Site Overlay

Investment Annoucement: Erly

Basic Info

Founders: Ty Clarke, John Austin, Tomi Puolakka
Info: www.geterly.com
Funding Round : $350K USD Pre-seed
Team: 4

Overview

Tagline – “Free and fast same day delivery.”

Erly is a combination software and micro-warehousing solution, which allows DTC brands to provide same-day delivery. 

Market

The ecommerce market is growing continually every year, especially in the last 12 months. Specifically, there is a growth in direct-to-consumer (DTC) brands. These prefer to sell only online, avoiding the cost of retail, and often increasingly avoid Amazon, selling from platforms like Shopify. The model is proving valuable, with brands like Allbirds garnering a $1.7 Billion dollar valuation. Now, we are seeing holding companies creating portfolios of them.

Part of the reason for the rise in DTC are the issues with marketplaces like Amazon. Reviews on their platform are crucial, but the system is full of fake reviews, costs are very high (around 25%), you don’t own communication with your customers, and the recent problems getting inventory to them means you aren’t controlling that either. 

But using only Shopify also has its issues – namely that you can’t offer Amazon Prime type of delivery. Prime is the most compelling reason to shop on Amazon in the first place. Having operated multiple brands on Amazon before, selling both fulfilled by Amazon (FBA), which offers Amazon Prime, and through brand-managed Amazon stores, FBA always does more sales. People expect things they buy to arrive in 2 days, and pay for this convenience. 

This is where Erly comes in. They are developing desktop and mobile software that will work with their growing locations of micro-fulfillment centers across North America, to provide same day delivery for their DTC partners. 

On demand, or micro fulfillment, is expected to reach $10 billion by 2026. Groceries have already been addressed by Instacart, Gorillas, and other, but for DTC there just aren’t good options yet. We expect Erly to become the leader. 

Team

The Erly founding team is made of Ty Clarke, John Austin, and Tomi Puolakka. 

Ty Clarke – is a 2x founder who engineered and sold his first ag-tech startup to a billion-dollar company in California before his 17th birthday.

John Austin – John is a business development and growth specialist with experience founding, scaling and selling e-commerce and technology businesses.

Tomi Puolakka – Tomi is an operations and supply chain professional. Prior roles include Director level Fulfillment @ Amazon, and the Director of Commercial / Partnerships for the Shopify Fulfillment Network @ Shopify.

Product

The product will be for large, growing DTC companies that have a small to medium portfolio of fast-moving products. 

When a brand signs up with Erly, they will send their products to Erly microwarehouse locations. Where they send them depends on where they do the most sales (ex San Francisco, Chicago, Toronto). Then, they connect their Shopify store to the app, and manage everything through the web app. 

Customers shopping on stores working with Erly will see an option for same day delivery, like the below:

Once an order is received, Erly will pass this to the specific warehouse, who then coordinate with the last-mile delivery service that they have partnered with locally. 

Erly will charge a small amount for storage, and currently it’s $9.99 for fulfillment. Delivery is free, and they will encourage brands to offer the service free as well. According to them, the fulfillment metrics are already profitable. The costs involved means brands using this will need to only offer the service on their highest moving items, that are likely at an MSRP of at least $25. 

There currently is no monthly fee for their brand partner, but this could be an option in the future once the network of warehouses is built out, and partners are seeing large % increases in conversion rate due to the better service to end users.

Summary

Erly already has a good start with over 20 brands lined up to use the service when it launches, and finalizing agreements with local last-mile delivery companies.

There are a number of risks with this investment. Other companies are stepping into the space, managing a network of warehouses remotely will require very tight operations, and capital expenditures will be high, so raising a large sum of money will be necessary.

Still, there has to be an option for DTC brands to offer same day delivery – it will be a common thing in a few years, and end users will come to expect it like they do on Amazon. We believe that this market will hit $10 billion in the next 5 years, and the team that Erly has put together will be the one leading in this new space.

Leave a Reply

Your email address will not be published. Required fields are marked *