Startup, legacy delivery companies try to solve the last-mile puzzle

While last year saw hundreds of VCs pour money into 15-minute delivery services, and companies like Jokr raised hundreds of millions of dollars based on the assumption that consumers wanted their products ASAP, the last-mile delivery space has a lot to figure out.

Jokr, for example, significantly pared down its operations to focus on its more profitable Latin America business, demonstrating that navigating the last mile is still a major challenge for legacy and startup delivery companies that face issues like supply-chain snags, parking access, and navigating returns for consumers.

Take Coco, an LA-based remotely piloted delivery service, which officially took to the streets of Austin, Texas, earlier this year. The company did so because Austin made sense as a “cost-effective, reliable,” and less traffic-heavy city, according to a release. Coco deploys fleets of automated robots that carry out deliveries, and it plans to expand its services to Dallas, Houston, and Miami throughout this year.

• The company’s growth is supported by a Series A funding round of $56 million earlier this year.
• Unique to Coco is that the robots are piloted by human drivers.

Last year, Coco became an industry leader in Los Angeles, operating across all of its major neighborhoods. The company attributed Coco’s success to its “reliability, speed-to-consumer, sustainability, and cost effectiveness.”

• Compared to traditional delivery methods, like vehicles, Coco says it’s able to shorten delivery times to consumers by 30% and has an on-time delivery rate of 97%.
• As demand for its services grew, Coco set its expansion goals on Texas, starting with Austin.

“When evaluating markets for expansion, Austin stood out to the team as a perfect match,” CEO and cofounder Zach Rash said in a statement. “Austin’s entrepreneurial spirit, top-notch food scene, and commitment to supporting small businesses makes it an ideal fit for Coco.”

In the startup space, Plano, Texas-based Pickup closed on a $15 million Series B funding round last year and is looking to close on a Series C by the end of the year. CEO Brian Kava told Dallas Magazine that the company was in roughly 30 US cities at the start of last year and now operates in 90+.

• Although the company was founded as direct to consumer, Kava said after the Series B, Pickup had to reconsider what the company looked like, which meant becoming more enterprise-focused and bringing in national retailers.

“We started doing that for that footprint, and then we’ve really seen a great deal of success,” Kava, who was appointed CEO earlier this year, told Dallas Magazine. “Most recently, probably in the last six to nine months, even expanding into more of an industrial and commercial footprint for partners in paint and auto, who, much like everywhere else, are trying to grow in the last mile.”

Kava believes consumers have three things they look for in an efficient last-mile delivery: flexibility, reliability, and quality.

• “Companies that are having customer experience and quality and performance top of mind—those will be the ones that survive,” he said.

Zoom out: Legacy last-mile delivery operators are also stepping up their game to compete with their new counterparts. FedEx, for example, teamed up with last-mile delivery company Nuro in 2021 to deploy fleets of robots similar to Coco’s. Also, before the pandemic, in February 2020, FedEx announced that FedEx Express would contract with FedEx Ground for the transportation and delivery of select, daytime residential express shipments.

This was part of an effort to make residential deliveries more efficient by putting the right package in the right network, then-president and COO Raj Subramaniam said at the time (He has since assumed the role of CEO and president of the board). “This change leverages the strengths and investments in the FedEx Ground network, making it the network of choice for residential packages fueled by e-commerce,” he added.