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Startups Come, Startups Go: Doorman vs Parcel, a Cautionary Tale

by Milkman

Startups come and startups go, victims of their own ambitions, of the vagaries of venture capital and the shifting sands of modern economy.

When it comes to deliveries the stakes are even higher: eCommerce is booming all over the world and everyone wants to deliver fast and cheap. Logistics costs, though, are steep. So steep they’re considered the key to make eCommerce profitable.

On October 6th Doorman, who offered time-window deliveries within a 1-hour timeslot, for both Shoppers and Retailers, ceased operations. With €3.5 million in funding the company was able to expand from native San Francisco to Chicago and New York. Its downfall proved to be an excess of enthusiasm from its customers. The original $19 monthly subscription program had to be raised to $29 and then to a staggering $79. And yet it was still losing money per delivery.

The startup, as reported by Techcrunch, sent a letter letting customers know it would no longer be in business, saying it was “joining forces with a larger team.” There have been no updates so we don’t know what that really means.

One of its early competitors: New York’s Parcel a few days ago has been acquired by Walmart in a bid to serve the Big Apple with same-day time-window driven deliveries. With $1.98 million in funding, the Startup has been bought for less than $10 million.

Doorman put itself at great risk by deciding to remain strongly oriented towards “personal plans”. Relying on gig-economy drivers probably factored in too: with volumes rising and cash dwindling the service lost in quality, as everyone can check by reading web reviews, leaving early users disappointed while a new generation of customers, who wanted more for less, took control.

Parcel, on the other side of the Continent, almost immediately understood that it wasn’t possible to survive by betting everything on services for the end user. It started exactly as Doorman: by collecting parcels for shoppers and then bringing them at their house on appointment but soon pivoted to serve Retailers and Online Shops. As we wrote countless times: being able to engage more fronts at once is essential for thriving in a sector that doesn't necessarily become profitable as a consequence of widespread adoption (it may even cost you more, as Doorman experienced).

Another wise decision made by Parcel was resisting the temptation of the gig-economy and working with an employed fleet. That, in turn, translated into an constantly excellent level of service.

When Walmart came the cautious boat moored inside a safe harbour and the brash one got lost amid the storm.    

#Our Vision, #Senza categoria, #startups

    
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