Seattle startup is the Airbnb of warehouses
Flexe’s speedy delivery among reasons it’s giving Amazon a run for its money
A Seattle startup has come out of nowhere to offer online merchants something even Amazon doesn’t: overnight ground delivery to nearly anyone in the U.S.
In less than five years, Flexe has created a marketplace of spare storage space in 550 warehouses, quickly establishing better geographic coverage than the vast delivery network Amazon.com spent decades and billions of dollars building. Flexe did it without spending a nickel on facilities and already has 25 million square feet of storage, about 25 per cent of Amazon’s capacity, and expects to add 10 million square feet this year. Merchants book storage space via a simple-to-navigate website; Flexe is essentially the Airbnb of warehousing.
The new overnight delivery service is well timed because online merchants are looking for new ways to reach customers but have few options that match Amazon’s speed. And because the inventory is stashed all over the U.S., overnight deliveries can be made by truck rather than plane, which is cheaper. Online brands such as mattress seller Casper also like Flexe because orders flow through their own websites, letting them maintain a direct relationship with customers.
“You can get goods to your customers as fast or faster than you can through Amazon Prime at a competitive price and it’ll show up in your own branded box rather than an Amazon box,” says Flexe co-founder Karl Siebrecht. “That is very important for companies looking to build brands.”
The Flexe story began at a birthday party in Seattle in 2013. Dhruv Agarwal, who owns online gourmet accessories business TrueBrands, was kvetching about the challenge of finding warehouse space. His company was growing 30 per cent a year, but many warehouses demanded a five-year lease, requiring him to take space that was either way too big or would soon be way too small. Agarwal wondered if he could find spare warehouse space for a few months at a time the same way tourists find a place to crash for a few days on Airbnb.
Flexe, whose founders were at that party, launched that year offering “overflow” services, when retailers and wholesalers needed to stash pallets of inventory for brief periods. Flexe added online order fulfilment last year, giving warehouse operators the option to charge more to pack and ship individual orders directly to shoppers.
The company has raised US$20.8 million, including a US$14.5 million round last year led by Redpoint Ventures. Ryan Sarver, a Redpoint partner, says “on-demand warehouse and fulfilment space is a game-changer.” Flexe declined to share financial numbers beyond saying sales grew 400 per cent last year.
Flexe has 200 partners. Iron Mountain, which provides document storage for financial, legal, health care and government clients, signed on two years ago to sell extra space in its 1,000 facilities in 90 markets. Solar panels, space heaters, sheets, pillows and mattresses from various merchants have passed through its facilities without disrupting the main business.
Flexe’s appeal extends beyond startups to brick-and-mortar retailers struggling to compete with Amazon online and brands hesitant to work with a fearsome retail competitor, says Neil Ackerman, a former Amazon executive who runs e-commerce initiatives at Mondelez and sits on Flexe’s advisory board. “Manufacturers, brands and retailers that want to compete with Amazon on delivery without giving up data and the customer experience are all target clients,” he says.