Walmart drops the $35 order minimum on its 2-hour ‘Express’ delivery service

In a move designed to directly challenge Amazon, Walmart today announced it’s dropping the $35 minimum order requirement for its two-hour “Express” delivery service, a competitor to Amazon’s “Prime Now.”  With Walmart Express Delivery, customers can order from Walmart’s food, consumables or general merchandise assortment, then pay a flat $10 fee to have the items arrive in two hours or less.

The service is useful for more urgent delivery needs — like diapers or a missing ingredient for a recipe, SVP of Customer Product, Tom Ward, noted in an announcement. They’re not meant to sub in for larger shopping trips, however — Express orders are capped at 65 items.

Today, Express Delivery is available in nearly 3,000 Walmart stores reaching 70% of the U.S. population, Walmart says. It builds on top of stores’ existing inventory of pickup and delivery time slots as a third option, instead of giving slots away to those with the ability to pay higher fees.

Like Walmart’s grocery and pickup orders, Express orders are shopped and packaged for delivery by Walmart’s team of 170,000 personal shoppers and items are priced the same as they are in-store. This offers Walmart a potential competitive advantage against grocery delivery services like Instacart or Shipt, for example, where products can be priced higher and hurried or inexperienced shoppers aren’t always able to find items or search the back, having to mark them as “out of stock.”

In theory, Walmart employees will have a better understanding of their own store’s inventory and layout, making these kind of issues less common. It will also have direct access to the order data, which will help it better understand what sells, what replacements customers will accept for out-of-stocks, when to staff for busy times, and more.

In addition to grocery delivery, Express Delivery competes with Amazon’s Prime Now, a service that similarly offers a combination of grocery and other daily essentials and merchandise. Currently, Prime Now’s 2-hour service has a minimum order requirement of $35 without any additional fees in many cases — though the Prime Now app explains that some of its local store partners will charge fees even when that minimum is met, and others may have higher order minimums, which makes the service confusing to consumers.

Walmart’s news comes at a time when Amazon appears to be trying to push consumers away from the Prime Now standalone app, too.

When you open the Prime Now app, a large pop-up message informs you that you can now shop Whole Foods and Amazon Fresh from inside the Amazon app. A button labeled “Make the switch” will then redirect you. Meanwhile, on Amazon’s website touting Prime’s delivery perks, the “Prime Now” brand name isn’t mentioned at all. Instead, Amazon touts free same-day (5 hour) delivery of best sellers and everyday essentials on orders with a $35 minimum purchase, or free 2-hour grocery delivery from Whole Foods and Fresh.

When asked why Amazon is pushing Prime Now shoppers to its main app, Amazon downplayed this as simply an ongoing effort to “educate” consumers about the option.

Walmart, on the other hand, last year merged its separate delivery apps into one.

After items are picked, Walmart works with a network of partners, including DoorDash, Postmates, Roadie, and Pickup Point, as well as its in-house delivery services, to get orders to customers’ doorsteps. This last-mile portion has become an key area of investment for Walmart and competitors in recent months — Walmart, for example, acquired assets from a peer-to-peer delivery startup JoyRun in November. And before that, a former Walmart delivery partner, Deliv, sold to Target.

This is not the first time Walmart has dropped order minimums in an attempt to better compete with Amazon and others.

In December, Walmart announced its Prime alternative known as Walmart+ would remove the $35 minimum on non-same day Walmart.com orders. But it had stopped short of extending that perk to same-day grocery until now.

To some extent, Walmart’s ability to drop minimums has to do with the logistics of its delivery operations. Walmart has been turning more its stores into fulfillment centers, by converting some into small, automated warehouses in partnership with technology providers and robotics companies, including Alert Innovation, Dematic and Fabric.

And because its stores are physically located closer to customers than Amazon warehouses, it has the ability to deliver a broad merchandise selection, faster, while also turning large parking lots into picking stations — another thing that could worry Amazon, which is now buying up closed mall stores for its own fulfillment operations. 

Walmart today still carries a $35 minimum on other pickup and delivery orders and same-day orders from Walmart+ subscribers.

Jumia co-CEO Jeremy Hodara talks African e-commerce, and his company’s path to profitability

This month, African e-commerce giant Jumia released its second full-year financials for Q4 and its fiscal year 2020. The results were mixed — active customers and gross profit increased, while orders and gross merchandise volume (GMV) fell.

A particular feature that has troubled the company since its inception in 2012 was also present, namely persistent adjusted EBITDA and operating losses. However, those metrics fell year over year, and the company, in a statement, said that it had demonstrated “meaningful progress on our path to profitability.”

The unevenness of Jumia’s business is also reflected in how its share price performed in the past year. In March 2020, the company hit rock bottom and traded at an all-time low of $2.15 after facing fraud allegations. But it hit an all-time high of $69.89 almost a year later this February. 

With the release of its financials, two things were top of TechCrunch’s mind: What made Jumia’s value swell by more than 3,000 percent in the last year, and will the e-commerce player’s unending losses end anytime soon?

I spoke with Jumia co-CEO Jeremy Hodara to get his insights on these two questions and on issues that have faced the company in the past.

Talking profitability with Jumia

This interview has edited for length and clarity.

TechCrunch: This time last year, Jumia was trading between $2 and $4. Now it’s within $40 to $50. What do you think has been the driving factor behind this?

Jeremy Hodara: What I think is really important about the stock rise is two things. First, in general, the world realized that there was a big paradigm shift in e-commerce and that e-commerce was the way to go for the future. This is something you can look at for every e-commerce company in the past 12 to 18 months. The second thing that happened is that we at Jumia have been very clear about the opportunities e-commerce represents in Africa. E-commerce is a real problem of access to consumption and has a strong value proposition to those who necessarily don’t fancy brick-and-mortar stores in Africa.

What we never really have proven is that you can build a profitable e-commerce business. However, I think that will change soon because what we’ve done quarter after quarter is to be disciplined to bring clarity that we’re going after a profitable business model and profitable growth. And as people understood and saw what we were doing, it also gave them more confidence about how exciting this opportunity is. In my opinion, what happened in the last 12 months was the combination of people understanding how important e-commerce is worldwide. Secondly, Jumia brought proof points that it was building a sustainable and profitable business model.

Would you say Andrew Left’s reversal in October and his decision to take long positions at Jumia also affected the share price?

Not really. Like I said earlier, I think it had to do with the story of e-commerce change for the future. That didn’t start in October; it started months before. Also, we being disciplined quarter after quarter to build what’s right started months before, so I can’t really comment if his decision affected our share price or if an investor’s negative or positive comments would change market sentiment towards our stock.

You’ve talked about how Jumia is trying to build a profitable business. But how’s it going to do that if the company reports losses quarter after quarter and year after year?

I think we’re on the right path, considering that our EBITDA losses reduced by 47 percent last quarter, and we’ll be trying to do so every quarter. We want to go about it by improving the efficiency of the business and opening new avenues for growth.

The most exciting thing about e-commerce is that first, you build large assets for your own use, but it becomes relevant for other stakeholders over time. For us, we have an application and website with very engaged visitors, and we’re exploring having third-party advertisers who place ads on the platform.

Our logistics service is also another way. We’re building tools and technology to equip our logistics partners and help them become more productive. This drives our costs per delivery down and is the type of benefit that comes with scaling. So I think there’s a path to profitability by opening the assets we’ve built for ourselves to benefit our ecosystem.

Jumia’s expenses dropped last year, but revenue also dropped despite a little increase in customer base. Aren’t those worrying signs?

On the revenue side, here’s how we should look at it. When you’re a marketplace, your revenue is the commission that you make from a transaction. So if you’re a seller on Jumia and sell something that costs $100 and your commission is 10 percent, your revenue inside the P&L of Jumia will be $10. If I buy a product from you at $90 and sell it to my consumer for $100, I’ll record $100 as the revenue.

That’s the insurance from the financial pinpoint between what you call the third-party and the first-party model. At the first-party model, you record as the revenue the value of the product. At the marketplace, you only record the commission. Jumia has, give or take, 10 percent of its business as the first-party model and 90 percent as the marketplace model. But that percentage changed over time, and when it did, you can see how the revenue went down.

So we don’t base our profitability on revenue. What is the right KPI for us is the gross profit as it shows the monetization of Jumia. It has been growing quarter after quarter, this time by 12% percent. Our active consumers growing 12 percent from 6.1 million in Q4 2019 to 6.8 million in Q4 2020 shows a disciplined growth towards profitability.

If there’s indeed a path to profitability, why did Jumia investors — Rocket Internet and MTN — exit the company? And does that put pressure on the company?

Oh, not at all. The fact that Jumia was able to gain support from the companies was a blessing, and they’ve come a long way with us. But like any investor after six to nine years, I think it was time for them to decide to leave the company, and I’ll say the company was lucky to have had them along our side from the beginning. Well, I can’t say for them, but for myself, I don’t think one can say that their leaving after so many years is a sign of distrust in our ability to become profitable.

One of the positives of your financials was JumiaPay. Does it tie into Jumia’s journey to being profitable?

JumiaPay is an amazing opportunity for us. Once you have a great commerce platform, you have a fantastic opportunity to build a great payments solution for your consumers. We can see that consumers are adopting it very fast, and I think this is because the platform also gives them access to other digital services where they top up their phone, pay bills and get loans. Also, it is a great payment method for consumers who want to prepay for services. And when you prepay for products, you make logistics more efficient and have more sales.

Sales remind me of the fraud issues in 2019 when some J-Force team members engaged in improper sales practices. What is Jumia doing to avoid situations like that?

It’s a lesson we’ve learnt, and we have put in the right compliance, the right internal control team to resolve such situations. I’ll say one of the reasons why we’re becoming one of the most professional organizations in Africa is because we now have these systems in place.

As an African company, how is Jumia addressing concerns around diversity, especially at top positions?

I think what’s really African with Jumia is who we are serving, our African sellers, our African consumers and our African team. In Nigeria, Juliet Anammah, who was the CEO of Jumia Nigeria, is now the chairperson of Jumia Group. I don’t know what constitutes an African or a non-African company, but what I can tell you is that our team is African, our consumers are African, and we’re selling on the continent every day. I think that’s what should make sense to our ecosystem.

Customer data platform Lexer raises $25.5M Series B for global expansion

Left to right: Lexer founders Dave Whittle, Aaron Wallis, Chris Brewer

Left to right: Lexer founders Dave Whittle, Aaron Wallis, Chris Brewer

The massive shift to online shopping during the COVID-19 pandemic means retailers need to analyze customer data quickly in order to compete against rivals like Amazon. Lexer, a customer data platform headquartered in Melbourne, Australia, helps brands manage data by organizing it on one platform, making analysis easier for small to medium-sized brands. The company announced today that it has raised $25.5 million in Series B funding for expansion in Australia, the United States and Southeast Asia.

The round was led by Blackbird Ventures and King River Capital, with participation from returning investor January Capital, and brings Lexer’s total raised so far to $33 million. Blackbird Ventures co-founder and partner Rick Baker will join Lexer’s board.

The company was founded in 2010 by Aaron Wallis, Chris Brewer and Dave Whittle, and its clients include Quiksilver, DC Shoes, John Varvatos and Sur La Table. The new funding will be used to add 50 more people to Lexer’s team, with plans to double its headcount in Australia, the U.S. and Southeast Asia. Whittle, the company’s chief executive officer, told TechCrunch it will also add more features to provide retailers with enterprise-grade customer data, insight, marketing, sales and service capabilities.

Brands use Lexer to increase their incremental sales, which includes sales to both existing and new customers, by helping them understand things like shopping patterns among different groups of visitors, which customers are most likely to make future purchases and what marketing strategies results in the most sales.

Lexer’s best-known competitors include Segments, which was acquired by Twilio for $3.2 billion last year, and Adobe Analytics. Whittle said Lexer’s key differentiator is providing an end-to-end solution.

While brands often have to use multiple data and analytics software to understand data from different sources, Lexer’s goal is to make everything accessible in one platform. “Our customers don’t have to engage expensive and time-consuming third parties for strategy, implementation, customization and project management,” he said.

Before Lexer’s Series B, most of its growth came from single brands, or groups of mid-market retail brands. Now it’s focusing on working with all sizes of brands, Whittle added.

The pandemic has forced many brands to place a greater emphasis on digital engagement to increase their online sales and stand out from other e-commerce merchants.

“There are literally hundreds of tactics we have enabled our customers to deploy to help them adapt to the limitations and barriers COVID put in place. For example, we helped retailers migrate offline customers to shop on their e-commerce sites,” said Whittle. “Another way was that if stock was low due to supply constraints caused by COVID, we helped retailers target their high-value and loyal customers to ensure customers satisfaction.”

Infra.Market becomes India’s newest unicorn with $100 million fundraise

The newest unicorn in India is a startup that is helping construction and real estate companies in the world’s second most populated nation procure materials and handle logistics for their projects.

Four year-old Infra.Market said on Thursday it has raised $100 million in a Series C round led by Tiger Global. Existing investors including Foundamental, Accel Partners, Nexus Venture Partners, Evolvence India Fund, and Sistema Asia Fund also participated in the round, which valued the Indian startup at $1 billion.

The new round, which brings Infra.Market’s total to-date raise to about $150 million, comes just two months after the Mumbai-headquartered startup concluded its Series B round. The startup was valued at about $200 million post-money in the December round, a person familiar with the matter told TechCrunch. Avendus Capital advised Infra.Market on the new transaction.

Infra.Market helps small businesses such as manufacturers of paints and cements improve the quality of their production and meet various compliances. The startup adds its load cells to the manufacturing facilities of these small businesses to ensure there is no lapse in quality, and also helps them work with other businesses that can provide them with better raw material and provide guidance on pricing. It also works closely with businesses to ensure that their deliveries are made on time.

These improvements, explained co-founder Souvik Sengupta, help small manufacturers land larger clients that have higher expectations from the businesses with which they engage. He said the startup has helped small manufacturers reach customers outside of India as well. Some of its clients are in Bangladesh, Malaysia, Singapore and Dubai.

“We are bringing a service layer to these small manufacturers, enabling them to grow their business. We don’t own the asset and are creating private label brands,” he said in an interview with TechCrunch in December. Infra.Market works with more than 170 small manufacturers and counts the vast majority of major construction and real estate companies such as giants Larsen & Toubro, Tata Projects and Ashoka Buildcon as its clients. Sengupta said the startup sells to more than 400 large clients and 3,000 small retailers.

Sengupta said in December that the startup was on track to hit the ARR (annual recurring revenue) of $100 million before the pandemic hit early last year. This nearly cut the startup’s business in half for at least two early months of the pandemic. But the startup has picked up pace again, and is now on track to hit the ARR of $180 million. The startup aims to grow this figure to $300 million by March.

“We are delighted to partner with Souvik and Aaditya in the growth journey of Infra.Market which is reshaping India’s construction materials supply chain. With pioneering technology innovation and the ability to stitch together private label brands, Infra.Market is positioned for strong growth, healthy economics and profitability,” said Scott Shleifer, Partner of Tiger Global Management, in a statement.

Sengupta added today: “We are seeing rapid acceleration in demand as Infrastructure and real-estate companies are looking to shift their procurement to get consistent quality and minimize delays.”

Jumia narrows losses, as its payment service grows in financial results

After years of losses, African e-commerce giant Jumia claimed significant progress towards profitability in its Q4 2020. Backing that claim, Jumia reported record gross profit and some improvements to its cost structure.

The company wrote in its earnings release that while “2020 has been a challenging year operationally with COVID-19 related supply and logistics disruption,” it had also proven “transformative” for its business model.

Let’s examine its financial results to see how Jumia fared during the pandemic year and see if we can see the same path to profitability discussed in its written remarks.

The results

Jumia’s core metrics were uneven in 2020. The company saw its user base grow by 12% in 2020, from 6.1 million customers in 2019 to 6.8 million customers. That means the company added 700,000 customers in 2020 compared to the 2 million customers it acquired the year before.

Other metrics were negative. The company’s gross merchandise value (GMV), the total worth of goods sold over a period of time, grew 23% from the previous quarter to €231.1 million. The company said this was a result of the Black Fridays sales in the quarter. However, when compared year-over-year, Q4 GMV was down 21% “as the effects of the business mix rebalancing initiated late 2019 continued playing out during the fourth quarter of 2020,” Jumia wrote.

Image Credits: Jumia

In terms of orders made on the platform, Jumia saw a 3% year-over-year drop from 8.3 million in Q4 2019 to 8.1 million in Q4 2020But while the company’s metrics were mixed during Q4 and the full-year 2020 period, there were encouraging signs to be found.

Last year, Jumia’s Q4 gross profit after fulfillment expense was €1.0 million. We reported at the time that the number’s positivity was commendable if merely another mile of the company’s path to profitability

The company built on that result in 2020, allowing it to report a record gross profit after fulfillment expense result of €8.4 million in the final quarter of last year. From a full-year perspective, the numbers are even starker, with Jumia managing just €1.5 million in 2019 gross profit after fulfillment expense; in 2020, that number grew to €23.5 million.

That Jumia managed those improvements while seeing its 2019 revenues of €160.4 million slip 12.9% in 2020 to €139.6 million is notable.

JumiaPay and improvement in losses and expenses

There are other metrics that are encouraging for Jumia.

Its gross profit reached €27.9 million in 2020, representing a year-over-year gain of 12%. Sales and Advertising expense decreased year-over-year by 34% to €10.2 million, while General and Administrative costs, excluding share-based compensation, came to €21.8 million in the year, falling 36% year-over-year.

In 2019, Jumia incurred a massive €227.9 million in losses, a 34% increase from 2018 figures of €169.7 million. But that changed last year as Jumia reported a smaller €149.2 million in operating losses, representing a 34.5% decrease from 2019

Turning from GAAP numbers to more kind metrics, Jumia’s Q4 2020 adjusted EBITDA loss also decreased. The company recorded an adjusted EBITDA of -€28.3 million in the final quarter of 2020, falling 47% year-over-year from 2019’s €53.4 million Q4 result. For the full 2020 period, Jumia reported €119.5 million in adjusted EBITDA losses, down 34.6% from FY19’s -€182.7 million result.

Jumia lost less money on an adjusted EBITDA basis in 2020 of any of its full-year periods we have the data for. Still, the company remains deeply unprofitable today and for the foreseeable future.

Fintech

Jumia’s fintech product, JumiaPay, has been a factor behind its improving metrics.

In Q1 2020, it processed 2.3 million transactions worth €35.5 million. That number grew to €53.6 million from 2.4 million transactions in Q2 2020. In the third quarter of last year, it recorded 2.3 million transactions with a payment volume of €48.0 million. For Q4, JumiaPay performed 2.7 million transactions worth €59.3 million.

In total, JumiaPay processed 9.6 million transactions with a total payment volume (TPV) of €196.4 million throughout 2020. TPV increased by 30% in Q4 2020 from its 2019 result and 58% in 2020 as a whole.

JumiaPay is a critical part of Jumia’s business, as 33.1% of its orders in Q4 2020 were paid for with the service, up from 29.5% in Q4 2019.

Share price and optimism around profitability

Jumia went public in April 2019. Since opening as Africa’s first tech company on the NYSE at $14.50 per share, the company’s stock has been on a rollercoaster ride.

It traded at $49 per share at one point before battling with scepticism about its business model, fraud allegations, and shorting by Andrew Left, a well-known short-seller and founder of Citron Research. What followed was the company’s share price crashing to $26 before reaching an all-time low of $2.15 on the 18th of March 2020.

Later, Left made a reversal after claiming Jumia had handled its fraud problems. He took long positions at the company and later proposed it would hit $100 per share. That change in market sentiment, coupled with the fact that Jumia changed its business model and halted operations in Cameroon, Rwanda, and Tanzania, enabled its share price to climb back, reaching an all-time high of $69.89 this February 10th.

Before today’s earnings call, Jumia was trading at $48.81. Since dropping its latest data, the company’s share price has expanded by around 10% to just over $54 per share as of the time of writing, indicating investor bullishness despite its continued operating and adjusted EBITDA losses

BigCommerce customers can now sell on Walmart’s online marketplace

BigCommerce has partnered with Walmart to allow its customers to sell on the Bentonville, Arkansas-based retailer’s ecommerce marketplace, it announced this morning. Shares of Austin-based BigCommerce rose sharply in pre-market trading after the news, gaining around 10% before the bell.

Walmart, best-known for in-person shopping, has proven an ecommerce success story in recent years. For example, in its most recent quarter while Walmart as a whole grew 7.3%, its ecommerce sales advanced 69%.

BigCommerce has also reported strong growth in recent quarters, supported in part by partnerships similar to the one that it announced today. The ecommerce SaaS provider rolled out an integration with Wish last year, for example.

In a call concerning its earnings, which were announced before the Walmart news was announced, BigCommerce CEO Brent Bellm told TechCrunch that his company had been impressed with customer uptake of the Wish integration. Regarding the Walmart partnership, in a second interview Bellm told TechCrunch that it was overdue on the BigCommerce side; given the historical success of the Wish deal, it will be curious to dig into how many of the ecommerce platform’s customers opt to sell on Walmart, and how quickly they do so.

TechCrunch also spoke with Walmart exec Jeff Clementz about the arrangement. He stressed Walmart’s online customer monthly-actives — 120 million, per his company — and the breadth of their demand; BigCommerce customers selling on Walmart could expand its product diversity, helping the traditionally physical retailer possible continue its rapid growth.

The two companies are incentivizing adoption of the deal amongst BigCommerce customers by waiving certain fees for a month for retailers that sign up to sell on Walmart; Clementz described it as the first time that his company had offered a “new-seller discount.”

TechCrunch has had its eye on BigCommerce for some quarters now, thanks in part to its 2020 IPO. But the company is also interesting as its regular earnings results provide a lens into the world of ecommerce growth amongst independent digital retailers. Shopify, a chief BigCommerce rival, provides a similar view into the ecommerce world.

Shopify previously integrated with Walmart in the middle of 2020.

Looking ahead, it will be interesting to see if the Walmart partnership helps BigCommerce continue its improving revenue growth. The company is in a marketshare race with Shopify. But while BigCommerce’s rival has posted impressive growth from its integrated solutions, like its payments service, the Austin-based company stresses what it calls a more open model. Shopify charges many customers a percentage of their transaction volume for using a third-party payment solution over its own, for example, which Bellm described as a “tax” during an interview.

“Merchant Solutions” revenue at Shopify, which it generates “principally” from “payment processing fees from Shopify Payments,” grew 116% in 2020 to a little over $2 billion.

So with BigCommerce collecting a partnership with Walmart to match Shopify’s own, we’re seeing not merely two ecommerce platforms go toe-to-toe on providing their customers with as much market access as they can, but two different business philosophies compete. Akin to Microsoft Teams and Slack, it’s a competition to spectate.

Shippo raises $45M more at $495M valuation as ecommerce booms

This morning Shippo, a software company that provides shipping-related services to ecommerce companies, announced a new $45 million investment. The new capital values the startup at $495 million. TechCrunch is calling the new funding a Series D as it is a priced round that followed its Series C; the company did not award the round a moniker.

Shippo’s 2020 Series C, a $30 million transaction that was announced last April, valued the company at around $220 million. D1 Capital led both Shippo’s Series C and D rounds, implying that it was content to pay around twice as much for the company’s equity in 2021 than it was in 2020. (Recall that investors doubling-down on previous bets as lead investor in successive rounds is no longer considered to be a negative signal concerning startup quality, but a positive indicator.)

Why raise more money so soon after its last round? According to Shippo CEO and founder Laura Behrens Wu, her company made material progress on customer acquisition and partnerships last year. That led to a decision around the time of Shippo’s Q4 board meeting with her investors that it was a good time to put more capital into the company.

In a sense the timing is reasonable. As Shippo scales its customer base, it can negotiate better shipping deals with various providers, which, in turn, help it continue to attract new customers. Behrens Wu noted in an interview with TechCrunch that when her company was helping its early customers ship just a few packages, shipping companies it supports on its platform didn’t want to meet with the startup. Now armed with more volume, Shippo can recycle customer demand into partner leverage, improving its total customer offering.

Behrens Wu said that Shippo had secured such a partnership with UPS before it raised its new round.

Turning to growth, Shippo doubled its platform spend, or “GPV” last year. GPV is the company’s acronym for gross postage volume. It roughly tracks with revenue, TechCrunch confirmed. So Shippo likely doubled its top-line last year. That’s good. Shippo wants to do that again this year, Behrens Wu told TechCrunch. The startup will also double its headcount this year, adding around 150 people.

Now flush with more capital, what’s next for Shippo? Per its CEO, the startup wants to invest more in platforms (where Shippo is baked into a marketplace, for example), international expansion (Shippo only does a “little bit” of international shipping, per Behrens Wu), and double-down on what it considers its core customer base.

TechCrunch was curious about how broad Shippo might take its product from its original home in shipping labels. The startup said that there’s lots of room in the journey of a packaged, from pre-purchase on, where her company might expand into. However, Behrens Wu cautioned that such a broadening of product work is not an immediate focus at her company.

Let’s see how long the current ecommerce boom lasts and how far this new capital can take Shippo. If it doubles in size again this year we’ll have to start its IPO countdown sometime in mid-2022.

Furniture startup Burrow raises $25M

Burrow, a startup that first launched with a modular sofa, eventually aims to sell you furniture for every room in your home. Today, it’s announcing that it’s raised $25 million in Series C funding.

Burrow participated in the Y Combinator accelerator in 2016 with an initial aim of building sofas that, by virtue of being modular, were easier to move and adapt to a variety of living spaces. Now its product lineup also includes armchairs, ottomans, tables, rugs, lights and other accessories. In fact, the company says it launched 19 new products last year, including a modular shelving system.

When I asked via email about this expansion, co-founder and CEO Stephen Kuhl told me that the company follows “a very rigorous research process” involving customer surveys, focus groups, online search data and more.

“The goal is to match the largest customer needs with the biggest market opportunities,” Kuhl said. “Once it’s clear what category to enter, we use our research to define how we’re going to develop the best version(s) of each product for our customer base, and how we’re going to build the best end-to-end customer experience around that product. I’m probably going to jinx it, but every single product we’ve ever launched has exceeded projections, a testament to our customer-centric, research-driven design process.”

Burrow says it saw triple-digit revenue growth last year, a trend it anticipates continuing in 2021. Kuhl suggested that the startup is also benefitting from broader trends accelerated during the pandemic, including the shift to e-commerce, an increased focus on the home and people moving to the suburbs (and buying more furniture in the process).

“Over the last 18 months, we launched innovative new products in every category of living room furniture,” he said. “In 2021, we’ll continue that expansion into every room of the home.”

The startup has now raised a total fo $55 million. Its Series C was led by Parkway Venture Capital, with Managing Partner Gregg Hill joining Burrow’s board of directors. NEA, Red & Blue Ventures, Winklevoss Capital and Michael Seibel also participated in the new round.

Burrow says it will use the new funding to launch new products while also investing in operations and building out its international supply chain.

“Parkway looks for brands that are changing how we live today as well as innovating to stay ahead,” Hill said in a statement. “We believed in Burrow’s business model from the beginning, having invested in their Series B round, and recognize all their future potential.”

 

Pipe17 closes $8M to connect a range of e-commerce tools without any code required

This morning Pipe17, a software startup focused on the e-commerce market, announced that it has closed $8 million in funding.

Pipe17’s service helps smaller e-commerce merchants connect their digital tools, without the need to code. With the startup’s service, e-commerce operations that may lack an in-house IT function can quickly connect their selling platform to shipping, or point-of-sale data to their ERP.

The venture arm of a large logistics investor GLP, GLP Capital Partners led the round.

Pipe17 co-founders Mo Afshar and Dave Shaffer told TechCrunch in an interview that the idea for their startup came from examining the e-commerce market, noting the energy to be found concerning selling platforms, and the comparative dearth of software to help get e-commerce tools to work together; Shopify and BigCommerce and Shippo are just fine, but if you can’t code you might wind up schlepping data from one platform to the next to keep your e-commerce operation humming.

So they built Pipe17 to fill in the gap.

According to Afshar, Pipe17 wants to simplify operations for e-commerce merchants through the lens of connection; the pair of co-founders believe that easy cross-compatibility is the key missing ingredient in the modern-day e-commerce software stack, likening the current e-commerce maket to the IT and datacenter worlds before the advent of Splunk and Datadog.

The prevailing view in the e-commerce industry, the co-founders explained, is that to fix a problem e-commerce players should purchase another application. Pipe17 thinks that most ecommerce companies probably have enough tooling, and that they instead need to get their existing tooling to communicate.

What’s neat about the startup is that it’s building something that we might call no-code-no-code, or no-code to a higher degree. Instead of offering a interface for non-developers to visually map out connections between different software services, it has pre-built what might need to be mapped. Just pick the two e-commerce services you want to link, and Pipe17 will connect them for you in an intelligent manner. For folks who find any sort of coding hard (which probably describes a lot of indie online store operators), the method could be an attractive pitch.

The startup’s customer target are sellers doing single-digit millions to nine-figures in year sales.

Why did Pipe17 raise capital now? The co-founders said that there are only so many chances to simplify a large market, akin to what Plaid and Twilio did for their own niches, so taking on funds now made sense. In Afshar’s view, e-commerce operations is going to be simply massive. Given the growth in digital selling that we saw last year, it’s a perspective that is hard to dispute.

The niche that Pipe17 wants to fill has more than one player. While the startups themselves might quibble about just how much competitive space they share, Y Combinator-backed Alloy recently raised $4 million to build a no-code e-commerce automation service. Which is related to what Pipe17 does. It will be interesting to see if they wind up in competition, and, if so, who comes out on top.

Wholesale marketplace Abound raises $22.9M

Abound, an online marketplace that helps independent retailers stock their shelves with new products from up-and-coming brands, is announcing that it has raised $22.9 million in its first institutional round of funding.

CEO Bill Shope founded the company with Niklas de la Motte and Drew Sfugaras. He told me that small retailers are constantly on the hunt for new products, which means attending trade shows several times a year. Abound, on the other hand, allows them to find those products through an online shopping experience, with wholesale prices (a.k.a. discounts of up to 50 percent), free returns and, in some cases, Net 60 sale terms (meaning retailers don’t have to pay until 60 days after the invoice).

The startup actually began as a community connecting manufacturer’s representatives and retailers, but Shope said the team “kept seeing the limits of that model,” while some retailers were asking to buy from the brands directly. So the team decided to support that experience, starting out by recruiting 50 brands with an offer of free consulting — as long as they were willing to be one of the brands on the marketplace when it launched in October 2019.

Of course, the retail environment changed dramatically in the following months, as the pandemic forced stores to close and/or adopt social distancing measures. Shope said the startup saw a dramatic, short-term decline in sales — but things quickly bounced back and kept growing as “all the trade shows got canceled.”

Partly, that’s because Abound also supports e-commerce retailers, but Shope noted that “the brick and mortars that were succeeding had a very powerful hybrid model,” where they continued to operate a physical store while also quickly launching websites and adding features like curbside pickup.

Abound screenshot

Image Credits: Abound

Abound says that since the beginning of 2020, it has added 180,000 new products in categories like baby and kid products, beauty, food and drink, home and living, jewelry and more. And monthly sales volume has increased 20-fold.

“From a retail perspective, I don’t think there’s any going back [to pre-COVID buying models,]” Shope said. After all, even before the pandemic, independent retailers had to compete with giants like Amazon and Walmart. “You’re not going to beat them on convenience products. The store that’s helping consumers discover new brands, or donating 10 percent of profits to charities — those are types of stories and products you need to have to draw consumers into your store.”

The funding was led by Left Lane Capital, with participation from RiverPark Ventures, All Iron Ventures and branding firm Red Antler. This will allow Abound to grow the team, expand internationally and continue developing the product.

In a statement, Left Lane Managing Partner Harley Miller said:

My family has been in independent retail for the last 20 years. Growing up, I attended many industry events, so I have long understood how under-optimized the wholesale buying and selling experience is. With the cancellation of most major trade shows in 2020 and 2021, emerging brands and independent retailers have been seeking new distribution channels to support their business ambitions. Abound offers an exciting and unique alternative to the legacy wholesale model at a time when small businesses need it most.