Ohi raised over $ 20 million to help direct-to-consumer brands offer fast delivery

  • Ohi delivers direct-to-consumer brand orders to customers in two hours.
  • The service is an alternative to Amazon and fulfills orders that come through a brand’s website.
  • Ohi CEO Ben Jones says the company plans to bring same-day shipping to the suburbs.

William Hicks has no plans to sell his Magic Mind brand coffee replacement drinks on Amazon anytime soon.

But many of its customers receive their orders within two hours of placing them directly on the Magic Mind website via the Ohi delivery service.

Shoppers can get two-hour delivery of Magic Mind drinks in New York, Los Angeles, Chicago and San Francisco. They can also opt for next day delivery, Hicks said.

“Expectations are marching towards same-day and next-day delivery due to Amazon,” Hicks said. But he added that his direct-to-consumer brand is better to serve customers directly and outsource last-mile delivery, as he gets better data on their shopping habits and can communicate directly with them instead of relying on a market.

Retailers have been offering fast delivery for DTC products for years. Amazon began offering two-hour delivery on specialty brands via Whole Foods a couple of years after acquiring the grocery chain in 2017. Fast-delivery startups like Gorillas, Jokr, and Gopuff also work with many food brands and DTC drinks, offering their products to consumers in just 15 minutes.

But some startups like Ohi are eliminating middlemen. Ohi delivers orders placed through a brand’s website rather than through a marketplace like Amazon. In addition to Magic Mind, its client roster includes Health-Ade, Untuckit, and Olipop.

Other startups are taking a similar approach. FastAF, for example, groups orders for DTC products, even from many brands selling on Shopify, and delivers them within two hours.

According to Ben Jones, CEO of Ohi, many DTC brands develop attractive pastel-colored websites and spend money on social media ads to get customers to buy their products. Ohi has raised just under $ 22 million to date to ensure shoppers are equally happy with what happens after they place an order.

“That high-quality pre-purchase experience doesn’t translate to a high-quality post-purchase experience,” he said. Once an order has been placed, it is often sent to a third-party warehouse and shipping partner chosen for their low cost, not speed.

Ohi’s goal, Jones said, is to offer Amazon-like shipping speed to DTC brands.

Brands ship their inventory to an Ohi warehouse, each of which has a delivery radius of several miles. This is in contrast to 15-minute delivery startups like Gorillas or Jokr, which deliver within a mile of their warehouses to deliver on their promise of faster delivery.

Once an order is received, Ohi relies on a mix of its own delivery fleet and third-party services, such as DoorDash, Uber and Roadie, to get orders where they need to go.

Ohi operates its delivery service providers with a system similar to Amazon Flex: the drivers use their own vehicles to deliver Ohi’s packages. “We think it’s pretty much the most effective way to do it,” Jones said.

The model makes Ohi “heavy software and light hardware,” he said.

While big cities now make up a large part of Ohi’s delivery area, Jones said Ohi has his eye on the sprawling suburbs of cities like Los Angeles. The company is present in eight markets in the metropolitan area and expects to have 13 by the end of the second quarter.

“Over time, we will fill the suburbs with micro warehouses to allow those areas to be on the same day,” he said.

Magic Mind’s Hicks said they believe fast delivery helps keep many customers buying as they can order more as soon as they run out.

He added that fast delivery wows many new customers when they order Magic Mind products via an Instagram ad or website.

“There’s an impulse to click that buy button,” he said, adding that delivering the product to customers the same day they order it means Magic Mind is “able to capitalize on the interest there is. day they buy “.

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