Stord: The Logistics Holy Grail

Every once in a while you come across a company and think, holy shit they did it. They built the exact product for the exact product at the exact time. Stord, the fulfillment provider, is one such company.

Context

When I was in VC, it seemed that a lot of the low hanging fruit was picked over. Many problems were more or less solved, and software became ubiquitous where adoption was convenient.

What was left was the more difficult areas, logistics being a large one. Its slow tech adoption has a lot to do with the fact that the industry deals with the physical world. Atoms not bits. Most logistics companies solve a simple problem: items need to move from point A to point B. A truck, a ship, or a plane usually does the trick.

In the physical world, software alone often can’t solve the biggest problems. So a new business model arose, uniting software + logistics operations. Perhaps the most notable example is Flexport which manages shipments and customs documentation behind a simple UI. Another is Odeko which provides an online marketplace of coffee supplies and facilitates overnight deliveries. There are many others.

Today we’ll look at how Stord used the software + logistics model to solve supply chain visibility: arguably the largest problem in the industry. Already a unicorn, Stord has one of the best chances to dominate the logistics world for the next decade.

Company Overview

Stord is a fulfillment provider: they manage package deliveries to homes and stores. Founded in 2015, the company serves customers like Coca-Cola and ecommerce giant Thrasio, helping them get products into customers hands via retail stores or direct-to-consumer. The company has raised over $300 million from the best investors in the game: Kleiner Perkins, Bond Capital, and Founders Fund, among others. Their latest round was a $120 million Series D3 at a $1.3 billion post-money valuation in 2022, at which time the company reportdely had $200M+ in run-rate revenue. The company is led by CEO & co-founder Sean Henry, a Thiel Fellow, and CTO & co-founder Jacob Boudreau. The company has 700 employees.

Problem & Solution

Brands work with tons of different carriers (trucking companies), warehouses, and third-party logistics providers (3PLs) to store and deliver their products to customers. Each of these providers runs different and usually clunky software, making it nearly impossible to get a unified view of where packages or delivery trucks are located. This problem makes it hard to communicate delivery times to customers, measure supply chain performance, or make informed decisions on operations.

Stord does two things to address this issue. (1) It provides software for the brand, the warehouse, and the carrier. These pieces of software are the Order Management System (OMS), the Warehouse Management System (WMS), and the Transportation Management System (TMS), respectively. (2) Stord also manages a network of 500 warehouses and 20,000 carriers for brands to use via its platform. Stord integrates with every provider in the network, getting real-time data on where inventory sits.

This strategy allows Stord to offer its brands a one-stop shop for for fulfillment. Instead of individually dealing with multiple different 3PLs, they can run all (or most) of their operations through Stord. The result is dramatically increased visibility across supply chain operations. Not to mention cost savings through access to Stord’s economies of scale.

Differentiation

Key to Stord’s value proposition is its marriage of software + the logistics network. But this isn’t totally novel. In fact, many other logistics companies do this: Flexport, ShipBob, Shipmonk, etc. However Stord goes a step further by creating not just an OMS for its brands, but software for all sides of the network, including the TMS for carriers and the WMS for warehouses. This gives Stord the logistics holy grail: a single data platform connecting warehouses, carriers, and shippers. Consequently, brands can give their customers accurate delivery updates, reduce delays, and decrease costs.

Stord is a compound startup. The company built three different heavy pieces of software, uniting the network of brands, warehouses, and carriers on one platform. This is not only very difficult to replicate but extremely valuable to customers. Stord is one of the only companies to crack this code.

Conclusion

Stord has achieved the holy grail: a single source of truth for carriers, warehouses, brands, and end customers. Stord gives brands the power to deliver an Amazon Prime-like experience to customers who want to know where and when packages will be delivered. Stord provides software to each player in the network and collects data in a single real-time database. It is an inventive and ambitious solution to the visibility problem that has plagued logistics for centuries.