Instant Commerce Revolution: Ohi, Instant Delivery, and the Booming D2C Economy
By Henry Woram, Vice President at Palm Drive Capital
Ben Jones was a twenty-something Cambridge graduate, beginning a career in finance. Then he suffered a serious back injury and was paralyzed from the neck down. Jettisoned in his London flat, the former collegiate athlete began a grueling 16 month rehabilitation process. During that long, challenging recovery process Ben could no longer just walk to the corner store to grab convenience items like a toothbrush. So Ben started buying everything online. And when you’re stuck in your apartment all day — an experience most of us replicated during the pandemic — the standard 3–5 day package delivery window feels like eternity.
This injury led to a revelation, that independent online merchants selling outside of Amazon simply could not compete with Amazon’s shipping speeds. So, Ben founded Ohi with the mission to improve the post-purchase experience for all online merchants. The most complicated problem in 2-hour delivery relates to inventory. Because inventory needs to be 2 hours away from consumers at all times for a 2-hour delivery model to work, Ohi has to know what consumers will order well before the consumer actually places the order. Ohi has built a robust technology platform to forecast SKU-level consumer demand on behalf of its merchants, flow inventory to the correct warehouses in its network, and enable seamless fulfilment and delivery. Ohi is investing heavily in the post-delivery experience as well, for example allowing brands on its platform to collaborate on orders — an example being when Ohi delivered Van Leuween ice cream pints alongside Olipop’s root beer so end-consumers could enjoy root beer floats. Ohi’s software platform connects merchants to urban warehouse operators and couriers across the country, enabling 2-hour delivery in major US cities like NYC, LA, Chicago and SF.
The Shift in E-Commerce
The pandemic and ensuing lockdowns changed e-commerce in a lasting way. 2020 saw massive adoption for Ohi’s platform as merchants scrambled to reboot their logistics capabilities. For example, during the first quarter of 2020, we saw 10 years of e-commerce adoption compressed into 3 months as e-commerce penetration jumped from 16% to 34%. Consumers across the country became e-commerce power users and built lasting habits and preferences. These preferences lingered well beyond lockdown. In 2021, consumer preference for same-day delivery services grew 50%.
When we first met Ohi in the beginning of 2021, they had grown their business 1,846% year-over-year. Even for a venture capital fund, we were unaccustomed to seeing such massive growth figures. It was evident that Ben and his team had found a gap in the market and that independent online merchants were not spending enough time focusing on the “post-purchase” experience. Independent online merchants excel at the “pre-purchase” experience: marketing, website design, online advertising, branding, etc. — but they often under- invest in fulfillment, shipping, returns, and all other components of a post-purchase experience that can make buying goods online truly delightful. And as anyone who has received a late or incomplete package can understand, post-purchase experiences are just as important as the pre-purchase experience when it comes to creating customer loyalty.
Prioritizing the Post-Purchase Experience
As we move into the post-pandemic world, Ohi is expanding its value proposition to independent online merchants, offering not just instant delivery at a low cost but also an engine that drives customer loyalty. Consumers who select Ohi’s shipping option exhibit a repeat purchase rate that is as much as 120% higher than consumers who select regular shipping options. This phenomenon makes sense intuitively for two reasons: 1) if your order arrives instantly, you are more likely to have a delightful experience with the product and the brand and 2) when you can rely on instant shipping speeds, there is no need to buy infrequently in bulk; instead, you can buy more frequently as the need arises. Ohi’s instant, delightful delivery experience also increases conversion rates on independent online merchants’ websites by 28%. We are excited to partner with Ohi as they continue to demonstrate the ROI from investing in the post-purchase experience through the success stories of their clients.
Internet Retailer studied the sales of 75 D2C brands in 2017 and 2018, discovering that these D2C brands were growing 3x faster than the average e-commerce retailer. Now, in 2021, D2C e-commerce sales have been projected to surpass $129 billion and maintain a growth of 19.2%. However, these fast-growing upstart brands face resource constraints when it comes to the post-purchase experience. Fulfillment and shipping, for example, are both capital-intensive endeavors that are extremely operationally complex. By partnering with Ohi, brands can tap into the power of instant commerce and delightful post-purchase experiences without having to build warehouse management software, a nationwide network of micro-fulfillment centers, or APIs into last-mile courier networks. In the 2010s we saw Shopify scale its offering so that merchants could easily open online storefronts, and in the 2020s we will see leading tech platforms like Ohi enable merchants to utilize the globe’s vast instant logistics network with the push of a button.
Originally published at https://palmdrive.vc on November 9, 2021.
