Strongsville, Ohio-based parcel shipping company Delivered recently agreed to purchase virtually all assets from Point Pickup Technologies, months after the company closed due to bankruptcy.
According to an acquisition agreement approved by a Miami-Dade County Circuit Court judge on June 10, Stamford, Connecticut-based Point Pickup Technologies agreed to sell $100,000 in company assets to Delivered. The assets include all customer lists, software and transferable permits, most books and records, Point Pickup’s website, promotional materials, and more.
As the package delivery market continues to struggle, this move came as little surprise to Nate Skiver, e-commerce consultant and founder of LPF Spend Management. Skiver said growth in the market has largely been generated by industry juggernauts like Amazon and Walmart, while many smaller parcel delivery companies have been struggling.
And there are a lot of small delivery options.
“With volume growth being very low, or actually even declining if you don’t count Amazon, that’s been one factor,” Skiver told FreightWaves in a phone interview. “… In addition to the primary well-established players like FedEx, UPS and the Postal Service, there are dozens of alternative carriers, regional carriers or final-mile providers who in some way deliver package volume. So all of those carriers are competing for a volume base that really isn’t growing. It’s led to favorable pricing if you look at it from a retailer standpoint. But it’s a very tough, competitive environment for package carriers, particularly smaller ones that are startup carriers because they just don’t have the volume and the revenue base of the larger, more established players.”
During the pandemic, large demand for delivered goods was a shot in the arm for parcel delivery startups. In October 2020, Point Pickup raised $30 million from BBH Capital Partners. Four years later, many of these companies have struggled to compete.
“There was a lot of funding available,” Skiver said. “Many companies had access to funds, either as additional rounds, or even as their initial rounds of a startup. And then, say in 2021 and 2022, if there wasn’t a pretty decent revenue and customer base established, then as that funding starts to dry up and margins [begin to look unhealthy], then you’re going to have a lot of trouble operating in this environment.”
Skiver said he has been expecting more attrition and consolidation in the market for some time.
“I actually would have thought by now that we would have seen more delivery providers also do the same thing [as Point Pickup] … . I still think that could happen as far as providers exiting the market. Really there have been little to no acquisitions as far as consolidation goes.”
For smaller parcel carriers, Skiver said it’s become more and more difficult to compete on price alone. He recommends these companies focus on other things that set their services apart.
“It’s more difficult to [compete on price] and still maintain a margin,” Skiver said. “Even though it’s incredibly difficult for regional carriers or other final-mile providers, as much as they can, [they should] focus on the value proposition of their service, reliability, delivery speed or any other differentiating factor of value they provide.”