Instant purchase and delivery of food and other essentials was one of the big bubbles of opportunity in the world of e-commerce in the last year, with dozens of startups big and small emerging and scooping up funding to build out businesses to bring items like groceries, toilet paper and Tylenol to people’s doors in 30 minutes or less. Now a startup called Arive that’s applying this concept to the wider world of consumer goods in a Prime Now-style service — partnering with premium stores and brands to sell and deliver items like Apple electronics and Bose headphones, Lululemon active wear, furniture and beauty and bath products and Van Moof electric bikes, and then delivering items via its own courier service — is announcing a Series A of $20 million to see if the idea finds traction beyond essentials.
The funding is being led by Balderton Capital, with Global Founders Capital (the firm connected to Rocket Internet’s Samwer family), Burda Principal Investments, La Famiglia and 468 Capital also participating. (La Famiglia and 468 Capital are repeat backers of Munich-based Arive, both having invested in the seed round for the company, which is not to be confused with the mortgage startup of the same name in the U.S.)
Arive’s funding, and list of backers, is notable in that it’s based on a pretty limited run so far. The startup launched only four months ago and is currently active in just four cities in Germany — Berlin, Hamburg, Munich and Frankfurt — although now the idea will be to use the investment to expand further across the country and to start considering which other markets to tackle next.
The reason for the vote of confidence is that so far, the numbers look promising. Arive is not disclosing how many customers it has or what its revenues are looking like, but it notes that the average order size is between €50 and €100 ($56 and $113) across some 1,000 SKUs, with the average basket containing between one and four items. That presents what Arive is doing as a very different proposition to what, say, a GoPuff or Getir is hoping to achieve with its instant delivery model, essentially replacing the weekly grocery shop with multiple baskets delivered to one’s door.
“It’s not just about being the next quick commerce vertical but building the next generation of e-commerce,” said Maximilian Reeker, who co-founded Arive with Linus Fries (the two co-lead the company). He described that next generation like this: “Very convenient delivery of between 30 and 60 minutes, connecting people to local stores with a bike-based service, in an app optimized for the phone.” All of its couriers are employed by the company, either full-time or part-time.
Arive has up to now split the model into three parts, providing consignment, wholesale and, in the next 2-3 months, marketplace options for sourcing supply. Fries said that currently the wholesale part accounts for the largest part of its business and sales.
Beyond that, white label services — where Arive might sell its backend technology and delivery infrastructure to third-party retailers to build their own instant delivery services — is another area that the company is considering, Fries said. This could be a very interesting opportunity in areas such as fashion: typically online sales of clothes have been challenged by issues of sizing and dealing with returns, which make for a high barrier of entry for a company like Arive without making extensive and focused investments to address them. What it could do, however, is provide its technology to fashion brands and retailers that have, who are considering ways of getting apparel faster to would-be online buyers.
Meanwhile, although it’s taking a different approach in instant delivery by eschewing groceries and FMCG essentials and focusing on higher-ticket slower-moving consumer goods, Arive is still operating very much with those grocery delivery startups in mind for another reason.
Reeker told me that Arive actually relishes the oversupply of these startups in certain markets — indeed, the bubble has definitely started to burst for some of these startups, as they get snapped up by much larger and highly capitalized rivals looking to expand to new geographies — because they become a signal for where Arive should be considering to expand to next.
“We want to go to more places in Germany and expand internationally, and while we haven’t decided which cities, we looking at those where existing grocery plays are live,” said Reeker. “The UK, France, they are all interesting. Having those grocery companies there is an advantage for us because it’s evidence of the consumer shift that has taken place. They are already used to getting their food quickly, which is the first step.”
Arive is not the first company to have thought of building a service around instant delivery of virtually any kind of item a person might like to have without leaving their homes to buy it. This was basically the premise behind Amazon Prime Now, which the e-commerce giant launched the service in 2014. Pointedly, although Amazon expanded it to several markets, eventually it discontinued the standalone app and branding it had built for Prime Now, which now exists as a faster-delivery option for some of the items that it sells via Prime.
The message there could be interpreted in two ways. It could point to challenges for scaling something like a fast-delivery service without also providing a wider range of options that offer cheaper options and longer delivery times to customers put off by the premium that comes with instant.
Or, it could point to how there remains an opportunity for a smaller and more focused company to get the model right, understanding that the market has matured in the last eight years and consumers are not only more willing to shop online than ever before due to Covid-19, but have focused their expectations of how that experience should more closely mirror the instant-gratification of shopping in person.
Investors are willing to bet that the two co-founders — which hatched the idea of Arive while at business school — have a shot in building something fit the latter of those.
“Linus, Max, and the entire team at arive are challenging e-commerce conventions with energetic execution and an acute sensitivity to the priorities of modern brands,” said Colin Hanna, partner at Balderton Capital, in a statement. “Using light electric vehicles to rapidly fulfill orders leaves a lighter footprint on our planet and ensures that customers are home to receive goods they’ve purchased online, avoiding costly failed deliveries. The team is also committed to building their UX in a way that protects, rather than erodes, the value of the brands they are lucky to work with. Finally, high basket sizes and no wastage means the company has a much stronger path to a sustainable business model over the long run. Balderton is fortunate to be backing arive as it scales rapidly across Europe.”
This article was originally published on TechCrunch.com. Read More on their website.