Tucson Tech: Shipping dilemma spawns fast-growing startup

This article was originally published by David Wichner for the Arizona Daily Star.

When shipping issues were hurting the hemp-oil business they founded in Chicago a few years ago, Kameron Norwood and partner David DiCosola decided to build their own packing and shipping operation.

They ended up building a whole new company, PackDash, which caters to the logistical needs of small- to mid-size retailers. They moved the company headquarters to Tucson and opened a fulfillment center near downtown in August 2021.

Now, Norwood and DiCosola are moving to raise capital and scale up the business after joining the yearling resident mentorship program at the University of Arizona’s FORGE (Finding Opportunities and Resources to Grow Entrepreneurs) business accelerator in July.

PackDash recently won a vote of confidence — and a shot of no-strings capital — when Norwood was awarded $100,000 by the Google Startup Black Founders Fund to advance the company.

Norwood, who grew up in Tucson and is a UA alum, also is one of 250 finalists for the Black Ambition prize, sponsored by rapper Pharrell Williams and offering 50 founders cash prizes ranging from $25,000 to $1 million.

‘Paralyzing’ problem

Norwood said he and DiCosola, whose wives are sisters, came up with the idea for their hemp-oil business Halfday CBD in 2018, when the federal Farm Act made hemp growing legal.

At the time, Norwood was working as a contract-relations manager for a major staffing firm, and DiCosola was vice president for a Chicago startup building technology for office managers, after previously working three years in senior positions at a major health care tech firm.

Halfday CBD (Cannabidiol) took off, and Norwood recalls making $10,000 to $20,000 a weekend selling products at marketplaces and festivals.

“When COVID hit, we couldn’t do events anymore, so we were forced online,” he said.

But the company had serious issues with its shipping provider, including an order accuracy rate of just 77% at one point, Norwood said.

“It felt paralyzing as a business owner, because I couldn’t grow my business,” he said.

After finding other logistics services lacking or too costly, Norwood and DiCosola decided to build their own shipping operation.

They rented out a space formerly occupied by a dry cleaner on Chicago’s north side and converted the space, cleaning and installing inventory racking and a shipping station themselves, Norwood recalled.

Norwood said that after talking up the success of their fulfillment center in the Chicago business community, some entrepreneurs shared the same problems and asked if Norwood and DiCosola could ship their products — and some associates offered to invest in their logistics operation.

“We were like, wow, this has some legs, and CBD was becoming difficult to sell, so it was a natural pivot for us,” he said.

After just a couple of years, PackDash has about 50 clients that sell a wide range of products, including diapers, pizza condiment packets, croutons and baby formula, including vendors to Whole Foods and Walmart.

“We found this kind of niche we carved out of anybody who’s under 20,000 orders per month, and can’t find customized, flexible, affordable, scalable logistics fulfillment services,” Norwood said. “You’ve got to be doing a ton of business to have the attention you need, and that’s what we’ve been able to service.”

Custom service

Known as a third-party logistics company, PackDash offers a range of customized services, including custom “kitting,” which can include labeling and packing of individual items, and responsive support with a dedicated Slack chat channel and agent for each client.

In some cases, Norwood said, PackDash also can offer more inventory storage than giants like Amazon, which limits the inventory of a particular item its sellers can store in its warehouses, and also deliver inventory as needed to companies like Amazon.

He recalled a client who needed to store a large minimum order of diapers from a German company, which was more than Amazon would keep in its warehouse.

PackDash was able to store the excess and “feed” Amazon product as needed, he said, noting that Amazon trucks regularly visit PackDash’s warehouses to pick up inventory.

The company plugs its logistics technology into a customer’s existing e-commerce platform, schedules inventory delivery and storage, and handles packing and shipping, and works with e-commerce systems to trigger automated tracking and delivery notifications.

PackDash works with all the major e-commerce platforms, including Amazon, Walmart, Shopify, Etsy and Google.

The startup is in the process of raising capital to expand, with plans to open four more fulfillment centers across the nation in the next three to five years, Norwood said.

Finding Tucson

When the PackDash founders were looking to expand with a fulfillment operation in the West, Tucson naturally at the top of the list, said DiCosola, who visited Tucson often while courting his future wife.

“I would visit, love it, then have to go back,” DiCosola said.

It was a homecoming for Norwood, who came to Tucson with his family from California when he was 10, attended Catalina Foothills High and received a bachelor’s degree in regional development from the UA in 2011. Norwood, who ran track in high school, served as manager of the UA track team for five years while studying for his degree.

After graduating, he moved to Chicago to start his career and met future business partner DiCosola.

The PackDash founders literally walked into their Arizona FORGE experience after arriving in Tucson last year.

They strolled into the FORGE offices at the historic Roy Place building downtown and were greeted by members of Startup Tucson, a nonprofit business incubator hosted by the UA at FORGE, who introduced Norwood and DiCosola to FORGE staff.

DiCosola, who has been involved in several startups and was a mentor at a Chicago business accelerator for nearly three years, said FORGE provides office space and a place to meet with other local entrepreneurs.

“FORGE had been a great way to be exposed to other entrepreneurs in the ecosystem,” he said. “A lot of the education you need as a business owner can come from structured resources, but so much comes from other entrepreneurs.”

DiCosola said the company will likely be looking to move into a much larger facility in Tucson by next year and expects to employ about 50 people here.

The company’s Tucson fulfillment center, in an old brick industrial center at 830 E. 16th St., is nearly at capacity already at 6,000 square feet; its center in the Chicago suburb of Naperville, Illinois, is 20,000 square feet.

 

“We want to be part of the community and create opportunities for more than just ourselves, and working with FORGE we can not only get exposed to resources and ways to raise money and find experts, but we can also make friends and expand our network, even find new clients.”

Brian Ellerman, FORGE’s founding director, said the PackDash founders have been successful so far and have already attracted interest from local investors, but like all fast-growing startups face challenges in scaling up.

“They just need that mentoring and advice to help them deal with that growth, how to do it in a way that doesn’t destroy them in the process,” Ellerman said.