The mile. Originating with the Roman Empire and refined to its current distance by the British in the late 1500’s, the mile has become a primary unit of measurement in the United States – and has many colloquial uses. Some people talk a mile a minute, some are willing to go the extra mile, and some will take a mile when only given an inch. On the cinder track of Oxford University in 1954, Roger Bannister (pictured at right) became the first person to break 4 minutes running the mile.
The last mile. For the 2.1 million online merchants in the U.S. that will ship 165 billion packages to mailboxes and doorsteps this year, representing almost $1 trillion in sales…the last mile can be the difference between happy customers willing to purchase again and refer friends – and a WISMO (where is my order) catastrophe.
Earlier this year, Origin Ventures participated in a previously unannounced financing in Veho, a next-day parcel delivery platform that leverages gig economy labor and a modern communication platform to create a greatly improved last-mile experience for brands and their customers. Today the company is announcing a $125M financing led by General Catalyst that values Veho at $1B. Construct Capital, Bling Capital, Industry Ventures, and Fontinalis Partners also participated in the financing.
Currently operating in 14 markets, Veho sorts deliveries into optimized routes. Drivers sign up for routes in advance, load their own vehicles at a Veho facility, and proceed to make drop offs. Drivers can communicate directly with customers via text – making an accurate ETA, special delivery instructions, and a photo of the package on the doorstep – a reality. The company has also started to operate reverse logistics, picking up returns directly from customers. Drivers get predictable routes and compensation; customers receive their order exactly where they want it – on time, every time. The company plans to expand to 50 markets in 2022.
Incumbent last-mile delivery companies have growth opportunities, but are constantly challenged by matching supply (fleet assets and drivers) with demand (parcel deliveries). In addition, their systems are not integrated with shipping partners in a way that enables real-time communication between the agent and the end customer. Veho reinvents the last mile by innovating on both of those fronts.
We had already experienced the benefits of Veho deliveries as customers when we first met company co-founder and CEO Itamar Zur. But what about the driver experience? As part of our diligence, our colleague Jacquie signed up for a delivery route in Chicago. The onboarding experience was straightforward, and Jacquie chose a predetermined route near her Chicago apartment. Jacquie loaded boxes in her car, headed out on her route, communicated in real-time with customers, and took a photo at each completed drop off. The technology enabled a seamless and efficient drop-off experience.
Jacquie pulls in to load her car at a Veho facility
Jacquie heads out with a car full of deliveries
The drop off is confirmed with the customer via a photo
Veho participates in the $100B+ global last-mile delivery market – and sits at the intersection of two of our investment themes in the Digital Native Economy – gig workers, and e-commerce infrastructure. The global gig economy is expected to reach nearly $350B in 2021, with transportation-based services representing over $100B of those wages. At the same time, e-commerce growth was accelerated by the global pandemic and is expected to reach nearly $5 trillion in 2021.
How important is reliable delivery? Just 8% of customers will abandon an order if delivery takes less than 3 days; that rate climbs to 38% if delivery takes longer than a week.
Our focus on Digital Natives led us into the gig economy four years ago, when we invested in gig and hourly hiring platform Fountain. That was followed by Everee, a software platform for same-day and next-day wage payments. The fund’s e-commerce investments include Tovala, Vivrelle and Blackcart.
While it may be more difficult to see Veho operating in the wild since it utilizes personal delivery vehicles vs. the branded fleets of FedEx, UPS, and Amazon…we expect the company to continue winning with brands and customers – one package, and one last mile, at a time.