Our Investment in Swyft: Prime Shipping for Everyone Else
We’re excited to formally announce our investment in Swyft, a Toronto and LA (soon!) based company that provides a magical same-day delivery experience for consumers, merchants and 3PLs. We co-lead the Seed round in July of 2020, and today they announced their $17.5M Series A investment led by Forerunner Ventures, iNovia and Shopify. We’re excited to welcome our new partners and continue to work with Aadil, Maraz and Zee as they build a same-day delivery platform for brands, 3PLs and delivery service partners.
When we met the Swyft team, they pitched us on a vision to help enable long-tail merchants comparable logistics options to Amazon, starting with same-day delivery. They’re building an asset-less B2B marketplace connecting merchants through a network of delivery service providers using APIs and same-day delivery workflows. The company helps e-commerce merchants deliver superior consumer experiences at scale without investing in fixed assets or the trouble of managing gigantic pools of gig workers. Swyft will deliver this at market competitive rates, often cheaper and faster than next-day shipping options.
In our early meetings, the team shared several unique insights around the problem, some of which came from their experience in the space. Aadil and Zee had direct experience working on Insights and Analytics and Last Mile teams, respectively, at Amazon. Maraz deeply understands the buying decision matrix for retailers through his work at Blackcart and Exact Media.
The rapid transition to e-commerce has put a tremendous amount of strain on the global supply chain. The combination of the pandemic and the shifting attitudes of consumers’ expectations has compounded this problem. Most merchants, retailers and 3PLs existing systems have struggled to support this new normal and will continue to do so unless they modernize their infrastructure. Despite this, Technavio expects the last-mile delivery market in North America to grow by USD 59.81 billion during 2021–2025.
Why is this such a hard problem for emerging brands, retailers and 3PLs to solve? Up until now, it’s required Amazon-like capabilities and infrastructure to deliver on this value proposition. This boils down to three things:
- Amazon controls their own supply chain end-to-end and has the necessary warehouses, fulfillment centers, and last-mile hubs in the relevant geographies they service.
- They have the capital and infrastructure to scale and pay on-demand gig workers.
- They can drive efficiencies through both volume and route density.
The rest of the market is forced to stitch together various solutions involving multiple delivery networks and consider additional warehouses. Swyft believes in a future where the next generation of logistics is collaborative and where interactions are more API-like. They will provide brands, retailers and 3PLs with the ability to manage their delivery network across multiple geographies through a single platform. Third-party delivery service providers can integrate and capture the volume that Swyft provides.
Consumers are signalling that they’re ready for a better online shopping experience. On-demand marketplaces such as Uber, Ritual* and Instacart have shown us that consumers are willing to pay a premium for a superior experience. We’ve spoken with brands that offer same-day delivery, and they are seeing an uplift in conversion and repeat purchase rates, which improves customer LTV. Coupled with the fact that, dollar for dollar, e-commerce revenue is higher margin than stationary retail, it makes sense for players to continue to fine-tune this funnel.
Retailers and brands have taken notice. Everyone from traditional big-box, Mom and Pop retailers (via companies like Faire*) and digitally native brands are rethinking their logistics solutions to support these changes in demand. Modern-day 3PLs are leading with same-day capabilities, and traditional players are looking to integrate. Warehousing and fulfillment companies are moving closer and closer to city centers to enable faster shipping.
Through Swyft’s collaborative approach, they will be able to lower the cost sufficiently such that over time, same-day rates will be comparable to next-day delivery. This unlocks a much larger market opportunity, and we believe it will influence different buying patterns and infrastructure decisions in the future.
We believe the convenience of online ordering combined with traditional retail’s SKU availability has an air of inevitability to it. We are excited to continue our partnership with Swyft, to solve last-mile logistics at scale.
If you’re interested in contributing to this mission, they’re hiring for many Toronto and LA roles.
* denotes a Golden Ventures portfolio company.