Commerce

How ‘household restocking’ startup The Rounds uses tech and AI to make sustainable e-commerce profitable

Comment

Image Credits: The Rounds

The Rounds, a sustainable “household restocking” service, wants to prove that last-mile logistics can be done both efficiently and profitably. Now, it’s claiming a significant milestone on the latter, as the startup claims it’s profitable not only at the unit economic level but also in terms of how it operates its fulfillment centers — the neighborhood locations from where it delivers inventory — like grocery items and household goods — and dispatches staff to fill customers’ orders.

“Being able to hit profitability there means the next step is true cashflow positive, and we’re making really good progress towards that,” The Rounds co-founder and CEO Alex Torrey tells TechCrunch.

Launched in 2019 in Philadelphia, and now available in D.C., Miami and Atlanta, The Rounds allows customers to shop from across 650 SKUs, up from 150 just a year ago. These cover a range of products, including household items, personal care, pantry staples and dry goods, in addition to items from select local sellers or co-ops, including bakeries, coffee roasters, florists or those who sell cheese, milk or eggs. In Miami, alcohol delivery is also available.

Customers sign up for the service, and for $10 per month, they can choose to restock their household’s needs — while also dramatically cutting down on plastic and packaging waste.

Image Credits: The Rounds

That’s because The Rounds’ business model involves delivering your items in reusable bags and containers. So instead of receiving your Instacart order in a dozen plastic bags on your doorstep, you receive your order in reusable shopping bags or cooler bags for the cold items. In addition, the items themselves come in reusable packaging — like mason jars or glass soap dispensers, for example. When you’re out, you place those containers in the bag on your doorstep where it’s picked up, washed and then re-used for future orders. For instance, your glass soap dispenser is refilled at the local hub from 50-gallon drums, and then returned.

In total, around 70% of the products The Rounds sells are in reusable packaging.

Since closing its $38 million Series A last year, The Rounds has saved 375,000 pounds of packaging waste, Torrey notes. In addition, The Rounds’ revenue has increased 6x during that time, he says, as the service has become more efficient.

The Rounds raises $38M Series A for its sustainable ‘household restocking’ service

“We now average between 15 and 18 deliveries per hour…that’s like UPS-level,” the CEO notes. This scale has been achieved, in part, by targeting specific urban ZIP codes where the service is accessible by 3.3 million households across its four markets, or a total of 8.6 million people. Within those ZIP codes, The Rounds targets apartment buildings to help it achieve density, making it easier to reach higher deliveries per hour metrics.

At present, the service has north of 10,000 paying subscribers — a figure that could be impacted by the service’s price.

“It is not the cheapest,” Torrey admits. “You can go to discount grocers or lower-price grocers to buy conventional goods that are lower in price,” he says. “But we’re also not a premium.” That is, The Rounds is not marking up items over retail to make ends meet, as Instacart often does. “We sell you premium products at the market price, no markup, and we bring it to you and put it in reusable packing.”

The longer-term goal is for The Rounds to get even smarter about what its customers need. This plan, which Torrey refers to as the “psychic home manager,” would eventually be able to determine what the customer needs to restock and when, so there’s no food and inventory waste, either. This part of The Rounds’ business could be aided by AI.

Already, AI is helping maximize the efficiency of The Rounds’ delivery routing and is now powering its recommendation engine that offers smarter suggestions of what to buy next, which helps increase average order value.

In time, AI should help The Rounds predict what the customer needs.

Image Credits: The Rounds

“The idea of building your ‘psychic home manager’ has been like our North Star,” explains Torrey. And, he adds, “implicit in ‘psychic’ is AI — it’s how do we have a prediction engine?”

“In the beginning, we had very limited ability to make predictions, let alone use any kind of machine learning or sophisticated algorithms. We had very, very basic algorithms that were helping us make those predictions,” Torrey continues.

Since its Series A, The Rounds has 10x’d its ability to make predictions with more powerful algorithms and true AI, Torrey says. “We’re not there yet…but we’re much, much closer to delivering that ‘psychic home manager’ experience,” he adds.

The company has achieved its fulfillment level profitability milestone and revenue growth while keeping its team lean. Though The Rounds, like other startups, did conduct layoffs last year, impacting GMs in local markets and other organizational changes, the current team is less than 50 people. The team also includes delivery personnel who are not contractors, but full-time hourly employees with benefits.

The hope, Torrey says, is that The Rounds’ progress can drive more sustainable e-commerce.

“Despite being the largest consumer spend category, e-commerce has been stuck the last 30 years — Amazon started in 1994 — with last-mile logistics that still runs on a single rail with single-use packaging,” the founder says. “We’re excited about proving that two-way last-mile logistics can in fact be done hyper-efficiently to be both profitable and good for the planet.”

More TechCrunch

Less than one year after its iOS launch, French startup ten ten has gone viral with a walkie talkie app that allows teens to send voice messages to their close…

French startup ten ten finds viral success and controversy in reinventing walkie-talkies

Featured Article

Unicorn-rich VC Wesley Chan owes his success to a Craigslist job washing lab beakers

While all of Wesley Chan’s success has been well-documented over the years, his personal journey…not so much. Chan spoke to TechCrunch about the ways his life impacts how he invests in startups.

13 hours ago
Unicorn-rich VC Wesley Chan owes his success to a Craigslist job washing lab beakers

Presumptive Republican presidential nominee Donald Trump now has an account on the short-form video app that he once tried to ban. Trump’s TikTok account, which launched on Saturday night, features…

Trump takes off on TikTok

With fewer than 400,000 inhabitants, Iceland receives more than its fair share of tourists — and of venture capital.

Iceland’s startup scene is all about making the most of the country’s resources

Kobo put out a handful of new e-readers a few weeks back: color versions of the excellent Libra 2 and Clara, as well as an updated monochrome version of the…

Kobo’s new e-readers are a sidegrade most can skip (with one exception)

In an interview at his home near Reykjavík, the entrepreneur-turned-VC shared thoughts on his ventures and the journey that led him from Unity to climate tech, a homecoming of sorts.

Unity co-founder David Helgason’s next act: Gaming the climate crisis

Welcome back to TechCrunch’s Week in Review — TechCrunch’s newsletter recapping the week’s biggest news. Want it in your inbox every Saturday? Sign up here. Over the past eight years,…

Fisker collapsed under the weight of its founder’s promises

What is AI? We’ve put together this non-technical guide to give anyone a fighting chance to understand how and why today’s AI works.

WTF is AI?

President Joe Biden has vetoed H.J.Res. 109, a congressional resolution that would have overturned the Securities and Exchange Commission’s current approach to banks and crypto. Specifically, the resolution targeted the…

President Biden vetoes crypto custody bill

Featured Article

Industries may be ready for humanoid robots, but are the robots ready for them?

How large a role humanoids will play in that ecosystem is, perhaps, the biggest question on everyone’s mind at the moment.

1 day ago
Industries may be ready for humanoid robots, but are the robots ready for them?

VCs are clamoring to invest in hot AI companies, and willing to pay exorbitant share prices for coveted spots on their cap tables. Even so, most aren’t able to get…

VCs are selling shares of hot AI companies like Anthropic and xAI to small investors in a wild SPV market

The fashion industry has a huge problem: Despite many returned items being unworn or undamaged, a lot, if not the majority, end up in the trash. An estimated 9.5 billion…

Deal Dive: How (Re)vive grew 10x last year by helping retailers recycle and sell returned items

Tumblr officially shut down “Tips,” an opt-in feature where creators could receive one-time payments from their followers.  As of today, the tipping icon has automatically disappeared from all posts and…

You can no longer use Tumblr’s tipping feature 

Generative AI improvements are increasingly being made through data curation and collection — not architectural — improvements. Big Tech has an advantage.

AI training data has a price tag that only Big Tech can afford

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: Can we (and could we ever) trust OpenAI?

Jasper Health, a cancer care platform startup, laid off a substantial part of its workforce, TechCrunch has learned.

General Catalyst-backed Jasper Health lays off staff

Featured Article

Live Nation confirms Ticketmaster was hacked, says personal information stolen in data breach

Live Nation says its Ticketmaster subsidiary was hacked. A hacker claims to be selling 560 million customer records.

2 days ago
Live Nation confirms Ticketmaster was hacked, says personal information stolen in data breach

Featured Article

Inside EV startup Fisker’s collapse: how the company crumbled under its founders’ whims

An autonomous pod. A solid-state battery-powered sports car. An electric pickup truck. A convertible grand tourer EV with up to 600 miles of range. A “fully connected mobility device” for young urban innovators to be built by Foxconn and priced under $30,000. The next Popemobile. Over the past eight years, famed vehicle designer Henrik Fisker…

2 days ago
Inside EV startup Fisker’s collapse: how the company crumbled under its founders’ whims

Late Friday afternoon, a time window companies usually reserve for unflattering disclosures, AI startup Hugging Face said that its security team earlier this week detected “unauthorized access” to Spaces, Hugging…

Hugging Face says it detected ‘unauthorized access’ to its AI model hosting platform

Featured Article

Hacked, leaked, exposed: Why you should never use stalkerware apps

Using stalkerware is creepy, unethical, potentially illegal, and puts your data and that of your loved ones in danger.

2 days ago
Hacked, leaked, exposed: Why you should never use stalkerware apps

The design brief was simple: each grind and dry cycle had to be completed before breakfast. Here’s how Mill made it happen.

Mill’s redesigned food waste bin really is faster and quieter than before

Google is embarrassed about its AI Overviews, too. After a deluge of dunks and memes over the past week, which cracked on the poor quality and outright misinformation that arose…

Google admits its AI Overviews need work, but we’re all helping it beta test

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. In…

Startups Weekly: Musk raises $6B for AI and the fintech dominoes are falling

The product, which ZeroMark calls a “fire control system,” has two components: a small computer that has sensors, like lidar and electro-optical, and a motorized buttstock.

a16z-backed ZeroMark wants to give soldiers guns that don’t miss against drones

The RAW Dating App aims to shake up the dating scheme by shedding the fake, TikTok-ified, heavily filtered photos and replacing them with a more genuine, unvarnished experience. The app…

Pitch Deck Teardown: RAW Dating App’s $3M angel deck

Yes, we’re calling it “ThreadsDeck” now. At least that’s the tag many are using to describe the new user interface for Instagram’s X competitor, Threads, which resembles the column-based format…

‘ThreadsDeck’ arrived just in time for the Trump verdict

Japanese crypto exchange DMM Bitcoin confirmed on Friday that it had been the victim of a hack resulting in the theft of 4,502.9 bitcoin, or about $305 million.  According to…

Hackers steal $305M from DMM Bitcoin crypto exchange

This is not a drill! Today marks the final day to secure your early-bird tickets for TechCrunch Disrupt 2024 at a significantly reduced rate. At midnight tonight, May 31, ticket…

Disrupt 2024 early-bird prices end at midnight

Instagram is testing a way for creators to experiment with reels without committing to having them displayed on their profiles, giving the social network a possible edge over TikTok and…

Instagram tests ‘trial reels’ that don’t display to a creator’s followers

U.S. federal regulators have requested more information from Zoox, Amazon’s self-driving unit, as part of an investigation into rear-end crash risks posed by unexpected braking. The National Highway Traffic Safety…

Feds tell Zoox to send more info about autonomous vehicles suddenly braking