Before Daphne Carmeli started Deliv with the intent to build a same-day delivery service that would upend the standards of well-established couriers, before spurring a 900% increase in consumer demand for their purchases to be dispatched to their door in hours, before signing up more than 250 national and regional retailers, including Macy’s, Bloomingdale’s, Foot Locker, Williams-Sonoma, and Banana Republic, and 800 malls across the country, Carmeli was in what she calls “semi-retirement.”
For many of us, that would mean long hours spent soaking in the personal pursuit of choice. Not so for Carmeli. She was coming off a successful run of launching, growing, and selling an enterprise software company which she came to after serving as vice president of marketing at Netscape/AOL.
Carmeli was dealing with the demands of having two teenage children at home and didn’t want to run another company, but discovering crowdsourcing changed her mind. She spent more than two decades defining brand new categories for then-upstart technology companies. Why couldn’t she build out a whole new business on the back of a recent innovation?
In 2012, she did just that. Deliv launched with a firm stance on what it was not going to be: “I didn’t want to be the consumer site where you would come or download an app,” and get stuff you bought delivered, Carmeli maintains. She didn’t have any interest in becoming an e-commerce company, either. That landscape was already fraught with competition from the likes of Amazon on down to the small, independent shop with a web storefront on Etsy.
What she’d learned in the time she spent away from the corner office is that it’s difficult as a startup to build both the supply and the demand side of a consumer business at the same time. But if you have a market and focus on the demand, the supply will generally follow. Armed with that knowledge, she scouted for an industry that was ripe for change and found it in retail.
Carmeli argues that with all the fretting of Amazon’s ability to chew up smaller, or less agile retailers, the companies themselves are missing a huge opportunity to gobble up Amazon’s share of their market. “They have one thing Amazon doesn’t,” Carmeli contends, “their inventory is within five miles of 90% of the population.”
So while Amazon is scrambling to build distribution centers and pumping up algorithms to anticipate orders and deliver by drone, Carmeli says retailers have the power to enable same-day delivery already.
“The speed and flexibility of fulfillment is the battleground, the beauty, and the opportunity,” she explains. With GPS-enabled smartphones, an entire labor pool can be deployed on-demand for delivering purchases from stores to consumers in a few hours. That makes the stores themselves, she says, like customer facing fulfillment centers. The fact that Amazon has made consumers expect such quick turnaround only works in Deliv’s favor. Says Carmeli: “Jeff Bezos is my number one sales person.”
It seems so intuitive, yet Carmeli admits when she was floating the idea past a few Silicon Valley veterans, the response was mixed. Some told her she was crazy. Others within the fulfillment industry told her they’d tried it and failed. Still others pointed to the demise of earlier businesses like Kozmo and Webvan. She was unfazed. “One way you know you are on to something is when you get polar opposite responses, that is a good sign you are on to something disruptive.”
A comScore survey from 2014 indicates that 40% of purchases are made between searching in store and purchasing online or vice versa and 74% of shoppers wanted their packages delivered to their homes. Indeed, now companies such as Instacart are expanding rapidly and snagging big investments for their crowdsourced delivery of groceries. For its part, Deliv raised over $12 million in three rounds of funding between 2012-2014.
“When you have something disruptive there are going to be investors who see the opportunity,” she explains. That said, if someone isn’t biting on your idea, she cautions, “Don’t try to change someone’s mind. You only need one [who believes in your idea].”
She convinced that if you stick to the data and get ready to fail fast and keep iterating, it’s a path to success. “I am not about trying to get everyone to agree,” says Carmeli, whether they are a group of industry executives or people on her staff.
“We have a very open culture of communication,” she says, admitting that she’s quite outspoken both when she approves of something or if she feels like something isn’t right.
She prefers to manage by alignment, so joining the nascent, but fast-growing startup requires a certain type of person, she says. “I look for people who can stomach the ups and downs of a startup and have that passion to build something significant,” she maintains.
In addition to a dedicated team, Carmeli attributes Deliv’s early traction like the 100% increase in average order value to $150, (the largest single order was $10,000) and an over 30% increase in average items per order to more than two items per order across product segments, including wine, home goods, apparel, jewelry, footwear, perishables, flowers, and electronics, is due to the fact that she’s not trying to compete with the retailers or take any of their data.
“How many national retailers sell through Amazon now?” she asks. The answer is zero. Carmeli is referring to when the likes of department store chains set up shop on the e-commerce platform a few years ago. “They kinda got screwed,” she asserts, because by letting Amazon be the middleman and fulfill store orders, Amazon immediately got access their customers’ data. Then, she says, it was a small sidestep for Amazon to go directly to the manufacturer, order a supply of top sellers and sell them at a discount.
Deliv isn’t taking any data and not monetizing searches, none of what makes a purchase valuable to a retailer. “I am like the FedEx for the last mile,” Carmeli says, without a warehouse or any assets other than the algorithms it uses to calculate the quickest and most efficient driver routes. Even the delivery people are independent, much the way Lyft’s or TaskRabbit’s pick up the work when it is available.
Bottom line, Carmeli says, she’s betting on the thing that isn’t going to change: people still want their stuff delivered cheaply and on a flexible schedule. Retailers can then decide what to charge for that delivery. “You put all retailers together in a network to leverage the economy of scale, then you say: who is David and who is Goliath now?”