Transportation and Logistics International
Not Delivering: Why Delivery and Logistics Startups are Failing
By Joel Ritch
Commerce launched an unprecedented demand by consumers for merchandise not seen in the shipping and logistics industry prior. The attitudes of, and behaviors by, consumers on the other end of a package have changed dramatically. On top of all of that, established shipping and logistics companies traditionally are not at the front of the pack leading with innovation, which means there has been a lot of room for improvement.
Investors have put more than $730 million into delivery startups from early 2014 through the first half of 2015, making last-mile delivery a highly contested battleground, with dozens of startups vying to win the game. So with all of the room left by traditional companies and the injection of funding, why can’t tech startups disrupt the logistics industry?
The crucial last-mile of delivery accounts for the majority of a shipment’s cost and complexity, and is fraught with inefficiencies. Complexity is the No. 1 reason delivery and logistics startups are failing. Startup companies have underestimated the resources needed to build a successful logistics-driven business from the ground up.
There are plenty of companies in the space, early-stage and long-standing businesses, but comparatively, even the companies that are doing well and gaining traction still have a ways to go. Shipping and logistics is not an easy task. Above and beyond the complexity issue, there are additional barriers to startups disrupting the logistics market.
Joel Ritch is a 30-year industry veteran and the CEO of Progistics Distribution, a last mile distribution and logistics company.