employment on their platforms, believing that the professionalism of drivers that have chosen this line of work yields better results.
In all cases, the work expected from drivers (and in some cases the helpers they bring with them) is more involved than an Uber ride or a Postmates delivery. Properly insured, capable drivers are a key element of success, which means they’re in demand.
Some startups say drivers stick to one platform. Some admit that drivers are gigging on multiple — the kiss of death for a gig service, since the second the gigs become commoditized, the primary way to win is on price.
“I don’t doubt it for a second,” said Brad Prigge, head of partnerships at Bungii. “They’re chasing the dollar just like the rest of us.”
It’s already heading in that direction for smaller delivery jobs, but with the service and insurance burden of larger gigs, that transition will take more time.
“If you have a box truck, or a cargo van, that’s not a leisure vehicle,” said Savage. “You’re not gonna go on a date in your cargo van. You are using that for your business … and those are the kind of drivers that we really want to bring onto the platform because we find that they provide a higher level of service than you know your average Joe, for lack of a better word.”
GoShare and some of its competitors charge a membership fee to keep serious drivers invested and weed out hobbyists.
Don’t cry for the big guys
Even though gig startups have taken a big share of large retail deliveries, the incumbents are doing fine.
XPO Logistics’ last mile revenue, which is mostly large items, was up 15% year-over-year in the most recent quarter. Chief Strategy Officer Matthew Fassler called the company “the largest outsourced provider of last mile logistics for heavy goods for most of the leading retailers and e-tailers out there,” in February. J.B. Hunt now has 100 facilities supporting these deliveries, which amount to around $700 million in revenue per year. The company’s final mile revenue jumped 30% year over year in Q4.
“Basically, everything the parcel folks don’t want to do, we’ll do. We’ll cross the threshold and go in there. And we kind of got into all these businesses just by listening to our customers,” J.B. Hunt COO Nicholas Hobbs said in March.
Freight broker GlobalTranz ended up in the last mile delivery game in 2020 the same way. Existing customers in the home goods space that were using GlobalTranz to get goods from the port to their warehouse asked the company to take the goods to the end destination too. Now the company is starting to market the service to new customers amid unceasing demand. The more entrenched players often offer a slate of services in addition to delivery, warehousing being the most important, and a key differentiator from the gig economy.
Demand for fast flexible last-mile delivery of large goods continues even as the pandemic slowly winds down due to the historic congestion at ports and capacity issues in freight markets. Whether gig or traditional, startup or old hat‚ they’re all winners now. But the true winners will be determined when the pandemic trends of stocking up the home subside and large-format e-commerce finds a settling point.