I think you analysis is extensive but misses a few points. To analyze the economics you have to look at the entire value chain. For e-commerce fulfillment it looks likes this roughly - sending products into the warehouse, receiving, storing and pick packing the products in the warehouse, shipping the products out. Traditionally each of these items are decided on sequentially in isolation. Without any regard on how it impact the others in the value chain. This causes inefficiency in the system and bloated costs for everyone.
To consider all of these value chains at once requires your to evaluate literally millions of data points (no exaggeration here) for every SKU inventory placement decisions; evaluate different states of the world and choose the is likely to represent the future. Majority of efficiency comes from this and that is what is reflected in the cost savings merchants get from using Deliverr.
Second - the state of the world is changing and we hope to be leading that change - 1 day shipping and same day shipping are not far away. That requires more distributed infrastructure and radically different placement strategies to keep overall costs in the systems down.
Thanks for the response, I definitely see the potential of Deliverr (related to the use of excess warehousing capacity) as expectations move to 1 day and same day shipping.
It seems inventory placement strategies developed by demand prediction models are only as good as the data set used to build the models. Obviously it's going to be hard to compete with Amazon on the breadth of data you have access to.
Where has Deliverr gotten the data to feed the prediction models in the early days?
Do you require your customers to provide historical sales data?
Do you pool customer data to improve the models for all of your customers? If so, do customers have a way to opt-out of their data being pooled?
To consider all of these value chains at once requires your to evaluate literally millions of data points (no exaggeration here) for every SKU inventory placement decisions; evaluate different states of the world and choose the is likely to represent the future. Majority of efficiency comes from this and that is what is reflected in the cost savings merchants get from using Deliverr.
Second - the state of the world is changing and we hope to be leading that change - 1 day shipping and same day shipping are not far away. That requires more distributed infrastructure and radically different placement strategies to keep overall costs in the systems down.