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Amazon's U.S. Domination Is the Best Thing to Happen to Delivery Startups

Amazon's delivery speeds will push traditional retailers to step up their game.

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

It might sound counterintuitive, but Amazon is going to make one or two delivery startups very, very successful.

The e-commerce giant continues to dominate online shopping in the U.S., with its third-quarter earnings results showing its North American retail business is growing more than twice as fast as the industry average. A huge part of this success can be attributed to Amazon’s investments in delivery speed, which is just two days on millions of products and same-day or faster on a sizable catalogue in more than a dozen major U.S. cities.

To stay alive or thrive, traditional retailers are going to have to attempt to eventually match this delivery prowess, and only a handful have the logistical know-how to even come close.

Enter Deliv, Postmates and Uber, all private companies competing to be the outsourced delivery operation for a wide set of big retailers. Each of the three have its own approach, and there’s probably not room for all of them when it comes to servicing big retail companies. But the opportunity is there for at least one to be the ally retailers turn to as Amazon continues to eat up market share.

Deliv is the only one of the bunch that isn’t a consumer brand and doesn’t insert itself in the relationship between the retailer and the customer. And that, CEO Daphne Carmeli believes, is huge in winning business.

“I’m never going to compete with anyone leveraging my service,” she said in a recent interview. “I’m the safest bet.”

The company integrates its technology into the back end of retailers’ online shops, and it employs a network of drivers that deliver packages on behalf of retailers from malls and stores to customer doors. Since launching in 2013, it has signed up big names including Macy’s, Bloomingdale’s, Foot Locker and, most recently, Express.

The challenge for Deliv is twofold: These enterprise integrations can take a long, long time, which can be tough from a cash-flow perspective for a venture-backed startup. And while same-day delivery for clothing may be a normal expectation a couple of years out, it’s not super popular yet, meaning the volume of products moving through Deliv’s network has a way to go. In the interim, Deliv has taken on some smaller retail partners that help increase volume.

Postmates has taken a different approach. Until recently, it was mainly known as an app to order food from local restaurants and stores. Food deliveries are probably the most common type of same-day delivery, meaning Postmates has been able to build up volume and geographic coverage thanks to the frequency of these transactions.

This year, though, it has landed several big retail partners, including Apple and Walgreens, in addition to deals with big food-and-drink establishments Starbucks and Chipotle. It is now a known, credible brand in the retail world, which means it is a dangerous player in this space.

Then there’s Uber, the ride-hailing giant that just announced some package-delivery partnerships of its own. The sheer number of cars it has on the road alone make it a player in this space, but industry observers were surprised that its partnership announcement didn’t include any big fashion brands or retailers, as Re/code reported it had been working on. It’s not clear whether more announcements are coming soon or whether some deals fell apart.

Either way, it would be surprising if Uber doesn’t get aggressive in trying to help retailers compete with Amazon, too — either through its own efforts, or perhaps through an acquisition of one of the above.

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