Logistics Tech Unicorn Helps eCommerce Brands Crack Next-Day Delivery Challenge

In neighborhoods across America, those people oddly standing on front porches and doorsteps aren’t looking around for lost car keys. Like all of us, they want to know where their package is.

Waiting for parcels to arrive is a triathlon of patience, zeal, and angst in the new quasi-sport of last-mile delivery. And that’s just the consumer side. Drivers face issues of their own.

Itamar Zur, CEO at next-day delivery platform Veho, had such an experience once as a student at Harvard Business School, bounced between customer service lines, awaiting an order that never arrived. Unsure what that better way was — or where to find it — he set out to build it instead.

In a conversation with PYMNTS’ Karen Webster, Zur said, “shipping providers in the past designed their businesses around large package delivery B2B businesses. Volume was flat throughout the week. You needed the same number of trucks. You needed the same number of drivers every day of the week. That’s not the world we are living anymore.”

ECommerce continues to reshape the shipping and logistics sector, as major players like Amazon put up more warehouses adjacent to population centers to shorten delivery times — now becoming one of the most meaningful metrics in the connected economy. Noting that eCommerce alone now represents 50% of shipping volume — and rising fast — Zur said traditional providers find it difficult to stay in sync with the demand that constantly ebbs and flows.

Zur’s approach was to build a last-mile marketplace that carefully orchestrates routes, goods, and drivers. The obsession with shortening delivery windows is the new horse race between eCommerce sites vying for consumer dollars, and notions of “experience” change drastically.

“I used to think delivery should take five to seven days until somebody offered me next day delivery,” he said. “Now they’re offering to reroute the package from my office to my apartment. When I know this is the experience, I never want to go back to five to seven days.”

Pointing to pandemic behaviors we can’t unlearn, he said, “We don’t want that anxiety around buying online. Traditional systems were not designed for the flexibility that is required, but also definitely not designed to move things around really, really quickly, give the visibility to the end customer which takes a lot of technology and … that’s what makes it so difficult.”

Transparency Takes the Edge Off

Customer experience is the sun all growing companies now orbit, but there’s merchant and brand experience to consider as well, as delivery snags can harm (or end) these relationships.

In fairness, it usually isn’t the brands’ fault, Zur said. They also lack visibility.

“[Brands] have to deal with partial information,” he said. “A lot of the industries that were built in the 20th century or prior have legacy infrastructure. Now, the operating model is very different. We talked about fixed number of trucks versus flexibility, but also the communication is not where it needs to be in 2022.”

Consumers tend to make negative inferences against brands instead of delivery services, which is part of the disparity that Zur set out to fix with the Veho logistics platform.

To help brands fight back in a last mile they have little to no control over, Zur said Veho is “extending that brand experience from the minute you place the order all the way to your door by providing that communication, but more than that, providing control so you can choose when and where and how to receive the package. Because of that, what we see is that those customers tend to come back and reward brands with higher customer lifetime value.”

Investors see a good bet, leading to Veho’s $170 million fundraise on Tuesday (Feb. 15). Much of that investor confidence comes from the rep Veho is already making for itself.

Read more: Logistics Startup Veho Raises $170M Amid ‘Permanent Shift Toward Residential Delivery’

“When a customer receives a box through the Veho platform, not only they’re able to track their package,” he said, “but they’re also able to choose when and where and how they receive their box. They’re able to leave instructions in real time. They talk to a live customer support agent who understands what they want and are able to answer their questions in real time.”

See also: Amazon’s 4Q Shows Push to Control Labor Costs and Build Automated Last Mile

Predicting Better Delivery Experiences

Nothing makes it the last mile without drivers, and that’s another part of the riddle that companies are frantically trying to solve to keep eCommerce action hot post-pandemic.

Veho’s predictive tech stack analyzes the number of deliveries and drivers days ahead, and “based on that we develop a marketplace that has enough liquidity of driver partners. It’s a technology that goes [into data to] provide that seamless between supply and demand.”

As for brands, Veho’s customized predictive approach to last-mile delivery attracts eCommerce companies looking to cement customer loyalty by offering them deliveries on their schedules. Along the way, Zur said, partners are finding that they’re also able to manage costs more efficiently and reduce overhead.

So far, so good, as Zur told Webster: “brands that work with Veho see a meaningful increase across the board — 40% higher customer lifetime value, 20% higher repurchase rate, 8% or an 8-point higher net promoter score” compared customers dealing with other shippers.

“Removing the anxiety from [last mile] is a huge win for the brands. It’s not just great for the customer, but it encourages and helps us go and place orders more easily,” he said. “That is the whole concept. We remove the anxiety. It unblocks an opportunity for brands and customers to interact more closely and build loyalty and help them grow their businesses.”

See also: Bell and Howell’s Bid to Help Grocery Stores and Retailers Monetize the Last Mile