You Build, We Deliver.
Arming retailers with logistical capabilities to compete in an e-commerce world
The foundational shift from brick-and-mortar to e-commerce that’s been taking place over the past decade has created opportunities for retailers to improve their margins, reach a broader audience, and understand their customers in increasingly refined ways. However, this ‘overnight’ transformation in consumer purchasing behavior has left some of North America’s largest chains behind — trapped in outdated operating models.
Most large big-box retailers built their businesses with brick and mortar operations at the core and simply are not set up logistically or operationally to manage e-commerce scale. The industry has tried to reinvent operating models on the fly to meet this changing demand; but in most cases, adding the capabilities required to deliver on a true e-commerce experience has taken more time and more capital than expected. The knowledge gap in “winning digital” has become a major moat, dividing traditional retailers from digitally-native technology companies. Amazon, for example, has become one of the US’s largest companies, while mainstays of the American shopping experience such as Sears, Toys ‘R Us, and many others have vanished.
This is in large part because traditional retailers lack a variety of skills required to satisfy the needs of the modern-day consumer, who expect an exacting and broad amount of goods available and delivered within hours. One of the skills lacking most is their ability to manage a profitable logistics model. Logistics includes everything from being able to predict inventory required to satisfy online demand, storing the right SKU’s in strategically-located warehouses, and managing the delivery of those goods in a timely manner to the end consumer. Most traditional retailers manage inventory out of large distribution centers located outside of major cities and deliver only bulk orders to their stores on a pre-scheduled basis. They lack the logistical “know-how” and infrastructure to manage deliveries to consumers’ homes, limiting the overall attractiveness of e-commerce in the first place.
Innovation in the logistics industry has ramped up over the past several years as opportunities to help traditional retailers compete in the e-commerce world have continued to surface. The first industry to experience this wave of innovation has been in grocery and food delivery. Companies like Instacart and Postmates enabled grocery stores to participate in the digital economy — by effectively outsourcing their logistics. Instacart takes the entire logistics layer off the grocery store’s plate — managing the trucks, drivers, and delivery.
The logistics arm of any industry is unique, complex and nuanced. Some challenges present in the grocery industry are: quality selection of fruits and vegetables and refrigeration of perishable goods whereas restaurant deliveries need to worry about speed of orders, and managing fleets of bikes to deliver in city-centers. These unique industry attributes coupled with the fact that each industry is massive in its own right lead us to believe that logistics companies will emerge in a variety of vertical-specific markets rather than having one horizontal winner across the board.
The building materials market is a $400B industry in the U.S alone, and is faced with an equal number of challenges making the shift to e-commerce. Retailers such as HomeDepot and Lowes account for the lion’s share of the market, and yet for years have struggled to effectively manage e-commerce. Contractors commonly visit these centrally-located big box stores on a daily basis to pick up the goods required for them to complete their jobs. The size and weight of goods being ordered, such as lumber or drywall, require larger trucks for delivery, as well as physically-capable staff to load and unload the trucks. The nature of these goods also requires larger storage facilities, and proper temperature conditions to ensure the quality of goods is not compromised. The massive consumer trend towards delivery has not yet penetrated the construction industry because the two main players haven’t yet made a solid play in logistics — but the opportunity exists for the right founder with the industry experience to deliver.
Eamonn O’Rourke is someone we see as having that great insight and drive to build the next era of construction retail. He has spent his life on job sites. Whether in Ireland, California, or Canada, Eamonn got his hands dirty building homes, running construction sites, and managing workers. Along the way, he spent his fair share of time shopping for the goods needed to complete the work. Eamonn came to the conclusion that it was time to tackle the logistics for the construction materials market and RenoRun was founded. Shortly thereafter, former entrepreneur and McKinsey operational guru, Dan Schacter, was hired and together they have built RenoRun into the most efficient logistical machine in the construction material industry.
Today we are announcing our Series A investment in RenoRun. We are committed to working alongside the amazing RenoRun team to completely transform the way logistics are managed in the construction materials market. RenoRun manages a fleet of delivery vehicles and employs pickers and drivers to ensure the highest quality materials are gathered and delivered to job-sites in under 2 hours. This revolutionary service adds a new e-commerce dimension to this industry, and helps contractors spend more time building and less time shopping!
