3 Things: Drone Delivery Pads, KiwiCo for Adults, Walmart Marketplace Roll-Up
Happy Sunday and a very warm welcome to all the new subscribers! I’m thrilled and honored to have you as readers and truly appreciate your thoughts and feedback 🙏. Each edition of 3 Things will contain a dive into 3 rabbit holes I’ve found myself going down recently. Subscribe to get each week’s edition straight to your inbox and if you enjoy it, please share (I suck at self-promotions so can use your help)! This past week I’ve been thinking a lot about:
Drone Delivery Pads
KiwiCo for Adults
Walmart Marketplace Roll-up
1. Drone Delivery Pads
The history of quadcopters goes all the way back to 1907 when brothers Jacques and Louis Bréguet managed to fly their unsteerable contraption just 2 ft above the ground. In the first half of the 20th century, radio-controlled pilotless aircrafts began being developed by the military for combat purposes and were deployed for the first time during WWII. In the 1960s, advancements in transistors brought miniaturization that enabled RC planes at approachable price points and the beginning of the consumer drone market. In the early 2000s, drones continued to evolve and be used for military purposes and by 2010, the Parrot AR Drone became the first consumer ready-to-fly drone controlled with a smartphone. Over the last decade, there has been an explosion of commercial and consumer drones, especially after the FAA started creating legislation and registration processes for drones in 2016. As of 2021 there are around half a million recreational drones and 400k commercial drones registered with the FAA. While it might be fun to take some ariel video with you DJI Phantom, the next phase of non-military drones will be all about last mile delivery.
Last week, the company Wing, part of Alphabet, announced that it had successfully delivered 100,000 consumer packages (including 10k cups of coffee and 2700 sushi rolls 😆) in its first 2 years of operating in Brisbane Australia. They claim to deliver goods like medicine, hardware, small groceries and more in under 6 minutes within a 6-mile radius. The goods are packaged into a small white box and delivered to the ground using a tether. Today, these drones can only carry up to 2.6 lbs and are battery-constrained on distance, but the technology continues to improve year over year and regulatory bodies are more and more willing to work with drone delivery companies. Another company Zipline has been operating successfully for years in Rwanda and Ghana and more recently has deployed their drones in the US enabling companies to deliver products to consumers in a matter of minutes. They were originally focused on healthcare but have now branched into retail/e-commerce and even disaster response and have delivered over 1 million products to date. As we see more adoption of drone delivery, there needs to be a place for these drones to safely land and deliver their parcels at residential and commercial locations. An independent company could create the landing pads that is agnostic to drone delivery company. There is a B2B play where you sell to these companies who can offer consumers an Amazon Prime-type experience and provide them this landing pad. Or, you could go direct to consumer and business and work with each delivery company to ensure compatibility. This feels like a winner-take-most market but to date, there is no standard or company that has won the market yet.
2. KiwiCo for Adults
STEM (Science, Technology, Engineering, and Mathematics), now known as STEAM (Science, Technology, Engineering, Arts, and Mathematics) started being a common term in the 1990s and became popularized by administrators from the National Science Foundation (NSF) in 2001. It has now become core curriculum for most schools and there are dozens of organizations devoted to helping teach kids these disciplines. Having skills and training in these fields is critical for young people to be able to solve problems, make sense of information, and gather and evaluate evidence to make decisions — all competencies necessary to thrive in the modern world.
STE(A)M efforts have been almost exclusively focused on the youth population and companies like KiwiCo have become popular, providing a monthly subscription box for kids 0 to teen that contains different STE(A)M-based projects to engage and inspire children. While it totally makes sense to ensure kids get access to this type of education, most adults are severely lacking when it comes to STE(A)M knowledge and competency. An education-focused company could focus on the adult population with a monthly subscription that is a combination of digital and physical products teaching adults science and technology concepts in an interactive, fun, and age-appropriate way. For older adults, each month could focus on gaining comfort with a specific tech concept to help them adapt to the digital world. For young adults, it can teach a combination of skills that will help in the workplace (think data science related) as well as more fun activities like learning to solder, blinking an LED, or creating a spherified liquid. There can also be a community component to the company where people can share projects, help each other, and generally socialize with like-minded folks.
3. Walmart Marketplace Roll-up
E-Commerce roll-ups are all the rage right now. After Thrasio, a roll-up of FBA (Fulfilled By Amazon) merchants went from unheard of to unicorn in a matter of months, others quickly began taking note and we’ve seen dozens of other Amazon roll-ups like Heyday, Perch, and Branded follow suit. Recently founder and investor Keith Rabois and Atomic co-founder Jack Abraham launched OpenStore, a roll-up of Shopify merchants. This summer, Una Brands raised $40M to roll up e-commerce brands across the Asia-pacific platforms like Tokopedia, Lazada, Shopee, and Rakuten. The play is very consistent; find brands with between $500k and tens of millions in revenue in non-seasonal popular categories, buy them, and create a PE style operational model leveraging shared resources to reduce operating costs and excelling at marketing and growth across the distribution platform of choice.
While you might not think of Walmart as a massive player in the e-commerce platform space for 3rd party vendors, they’ve been quietly growing Walmart Marketplace, their curated list of 3rd party sellers that they launched in 2009. Sellers can leverage the world’s largest retailers for international distribution, and Walmart has maintained a simple pricing structure taking between 8-15% commission on each sale. In 2020 alone, Walmart Marketplace doubled to over 50,000 sellers and they announced a partnership with Shopify enabling Shopify merchants to have access to Walmart Marketplace and their 120M monthly visitors, taking a run at Amazon. There is an opportunity to take the roll-up model that is being applied to Amazon and other platforms and do the same with Walmart Marketplace. There is not yet a ton of sophisticated competition on that platform today so it’s a good time to identify the right type of merchants and create a scalable roll-up model and beat others to market.
That’s all for today! If you have thoughts, comments, or want to get in touch, find me on Twitter at @ezelby and if you enjoyed this, please subscribe and share with a friend or two!
~ Elaine