By B.L. Ochman
In 2013, Q1, instant gratification – the last differentiator of bricks and mortar stores – will take a well-funded hit from Shutl.com, a London-based firm that promises to deliver online purchases within minutes of sale, starting in New York and San Francisco.
Consumers can buy just about anything online. But shoppers have had to wait a day or more to receive online purchases since the death of much-loved Kozmo.com Inc.
Shutl CEO and founder Tom Allason, 32, a veteran entrepreneur who founded eCourier.co.uk and built it to $10 million in sales, says: “We intend to fix delivery. Consumers have been buying online for 18 years, but e-commerce hasn’t evolved with the web. You can purchase almost anything in seconds and yet you have to wait a day or many days for delivery.”
Significant investors include UPS
Profitable in the U.K., Shutl’s crossing the pond with serious investors on board. In October, Shutl secured a $3.2 million in equity investment from e.ventures and Notion Capital, in addition to a $2 million investment earlier in the year from investors including UPS. Allason says the service can be scaled globally wherever there are retailers and ground courier services.
The U.S. launch of U.K.’s Shutl will let you get online purchases from participating retailers delivered within 90 minutes or in a one-hour window of your choice. It won’t cost more than standard delivery, but it’ll only work for distances up to 10 miles. The process is seamless for consumers, since Shutl’s web platform does the connection between retailers and same-day courier companies who are Shutl’s partners.
Many retailers assign a basket value (i.e. spend $49) for free delivery, choosing not to pass on their cost “Not because they are altruistic, but because it makes purchase twice as likely,” Allason says. He claims Shutl retailers enjoy an average conversion rate of 20 to 25%.
Retailers who can offer the service online are those with local stores. Shutl will be offered as an option during the online checkout process. Deliveries will be made by existing courier service.
Potential $26 billion market
Shutl now serves approximately 45 million people in 60 towns in the UK, Allason says, but it’ll never be a rural solution because the service is only cost-effective up to a 10-mile range. Still, that’s a multi-billion dollar range.
The U.S. offers twice the market of the UK, he says. Allason told TechCrunch that the quick delivery market in the U.S.is expected to hit $26 billion by 2016.
The mistake made by Kozmo and its competitor, Urban Fetch, is that they offered their service free, with no minimum purchase and they built their own delivery networks. They hired their own couriers, Allason notes, and had to pay the couriers before they had customers.
“We’re using messengers at existing services, piggybacking on their existing capacity and re-selling it at higher prices,” he says. It’s a win for the services, which get more business, and for the customer who gets quick delivery of goods bought online.
Competitors include FedEx
Amazon already offers same-day delivery in Boston, New York and Chicago, but Chief Financial Officer Thomas Szkutak told Bloomberg News that it doesn’t plan to roll the service out on a broader basis.
FedEx entered the market with its SameDay City service, available in 20 municipalities from Phoenix to Los Angeles to New York.
“We’re a scrappy startup now,” Allason says. Two thirds of the firm’s 30 employees are engineers. Most marketing of Shutl will be done through the retailers who offer it, but Allason says he will do some marketing to build awareness.
Operating in the UK since 2010 Shutl claims to hold the record for the world’s fastest e-commerce delivery; a shopper receiving his goods within 15 minutes of checking out online. Will that be fast enough for New Yorkers? We’ll soon see.