Amazon’s One-Day Shipping Pledge Boosts Logistics Startups

Amazon’s announcement that it plans to inject $800 million to facilitate next-day delivery has created opportunities for logistics startups that can help retailers remain competitive against the eCommerce giant, according to a report by Bloomberg.

Companies like Walmart, Best Buy and Macy’s are all looking to logistics startups to help them keep up. One such startup, Flexe, which runs a warehouse and fulfillment marketplace, just raised $43 million in a Series B funding round.

Another company, Dolly, which handles larger items for shipping, recently announced a $7.5 million infusion of cash.

Analysts say Amazon is poised to take almost 50 percent of the $600 billion in money spent by U.S. shoppers online this year, and retailers need to get creative to keep up.

“Interest in logistics investments has picked up, and we’ll see even more of that this year,” Julian Counihan, a partner at Schematic Ventures in New York, said in the report. “Retailers traditionally invested in physical stores to increase sales. Amazon flipped that on its head and made logistics the driver of customer experience.”

Flexe, which acts as sort of an Airbnb for warehouse space, has been rapidly expanding. It recently hired former Amazon transportation president David Glick as CTO in a bid to expand its eCommerce fulfillment operation, which makes up three quarters of the company’s sales.

“Having big customers like Walmart known for high standards brings legitimacy to our business,” Flexe CEO Karl Siebrecht said.

Dolly’s focus on bigger items gives it an advantage over Amazon, which is still trying to figure out a way to move big weight items efficiently. The company says it can deliver appliances, sofas and TVs in as little as 90 minutes.

“We give retailers the ability to tell their customers that they offer way better terms than Amazon for big and bulky items,” CEO Mike Howell said. “Amazon wants to sell more furniture, but it’s having a very difficult time meeting its customers’ expectations because delivering furniture is so much different than delivering small parcels.”