Over the past year and a half, Israel, like the rest of the world, has moved to heavily rely on various delivery services. However, as we all know, these delivery services aren’t always available when we need them most, in addition to tagging on hefty charges for any delivery request. Israeli startup Avo (previously, Jul) is looking to disrupt the Israeli delivery space, offering same day delivery from the supermarket at no extra charge. Just this last week, the Israeli startup secured a $45 million Series B round, coming only a few months after raising its Series A. The current investment was led by Insight Partners, with participation coming from F2 Capital, Kleiner Perkins, IBI Tech Fund, The Phoenix Insurance Company, and JLL Spark. To date, the company has totaled $80 million in funding, and plans on expanding service to the U.S. and Israel.
No minimum order, no delivery fee -- straight to the office
For those numbered among the high-tech crowd, there’s a fair chance that you have already come across Avo, under its former name -- Jul. The concept is fairly simple; when you go into the Avo store, there you can find pretty much everything you would find in a major supermarket or department store: food, pharmaceuticals, baby products, and even gadgets and accessories for the kitchen. However, unlike supermarkets which demand a fee and exact (and often uncomfortable) delivery time, Avo has delivery people on fixed routes that go through the high-rises and office buildings. This offers users more flexibility with their pick-ups, as Avo provides same day deliveries straight to your office or residence.
I even sometimes use Avo when I’m at the Geektime offices at Brain Embassy, Tel Aviv, and I’ve been really impressed by their service. Whenever I’ve ordered before 11am, delivery always arrives by the early afternoon directly to the Avo station placed at the building’s entrance. For orders that require refrigeration, Avo has dedicated fridges and stations at the office where they wait for me to pick up. Although, I haven’t quite quit going to the supermarket altogether but for topping off the grocery list or for getting that one thing you forgot to pick up, it’s a great service, especially in light of the no minimum of zero delivery free. So, you could order one milk or even just toothpaste, and it will be waiting for your convenience -- just please don’t tell your local corner store.
Could an online supermarket actually be a tech company?
This question made me ponder. As an Avo user, I wondered how much of the company’s core is technological, and not just a popular supermarket with scheduled deliveries.
So I asked Dekel Valtzer, CEO and co-founder at Avo, and he explained to me that among other things, the company builds AI tools that help predict demand in certain areas based on past consumer behavior in that same area, time of year, whether there is a holiday at that time and more. In addition, the company has tools that balance the demand in certain areas, to create, for example, sales promotions where demand has decreased.
"We integrate technology, most of which we develop ourselves. From identifying desired products, predicting demand itself, through receiving goods from suppliers through automation. Technology offers a more efficient collection, calculating the optimal route for vehicles and calculating the correct way of packing orders," he says. The name of the game, according to my conversation with Avo, is to use technology to enable profitability in the field of food retail as well.
According to Valtzer, most of the food retail logistics field suffers from relatively low profit margins and even losses (hey, even Domino’s has started charging delivery in Israel recently). He explains that until recently the consumer would come to the retailer with a vehicle, pick up the products, pay for them, load them into their vehicle and bring them home - but nowadays, big chains pay collectors, packers, drivers and couriers. And all this without talking about customer service systems, compensation, credits and everything in between, while having to keep the same or similar price to the walk-in purchase at the store.
“The existing model of sending an order to each customer individually creates absurd situations where the courier sometimes travels several times a day to the same building, only to different apartments. This is a very inefficient and expensive model, ”claims Valtzer. Instead, as mentioned, Avo works in front of population concentrations, reaching each distribution point once a day. "This is how we centralize a lot of orders at one point, which makes business much more efficient and has a better chance of reaching profitability within a reasonable time." In addition, Avo's service advertises itself, through HR divisions or even apartment tenant committees, which enables the company to better control and focus its marketing efforts.
Why raise funding so soon after the last one?
“The announcement of the previous round was not necessarily the specific date of the investment itself. As a matter of fact, we have identified a very interesting opportunity in the US market. We believe that as long as we do not have major competitors in our space, we need to move fast and expand to as many cities in the United States and in Israel as possible. "
Hundreds of employees in the U.S. & Israel, and all will receive stake in the company
In addition to the funding announcement, Valtzer says that, among other things, all the company's employees are entitled to options. When I ask him how it works in a company that also employs hundreds of collectors, couriers and drivers, he explains that “we intend to give all Avo employees shares starting from a certain seniority” and claims that he wants all the company staff to “own part of the company…”
The company currently operates in several cities in Israel, as well as in New York and Chicago in the United States. Avo claims that they will expand the service to many markets in the U.S., and to dozens of new cities and towns in Israel, including developing solutions for private homes and lower-rise buildings. Avo was founded in 2017 (as mentioned, under the name Jul) by Valtzer, Idan Hershko, Nir Smadar, and Neri Bluman.
The company was originally founded as a solution for concentrating deliveries of baby products in nurseries in Tel Aviv, after making the rounds at Y Combinator, the world-renowned accelerator. Today, the company has thousands of buildings and various organizations that use its delivery service, and reports a huge 1,000% increase in revenue over the past two years. The company employs over 800 people in its offices in Tel Aviv, New York and Chicago.