Thought Leaders in E-Commerce: Devin Johnson, CEO of FirstMile (Part 2)

Sramana Mitra: Let’s double-click down on those two points and explore them further. Obviously, there are smaller merchants who are selling on Amazon. Some of them are using Amazon’s own logistics capabilities.

To your point that they’re working with Amazon, yes they’re working with Amazon. What is it that you are bringing to the party where you are supplementing Amazon’s capabilities? What do you mean when you say work with Amazon?

Devin Johnson: The answer to that question lies in the broader understanding of what FirstMile does. I’ll speak about the part that I think will answer your question. We are a partner that shares in the work of logistics for downstream distribution and delivery of parcels. You’ve probably experienced this when you purchase a package online, whether from Amazon or anywhere else. It says, “Thank you for your order. Here’s your tracking number. It’s been shipped with UPS.”

A couple of days later, you get a package delivered but you notice it’s delivered by the mailman. What’s happened is that UPS has picked up that package from its customer, consolidated that with millions of other parcels, and moved those around the country and gave it back to the post office for final delivery. In that relationship, the post office is referred to as the last mile delivery partner. They’re the last theoretical mile of delivery in that relationship.

FedEx puts stuff on USPS planes. USPS puts stuff on FedEx and UPS planes. They, oftentimes, share in the work. FirstMile is like that in that we have a mix of delivery partners where we are able to leverage their distribution networks – sorting capabilities and physical last mile delivery capabilities. There are actually some fantastic shipping solutions around the country that, historically, have only been used and leveraged by large companies.

Suppose you have just designed the latest and greatest belt, and you’ve launched it on Kickstarter and got some traction. Two years later, you have daily orders of 200 to 300 orders a day. You have some need to specialize and watch your cost to compete but it’s really hard to get outside the norm of just UPS, FedEx, and USPS for a couple of reasons. One is it’s hard to get the attention of some of these bigger, more complicated networks. Accessing them can be very hard. There are technological limitations. There are actual logistics limitations.

Your parcels have to get into these networks to access them which could be down the street or three streets away. There are a lot of limitations on the front end. What FirstMile has done is we’ve built technology and we’ve married it with a physical network of trucks and vehicles that are company-owned assets. Through the marriage of those, we’ve been able to bridge the gap between the exploding small to medium-sized e-commerce market and some of these really well-oiled transportation networks which, historically, were only easily digested by large companies because they had the technology and resources.

They had the volume to make sense to have a truck come everyday and line haul their stuff two states away. We’ve built technology to allow our clients to leverage the best practices of some of these lesser-known but very effective shipping networks around the country for delivery of packages, without having to deal with all these limitations on the front end. If you’re running a business, you can hire the world’s best transportation manager. You have the world’s best warehouse manager.

Let’s say you have a thousand packages a day. The warehouse manager can go in and install a great piece of shipping software that would help him know the best way to ship packages. You could find five different shipping carriers. The technology exists today where you could say, “I’m going to create a shipping rule for every weight and in every zip code around the country.” You could create these rules and you could go and sign contracts with all of these carriers to support all of that routing.

You have this incredible logic that says, “For package going to California from Nevada with at least two pounds, it ships this way. If it’s four pounds and it’s going to New York City, this is the best way to get it there.”

This segment is part 2 in the series : Thought Leaders in E-Commerce: Devin Johnson, CEO of FirstMile
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