Demanding consumers are fueling the rise of retail and logistics technology startups aiming to enable the Amazon-like experience that’s become table stakes in a cutthroat, competitive industry.
Speaking at the CommerceNext conference in New York City last week, Bain Capital Venture’s Jamison Hill said though he’s been an Amazon Prime member for years he didn’t fully appreciate how much he’s come to rely on free two-day shipping until he was shopping a new bedding brand online—that would fulfill his order in two weeks.
“I won’t even need it by then! I’ll have moved! I’ll be a completely different person, who knows who I’ll be in two weeks,” Hill recalled of his reaction to the unexpectedly long shipping estimate. “When I took a second and thought about that, I realized how ridiculous [my reaction] was.”
After talking himself down from the proverbial ledge, Hill completed the transaction and was pleased with the product when the order eventually arrived—but couldn’t shake the feeling that no-cost, 48-hour shipping has somehow become an inalienable right for tens of millions of consumers.
That’s among the reasons why Bain has invested in new companies like FourKites and ShipBob that are laser focused on innovating in the supply chain. The latter is one of the promising innovators offering retailers the kind of “modern fulfillment infrastructure” necessary to level up with Amazon (and its seemingly bottomless pockets). Building out a network of fulfillment warehouses right in the heart of urban centers, ShipBob lets retailers add inventory to any of its facilities—stock that’s then split based on sales velocity data, Hill explained, and ground shipped to customers nearby.
New digital-first brands flock to services like the one offered by ShipBob, but they’re not alone. “I think there are companies that are building new consumer experiences but there also is an established cadre of retailers [that] desperately need to build these modern capabilities,” Hill noted.
While legacy retailers are catching up to the technology age, direct-to-consumer startups like the Warby Parkers, Everlanes and Caspers of the world are making the move from clicks to bricks. More often than not, the digitally native brands approach Bain in need of professionals experienced in launching physical stores, running operations and managing supply chains.
“You’re always going to need a foothold in the real world,” Hill said.