Ensenda expects to sign first major retailer this year
Ensenda Inc., a same day delivery service that contracts with local couriers to fulfill products from retailers’ store shelves (internetretailer.com, 10/9), plans to announce its first major retail contract within four to six weeks, Chris Mannella, president and CEO, tells internetretailer.com. Operating on a $3 million investment from Alloy Ventures since last December, Ensenda has been implementing its systems and lining up 75 couriers across the country in anticipation of signing a major retailer this year. Ensenda has been proving out its system with Kepler’s books of Palo Alto, CA, since June.
Ensenda’s approach is similar to the defunct DNet delivery service which ceased operations last year when investors decided the company couldn’t create a sustainable business. What makes Ensenda different, says Mannella, is that it is focusing on the retail delivery aspect, while DNet was trying to develop other businesses as well. Mannella, a co-founder of Ensenda, worked as a consultant to DNet for a period. Ensenda’s other co-founder Rob Howard worked for DNet.
What makes Ensenda different from the other same day delivery services that failed this year and last, such as Kozmo.com, is that it is a communications system that sends orders to courier services in the market where the order originates. It operates no delivery facility itself. “Ensenda is well positioned to pick up on last mile delivery by aggregating the existing assets of courier services around the country,” he says. “We’re using technology to basically build a delivery fleet on someone else’s dollar.”
Ensenda requires its courier partners to operate dispatch systems that are always available to receive orders over the Internet, or to be always on a web site where they can retrieve delivery orders. When an order arrives, Ensenda will insert it into the local courier’s dispatch system or post it to a web site where the local courier can pick it up. In either event, Ensenda requires that the courier acknowledge that it accepts the order. If Ensenda does not receive acknowledgement within a set period, it will pull the order back and assign it to another courier. Couriers with the best performance will get additional orders.
Because the orders are incremental to a courier’s business, Ensenda believes that delivery prices will be very competitive with overnight delivery. “Our research has shown that 90% of online customers would choose same day delivery if it’s no more expensive than overnight,” Mannella says. He expects Ensenda’s charges to be less than overnight. And he doesn’t expect retailers will mark the cost up a lot because there is a marketing benefit to offering affordable same day delivery. “50% of online shoppers would buy more often from a retailer who offers same day delivery,” he says.
In spite of the well publicized crashes of same day delivery companies, including the Webvan Group, where Mannella also worked, there was little resistance by investors to this concept, Mannella says. “Within the investment community, there was concern about another capital-intensive approach to same day delivery,” he says. “This is not a capital-intensive approach. It required some explanation, but not a very long one.”
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