Why we invested in Hived

Hived is a parcel delivery company that is using a combination of software, data science and model innovation to build a zero-emission, low cost but high-quality service. One of our three investment themes at Eka is “Sustainable Consumption”, specifically backing companies that can accelerate the shift to an efficient and circular consumption model. Hived’s approach to logistics sits right at the core of this thesis and we are excited to partner with Murvah and Mathias as they build towards their vision of a zero emission parcel delivery company.

Hived are addressing the e-commerce parcel delivery market. The market for parcel delivery has grown rapidly fuelled by the growth in e-commerce which has been accelerated by Covid. It is c. £13.5 bio in 2020 in the UK market alone and growing c.20% yoy and is dominated by the large incumbent players with the top five carriers in the UK accounting for 75% of UK parcel shipments by volume (Royal Mail (35%), Amazon Logistics (15%), Hermes (10%), UPS (8%) and DHL (7%)).

Last mile logistics is now firmly at the heart of the experience any brand delivers to their customer. Companies want a delivery experience that does justice to all the work they put in to their product and brand but that is a real struggle. In general the incumbent parcel carriers don’t really do brands. Pause for a minute and think about the brand experience of the companies that deliver packages to your door, reflect on the SMS and apps they use to communicate, the look and feel of their brands, the general experience, the weird slips they put through your door if you’re not there, etc etc. Now also think about the way that they deliver, especially in big cities, the vans they use, the routes they must have to drive. The net result of this is that:

1. The recipient experience is poor (lack of consistency, poor software etc)
2. Environmentally there are huge inefficiencies in both routes and vehicle types. They are built on half empty diesel vans driving round cities. Emissions per parcel is hard to come by but for context DPD delivered 1.3bio parcels across Europe in 2019, offset 1m tonnes of CO2e and 92% of their emissions came from their delivery vehicles (source: DPD CSR report 2019).
3. There has been very little model innovation meaning most of the incumbents run on inefficient models and struggle to compete on price
4. There is very little focus on getting packages out of the home vs in to the home, which presents a huge long term opportunity for circularity

We have the technologies available to us today to solve these problems, but it is going to take ground up innovation. The model needs to be designed from a blank sheet of paper, data needs to drive every decision and there has to be a hard, non-negotiable, no combustion engine policy. This is the observation that Murvah and Mathias founded Hived on. Murvah knows how to build brands and Mathias knows how to optimise using data. The combination is a powerful one, and the result is a parcel delivery model that:

1. Is building a consumer grade brand that can deliver in more specific, shorter window slots
2. Uses 100% electric vehicles and has a much lower van per delivery footprint
3. Can deliver points 1 & 2 at a competitive price

In doing so they truly deliver shared value: the experience is better for the consumer and the brand without having to compromise on cost while also removing combustion engines from the model, reducing carbon emissions and inner city air pollution.

Last, and definitely not least, we were blown away by their thinking on how to approach the people who will be delivering their parcels. They have gone deep on how they will build a model that is fair, inclusive and brings work satisfaction.

Parcel delivery is a deeply complex problem to crack. There are a huge number of moving parts, margins (both error and financial) are tight. But it is a huge market, with a huge financial footprint and a deep need for change. Exactly the kind of problem our fund was set up to invest in to solving!