Start-up courier plans to shake up established players

[Budfrog]

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IN THE latest bid to disrupt FedEx and United Parcel Service (UPS), start-up Roadie aims to entice college students and other travellers to earn some extra pocket money by delivering packages on the way to where they are already going.

Waffle House will unveil a partnership on Tuesday to become part of the network of pick-up points for the service, offering a place for drivers to rendezvous with both senders and receivers. Roadie, which launched late in January and aims to become the Uber of package delivery, is still tiny. So far, the app has been downloaded about 7,500 times, while drivers have been recruited to deliver about 50 items. But big investors have signed on for the more than £6.48m initial investment round, including Square’s co-founder Jim McKelvey, TPG Capital founder David Bonderman and even UPS, according to Roadie.

This partnership is a first for Waffle House. The eateries are open 24 hours a day, and CE Walt Ehmer says it is the first time the chain of 1,750 has joined with a start-up, something he had not previously envisioned.

"We’re just bacon and eggs over here," Mr Ehmer said in an interview. "I’ve been amazed with the explosion of Uber and Airbnb and other technology that kind of enables people to get together and conduct business together."

Others have attempted to tread on the territory of parcel-delivery giants FedEx and UPS, with limited success. Regional delivery companies have rapidly gained market share with low-price, super-fast service, while the US Postal Service is leveraging its expansive network to challenge the private companies for a bigger share of e-commerce deliveries.

So far, no delivery start-ups that rely on the so-called sharing economy have made significant inroads, although a few others aim to enable local deliveries or to connect truck drivers with those wanting to ship freight.

Roadie founder Marc Gorlin came up with the idea about a year ago for the service after he had to get tiles quickly transported from Birmingham, Alabama, to his Florida condo, which was under repair. He realised there was likely somebody already driving that route who might be willing to drop off the tiles for £12.97.
"That was the idea for Roadie — basically utilising all these cars that are already going somewhere," Mr Gorlin said.

So far, the Atlanta-based start-up has launched an app for the southeast, encompassing 10 states from which shipments can originate. Prices will range from about £7.78-£129.66, calculated on a base fee and a variable amount per mile, which is adjusted according to the distance driven.

While some items will be more expensive than what UPS or FedEx charges, the rates for getting big and heavy items to a destination quickly will be most competitive. Drivers are paid 80% of the price, less a £0.65 safety fee to cover insurance for the item, and the company sends a document at the end of the year noting the distance driven so it can be written off for tax purposes.

Roadie will also offer some free roadside assistance, and will establish meeting points such as Waffle House for drivers and customers to hand over deliveries. Most deliveries right now are door-to-door.

Mr Gorlin previously co-founded start-up Kabbage, a small-business lender. Some investors are betting on him a second time, including Warren Stephens of Stephens, who led the initial investment round.

"Nobody really knows what technology will do and how this will all play out," Mr Stephens said in an interview. "There has to be some piece of transportation that can be more effectively done with something like Roadie than the UPSs and FedExs and other traditional shippers."

UPS said that it made the investment via its Strategic Enterprise Fund, which invests in start-up companies redefining logistics ranging from e-commerce to health care to aerospace.

"Start-ups provide opportunities to rapidly learn about a broader landscape of business models without distracting internal (research and development) resources," said Rimas Kapeskas, MD of the fund, in an e-mail.

An investment like Roadie can "improve the corporation’s ability to be proactive to technology advances and market shifts".

However, Roadie faces a number of challenges — perhaps most important, legal concerns. Items could be stolen or damaged, or the service could be used to transport illicit materials such as drugs.

Mr Gorlin said the sender, driver and receiver would take photos of each item before and after to ensure it was legal and arrived in the same condition.

Shippers must agree they are not shipping a prohibited item. The company keeps a copy of drivers’ licences — checking to ensure they are valid — as well as contact information for the sender on file. The company will also add a proprietary background-checking system soon.

Roadie insures shipped items up to £324.15, and the sender can track the driver’s location in real time via the app. While it is unclear who would be held legally responsible for transporting illicit materials, both FedEx and UPS have in recent years faced legal challenges for the alleged unlawful transportation of both cigarettes and pharmaceutical products. Both companies have said that they cannot police what is inside packages.

Additionally, it is unclear whether Roadie can recruit enough reliable drivers willing to take on the inconvenience of making a delivery for pocket change. Mr Gorlin and his team have held recruitment events at Nascar races and college football games, giving out T-shirts and collecting more than 115,000 e-mail addresses to target attendees.

Juanchella Kemp currently works as an Uber and Lyft driver in Atlanta. She has taken a couple of gigs with Roadie, most recently delivering a birthday gift for a six-year-old in the metro area five minutes away from a destination to which she was already headed.

"I wouldn’t go out of my way," she said. "It’s just advantageous when I’m already going that way to make a little pocket change."

[Lounge Lizard]

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