Why Last-Mile Startup Veho Says ‘Shipping is the New Shopping’
Last-mile delivery service Veho announced on Tuesday it is expanding its reach to include the New York, Boston, and Hartford, Conn. areas, adding 11 new locations and bringing its total markets served to 42.
“We’re in an e-commerce era defined by convenience, speed and personalization that drive consumer purchase behavior. Shipping is the new shopping,” said Itamar Zur, CEO of Veho, which has raised nearly $300 million to-date. “Retailers that invest in providing a great delivery and returns experience for their shoppers will ultimately come out on top…. We’re thrilled to bring our customer-first delivery and returns experience to more of New England.”
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The new markets include Hartford, New Haven, Greenwich and Bridgeport in Connecticut, Boston, Springfield and Worcester in Massachusetts, Providence Rhode Island, and the Bronx, Westchester and White Plains in New York.
This adds to its service in Denver, Oklahoma City, Dallas, Houston, San Antonio, Nashville, Chicago, Cleveland, Indianapolis and Florida.
Veho reports that it has tripled its revenue growth since the end of 2021, increasing volume by 48 percent and realized revenue by 55 percent, and it claims to have the best on-time delivery in the last-mile business at 99.9 percent, a non-negotiable sticking point for Zur, who came up with the idea for Veho in 2016.
“Having control of the experience starts with knowing what time [your package is] coming—that’s the table stakes,” Zur said. The real opportunity, he added, is giving consumers control over where and when and how they receive their delivery.
Zur said Veho allows consumers to reschedule delivery dates from their smartphones as well as leave messages for customer support with specific instructions that can help avert one of the biggest pain points in the delivery industry—porch piracy.
One solution Veho employs is using zip code data to identify locations where piracy is most prevalent, and in a more advanced step, enables customers to leave a message with Veho drivers giving them specific instructions on where they can securely leave a package.
“You cannot directly communicate with FedEx or UPS; these companies are not looking at whether or where you can leave it outside,” Zur said, citing the “competitive advantages” of a delivery platform such as Veho that “has direct communication with the customer.”
Veho assembles its delivery fleet in the manner of ridesharing, and drivers claim fares from an app populated by the nearby warehouse on a first-come, first-serve basis.
Zur said that apart from being able to adapt and scale quickly, there is another advantage to not trying to build a fleet of one’s own with a shift-committed team of drivers.
“If you run a fleet of drivers every day, some days it’s going to be under-utilized and some packages will be left behind,” Zur said. “The idea is to be able to give customers control over when the box is being delivered and to do that you have to be flexible so you can deliver a package at 9 o’clock at night.”
Zur said off-hour deliveries do incur a flexibility fee for the drivers, but as for the cost of the service, it is completely up to the retailers whether they want to pass that on to the customer, or eat it themselves in an effort to build goodwill.
“Let’s say in low margin products, brands could say, ‘I want to charge for it’ and then leave it to the consumer to decide whether they want to pay whatever they want,” Zur said. “In other cases [a business] might say ‘I’m going to subsidize that’ because they value repeatability so much. Where I make my money is when the customer comes back to them and places more orders.”
Even with the 11 new markets, a glance at Veho’s U.S. delivery map shows a notable absence of service west of Denver and in rural areas entirely. Next-day rural delivery won’t be coming anytime soon but the coverage circle around urban hubs is getting bigger.
“To enable fast, next-day delivery and do it in a cost-effective way, one has to ship the product from a place that is already close to the city,” Zur said, adding that Veho’s range typically covers a 250-mile radius around a distribution center. “When you’re trying to compete with Amazon, a customer purchasing things is determined by how fast you are and how reliably you can deliver the packages.”
Rent the Runway welcomed the addition of Veho’s new markets.
“We look forward to offering Veho’s service to Rent the Runway customers in New England beginning this summer,” said Drew Rau, senior vice president of supply chain and inventory at the New York-based fashion rental and resale company. “Offering a premium delivery and at home pick up experience has been an instrumental part of Rent The Runway’s strategy, and we are pleased to extend that benefit to customers in this region soon with Veho.”
