While ecommerce sales are on the rise — with revenue projected to increase from $2.3 billion in 2018 to $4.5 billion by the end of 2021 — fulfillment remains a challenge as the pandemic snarls the supply chain. As early as July, a U.S. Census Bureau survey f0und that 38.8% of U.S. small businesses were experiencing domestic supplier delays. Shoppers tend not be very understanding of of disruptions, unfortunately, with 38% saying that they’ll abandon their order if the delivery is estimated to take longer than a week.

Against this backdrop, Deliverr, an ecommerce fulfillment startup headquartered in San Francisco, today announced that it raised $250 million in series E funding, bringing its total raised to over $500 million. The round, which was led by Tiger Global with participation from 8VC, Activant, GLP, Brookfield Technology Partners, and Coatue, values Deliverr at $2 billion post-money.

CEO Harish Abbott says that the proceeds will be put toward growing Deliverr’s shipping network, supporting product development, and expanding headcount.

“The most effective way to address supply chain congestion is to move inventory closer to the end customer. Deliverr is the only company working to solve this problem through stronger inventory placement, while leveraging cutting-edge machine learning and optimization technology to build a smarter fulfillment network,” Abbott said in a press release. “With this new capital, Deliverr will focus on scaling next-day fulfillment for ecommerce merchants and grow our world-class team of engineers, data scientists, and operations experts.”

AI-powered fulfillment

Deliverr was cofounded by former Symphony Commerce colleagues Abbott and Michael Krakaris in 2017. Prior to Symphony, Krakaris spend time working with product marketing teams at Twilio. Abbot was the chief product officer at Lulu.com and a senior program manager at Amazon.

Using predictive analytics and machine learning, Deliverr anticipates the demand for products based on demographics, geography, and other variables. The platform then uses the analysis to “pre-position” items close to areas of demand, stocking items across a network of over 80 warehouses, cross-docks, and sort centers.

Deliverr rents out — rather than purchases — warehouse space, using warehouses’ fulfillment departments to pick and pack ecommerce orders. The company’s software determines which products to send to which warehouses and then finds the best delivery method to ship to customers, with either two-day or next-day delivery guarantees.

Deliverr’s platform integrates with retailers’ listing tools and allows managers to explore cost previews for each SKU in their catalog. It also syncs with sales channels so that orders flow in automatically.

Growth market

One in three companies claim to have incorporated AI capabilities like those offered by Deliverr into their supply chain management processes and one in four is working toward that goal, a study from Symphony RetailAI found. A separate report suggests that within the next two years, retailers plan to upgrade their predictive inventory planning, predictive labor planning, and robotic systems for picking and material handling.

Deliverr is a beneficiary of the tech boom. The company’s network — which Deliverr claims is within 100 miles of half of the U.S. population — is on track to power a more than $2.5 billion gross merchandise volume (GMV) run rate by the end of 2021. (For retailers, GMV refers to the average sale price per item charged to a customer multiplied by the number of items sold.) Current customers include large retailers on marketplaces from Shopify, Walmart, Amazon, eBay, and Target.

The explosive growth of online sales is expected to drive the ecommerce fulfillment services market to $86.44 billion in value this year, according to Grand View Research. Deliverr competes with on-demand logistics and fulfillment startup Flowspace, Bringg, ShipBob, Bond, and Shippo, among others.