Ecommerce's Global Surge as Money Rushes In
With a flurry of mid-tier acquisitions of ecommerce technology companies followed by an IPO surge of the most iconic DTC brands, ecommerce continues to accelerate around the world.
When I was helping run Watchmaster in 2015 out of Berlin, the levels of complexity never slowed as we started selling in new countries every month.
VAT. Duties. Multi-language. Multi-currency. Multi-site. Cross-border shipping. Random German buyers who wanted to bring €30,000 cash stuffed in an envelope to our office and “negotiate” Rolex prices well after sunset.
But there was one issue that was the biggest bottleneck of all: Payments.
If we could not securely and easily transact payments, nothing else mattered. This was further exacerbated by our AOV sitting at over €6,000 (or ~$7,300 USD in today’s exchange).
This was before Stripe was an option across Europe, much less installment payment solutions like Affirm, Sezzle, and Afterpay.
In Germany, the credit card limits were often ~€1k, so we had to offer direct deposit and BOPIS, along with credit card solutions.
In France, it took months for a new startup based in Germany to get approved by the largest French banks to transact via ACH.
In the UK, they fortunately had higher credit card limits (and we subsequently charged more across the region), but we had to custom build that entire payment solution.
And throughout the Nordics and the Netherlands (where we at least kept the entire site in English), we had to deal with another six autonomous countries.
We somehow finished around €30M in revenue in that first year through a lot of aggressive marketing and sales, our dynamic pricing engine, and VAT arbitrage.
But the resources, energy, and capital spent to ease the pain around payments, which was a pure software problem, greatly affected the business in the short- and long-term. After 18 months at the initial rocketship pace, Watchmaster was never the same.
Now, with companies like the aforementioned Stripe, much of this has been solved.
So a macro focus has shifted to something that is not just a software problem, but a physical infrastructure and people problem: Logistics.
Direct-to-consumer fulfillment. Business-to-business fulfillment. Storage. Freight. Middle mile. Last mile. 2-day shipping. Next-day shipping. Same-day shipping.
In short: How can brands ensure their customers receive their orders quickly, affordably, and reliably?
That’s why we at ShipBob have expanded into the UK, Ireland, and Canada. That’s why we are launching at least two more global facilities this year and doubling up again in 2022. That’s why Shopify took a nearly $200M pre-IPO stake in Global-E. That why companies like Passport, Zonos, and FlavorCloud are seeing adoption accelerate.
We all know we’re living in a global commerce world, but it’s accelerating even faster outside of the US. I’ll share more on that next week with some surprising international ecommerce growth data.
The State of Ecommerce
What’s happening in the ecosystem? Who’s up? Who’s down? Who’s building the future?
P&G saw a 50% jump YoY in ecommerce sales: The 184-year-old multinational consumer goods corporation saw its market share in ecommerce equal their brick-and-mortar outlets with net sales hitting $18.1B.
Walmart is building a Prime-like flywheel: In December 2020, Walmart expanded the Walmart+ membership to include free next-day and two-day shipping no matter the basket total, removing the $35 minimum in an attempt to accelerate the Walmart flywheel.
Postscript with the ultimate product drop in SMS payments: Not going to lie. I was envious of their product drop, so I snagged their SaaSy shorts with just a few texts. They are bringing SMS payments to the masses where you can skip checkout and pay via text across all Postscript powered sites. Buckle up.
Is Gap the new GameStop? In bets I would have lost, Gap is #4 on the StockTwits Top 25 for gains in 2021. Rumor is they sponsored Elon's SNL wardrobe.
Mailchimp wants in on ecommerce: Claiming nearly 6M of their 14M customers are in the commerce space, it is now launching its own online store platform.
Uber taps GoPuff for grocery delivery: GoPuff will make inventory of convenience store and grocery items available to Uber customers in 95 cities starting next month and nationwide by the end of the summer. GoPuff will handle logistics and delivery for the orders, and Uber will take a percentage of each transaction made through its app.
The UK > The US in ecommerce: As the world opens up, the UK has a 50% higher ecommerce penetration rate than the US. What does that mean for the future of ecommerce in the US? And how does that impact ecommerce technology companies?
Acquisitions & IPOs
For ecommerce technology, many discuss IPO or bust, but that is far from the truth and the last few weeks proved that with several mid-level acquisitions, along with the biggest IPO of 2021.
Ecommerce Technology
Returnly: Affirm acquired Returnly for $300M, as they position them as fintech with a robust returns solution with options like store credit issued before the item is actually returned.
TaxJar: Privately valued at ~$1B, Stripe swooped in for the go-to ecommerce tax solution.
Reamaze: GoDaddy acquired the under-the-radar ecommerce customer support solution. As was covered by CommerceStacks, Reamaze is the third most popular customer support solution, trailing only Zendesk ($16B market cap) and Gorgias.
Rise.ai: Fellow Israeli-based companies, Wix acquired the gift card and store credit solution. Wix saw a 126% YoY increase in revenue processed at $5.4B in 2020. This is another signal they are not slowing down with their focus on ecommerce.
Coupang: Valued at >$69B as of writing this, the South Korean ecommerce giant became the largest IPO in the US in 2021. Shockingly, I’m long Coupang (even though I’m down 16%) on a company that 0.0001% of the US has heard of (unverified stat). They boast over 100 fulfillment centers and share an investor with ShipBob in SoftBank.
Ecommerce Brands
On the brand side, “it’s time to put to rest the ‘but where are the exits?’ narrative” and prepare for “hot DTC summer.”
Figs: With 138% YoY revenue growth, 1.3M customers, and 26.3% EBITDA margin, the fashionable scrubs brand is taking their talents to Wall Street. Wait: A must read on Figs.
Warby Parker: One of the most influential DTC brands is looking to enter the public markets. They are backed by Tiger Global, General Catalyst, Forerunner Ventures, and Menlo Ventures.
Allbirds: As a requisite of the VC wardrobe, the five-year old footwear (and soon apparel brand?) is looking to go public. They are backed by Tiger Global, Maveron, Lerer Hippeau, and Franklin Templeton.
Away: With a new CEO in co-founder Jen Rubio, Away is eyeing the public market after weathering an interesting 2020. They are backed by Global Founders Capital, Accel, and Forerunner Ventures.
Onnit: Unilever gave Austin another win as they acquired “the holistic wellness and lifestyle company” for an undisclosed amount.
The Honest Company: Burying the lede, the Jessica Alba founded company IPO’d at a ~$1.5B valuation. In an effort to make wellness products more transparent, Alba paved the way for how to build a brand in the 2010s and completely rewrote the rules on how celebrities can and should build brands. They are backed by L Catterton, General Catalyst, and Lightspeed Venture Partners.
Following the Money
While “the broader markets have boomed,” there’s been a lot of money put to work accelerating ecommerce with a focus on platforms, finance, logistics, and fashion.
Kajabi: Located in my hometown and with their logo plastered on the latest “high-rise” in Irvine, Kajabi raised a $550M round at a $2B valuation for their ecommerce platform focused on knowledge-based businesses from Tiger Global (foreshadowing). Led by co-founder Kenny Rueter, the company has stayed under the radar and leveraged early customers like Brendon Burchard to scale their solution that was years ahead of the curve. I remember meeting Kenny and Travis for the first time at a small OC tech event at my cousin’s house in Newport Beach. There were probably 9 of us. The startup scene in OC circa 2011 was small.
(Shout out to Travis Rosser, Kenny’s co-founder of Kajabi.)Clearbanc: New year new you...fresh off a $100M Series C round and now going by Clearco, they are sporting a $2B valuation and pushing the Toronto startup scene forward. Along with fast-tracking the non-dilutive capital market, Clearco and their founders Andrew D'Souza and Michele Romanow want to help companies figure out how to best put that money to work (spoiler).
AfterShip: After a $1M Series A in 2014, AfterShip delivered a $66M Series B from Tiger Global. What stood out to me most from this Hong Kong HQ’d company is ~30% of their customers are outside of the US. The world’s getting smaller.
Recharge: With a valuation at $2.1B, Recharge raised $277M from Summit Partners, ICONIQ Growth, and Bain Capital Ventures. The Santa Monica-based company has processed over $5B in transactions from 15,000 merchants across 20M subscribers.
Carted: A universal commerce API company that wants to allow you to turn any link on the web into a checkout has raised $10M, led by Blackbird VC.
Parade: Breaking the trend from technology, Parade and their 23yo founder, Cami Tellez, raised $10M led by Maveron Ventures to take on Victoria’s Secret. Thanks to Polymathic for bringing Cami to share her story on how she’s built a $70M brand in a year and a half.
Nobull: A month after becoming the official Crossfit Games title sponsor, the 7-year-old footwear and apparel brand cracked the $500M valuation mark with their latest round. With three stores in Boston, Miami, and SoHo, they sell primarily online.
Companies to Watch
Each week, I’ll highlight a couple companies in the ecommerce technology and brand space that stand out to me. If you have suggestions, please reply to my email or DM me.
Ecommerce Technology
I love when I come across companies or industries that are growing like weeds and I am far from the target market. It always reminds me how much there is to learn.
That being said, I don’t come across that situation often in the ecommerce technology space, but have over the last couple weeks with recommerce. Other than buying used books (a vice of mine), I don’t get the mass appeal of buying and selling used clothing, especially that which is high-end (haute?).
But that is exactly what Treet and Archive are enabling. Seemingly attacking the opportunity from different angles, they are each building a P2P ecommerce platform for merchants to launch and own a fully-branded secondhand site. Right now, most brands capture no revenue, no data, and have no control of this part of the market, as customers sell their items on sites like Ebay, Farfetch, and Depop.
Keep on eye on these companies and this space.
Ecommerce Brands
Highly recommend picking up some Touchland. Launched in 2018 after years of work behind the scenes in Spain, Andrea Lisbona brought a hand sanitizer meets moisturizer to the market.
She skipped the usual channels for sanitizers and launched as a beauty brand with retailers like Ulta. Join me, Rosie Huntington-Whiteley, Kris Jenner, and Naomi Campbell as promoters of the brand.
The Best I’ve Seen in Marketing
This is “old” but I have to write about it.
What The Weeknd did with the Super Bowl is likely the greatest thing any of us will see with marketing in 2021. He paid $7.5M of his own money to be the halftime show. Unlike most events with “pay-to-play,” he delivered a memorable show and instantly became my six year-old’s favorite musician.
He wasn’t the only one.
The day after his Super Bowl performance, The Weeknd sold 1 million tickets for his 2022 concert tour. That’s at least $50-60M in revenue.
Shameless ShipBob Shoutouts
Yes, I know it’s May, but I can still give a belated Q1 recap, since that's what you all came for.
I’ll deliver it in bullets…
New fulfillment centers (now up to 16):
London, England <== Oprah spilled the tea
Phoenix, AZ
Louisville, KY
Geneva, WI
Where should our next international location be?
And on the partnership side in our app store?
Operation GreenBob:
We went 100% carbon neutral across our fulfillment network, thanks to our partnership with Pachama.
Speaking of Pachama, they just raised $15M in new financing after launching just over a year ago. The round included Amazon, Bill Gates, Chris Sacca, and Manu Ginobili.
My Asks
Give me feedback on this and send me what you find interesting in ecommerce.
Forward this to somebody who needs to read this.
If you know any brands looking to expand into the UK, hit me up. I know this company that just launched a fulfillment center in London.
In Closing
I was hesitant to hit send on this forever. So what got me to hit send…
In an internal memo, our CEO Dhruv Saxena shared one of the catalysts to get him to start ShipBob: the movie The Social Network.
I’ll include a small blurb:
“I was blown away that a person no older than I was had the audacity to start an internet company and build it into the world’s largest social network in a matter of few years. He didn’t seek anyone’s permission or approval.”
That resonated with me and seeing Facebook’s international growth firsthand is what actually pushed me into the technology world.
And in Dhruv’s closing, he asked more of us to share our points of view both internally and publicly, so here we are.
Lastly, this graph below never ceases to amaze me on the impact of The Social Network on startups with YC applicants as a proxy.
If you got this far, thank you.
And don’t hesitate to let me know how I can help you.
Best,
Great write up, Casey! Looking forward to #2 ✌🏼
Looks like your StockTwits Top 25 URL points to the wrong site!