When Lickety Ship launched in late 2006 to deliver ecommerce items to purchasers within four hours of checkout, I asked if it would end any differently than the ill-fated Kozmo, which burned through $280 million in capital before a spectacular flame out in 2001.
Kozmo didn’t charge for deliveries, and people would jokingly buy a packet of M&Ms or other small item and have it personally delivered for free. A $150 million marketing deal to get Kozmo promoted in Starbucks cafes didn’t help much, either.
LicketyShip, founded by Robert Pazornik, took a different approach. They would charge users a steep fee for quick delivery, leveraging under-used couriers to deliver the goods. The hope was that there was enough demand for super-fast delivery that they could make a business out of it.
It turns out that the idea may not have been so bad, but the execution was impossible. LicketyShip needed to do deals with retailers who had goods physically located near the markets served - they had to be close enough so that a courier could go to the location, pick up the item, and then drop it off with the customer. And since LicketyShip was selling the items from its own site, it had to integrate deeply with these retailer’s inventory systems. If it worked, that integration would be a huge competitive advantage. But in practice, it was impossible.
In July 2007 the company gave up on integrating directly with retailers, and began to focus just on aggregating local courier services. You can now use the service (in supported geographies) to pick up items you’ve bought over the phone with local retailers.
The good news is that the company didn’t waste a lot of money on the first model - they’ve raised just $1.5 million in capital from angel investors.
But the bad news is that investors got tired of waiting for Pazornik to make this thing work, and about a month ago they made a switch. Pazornik was out of the company he founded. John McGrory stepped in to replace him as CEO.
Now the company is preparing a relaunch, and will be focusing on aggregating courier services for more than just deliveries of retail goods. In effect, they’ll be taking the huge but highly fragmented courier market and turning it into a web service.
25 million courier packages are delivered each month in the U.S., McGrory says, at an average cost of $100 per delivery (implying a $30 billion market annually). There isn’t much price sensitivity - people want reliability more than anything and tend to build relationships with individual courier services over time (law firms use them extensively, and pass the cost on to clients, for example). The key to cracking the market, McGrory says, is to provide bookings via a web service or by phone along with a service guarantee. Think 1-800-Flowers for couriers.
And LicketyShip is also building an API to turn courier services into a web service. Any ecommerce site or retailer, for example, could build in an option for immediate courier delivery. All that would be required is that they have a warehouse near the customer. Best Buy and Barnes & Noble would be ideal customers. This would also help brick and mortar competitors to better leverage those physical assets by allowing immediate fulfillment, on the same day as purchase.
The company is now out pitching this new strategy to investors, and hopes to close a new venture round this summer.
Who didn’t see that coming?
Kozmo 2.0 won’t work - sorry. How many links in this article go to Crunchbase? Seems like all of them except one tiny link to Lickety.
You can tell from their name and logo that they had aspirations of greatness.
The other day I saw a guy wearing a brand-new-looking UrbanFetch t-shirt on the Upper East Side.
That was freaky — like a good Lost episode.
If you, UrbanFetch guy, are reading this, please explain.
R.I.P. froggy
The idea sounds like a win to me, but as usual it is totally dependent on the execution and not the idea.
Web 2.0 has become a silver bullet to cure any ill-fated business plan.
talking to Robert is a chore in itself, glad to see he got what was coming, welcome to the real world idiot!
Having a hard time envisioning how this concept will scale to become a meaningful, profitable business - but time will tell
I love the fade out picture but the added coloring to the eyes . . .argh. . . bonfire of the vanities . . .
“25 million courier packages are delivered each month in the U.S., McGrory says, at an average cost of $100 per delivery (implying a $30 billion market annually).”
Whaaaa?? 25M x 100 = 2.5B….
Ooooh, nevermind. 25M per month. Disregard!
Kozmo had a chance when their service was limited to Manhattan — a very compact and dense territory… The problems for Kozmo came when they expanded. There are few, if any, scale advantages that come from growing a “local delivery” business beyond any particular locale.
LicketyShip tried to serve “all California Metropolitan areas”… Insane. The secret to this sort of thing is to carefully cherry-pick your territories. Only enter markets that are dense and only stay in a market as long as it is self-funding.
bob wyman
Who didn’t see that coming?
can you say feasibility assessment? they should’ve known these issues up front….aggregating couriers? big maybe.
What were these guys background?
Just reading this business model makes it sound nearly impossible. Not even a fully integrated retailer like BestBuy could pull this off. Trying with independents is suicidal.
This must have been some MBA study that shows some enmormous ROI if you could deliver quickly.
Who gave them the $$$ - they should be fired.
At Darrb.com we had a different approach. We created a marketplace for delivery services, where people willing to send items meet others willing to delivery those items (we call them Darrbers) and get money in return.
If you live in a city and work in another city, why not picking up something on your way and deliver it to the destination you are already going to, and get some cash in return?
If you use the same route on a daily basis, why not monitize your trip?
someone needs to send something somewhere .. and with a database of people going to that location any way .. we create a cheaper, faster and sometimes better quality delivery service compared to couriers. it has worked in many cases and feedback system does the needful to insure quality and effectiveness.
Good idea Murshed, but what about security, insurance, SLA’s, that type of thing? I think that’s why companies use couriers. But for regular joe’s it might work.
Jonathan,
once a Darrbers wins a bid, his mobile number will be sent to the person who asked for the delivery, the Darrber will recieve the mobile number of the person as well. This allows them to communicate outside the site & get to meet each other.
Darrbers print the summary page to use it as an invoice. we are working on an invoice system to make this process easy to act as an evidence of item ownership.
online marketplaces tend not to offer Insurance, they act as a platform to connect both parties, Although its a good idea to create something around it that would work for all.