Supply Chain Startup: Chasing the final mile

Some startups look to grab a piece of a growing market. Think Lyft following Uber followed by Via and Curb in select markets.

Others look for the unserved space that exists between the apps. That's one way to think about Point Pickup, co-founded by CEO Tom Fiorita to deliver online orders from retail stores to consumers. Fiorita describes Point Pickup as a delivery solution platform for final mile and same day delivery characterized by micro-driver networks – we'll explain all of that in a minute.

In Fiorita's view, the distance between an order fulfilled by a store and the consumer was the unserved space between what he terms the “middle mile” of delivery from distribution centers to sortation centers; home deliveries to consumers handled by the legacy transportation services and final mile services serving the restaurant community, like Grubhub and Ubereats and DoorDash. “The middle mile is getting commoditized,” Fiorita says. “So is restaurant delivery.” In the parlance of Wall Street, where Fiorita once worked as an institutional sales, hedge fund manager and consultant, “it's a race to the bottom.” Meanwhile, the space Point Pickup is addressing is one “that the legacy people don't want to do or can't pivot to change,” he says, adding that “retailers can't do or they'd be doing it. That's the value we bring to the enterprise.”

The idea for Point Pickup came to Fiorita one day while he was stopped at a red light in front of a Whole Foods in his hometown of Greenwich, Connecticut. At the time, he was doing some consulting to hedge funds and was out for a mid-day break from work. “I noticed a line of everyday people in their own cars,” he remembers. “I thought Amazon has paved the way for home delivery and Uber has desensitized the consumer to getting into a car with a driver who isn't wearing a uniform.”

His idea: Start an app that allows those everyday people – what he now refers to as EDP's – to make a few extra bucks delivering orders from local retail stores while they're coming and going to work or just have time on their hands. “I was going to save Main Street America,” he jokes. The app would aggregate demand from local retailers and utilize independent contractors for local delivery – what he has since coined MicroDriverNetworks.

He began writing logic in a spreadsheet in his basement office. At the end of 2014, he went to Boston to visit a friend from Romania who owned a digital advertising agency located in Bucharest. A bottle of wine later and they were partners. Point Pickup incorporated in March of 2015.

By early 2016, they had an app and a business. Today, Point Pickup has 70 employees and some major enterprise customers, including grocery delivery for Walmart. But, with the exception of one institutional investor, funding came from Fiorita, his partner and the proverbial friends and family. Fiorita adds that they are preparing now to go out for an A round of funding. “Our situation is a little different than most startups,” he says. “I'm not 28 years old and living in Palo Alto. I've built businesses in the past. And, having built a hedge fund, I learned early that a misalignment between owners and investors can destroy a startup because of too many controls.”

There have been important pivots along the way. In 2016, while trying to build out a network to serve local retailers, Fiorita was approached by Target to see if Point Pickup could handle something known as direct injection – delivering orders filled at a Target store to the post office. And, could they get a solution up and running in four weeks?

The experience was Point Pickup's entrée to the enterprise market. “The Target experience was an aha moment because we realized there was an opportunity to serve the enterprise market,” Fiorita says. But, rather than take packages to the post office, he would utilize his network to pick up orders at say the local Walmart for home delivery in that store's local area. “We were always premised on the final mile to the home,” he says. “But, we pivoted away from Main Street America to an enterprise base.”

The focus now became to build a platform that could deliver the same consistent, on-time performance as a UPS, FedEx or USPS but with everyday people driving everyday cars. “We built the API, we let them find the customers and we're their final mile,” Fiorita says. The mission: Be the premier enterprise same-day delivery solution provider.

His pitch to major retailers, many of whom at the time were trying to use their employees to do deliveries on their lunch breaks, was simple: It's like having your own fleet, but better, because we're dedicated to recruiting, training and managing the network. Point Pickup builds driver loyalty, and minimizes turnover, by providing consistency to drivers, based on the number of orders they want to fill a day and by sending them to the same store or stores every day. “The drivers aren't competing with one another like they might on a ridesharing platform and store management gets to know them,” Fiorita says.

Currently, he has 78,000 drivers in 46 of the lower 48 states (all but Iowa and New Mexico), with plans to launch in Alaska, Hawaii and Puerto Rico. The bulk of the business is grocery delivery, but the company is also in growing markets for alcohol, pharmaceuticals and general merchandise. “We'll keep building out our MicroDriverNetworks,” Fiorita says.

What has been Fiorita's most important lesson getting the business up and running? “You have to be a good listener and let the markets drive your direction, and not your technology,” he says. “The world is local. If you treat it as such, you'll have a winning solution.”

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn't be interpreted as an endorsement of a firm or its technology. Rather it's to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow's supply chains.

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