When Michael Krakaris was 21 and working his first job out of college, he never imagined that roughly one year later he'd co-found a company that would call Walmart its biggest ally and Amazon its biggest rival.
"This isn't anything you plan for," says the now 24-year-old, co-founder of Deliverr. "When you see an opportunity you go for it." His San Francisco-based company, which offers fast-shipping services to e-commerce businesses, became Walmart's exclusive two-day shipping provider in February 2019.
"In Michael I found this very complementary skill set," says Deliverr co-founder Harish Abbott. While Abbott is more technical, Krakaris is the ideas guy. The pair met in 2016 at Abbott's previous startup, where he was also CEO. It was a one-stop shop for big brands' e-commerce needs called Symphony Commerce. Abbott and Krakaris stayed in touch, even after Abbott stepped down from his CEO role in early 2017. They also kept close to the industry.
After hearing from many e-commerce brands about frustrations with their logistics providers, the pair started tinkering with creating a shipping service just for small e-commerce businesses. Deliverr launched in September 2017, with the not-so-modest goal of upending Amazon's fulfillment dominance.
While the company has a long way to go to accomplish that, it's showing promise. Today, the startup has grown to a 25-person team and raised roughly $7.1 million from investors such as 8VC, the San Francisco-based venture fund started by Palantir co-founder Joe Lonsdale. The company declined to share revenue information and the number of merchants using its platform.
In recent years, Deliverr has racked up some important wins. In 2018, the startup persuaded both eBay and Walmart to automatically add fast-shipping tags to its customers' listings, which Krakaris says can improve a product's ranking in search results. The uptake among users has been swift, says Krakaris, and Deliverr's monthly revenue has increased more than 1,400 percent since then. And after the February announcement, the startup officially became Walmart's exclusive provider for its two-day shipping program. So now any merchant selling in Walmart's online marketplace can opt in and use Deliverr's shipping services.
"Our estimate is that sales improve as much as 20 percent [with a fast-shipping badge]," says J. Kelly Leary, director of global supply chain at Etailz, an e-commerce retailer that sells products on behalf of third-party brands based in Spokane, Washington. He noted that the effect is similar to how the blue Prime badge at Amazon works.
Etailz sells a variety of items across eBay, Walmart, and Amazon. The company uses both Amazon's fulfillment service, Fulfilled by Amazon, and Multi-Channel Fulfillment services. The latter service is designed for third-party retailers that want to use Amazon's logistics arm to sell in other marketplaces or through their own websites. In recent years, however, Walmart updated its policies to explicitly forbid sellers from using Amazon's services to fulfill orders, which is why Leary says Etailz ended up using Deliverr's services. In less than a year, Deliverr began fulfilling more than 1,000 Etailz orders on a per-quarter basis, up from only a handful, he adds. Etailz still uses Multi-Channel Fulfillment service to fulfill orders on eBay, although it's also testing a few listings with Deliverr.
To be sure, Deliverr is tiny compared with Amazon. The Seattle-based e-commerce Goliath ships more than five billion products per year in the U.S. through more than 130 fulfillment centers, according to one estimate from R.J. Hottovy, senior retail analyst at Morningstar, which shares an owner with Inc. By contrast, Deliverr operated out of just 13 warehouses scattered across the country at the end of 2018. Rather than purchase its own facilities--that is, follow Amazon's model--Deliverr leases its warehouse space, which Krakaris affirmed is part of his company's growth strategy. "If you're putting all this investment into one warehouse, expanding into two or three locations is really expensive," he says.
According to Alex Kolicich--a founding partner at 8VC and lead investor in Deliverr's Series A investment round--the biggest feather in Deliverr's cap is its technology, which uses machine learning to both track and predict when and where items will need to be shipped. As a result, Deliverr can move products to nearby warehouses even before buyers order them.
"This is a technology company and that's where the competitive advantage comes from," he says.