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FRONTDoor Collective Raises $7.5M For Sustainable, Last-Mile Delivery Standards

Last month, FedEx (NYSE: FDX), Walmart (NYSE: WMT), XPO (NYSE: XPO), Amazon (NASDAQ: AMZN), Instacart, and U.S. military veterans came together to form the FRONTdoor Collective (FDC), a network of franchised delivery service partners (DSPs) to help businesses manage the growing demand for last-mile resources.

With goals to expand to 300 franchisees by the end of the year and partnerships with electric vehicle manufacturer Canoo for 10,000 last-mile vehicles, Chief Development Officer Kelly Pickering explained that FDC would create an unfaltering experience for businesses by implementing service-level agreements produced with franchisee needs in mind.

Related: Q&A: FRONTdoor Collective executives explain importance of franchised DSP network

On Tuesday, the company announced it has raised $7.5 million in a Series A round led by GLP Capital Partners (GCP) to continue building its DSP network.

In an interview with FreightWaves, C.J. Horist, co-founder and COO of FDC with experience building delivery networks at Amazon, explained the trick to building a strong network of last-mile delivery partners.

"Making these jobs a career compared to a job can have a huge impact on service," said Horist.

"The bigger the organization becomes, the harder it is to focus on the human element. Among these partners are really talented entrepreneurs who see the same vision as we do. Our core value is that drivers are champions. We do everything for the driver and that motivates our franchisees to do the same, which leads the driver to take care of customers' packages.

"There are a number of companies that are using gig workers to create their carrier network but those workers have five apps on their phone and whichever one's giving them the best surge pricing for the week is where they are going to work. The unit economics long term will never quite get where they need it to be."

Horist expressed that in order to build a sustainable, last-mile network, the people managing the day-to-day deliveries need to have sustainable, stable jobs as well.

"Customers are demanding faster and faster delivery. I think there is a disconnect between who is actually making those [expedited] deliveries and what the implications are of that. If you want to be able to continue to delight customers with that type of experience, it starts with working with providers who take care of their drivers," he said.

Horist went on to explain that this raise was an important example of why creating a DSP network that worked under a franchise business model could be a powerful player in the last-mile space.

"Because we can bring together this network under the FDC, we can go out and raise institutional capital and use that to help build out the best-in-class technology a small business owner could not do themselves. With GCP as a partner, their strategic connections will allow us to build the technology that our DSPs are craving," he said.

The main focus of the investment will be around building technology, like route optimization and planning tools, and other requests received by DSP partners. The FDC will use the funds to grow its technology team that consists of about 20 employees currently.

"We have hundreds of last-mile delivery companies reaching out to us, asking to be a part of our network," said Horist. "They are interested in getting a different opportunity in this space and our team is doing a great job making sure we bring in the best to add to our franchisees."

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