On the way to a second recruitment round and a pilot among ecommerce giants, the start-The Israeli app Deliverider wants to change the way of thinking when it comes to deliveries and make available products at a relatively low price (even NIS 10), which are difficult to find in the online world due to shipping costs that make the purchase of a single product unprofitable for the consumer.
Deliverybrider offers businesses to cooperate with the strong e-commerce sites, usually in the food or pharmaceutical fields, and add their products to the existing deliveries to consumers’ homes at no additional cost – thus allowing consumers to enjoy a variety of cheap products online at the same price as in the store. Deliverybrider is the one that will collect the products and bring them to the online distribution centers of the chains, and from there the products will be sent to the consumer in a consolidated shipment.
Behind DelliBrider are Ido Raz, who serves as CEO, and previously served as Shufersal’s business development and innovation manager; and Elad Kantor, who serves as VP of Technologies. The members of the board of directors include the former CEO of FedEx, Udi Dagan; and Alon Fait, the founder of Splitit. The company employs 12 people, some of them abroad. The company has completed an initial fundraising of approximately 2 million dollars from “Family Office” and senior investors from the field, and is on its way to another round of fundraising.
The founders of Deliverider – from the right: Ido Raz, CEO and Elad Kantor, VP of Technologies / photo: Deliverider
Carrefour effect
Increasing the shopping basket is a challenge that the online players face, when the behavior of consumers in the online arena works differently than in the physical arena – for example, regarding unplanned purchases, resulting from checkout promotions or sales promotions of products on the sales floor.
Deliverybrider offers a solution to this issue, with the collection of products from businesses located within a radius of about 10 km around the distribution point of a food or pharma retailer, who market online. In this way, consumers can order one product at a relatively low cost, for example, from a bookstore or toys nearby, and receive the shipment together with an order for products made on the website of any food chain.
Deliverybrider’s logistics system will collect the small orders in several daily rounds, and deliver them to the retail network. This, in turn, will combine the products into one shipment with the products that the consumer ordered directly from her. In the case of returns or exchanges, consumers will have the option to physically access the store from which the product was ordered or make a return through the company.
Raz explains that in this way, consumers will be able to purchase products even at a cost of NIS 20 per item, without having to deal with the shipping dilemma that sometimes comes with the cost of the product, and without the consumer having to build large baskets of NIS 200 in order to receive free shipping.
The businesses will be able to increase their sales and play in the online arena where they are less active, and the retailers in the food or pharmaceutical sector will increase the shopping basket made through them by 5%-10% and will be able to maximize the profitability of the online activity – which involves shipping and collection costs that do not always tilt the balance of profitability in their favor .
According to Shufersal reports, for example, 22% of its sales today are made online – and it is expected that this segment will grow in the coming years (in parallel chains abroad, online reaches 30% of the activity). Soon the French Carrefour will enter the country, which will also try to take a bite out of the online activity of the players in the industry – so that they all have a clear interest in increasing the supply and online activity.
We should note that Dellibrider registered patents for her idea, which was also presented to international actresses. The company is in contact with Shufersal, and it can be assumed that soon cooperation between the parties will mature into a pilot.
The challenge in the profit model
The logistics platform launched by the company (which operates in the B2B arena) is driven by an algorithm that, as mentioned, connects businesses to the online retail arena. This system of deliveries has both a social aspect (promotion of small businesses) and an environmental aspect (consolidation of several orders into one delivery saves air pollution).
Deliverybrider’s model offers to solve an existing problem, which will allow the right to exist for small products in e-commerce. However, in order for the model to be profitable, it will be required to work in large numbers and generate a large traffic of deliveries, that is to ensure that in each round of product collection there will be a quantity that justifies the move. We note that the business model according to which the company works is based on commissions paid by the surrounding businesses, and the commission is about a fifth of the price of the order.
The businesses, for their part, are notified of the order placed for their products directly via a dedicated tablet placed in the store, where the product is prepared and collected by the delivery system of Deliverybrider in a short time (similar to Walt’s mechanism).
“We found that items with a value of up to NIS 50, such as tambourine products, stock products, cell phone accessories, toys, books, or personal care, show the highest conversion rate as products that come with the shopping basket,” says Raz.
“However, in light of their low cost, online retailers around the world find it difficult to display them on their websites, as they have difficulty ‘carrying’ the price of the shipping fees. Thus, the customer is ‘forced’ to build a large basket of products in order to provide a reasonable shipping price in relation to the value of the basket.
“With us, the drivers pick up the ordered products using a van or scooter, and deliver them to the distribution center of the online retailers to be combined with the ordered basket, even from one day to the next – which allows for a low carbon footprint.”
The networks are turning to a broad platform format
Online shopping gained tremendous momentum during the Corona period, with the entry of new audiences into the arena, and in fact today the market is where it was supposed to be according to the forecasts in just five years. The task that remains before the various networks after the return to normality is to maintain this volume, and above all to optimize it – both in terms of the profitability generated by the online channel, and in terms of the service, which in the online world requires more effort from them.
To this end, the networks operating in the arena realized that they had to operate in a broad platform format. So, for example, Shufersell, which is the biggest player in the field, sells on its website a large variety of products from other worlds such as electronics and electricity.
Shufersal is far from its competitors in terms of the volume of online orders, while not everyone is willing to operate in the online arena (for example Yohannoff who offers self-pickup to those who order on the website). According to data from Shop Analytics, which monitors the purchases of about 3,000 consumers every month, about 43% of the orders from websites that also operate in the physical arena are made every month at Shufersal.
According to the company’s data, the Rami Levy chain accounts for about 10% of sales, and Bitan Online about 2%. A chain that promotes online orders (even on Shabbat) is Tiv Taam, which marked the field as part of its growth engines. Another dominant online chain is Super Pharm, from which about a fifth of the orders in the category are made – and it has also long since left its traditional boundaries, offering products from various fields.
Alongside the traditional orders, the quick order segment of grocery products is developing – Volt operates “dark stores”, from which it collects products for quick collection; Quick (acquired by Beitan Wines) is based on the drive to have products available quickly; And convenience stores have also entered the express delivery arena.
Next to the point of departure according to which we will all order our shopping from a distance, more and more chain branches are popping up, in the urban areas and their surroundings, which are convinced that consumers will not leave the physical store.