Online shopping and instant delivery services like Instacart and Amazon Prime are the height of modern convenience, but for many consumers concerned about sustainability and e-commerce’s impact on the environment, so does every box and plastic bag on their doorstep. Feeling guilty. If there was a better way to shop, we’d be amazed when we clicked “Add to Cart” again. Well, maybe there is.
A startup called The Round believes it has landed on a solution that can make online business more efficient, more eco-friendly and — as indicated by its newly announced $38 million Series A — profitable.
Investors Annie Khadavi at Redpoint Ventures and Andrew Chen at Andreessen Horowitz led the startup’s final round, which included seed investors Construct Capital and an early round of capital. To date, The Rounds has raised $42 million.
The model employed by The Round involves what it calls reverse logistics – a system where online goods are not only delivered to the consumer, but their empty goods are also picked up at the same time. Layered on top of this are regularly scheduled supplies to meet basic household needs, from cleaning supplies to personal care items to shelf-stable foods and more.
Alex Torrey, founder and CEO of Rounds, came up with the idea after more than a decade of living in a big city to solve his own personal pain without a car. Like many other residents of the city, he found himself returning to his apartment with large and bulky products while running to the local store or ordering small furniture online.
“I remember ordering hand soap … and having to sort through thousands of options on Amazon,” Torrey recalls, noting the difficulties of using traditional e-commerce sites for everyday needs. Then, when the package arrived, Torre realized how wasteful such an Amazon delivery would be.
“In the box I put a plastic bottle of hand soap – the same as the bottle on my sink. Now I have two identical plastic bottles [but] One of them is empty. “Plastic is designed to last hundreds of years – mine didn’t even last 100 days,” he says.
This system makes no sense.
Coupled with the fact that he lived in a building with 500 other apartments where many other people regularly ordered hand soap and other supplies, it didn’t seem like the most efficient way to restock supplies. After all, without the extra packaging designed for retail shelves, a hotel of this size orders in bulk. So why can’t consumers order this way?
As it turns out, you can.
In the year Launched in Philadelphia in 2019 and still flying a bit under the radar, The Round today operates by allowing shoppers to buy about 150 SKUs (SKUs) in categories like home goods, personal care, storage and dry goods, in addition to groceries. Depending on the area, select local vendors such as bakeries or coffee roasters, or others you may find at your local farmer’s market.
Consumers sign up for a free annual service, then create a recharge schedule for their weekly deliveries.
But unlike many subscription-based delivery services, The Round allows customers to continuously adjust which items are shipped and when. The system will send you a text message before delivery to remind you to check your order dashboard where you can add or remove items. You can also text your Instacart shoppers back to make your changes.
This is a big improvement over more basic fulfillment systems like Amazon’s “Subscribe & Save,” which require consumers to predict their expected re-order efficiency, often resulting in oversubscription or oversubscription.
And while it shares some similarities with sustainable produce retailer Grove Co.’s monthly subscription-based offerings, it delivers its items weekly in reusable bags — and best of all, the company takes your empty containers and bags for use. Future shipments. (After cleaning, of course!)
This is not an unknown model – milk used to come in a glass bottle, for example, it will be returned in the next delivery. After World War II, it fell out of fashion with the rise of supermarkets to serve those who moved to the sprawling and sprawling suburbs. And now everyday e-commerce is a competitor to this model. But despite advances in last-mile logistics and recyclable cardboard, traditional e-commerce has been particularly bad for the environment. Items still contain excess packaging – plastic fillers and additional packaging – which are often thrown away and not recycled.
Also, Toren said, “It isReduce, recycling, recycling. It’s recycling. Worse option,” he says.
“With The Round, we’ve built a way for you to get it [items] Without any packaging waste. It can be delivered to you without cardboard, single-use plastic. We are building what we believe is the future of last mile logistics,” he says.
The startup’s e-commerce site uses technology to help consumers make better decisions about their remodeling needs.
Using the online dashboard, shoppers enter items between columns labeled “Now,” “Soon,” and “Later.” “Now” deliveries are coming this week and these can be adjusted by the user or the system’s algorithms learn from scheduled pickups. When the QR codes of your returned containers are scanned, it learns how often cycles pass through a particular product.
Members pay $10 per month, but delivery requires no additional fees or tips. The cost of individual items can be compared to Costco or other warehouse stores, the company said, but it is divided into smaller quantities.
But this can be a hindrance to some. Warehouse Club shoppers get at least a full box of produce, unlike The Zuruds, where you can only get half a box of cereal or pasta in a refillable mason jar. That can be difficult for large families, as ordering the quantities needed to feed parents and children can leave customers with many empty jars at the end of the week.
It may not deliver the savings on that scale.
“It’s not the cheapest option,” Torrey said. “We’re not saying we’re cheaper than anything you can find out there. This is not our value proposition.
After starting in Philadelphia, it expanded to DC, Miami and Atlanta in the 2021 and 2022 rounds. It now counts over 10,000 active members and claims 10x growth. While Torrey did not disclose annual revenue for Zurrounds, he noted that it is already profitable on an individual offering on a unit economics basis.
To help on this front, the company has a number of apartment building partners that have allowed it to expand rapidly as it enters new markets.
“There is no secret. It comes from the fact that our model is very efficient on the supply side because we aggregate our demand,” explains Torre. “We don’t send a Door Dash person to your apartment building with one delivery, then they have to go to another restaurant and deliver something else to another apartment building. That is very expensive. Very little is delivered per hour,” he says. “We’re sending ‘Rounder’ with a big trailer behind it, a delivery full of their e-bikes.”
The ‘Crocodile’ can also deliver directly to customers’ doors in many buildings due to partnerships.
Now, GM-owned electric van maker BrightDrop is testing test supplies to see if the company can become more efficient by using vans designed to deliver the last mile.
Torrey himself took an interesting path to entrepreneurship as he was recruited into the CIA out of college, where he worked as an analyst and spent time in Afghanistan – credits for teaching him a sense of mission and what it’s like to work. with a small group of people. Later, he pushed Umano, a consumer startup, all the way to Shark Tank, which was a learning experience where he made many mistakes. He then entered the marketing agency world, leading product strategy for large companies like McDonald’s, but couldn’t shake the entrepreneurial bug.
Thanks to a supportive partner, Torrey decided to take another stab at it and enrolled at the Wharton School of Business, where he met co-founder Byungwoo Ko. Ko’s background is relevant to The Rounds as he previously worked at Uber and Uber Eats on both the operations and strategy side.
The founders have now grown the circle to four cities and 10,000 customers with just 100 full-time employees, including the delivery staff (we’re told they’re all W-2 workers, not gig workers).
With the new funding, Rounds is now expanding the team, particularly on the technology side, as well as market penetration, deeper into existing markets and into new geographies. Longer term, it aims to have a footprint in both major US cities and other suburban markets as well.
While the startup’s mission is admirable, the fact that rounds are still not the cheapest option could hurt its growth potential, and it has to contend with a tough economy where its mostly urban customer base is consumer-friendly. One-click orders with Amazon Prime. It may also have trouble convincing families to join, as the current product range seems designed more for families of one to two. And because it’s not a full-service grocery delivery service, people may prefer to do one full weekly order with a larger provider like Shipt, Walmart or Instacart rather than having a separate service for household and packaged goods and another new service. Produce, milk, meat and frozen.
The rounds also need to convince beyond the eco-intellectual value, which comes down to product quality and diversity – something that can be improved from time to time with local business partnerships, including at some point local product suppliers. More on the way.
(Consumers also need to trust that the startup isn’t just running into Costco itself and transferring its products to Mason jars for sale! The company says it works with US distributors for goods — it doesn’t buy from retailers on behalf of consumers like other grocery delivery services.)
Torrey admits that the struggle ahead will include convincing customers of the value proposition and reaching more people than today.
“That’s our mission: make everyday sustainable choices effortless – because we’re more convenient and zero-waste and our way of serving and no packaging. And ‘for all’ this means not only that we should be able to physically serve you, but also the idea of raising the value proposition,” he said. “This is not a premium service; This is a very valuable service.
It’s time to see if more consumers agree.
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