Dive Brief:

• Onfleet, a supplier of delivery management software to grocers and other retailers, has raised $14 million in Series A funding, the company announced Friday. The round was led by Kennet Partners.
• The San Francisco-based firm, which works with retailers including Kroger, United Supermarkets and Imperfect Foods, will use the funds to rapidly expand its employee base, Onfleet co-founder and CEO Khaled Naim said.
• ​Onfleet has been riding a wave of demand for its services as retailers look to enhance their ability to provide delivery services to online customers.

Dive Insight:

The surge in demand for e-commerce services fueled by the pandemic has underscored the need for retailers to find ways to efficiently bridge the distance between their locations and customers' homes. While many companies have turned to providers like Instacart and Shipt to handle these operations, others have opted to run their own delivery services, creating a growing need for tools to manage behind-the-scenes details.

Onfleet's technology integrates with retailers' online ordering systems to help retailers plan and optimize delivery routes, track drivers, provide updates to customers and collect feedback. The software also allows drivers to handle details like recording customer signatures and verifying an order recipient's age when dropping off alcoholic beverages.

Onfleet, which was founded in 2012 by a group of engineers at Stanford University, has raised a total of $20 million in funding. The company works directly with retailers that run their own delivery fleets and also partners with third-party delivery companies. 

Onfleet strives to help retailers reduce the costs that stem from running delivery services, according to Naim. "What we see really working when you're talking about margin is, 'Let's build dense routes, aggregate demand and [set up] specific time windows in order to maximize efficiency,'" he said. "That driver's wage is the biggest cost with last-mile, assuming they're bringing their own vehicle, and you want to squeeze as many orders per unit time as possible."

Thistle, a West Coast meal delivery service that ships fresh, ready-to-eat foods to customers twice a week, uses Onfleet's technology to manage deliveries. CEO Ashwin Cheriyan, who founded Thistle with his wife, said running e-commerce fulfillment in-house using drivers who provide their own vehicles has helped the company better serve customers. Thistle had been using a third-party delivery service, but decided to put drivers on its own payroll in 2018.

"Delivery [is] such a critical part of the experience, because if the delivery goes well, then we make good on our promise that our platform is easy," said Cheriyan. "If the delivery goes poorly, we actually haven't made things easy at all. And that would complicate a customer's life."