Executive Briefings

Darkstore Takes Airbnb Approach to E-Commerce Fulfillment

App-driven startup Darkstore, which matches e-commerce shippers with urban fulfillment centers that have excess capacity to facilitate same-day delivery, will use a new cash infusion to expand beyond the three markets it currently serves.

Lee Hnetinka, Darkstore's CEO and co-founder, compared what his company does to Airbnb, the popular app that turns owners of residential properties into proprietors of guest accommodations. The company officially launched in late March, and recently closed a $1.4m seed round from Pivot North.

“All the leading e-commerce brands without a [fulfillment center] in a city, there’s no way for them to offer same-day delivery, and that’s the problem we are solving,” Hnetinka said.

The new funds will be used for aggressive expansion; Hnetinka projects the company will deliver $110m worth of product in the next 18 months. He said companies ranging from e-commerce startups to Fortune 50 brands have expressed interest in his services. Darkstore currently operates in San Francisco, New York and Phoenix and will soon expand to Chicago, Los Angeles and Seattle.

“Our first location was in Phoenix because our client Tuft & Needle is headquartered there,” he said, referring to the online mattress seller. “There aren’t many tech-enabled delivery companies in Phoenix, so we found Coyote Courier. They’re good at delivery but don’t have the technology so we supplied that. We use their 10,000 square foot DC that used to be used for forward stocking inventory like Macy’s receipt printer parts. Coyote had excess capacity so we’re literally monetizing dust for them.”

Other early Darkstore clients include headphone maker Master & Dynamic, cellphone case seller Peel, wifi device company Luma, nutritional supplement seller Nootroo and Canadian apparel company Frank & Oak.

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Lee Hnetinka, Darkstore's CEO and co-founder, compared what his company does to Airbnb, the popular app that turns owners of residential properties into proprietors of guest accommodations. The company officially launched in late March, and recently closed a $1.4m seed round from Pivot North.

“All the leading e-commerce brands without a [fulfillment center] in a city, there’s no way for them to offer same-day delivery, and that’s the problem we are solving,” Hnetinka said.

The new funds will be used for aggressive expansion; Hnetinka projects the company will deliver $110m worth of product in the next 18 months. He said companies ranging from e-commerce startups to Fortune 50 brands have expressed interest in his services. Darkstore currently operates in San Francisco, New York and Phoenix and will soon expand to Chicago, Los Angeles and Seattle.

“Our first location was in Phoenix because our client Tuft & Needle is headquartered there,” he said, referring to the online mattress seller. “There aren’t many tech-enabled delivery companies in Phoenix, so we found Coyote Courier. They’re good at delivery but don’t have the technology so we supplied that. We use their 10,000 square foot DC that used to be used for forward stocking inventory like Macy’s receipt printer parts. Coyote had excess capacity so we’re literally monetizing dust for them.”

Other early Darkstore clients include headphone maker Master & Dynamic, cellphone case seller Peel, wifi device company Luma, nutritional supplement seller Nootroo and Canadian apparel company Frank & Oak.

Read Full Article