UPS is jumping into the same-day delivery game, announcing Friday that it is acquiring Roadie.
Terms were not disclosed. The transaction is expected to close in the fourth quarter of 2021.
“Roadie’s leading technology, combined with UPS’ portfolio, will open doors for new growth opportunities,” UPS said in a statement announcing the acquisition. “Roadie’s technology platform also will provide opportunities to improve existing, and potentially add additional, UPS small package capabilities.”
UPS (NYSE: UPS) said Roadie will continue to operate under the same name and will not carry goods from the UPS network, and packages transported by Roadie will not cross into the UPS network.
Roadie is an “on-the-way” delivery platform that counts some of the nation’s largest retailers among its clients. The company leverages technology and gig economy drivers to handle last-mile, on-demand and same-day deliveries.
The Home Depot (NYSE:HD) is an investor in Roadie and one of its largest customers. During the pandemic, Roadie expanded its services for the home improvement giant in March 2020 by increasing same-day delivery to 600 Home Depot stores. It added 300 more stores in April and by the end of 2020, Roadie was handling same-day delivery at over 1,300 Home Depot locations.
The company also has delivery agreements with Tractor Supply, Best Buy and Advanced Auto, and this summer reached an agreement with Bed Bath & Beyond (NASDAQ: BBBY) and buybuy BABY.
Founded by Marc Gorlin, Roadie was born out of a bad experience he had trying to buy tile from a manufacturer. When the tile arrived, it was in pieces, and while Gorlin knew a nearby warehouse had replacement tile, there was no immediate way to get that tile to his house.
“I knew there had to be someone already making that trip who would be more than willing to throw my tile in his or her trunk for $20. From that problem, Roadie was born,” he told FreightWaves in 2018.
In June, new UPS CEO Carol B. Tomé said the company was considering the launch of same-day delivery service, suggesting it may go outside its network.
“We don’t have this all the way figured out, but we have a team of people looking at it,” she said at the time. “There’s an opportunity there that’s very different [from what] we’ve done in the past.”
The pandemic increased the demand for Roadie’s services. Gorlin told Modern Shipper the company grew fourfold in 2020, adding over 5,000 store locations to now service over 15,000 locations. The company claims 98% successful delivery and has 200,000 drivers in its network covering 20,000 U.S. ZIP codes.
“Roadie thrives on episodic use of our drivers and with that, it allowed us to scale more easily during the pandemic,” he said. “We had days where it was 2,000% or 3,000% higher [volumes] than it might have been before the pandemic.”
E-commerce consultant Brittain Ladd, said the acquisition is not likely to impact UPS’ revenue significantly, and he believes the delivery company should be thinking about bigger fish.
Related:
Read: On-demand delivery: ‘What Amazon started, COVID finished’
Read: UPS mulling same-day delivery service with contracted drivers — CEO
“This is a minimal step on the part of UPS to expand delivery capabilities leveraging Roadie’s platform. I don’t believe the acquisition will have a material impact on UPS revenue,” he said. “I like what UPS has done, but I encourage the company to think much bigger. For example, an acquisition of Skipcart would complement the acquisition of Roadie. Another option I wish UPS would have pursued is acquiring GoPuff.”
Ladd went on to suggest ways Roadie could provide additional value to UPS.
“UPS should also invest in opening micro-fulfillment-as-a-solution (MaaS) facilities whereby automated micro-fulfillment centers are leveraged by UPS, and supported by Roadie, to provide precision fulfillment and delivery of groceries and general merchandise,” he added. “UPS-owned and operated MaaS facilities would position UPS as a major competitor to DoorDash and Instacart and [expand] UPS MaaS across the retail industry. UPS deserves a lot of credit for continuing to invest in their business and considering new ideas.”
The Teamsters, who represent much of UPS’ workforce, have long bristled at the idea of non-union UPS workers delivering packages.
“This company’s goods should not cross over to UPS and vice versa. We will watch closely to ensure that Teamster bargaining unit work is protected,” a Teamsters spokesperson told Modern Shipper.
The union is gearing up for an election for its next president as James P. Hoffa is retiring. One of the candidates is Sean O’Brien, president of Local 25 in Boston. FreightWaves’ Mark Solomon recently reported on the election and the impact it will have on the next UPS contract, which expires in 2023. The Roadie acquisition could add to the negotiation dynamics for the next UPS contract.
“At 46 the youngest of the two candidates, O’Brien has a reputation as a firebrand. Some of that flame has, over the years, been directed at UPS,” Solomon wrote, before quoting an industry insider. “He is feared inside UPS for being a no-compromise hardliner,” said one industry executive familiar with the situation. “In any situation involving his local, [UPS] felt it had no good way to control him.”
In September 2017, Hoffa fired O’Brien, who led the Teamsters’ small-package division at the time and was gearing up for negotiations on the current UPS contract.
The other candidate is Kevin P. Moore, president of Local 299 in Detroit.
Click for more Modern Shipper articles by Brian Straight.
You may also like:
Social Auto Transport raises $1.5M in seed funding to expand gig economy auto-moving business
Bringg’s collaboration with Uber opens new doors for e-commerce
Tycoon Whibbey
Yes! Thank you ups.