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August 24, 2022
According to consulting firm McKinsey, funding for logistics startups almost doubled in 2021 compared to 2020. The increased investments were attributed to supply chain disruptions such as raw material shortages, delays at ports, labor shortages, lack of warehousing space, and tight capacity across all modes of transportation.
In total, McKinsey estimates that $80 billion in funding was made in logistics startups in 2021. The most significant percentage was on-demand last-mile delivery platforms, followed by road freight marketplaces and new last-mile parcel networks. Combined, these three business models represented 56% of the $80 billion funding.
While reverse logistics was not specifically called out, funding for warehousing and automation, e-commerce fulfillment, contract logistics services, and inventory/order management represented 13.5% of the total $80 billion in funding.
The reverse logistics segment of the supply chain has gained attention because of the growth in e-commerce. Retail e-commerce totaled $507.7 billion for the first half of this year, compared to $437.7 billion for the same period in 2021. Today, e-commerce represents 14.5% of total retail sales.
A classic example that many of us are guilty of, me included, is buying different sizes of shoes or different colors of blouses, knowing full well that one or all will be returned.
The management and handling of returns are expensive. As noted in the Reverse Logistics Association’s quarterly returns index and commentary, space, labor, and transportation are pain points.
RLA 2023 Startup Competition
A growing number of reverse logistics startups are addressing the high costs of returns as well as other parts of the reverse logistics segment.
New to RLA’s annual conference will be a reverse logistics startup competition. The competition is open to startups whose focus is on reverse logistics or returns and is less than five years old with a cap revenue of $5 MILLION for 2021.
Startups will present their company’s mission and solutions to returns and reverse logistics to a panel of judges, plus the 600+ attendees at the RLA Vegas 2023 Conf & Expo (Feb 7-9) in Las Vegas.
Awards and Prizes will be granted to the winner. Judges pick: $4,999 1-year RLA Bronze Membership Attendees pick: $2,999 1-year RLA Copper Membership. In addition, the winner will receive an exclusive interview in RLA’s quarterly magazine.
To express interest, email a 100-200 word summary of your solutions pitch to me at Cathy@RLA.com. We look forward to seeing you!