Forge Retail Pulse: A sneak peek into last-mile delivery, data, communication, and returns
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This edition covers last-mile delivery, customer data, customer communication, and a spotlight on returns.
Startup Deals
Last-mile delivery - Consumers want purchases delivered anywhere, anytime. As a result, last-mile delivery startups have experienced a meteoric increase in popularity, with dozens of new startups cropping up, and many existing businesses scrambling to meet new consumer expectations. One of these startups is Gophr, which focuses on "leveling up" couriers by treating them as talent rather than as a commodity or cost center. Gophr optimizes last-mile delivery based on courier paths and strengths, understanding which couriers might be strong in multidrop, which are strongest in customer communication, and which are best on the circuit, while also minimizing the time couriers spend driving back empty-handed. Gophr raised a £4M Series A led by Nauta Capital, supported by 300% revenue growth over the last 12 months. It has completed more than 2 million same-day deliveries to date for customers including HelloFresh, Boots, Co-op, and Selfridges.
Customer data platform - With the rising complexity of retail, companies are struggling to collect, understand, and segment data to fully leverage their customer base and compete against the likes of Amazon. While customer data platforms have made a splash in the market, many require expensive and time-consuming lifts from either third parties or internal resources for strategy, implementation, customization, and project management. Lexer, on the other hand, offers a quick-start, end-to-end solution that allows brands to manage and leverage their data on a single platform to increase incremental sales. With prebuilt integrations and APIs, Lexer can be deployed quickly with little heavy lifting, no matter what existing infrastructure retailers may have. Lexer has helped many offline retailers migrate online and adapt to the changes the pandemic has presented. For example, when retailers faced Covid-related supply and inventory constraints, Lexer helped prioritize their high-value and loyal customers to ensure satisfaction for those that mattered most. Lexer recently announced a $25.5M Series B led by Blackbird Ventures and King River Capital for expansion in Australia, the United States, and Southeast Asia. Existing clients include Quiksilver, DC Shoes, John Varvatos, and Sur La Table.
Customer communication - Text messaging as a retail marketing channel is not new, but how often do customers reply to the coupon-style text messages they receive? How often do customers say, "This text conversation is just like talking to a store associate on demand"? The answer is probably never, and Emotive aims to change that. Rather than treating text messages as newsletter blasts, Emotive facilitates conversations with customers, acting as an online sales associate. It turns out that when retailers start having conversations regarding shopping cart abandonment, sales, and new products, customers are much more likely to buy (8% to 10% conversion rates vs. 1% or 2% for a standard text marketing campaign). Emotive has benefited by changing the tone of customer communication via text, posting a 466% increase in revenue growth in 2020. It recently announced that it raised $50M in a Series B funding round at a $400M valuation. Customers include Hum, Thread & Supply, Fire Cider, and Piper Finn.
Theme Exploration: Returns
In the US alone, consumers returned $428B of merchandise in 2020, translating to approximately 10.6% of retail sales. For every $1B in sales, the average retailer incurs $106M in merchandise returns. But returns themselves are not a strong determinant of customer loyalty; instead, it’s how retailers handle the return experience. In fact, 96% of customers who are satisfied with the returns process said they'll purchase from the retailer again, while 33% of repeat customers who had a "difficult" experience would not shop again. In other words, positive return experiences keep customers coming, but bad return journeys could mean permanent churn.
Startups that can kickstart your returns journey:
Return experience - Narvar is a customer experience platform that has built out product solutions specifically designed for seamless returns. Narvar allows retailers to set return policies informed by market intelligence and benchmarks, leverage a network of more than 75,000 drop-off locations, provide QR-enabled transactions (meaning real-time tracking and printer-free returns), and implement a plug-and-play online returns portal to reduce customer service calls. Narvar currently serves 800+ retailers globally, including Sephora, Patagonia, Levi's, Sonos, Warby Parker, Home Depot, LVMH, and L'Oréal.
Exchanges - When making returns, 63% of customers actually replace the item. Of those who do not replace the item with the same retailer, 18% cite faster replacements elsewhere as the main reason. Returnly aims to increase the rate at which sales are "saved" by making sure customers receive the right item before returning the wrong one. With Returnly, retailers can automate exchanges and turn them into additional shopping opportunities. Plus, Returnly pays for the new order and takes 100% of the product risk in the event the customer fails to return the item or it gets lost in the mail. Untuckit, Outdoor Voices, ThirdLove, Everlane, Koio, Supergoop, Timbuk2, and Gorjana are just a few of the companies already utilizing Returnly to revolutionize the returns process.
Reverse supply chain - Returned and excess items create about 5 billion pounds of landfill waste every year. Optoro's platform enables retailers to eliminate the waste produced in the reverse supply chain, from minimizing carbon emissions released in return shipping to creating a circular business by matching returned products to new buyers. Optoro currently works with Ikea, Best Buy, Staples, Target, American Eagle, Groupon, Bed Bath & Beyond, BJ's, and others.
Essential Industry Reads
Silicon Valley Bank just released its State of the Markets Report Q1 2021, covering our year with Covid-19, what the market looks like entering the 11th year of the longest bull market in history, and forecasts for the next decade. Click the link below to learn more about the state of the market and the effects of interest rates, the US presidential election, unprecedented levels of dry powder, private IPOs (PIPOs), and more.
On February 2, Amazon CEO Jeff Bezos announced that he would step down, appointing Andy Jassy, CEO of Amazon Web Services, as his successor. Originally launched as a side business to address an internal friction point, AWS now represents 13% of Amazon's sales and 62% of its operating income. Forbes highlights the incredible growth of Amazon Web Services, its future potential, and what the appointment ultimately signals: “Cloud, Not E-Commerce, Is Amazon’s Future.” Click below to deep-dive into a fascinating case study about investing in non-core growth, commercializing core capabilities, and ultimately transforming a retail and ecommerce business into a data infrastructure business.
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