In a stunning turn of events, Deliv, the delivery service that was most recently valued at $190 million, announced that it would be shutting down all operations over the next 90 days and that its technology would be purchased by Target for an “immaterial” amount.
The Menlo-park based company was founded in 2012 and focused on providing crowdsourced, same-day delivery services. The company enabled big-box stores such as BestBuy, Macy’s, Walgreens, and others to provide same-day delivery to their customers – they were one of the first third-party services to do so.
The downfall of Deliv is very telling, for a variety of reasons.
On its face, this is a story of the impact that COVID-19 pandemic is continuing to have on the economy; shipping and retail in particular. According to CEO Daphne Carmeli, “Due to a confluence of events over the past few months, Deliv will, unfortunately, be winding down our operations over the next 90 days. The last day of service will be on or before August 4th, 2020.”
However, COVID is not the only factor involved.
Providing same-day delivery has always been an extremely costly endeavor. In fact, it is often unprofitable. Amazon, with its deep pockets and long term vision, has been perfectly comfortable losing money on delivery to this point as it has helped cement their position as the dominant player in eCommerce.
However, Amazon tends to operate under its own rules.
Deliv rolled out its service to enable businesses other than Amazon to compete with their lightning-fast shipping options. Fast delivery created such an advantage for Amazon that it became an option that consumers began to expect from all businesses they purchased from.
COVID-19 likely sped up what was an issue that had already been brewing. There are risks to offering same-day delivery, and those risks are magnified in our current environment – they are also likely to increase in whatever “new normal” is to come.
Target has stepped in to purchase the technological backbone of Deliv but only plans to use it for research purposes. In addition, Target will take on some of Deliv’s staff – including CEO Daphne Carmeli.
The story of Deliv only enforces the notion that shippers need to focus on acting now to prepare for whatever may come in the aftermath of COVID-19. As carriers change their pricing models to cope with the new reality, shippers will need to put greater focus on optimization and cost-savings going forward.