For sellers working through ecommerce platforms like Amazon (NASDAQ: AMZN), eBay (NASDAQ: EBAY) and Shopify, inventory management and fulfillment services are very crucial to keeping their businesses running, and in scaling up operations. As Amazon gains ground in the ecommerce space, many sellers see value in holding their inventory in Amazon Fulfillment Centers (FBA), as a majority of their sales is powered through the Amazon network.
The ecommerce behemoth offers multi-channel options, enabling sellers to use FBA to fulfill non-Amazon orders, helping them grow their business across varied mediums like eBay, Walmart, and Shopify without the need to branch out their inventory holdings. Amazon Prime also enables fast shipping, which has quickly risen in importance as one of the critical yardsticks for increasing customer delight and in creating brand loyalty.
However, this does come at a cost, as Amazon’s fast shipping is only made available to sellers who come under its coveted Prime badge, which would not be possible if sellers refuse to stock their inventory within the FBA. This is particularly frustrating for a section of sellers who find it cheaper to hold their own inventories and manage fast shipping, as they still cannot attain Prime status – leading them to a catch-22 situation.
This predicament is true of sellers on non-Amazon platforms like Walmart, eBay, and Shopify as well, who stock their inventories on FBA, but do not have the option of having fast-shipping as the Prime status does not hold outside the Amazon ecosystem.
However, companies in the warehousing space are sighting an opportunity here, with Deliverr being one such startup, helping businesses ship products on ecommerce platforms with an Amazon-like fulfillment service. “You can send inventory into the Deliverr network which we store and once orders come in from an ecommerce channel, we get the order, pick, pack, ship and deliver the order to the customer,” said Michael Krakaris, co-founder of Deliverr.
Before setting out with Deliverr, Krakaris worked in product marketing and sales divisions of a few different initiatives in the telecom and ecommerce industries. “While there, I saw a lot of similarities with the fulfillment space. The infrastructure existed, but there wasn’t a great software layer that was orchestrating where inventory sits in relation to buyers and how orders were shipped out based on the carrier,” he said. “There wasn’t a service that had clear pricing or had quick onboarding outside of FBA – which was a great solution for Amazon, but wasn’t great for any warehouse outside of it.”
The biggest challenge that Deliverr faces is to convince retailers to make the shift from FBA to Deliverr, albeit in fractional increments – like 20% of the inventory on Deliverr, with the rest remaining on FBA. “When they are shipping with e-tailers like eBay and Walmart, they could put their inventory in Deliverr, and it will sell faster than an inventory in multi-channel FBA, because we integrate with Walmart and eBay shipping,” said Krakaris.
Deliverr’s integration with eBay’s guaranteed delivery helped its sellers increase sales by 20-30%, but Krakaris insisted that the sales increase was not enough to convince sellers to jump ship. “But when we started powering free two-day shipping on Walmart, we saw that it was doubling sales for our clients. This brought a lot of sellers on the table,” he said. “Sellers understood that though we might not have the best price, they would be shipping in two days, and this would double their sales. This made us become a revenue driver for sellers just like FBA.”
Apart from channeling sellers from FBA to Deliverr, the company also considers businesses that maintain their own inventory as their target audience. “When you are shipping yourself, you can’t get into Walmart free shipping, or into eBay guaranteed delivery on nationwide two-day coverage, which are big value propositions for sellers. So we look to convince them to move into an FBA-like service and get a bigger gain through fast shipping times,” said Krakaris.
For improving traction, Krakaris explained that the company took a customer-first approach with a near obsession towards making sure their sellers are as happy as they can get while putting their inventories in Deliverr. “It is really important to us to have that level of attention on our seller base as sellers need to trust in us to send thousands of inventory units into the Deliverr network – goods that hold a lot of value,” he said. “Building that trust takes time. Sellers are always going to test you out first and then are gradually going to expand. And we need to make it really easy for them to do that.”
Deliverr’s interface allows sellers to create an account in under two minutes, said Krakaris, with sellers shipping their first order within two days of creating an account. “In the onboarding part, everything is self-served and similar to FBA, as we don’t have minimums or upfront contracts or fees,” he said. The company is now on the verge of pushing out an update to its Walmart free two-day integration and has just released discounted rates for Walmart orders.