It’s a well-publicized fact by now that last-mile delivery is the most expensive part of shipping . It’s also the least flexible. Couriers often pack their vans for a whole day’s worth of deliveries and are under pressure to deliver as many packages on their runs as possible – add urban traffic and competition for parking spaces to the equation and it becomes almost impossible to predict in advance when a delivery will arrive. This lack of flexibility means that many customers end up having to collect packages themselves from local kiosks, which may not be ideal for bulky products or businesses that place a premium on the whole customer experience.
Enter a logistics startup in New York called Bond. By renting out small, pop-up warehouses in vacant lots right in the midst of the city, Bond allows the customers of its customers (online retail companies) to choose their own delivery times. Deliveries are then made by Bond’s own delivery staff, rather than contractors, riding electric cargo bikes. This is only possible by being embedded ‘hyper-locally’ from the end-customer whilst being agile enough to negotiate flexible leases with vacant lot owners at knock-down prices.
Bond’s customer base currently focuses on a niche segment of the e-commerce market – businesses with loyal customers making predictable and regular repeat purchases. By partnering with these businesses, Bond is able to optimize its network of nano-warehouses based on where the end-customers are. Furthermore, the retail model of these sorts of businesses are ideal for Bond’s nano-warehouses because they do not need to store a large amount of inventory.
Bond typically sign leases that allow the landlord to terminate within 60 days if they find a permanent tenant. But they also move quickly when they set up a new location, typically a new warehouse is up and running in less than a week for basic renovations. One of their nano-warehouses in Manhattan still had the barber’s awning outside the front door.
Apart from reducing congestion and providing a better customer delivery experience, Bond’s business model also seems to solve another challenge facing the logistics industry – finding leasable space close to major global cities such as New York that is fit for setting up proper distribution warehouses. Competition for real estate has forced up rents and moved such warehouses further and further away from where deliveries actually need to be made. Yet at the same time, there seems to be no shortage of much smaller vacant lots right in the hearts of these cities. Perhaps Bond has hit upon something special here if they can demonstrate that being agile by going small and hyper-local can out-compete the traditional distribution model.
However, to have a greater impact they will need to make their business model work beyond their current niche market of direct-to-customer e-businesses. Given the investments they’ve attracted from serious venture capital names such as Lightspeed Venture Partners, it will be interesting to see where they will expand to next as well as the pace and scale of that expansion.
Written by Bobby Chen, RISE.
2. 2019-10-01. Winning the Battle for eCommerce Last-Mile Excellence.