6 River Systems co-founder on the state of warehouse robots

Robots have conquered ProMat. The supply chain and logistics show is a kind of perfect microcosm of where the industry is heading. Many of the show’s main attractions have moved from center stage to the physical margins of the show floor, while competitors like 6 River Systems and Locus grab the spotlight — my interviews with both happened in conference areas located on the second floor of their massive booths.

Among other things, this proved an ideal setting for speaking with founders and executives of some of the space’s biggest players. Jerome Dubois ticks both of those boxes as the co-founder of 6 River Systems, and he now serves as VP of Shopify Logistics, following the e-commerce giant’s 2019 acquisition of the robotics firm.

We spoke about the role of Amazon in the company’s foundation and what the future looks like for robotic picking and interoperability.

TC: What is the 6 River story?

JD: I’ve been in the industry for 25 years. Got my start on the software side, so warehouse management systems — [at] a company called Yantra, which is now a part of IBM. I joined Kiva in 2008; was there through the acquisition. I was [Locus CEO Rick Faulk’s] predecessor and Bruce Welty was my customer. I’m the one who told Bruce that “we’re shutting your systems down.”

Small worlds inside of small worlds.

Yeah. But we have a ton of respect for that team. We’re the two leaders in this space, between Locus and us. Fetch is probably a distant third after that.

Both you and Fetch were acquired.

Yeah. We were acquired in 2019. Fetch was acquired [in 2021].

Why was that the right move? Had you considered IPO’ing or moving in a different direction?

In 2019, when we were raising money, we were doing well. But Shopify presents itself and says, “Hey, we’re interested in investing in the space. We want to build out a logistics network. We need technology like yours to make it happen. We’ve got the right team; you know about the space. Let’s see if this works out.”

What we’ve been able to do is leverage a tremendous amount of investment from Shopify to grow the company. We were about 120 employees at 30 sites. We’re at 420 employees now and over 110 sites globally.

Amazon buys Kiva and cuts off third-party access to their robots. That must have been a discussion you had with Shopify.

Up front. “If that’s what the plan is, we’re not interested.” We had a strong positive trajectory; we had strong investors. Everyone was really bullish on it. That’s not what it’s been. It’s been the opposite. We’ve been run independently from Shopify. We continue to invest and grow the business.

From a business perspective, I understand Amazon’s decision to cut off access and give itself a leg up. What’s in it for Shopify if anyone can still deploy your robots?

Shopify’s mantra is very different from Amazon. I’m responsible for Shopify’s logistics. Shopify is the brand behind the brand, so they have a relationship with merchants and the customers. They want to own a relationship with the merchant. It’s about building the right tools and making it easier for the merchant to succeed. Supply chain is a huge issue for lots of merchants. To sell the first thing, they have to fulfill the first thing, so Shopify is making it easier for them to print off a shipping label.

Now, if you’ve got to do 100 shipping letters a day, you’re not going to do that by yourself. You want us to fulfill it for you, and Shopify built out a fulfillment network using a lot of third parties, and our technology is the backbone of the warehouse.

Your technology was built for brownfield structures.

That’s correct. We can go in and just implement with the technology. We can go into existing customer warehouses without having to change anything. That allows for a very quick implementation timeframe. That’s one of the big advantages. We get to that double productivity in a matter of weeks, as opposed to having to wipe out a building and start fresh with a new system.

But if they want to go greenfield, you can start from scratch and actually build around the technology.

That’s right. Maybe 10% of our install base is greenfield.

Watching you — Locus or Fetch — you’re more or less maintaining a form factor. Obviously, Amazon is diversifying. For many of these customers, I imagine the ideal robot is something that’s not only mobile and autonomous, but also actually does the picking itself. Is this something you’re exploring?

Most of the AMR (autonomous mobile robot) scene has gotten to a point where the hardware is commoditized. The robots are generally pretty reliable. Some are maybe higher quality than others, but what matters the most is the workflows that are being enacted by these robots. The big thing that’s differentiating Locus and us is, we actually come in with predefined workflows that do a specific kind of work. It’s not just a generic robot that comes in and does stuff. So you can integrate it into your workflow very quickly, because it knows you want to do a batch pick and sortation. It knows that you want to do discreet order picking. Those are all workflows that have been predefined and prefilled in the solution.

With respect to the solving of the grabbing and picking, I’ve been on the record for a long time saying it’s a really hard problem. I’m not sure picking in e-comm or out of the bin is the right place for that solution. If you think about the infrastructure that’s required to solve going into an aisle and grabbing a pink shirt versus a blue shirt in a dark aisle using robots, it doesn’t work very well, currently. That’s why goods-to-person makes more sense in that environment. If you try to use arms, a Kiva-like solution or a shuttle-type solution, where the inventory is being brought to a station and the lighting is there, then I think arms are going to be effective there.

Are these the kinds of problems you invest R&D in?

Not the picking side. In the world of total addressable market — the industry as a whole, between Locus, us, Fetch and others — is at maybe 5% penetration. I think there’s plenty of opportunity for us to go and implement a lot of our technology in other places. I also think the logical expansion is around the case and pallet operations.

Interoperability is an interesting conversation. No one makes robots for every use case. If you want to get near full autonomous, you’re going to have a lot of different robots.

We are not going to be a fit for 100% of the picks in the building. For the 20% that we’re not doing, you still leverage all the goodness of our management consoles, our training and that kind of stuff, and you can extend out with [the mobile fulfillment application]. And it’s not just picking. It’s receiving, it’s put away and whatever else. It’s the first step for us, in terms of proving wall-to-wall capabilities.

What does interoperability look like beyond that?

We do system interoperability today. We interface with automation systems all the time out in the field. That’s an important part of interoperability. We’re passing important messages on how big a box we need to build and in what sequence it needs to be built.

When you’re independent, you’re focused on getting to portability. Does that pressure change when you’re acquired by a Shopify?

I think the difference with Shopify is, it allows us to think more long-term in terms of doing the right thing without having the pressure of investors. That was one of the benefits. We are delivering lots of longer-term software bets.

6 River Systems co-founder on the state of warehouse robots by Brian Heater originally published on TechCrunch

Replo gives businesses a low-code option for creating Shopify landing pages

This is a tale as old as time: a small e-commerce owner wants to build a great landing page for their company, but the available tools only get them so far, and they don’t have the funds to hire a developer.

This is where Replo comes in, offering a low-code web platform and marketplace so that businesses can build customizable websites similar to the way a child builds with Legos.

The company is currently focused on Shopify users and offers hundreds of built-in templates that Replo shows you how to use or helps you build a page from scratch.

Users can change text, build out sections, change out products or save sections of text to a library for use on other pages. In addition, there is a section library. It also integrates with a user’s Shopify store.

You can start using Replo for free with one user and get unlimited features and previews. The next level starts at $99 a month.

Replo is targeting mid-market e-commerce companies, those that sell between $1 million and $100 million per year. Co-founder Yuxin Zhu called this “an interesting problem” because there are a spectrum of e-commerce companies from the mom-and-pop with two people to a large household name that is working lean with 10 people.

“They don’t have any developers or have millions of dollars to hire expensive engineers,” he told TechCrunch. “However, they all still need to launch content and build out their e-commerce experience, and the part that was interesting to us is that this was a solvable problem.”

The 2-year-old company was founded by Zhu and Noah Gilmore, who know a thing or two about using technology to make something better. While undergraduates at UC Berkeley, they launched and sold Berkeleytime.com, a platform that digitized Berkeley’s course scheduling system.

Replo Noah Gilmore Yuxin Zhu low code Shopify

Replo Noah Gilmore and Yuxin Zhu (Image credit: Replo)

Prior to starting Replo, Zhu and Gilmore held senior engineering and management roles at Uber and Plangrid, respectively. Rounding out the team at Replo is Justin Wiley, former vice president of business development at JUMP, and Steven Schlaefer, who was previously with LiveRamp.

The founders honed the company at Y Combinator and was part of its Summer 2021 batch. Today, the company announced a $4.2 million seed round from backers, including Y Combinator, Infinity Ventures, La Famiglia, Figma Ventures, Guillermo Rauch (Vercel) and a group of strategic investors from the e-commerce space.

Meanwhile, connecting with Shopify is big. Shopify processed $175 billion in online sales in 2021, and there were over 6 million Shopify Plus stores in 2022.

So Replo is not alone in building infrastructure for these merchants or attracting venture capital for their approach. For example, Triple Whale, Postscript, Shop Circle and Popup all raised in the past year for their respective tools to help Shopify merchants in building their businesses.

Since officially launching the platform in 2022, Replo has over 1,000 brands and agencies using it and 300 paying customers that were onboarded in the last three months, Zhu said.

Much of the new funding will go into making strategic hires in engineering and product development to manage the demand the company is currently seeing.

“Word-of-mouth is very much a positive and a negative,” Zhu said. “It’s good when everyone starts talking about it, but we also want to build out a community and a support channel so things can happen without us, too.”

Replo gives businesses a low-code option for creating Shopify landing pages by Christine Hall originally published on TechCrunch

Triple Whale raises $25M for its Shopify data platform

Shopify powers a massive number of e-commerce sites, so it’s also no surprise that there is a vast ecosystem of tools around it that help these merchants manage all aspects of running their stores. Triple Whale, a Columbus, Ohio-based startup, focuses on providing Shopify store owners with a single platform that brings together all of their analytics into a single service to help them improve their conversion numbers and get better insights into their marketing campaigns. Using all of this data, the team is now also starting to build smart, AI-based tools on top of it.

The company today announced that it has raised a $25 million Series B round from NFX and Elephant, with strategic participation from Shopify itself. That’s on top of the company’s 2022 $24 million Series A round (led by Elephant) and its $2.7 million seed round (led by NFX). To raise this much these days, startups have to show considerable traction. The team says it saw 1,400 percent year-over-year growth, with over 5,000 brands now using its service. The company notes that these brands generated over $14 billion in sales last year.

Image Credits: Triple Whale

Triple Whale was co-founded by AJ Orbach (CEO), Ivan Chernykh (CTO) and Maxx Blank (COO). Orbach and Blank, who grew up together in the same neighborhood in Jerusalem, came into the Shopify ecosystem by running their own brands and stores on the platform, with Chernykh joining them at Triple Whale as their technical co-founder. The idea behind Triple Whale was to take a lot of the processes they used to run their stores and turn them into a product.

“I took the spreadsheets that I was using to track my ad spent and the overall KPIs that I needed to watch, and we took that and we productized it and made it into a mobile app that a lot of people liked,” Orbach explained. “We took a lot of the playbook from what we learned in D2C with influencer marketing and really applied it to a community that we found on Twitter — which was very influential in the D2C space and we used that playbook to get a lot of the traction.”

Just around this time in late 2020, Apple launched iOS 14 and with that, it’s new privacy features. This meant that many store owners couldn’t rely on the data they were getting from Facebook anymore, so Triple Whale built a new attribution system for them (dubbed Pixel) which is now at the core of its platform.

AJ Orbach (CEO), Maxx Blank (COO) and Ivan Chernykh (CTO)

“The data coming from Facebook was just a mess. There was no way we could make any sense of it. And so we said, we have to build attribution,” explained Blank. “First of all, our clients are suffering because they don’t have visibility, but also, if we want to start building automation, we need to correct data.”

With Pixel, Triple Whale can offer first-party attribution and real-time data for merchants, but what the team is now focused on is building out its automation, machine learning and generative AI-based tooling around that. Some of that is pretty straightforward, like its new rules engine and ‘AI Timing’ feature which helps merchants automate their media buying, for example.

“We will give you the best time to buy over the week based on your data and then you’ll be able to use our rules engine to, for example, shut the ad off between 12 and 6 at night so you don’t waste money,” Blank explained.

Image Credits: Triple Whale

Using generative AI, the team also plans to soon launch new services that will help merchants generate ad copy and images. It’s also soon launching a new tool, Lighthouse, which looks for anomalies (maybe a product is selling significantly faster than usual) and then alerts users and recommends potential actions to capitalize on this.

As the founders noted, the core idea was always to offer a centralized data platform, a layer of visualization on top of that and then automation tools that help users leverage this data to grow their businesses.

The team tells me that many of the brands on its service are currently generating between $1 million and $50 million per year. But with many larger brands now also starting to use its service, the team is also starting to look into how it can best serve these larger customers. The company’s pricing is based on which tools a merchant wants to use, but its full-stack suite currently sells for $400/month, with the dashboard without Pixel attribution costing $100/month.

“Triple Whale has built an excellent marketing analytics platform that equips multi-channel merchants with the marketing insights they need in a fast-evolving online retail landscape,” said Sabrina Frias, Corporate Development Manager at Shopify. “This strategic investment will help scaling merchants better understand the impact of their marketing spend to scale operations. We look forward to seeing what this team can do!”


Triple Whale raises $25M for its Shopify data platform by Frederic Lardinois originally published on TechCrunch

Product Managers Look For A Better Way To Deliver Products To Customers

Product managers are starting to move away from using Amazon
Product managers are starting to move away from using Amazon
Image Credit: Open Grid Scheduler / Grid Engine

So if you were a product manager and you wanted to both advertise your product to your customers and make it easy for them to buy it from you, how would you go about doing that? If you are like most of us, you would probably use your product development definition to make sure that it got included in Amazon’s inventory. After all, they are one of the largest firms out there and when people go to buy something, they almost always go to Amazon first. However, what if there was an alternative? What if there was a better way to go about advertising and shipping your product? Would you be interested?

The Problem With Amazon

There is no question that Amazon has a lot of reach. Your potential customers probably already use Amazon. If you were a product manager who was looking to boost your sales there is a good chance that you would turn to Amazon. Once you did this, you would add your product to Amazon’s marketplace. Once that was done, you could then use the e-commerce giant’s fulfillment service to package and ship the orders. This would supplement the business that you were already handling yourself. This would look good on anyone’s product manager resume, right?

Then time would march on. It is entirely possible that further on down the line you may find yourself pulling your products from Amazon. The reason that you might be doing this is because of fulfillment costs and seller fees that shaved your margins. Where could you move your online business if you were not going to be using Amazon? You could move it to e-commerce technology company Shopify, which has begun rolling out its own physical distribution service. Despite the vast reach of Amazon’s marketplace, as a product manager you may realize that if you’re trying to build something such as a brand or a relationship with your customers, Amazon’s may not be the best place. In fact, you have even noticed that at times Amazon was advertising their Amazon competing products on your Amazon page.

A lot of product managers who are looking to reach customers and fulfill orders have many more options these days. Amazon’s dominance of digital retail sales has led to a fast-growing ecosystem of startups and services aimed at matching different parts of Amazon’s sprawling network and at helping product managers and brands of all sizes meet consumer expectations set by the e-commerce heavyweight. Taken together, the businesses are creating what amounts to what could be called a virtual logistics system in Amazon’s shadow for product managers racing to keep up with the sector’s leader. This is creating new competition for Amazon even as it continues to upend traditional retail and distribution strategies.

Alternatives To Amazon

So why would a product manager side-step Amazon and go with one of their competitors? Some of the new offerings cater to product managers who may sell on Amazon but don’t want to pay the company’s fulfillment charges, or that view Amazon as a potential competitor. Product managers are not alone in feeling this way – some major brands such as Nike Inc. have pulled back from selling directly through Amazon. These firms have chosen for a variety of reasons to use tools they’ve either built themselves or brought in from other companies. The firms that are competing with Amazon include Shopify, Wix.com and Squarespace. These firms help sellers set up digital stores and process payments. A growing lineup of new and established software firms are offering tailored technology to tell retailers where to keep their inventory.

Just presenting your products to your customers is not enough. You also have to be able to ship them to your customers. New operators like ShipBob and Quiet Logistics fulfill orders for direct-to-consumer brands through their own warehouses that allow product managers put their inventory closer to customers for faster shipping, To help companies match Amazon’s growing network of distribution centers, on-demand warehousing startups such as Flowspace Inc. and Flexe Inc. connect product managers to warehouses with space to share. Robotics companies like 6 River Systems and GreyOrange supply automation to mimic Amazon’s robot-heavy handling while software companies such as Shippo, ShipHawk and ShipHero help product managers book shipments and track order deliveries.

The upstarts have built business as more established companies including the big parcel carriers have started to tailor services to businesses looking for fast and nimble ways to reach consumers. Amazon accounts for roughly 37.6% of U.S. e-commerce sales. The site’s seemingly endless range of goods has conditioned shoppers to order everything from cell phones to coffee makers online. Many expect shipping for those purchases to be fast, free and trackable. Amazon has created a huge level of expectation. However, Amazon by itself can only fulfill part of it, from a service provider standpoint. Shopify and online marketplace eBay Inc., companies that are best known for helping customers sell goods online, plan to offer physical distribution services, using technology to stitch together networks made up of third-party warehouse operators. Shopify, bought logistics automation company 6 River Systems this and has seven U.S. fulfillment locations says it gives smaller logistics providers access to technology. They can also can offer product managers lower rates than they could negotiate on their own. Shopify tells them where to send their products, and they can fulfill their products in two days to 99% of the population at a reasonable rate.

What All Of This Means For You

Product managers’ product manager job description tell them that they have products that they would like to have their customers buy. The challenge that they face is finding ways to get customers to notice their products and then getting their products to their customers when they purchase them. One of the simplest ways to go about doing this is to work with Amazon. All you have to do is add your product to Amazon’s inventory of products and allow Amazon to handle the shipping and delivery of your product. However, there are some downsides to doing this. Is there a better way?

Many product managers see Amazon as being a way to extend the business that they are already a part of. Their products can be listed on Amazon’s web site and shipped to customers from Amazon’s warehouses. However, over time product managers may discover that that the cost of using Amazon for these services is quite high. Additionally, if Amazon starts to sell a competing product they may advertise their product on your Amazon web page leading to fewer sales. Alternative providers such as Shopify have appeared in the past few years. They have created a virtual logistics system in Amazon’s shadow for product managers to use. Shopify, in partnership with PayPal, has established a physical distribution service that product managers can use to get their products to their customers. Product managers can now advertise and ship their products at lower rates then they could get from Amazon.

The ultimate goal of any product manager is to make their product as successful as possible. In order to make that happen, we have to find ways to sell as much of our product as possible while keeping as much of the money that comes in as we can. Amazon is a great way to achieve the first goal, but it may not allow us to reach our second goal. New companies like Shopify are starting to provide product managers with new options for advertising and shipping their products to customers. Product managers need to evaluate what their options are and make the decisions that will allow them to make their products as successful as possible.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What other Amazon services do product managers have to consider when evaluating alternatives?

Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Let’s face it, being a product manager for a hardware store does not seem like it would really be a cutting edge job. Hardware stores have been around for a long time and we all know what they do: sell a lot of different things that we can use around the house. None of this really seems to be all that well suited for an e-commerce approach – don’t you have to touch what you are buying? The Ace Hardware product managers don’t think so. They’ve made a decision to update their product development definition and try to go digital.

The post Product Managers Look For A Better Way To Deliver Products To Customers appeared first on The Accidental Product Manager.

Shopify agrees to consumer safety tweaks in Europe

Shopify has agreed to make changes linked to shopper safety and combating fakes after a regulatory intervention in the European Union following a number of complaints, the Commission said today.

The changes agreed to include a commitment to create a “fast and effective” ‘notice and action’ procedure for national consumer authorities to report problems they spot; and an agreement to change its templates to encourage traders to be more transparent with consumers.

Per the EU, the complaints — which it said peaked during the COVID-19 pandemic — mainly related to web stores hosted by the B2B e-commerce platform which were found to have engaged in illegal practices, such as making fake offers and fake scarcity claims; supplying counterfeit goods; or not providing their contact details.

It said Shopify has agreed to take down shops when concerns are raised with it by national consumer protection authorities in the EU — and to provide “relevant company details” to the regulators.

As regards its templates, the EU said Shopify has committed to including fields for company information and contact details in templates for web shops’ contact pages and generators for Terms and Conditions, Privacy Policies and Refund Policies.

It has also agreed to provide clear guidance to traders on applicable EU consumer law, it added.

The background here is the EU launched a dialogue with Shopify in July 2021 in conjunction with the EU’s network of national consumer protection (CPC) authorities to press Shopify to make changes to address illegal practices of traders on its platform.

In a statement, justice commissioner Didier Reynders welcomed Shopify’s commitments:

Almost 75% of internet users in the EU are shopping online. This is a huge market for scammers and rogue traders to exploit, and they will continue to do so unless we act. We welcome Shopify’s commitment to ensure that traders operating on its platform are aware of their responsibilities under EU law, and are taken down if they break the rules.

The EU added that national consumer authorities in the region have also agreed to reinforce their cooperation with the Canadian Competition Bureau against Shopify traders that are not based in the EU/EEA — suggesting they will seek to alert Shopify’s domestic regulator to consumer protection issues that might affect users elsewhere.

The bloc said Shopify’s implementation of the commitments will be monitored by the CPC, adding that national consumer protection authorities could also decide to launch actions at a national level to ensure EU standards are upheld.

A similar EU-CPC dialogue procedure recently involving TikTok — also kicked off in response to a series of complaints — led the video sharing platform to make some commitments to beef up ad disclosures.

While Amazon also recently bowed to coordinated pressure from EU consumer protection regulators — agreeing to ditch Prime cancellation dark patterns in the region after another one of these CPC interventions.

Shopify agrees to consumer safety tweaks in Europe by Natasha Lomas originally published on TechCrunch

Keith Rabois’ OpenStore bags new funding as valuation soars to $970M

Many of the e-commerce roll-up companies, also known as aggregators, slowed down this year after a record 2021. However, some younger companies in this space are still thriving.

One of these is OpenStore, a company founded in 2021 as a way for Shopify entrepreneurs looking to move on to sell their businesses in a matter of days with a cash offer and less stressful experience. Over the past 18 months, OpenStore acquired dozens of businesses representing tens of millions in revenue.

The early success of the company may lie in the makeup of its founders: OpenStore is led by some heavy hitters, including Founders Fund general partner Keith Rabois and Jack Abraham, Atomic’s founder and managing partner, who started the company along with Matt Lanter and Jeremy Wood.

“We’ve been disciplined, applying the same principles that I have been doing for the past 23 years,” Rabois told TechCrunch.

Continued growth

While aggregators this year have announced layoffs and even wound down their acquisition divisions, OpenStore “grew substantially, increasing the number of brands and tripling the size of the team,” Rabois said. The company now has more than 100 employees.

In addition, while funding to aggregators has slowed to a comparative trickle — $9 billion of funding went into aggregators by September 2021, compared with $2 billion over the same period in 2022, per the Financial Times — the Miami-based company is among the recipients of some of those recent investment dollars. To wit, OpenStore just closed on $32 million in a round led by Lux Capital that values it at $970 million. The company said this is a 25% increase in the company’s valuation from its previous round of $75 million in funding announced in November 2021.

The new round brings OpenStore’s total equity funding to over $150 million from investors that include Atomic, Founders Fund, General Catalyst and Khosla Ventures.

“The round was preempted,” Rabois said. “We have a fair amount of capital on the balance sheet and were looking to raise next year, but Lux reached out to me. I respect them and their strategy and was receptive to working with them.”

OpenStore’s acquisition “sweet spot” is U.S.-based, direct-to-consumer brands that have between $1 million and $10 million gross merchandise volume, Rabois said.

Josh Wolfe, Lux Capital’s founder and managing director, said via email that the firm “believes OpenStore’s model is the future of online retail,” and that its “focus on accelerating the path to liquidity for Shopify merchants means that OpenStore is especially relevant and valuable in challenging economic times.”

The company is also ramping up its acquisition pace and will use some of that new equity to continue growing the team and acquire brands, he said. Brand acquisitions include apparel brands Jack Archer, Barn Chic Boutique, Yogaste and Wearva.

OpenStore’s longer-term goal, according to the company, is to “bring the experience of spontaneous discovery back online” in a new way of shopping that connects merchants with customers via one shopping experience driven by data, information and capital.

Much of these efforts will be led by David Zhu, a former DoorDash engineer who joined OpenStore in May as head of engineering. He will continue developing the company’s technology, including automating the process of acquiring merchants on Shopify and accelerating the operational efficiencies running these online stores through OpenStore, even going so far as to reduce the acquisition offer from the current 24 hours down to an hour, the company said.

Challenging times

Aggregators in general purchase companies from marketplaces like Amazon and Shopify, with the goal of growing them using technology and logistics expertise. Money poured into these kinds of companies, touched off in part by Thrasio’s seemingly quick rise to the top in 2020.

They apparently overdid it, with funding drying up this year.

There are myriad reasons why this happened. Taliesen Hollywood, director of specialist M&A at London-based Hahnbeck, brokers deals with aggregators and told TechCrunch that it is “not so much that any particular aggregator or brand owner is struggling, it is that online retail as a whole has had a very difficult year.”

“The deceleration or reversal in growth for most of these brands compared to the COVID peak, combined with increased costs, most notably in shipping but also in pay-per-click advertising and others, has made for difficult trading conditions,” he added. “Almost all brand owners are feeling this.”

Hollywood went on to say that the aggregator sector continues to be fragmented, with a small percentage of brands, particularly those who are younger, still growing well and with good margins.

He agreed that the total market in 2022 is “much quieter than 2021,” but attributes that to both buyers and sellers. On the buyer side, the FT report said merchants last year were being bought for sometimes 6x to 7x adjusted earnings before interest, tax, depreciation and amortization, which meant acquisition capital didn’t go as far.

That was good for sellers, but as the e-commerce market slowed down, so did their businesses. They also had to manage logistical issues with products sitting on cargo boats in the middle of the ocean or on docks for the past year. All of that combined is causing sellers to wait until business is good again, Hollywood said.

He went on to say that business “valuations have softened a bit, but have not collapsed,” and that capital continues to flow, citing Cap Hill Brands’ $100 million Series B investment from BlackRock earlier this month as a sign that investors still believe in the aggregator model.

Meanwhile, Rabois is also eyeing valuations. He believes OpenStore “has nothing in common with the other aggregator companies,” which he called “arbitrage businesses on Amazon.” Rather, he said companies aggregating businesses from Amazon aren’t able to make many improvements whereas with Shopify, there is room to grow.

The company continues to buy “multiple companies per week,” and is being “careful about valuation” and disciplined in pricing, Rabois said.

“It was a hot market last year, but we are very strict now about valuation and what a business is worth and making offers that we are comfortable with,” he added.

Keith Rabois’ OpenStore bags new funding as valuation soars to $970M by Christine Hall originally published on TechCrunch

TechCrunch+ roundup: Dotcom crash history lessons, post-M&A strategies, climate tech heats up

What can today’s founders learn from the 2000 dotcom bubble burst?

381632 01: The Pets.com sock puppet. The San Francisco-based pet products company, known for its commercials with the sock-puppet dog and the slogan "Because pets can''t drive," said November 7, 2000 that it is closing down after failing to find a financial backer or buyer. (Photo by Chris Hondros/Newsmakers)

Image Credits: Chris Hondros (opens in a new window) / Getty Images

The late 1990s were a fascinating time to work in startups and live in San Francisco.

I didn’t need to be an economist to realize that many of the companies I worked for and patronized were lacking solid fundamentals: The same unprofitable startups that offered in-house massages, catered meals and laundry service were also purchasing Super Bowl ads and freeway billboards.

I still have storage crates in my kitchen from Webvan, a grocery delivery contender that flamed out so famously, MBA candidates now study it in business school. Similarly, messenger bags for Kozmo.com, which promised to bring “videos, games, DVDs, music, mags, books, food, basics & more” to customers in 60 minutes or less, sell today for $350 and up on Etsy.

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

By 2000, many of these high-fliers had left smoking craters behind. Anna Barber was VP of Product at Petstore.com when her company was sold off in a fire sale to Pets.com, a competitor.

“We laid off our staff except one person, who stayed around with the CEO to help wind down the company and settle up with all our creditors,” says Barber, now a partner at M13. “That person was me.”

Today at noon PDT/3 p.m. EDT, she’ll join me to talk about how today’s startup operators can avoid many of the missteps founders made in past downturns.

We’ll discuss the economic, social and emotional impact created when so many companies close their doors at once, and Barber will talk about how founders can align with their investors and employees while managing through uncertainty.

This Twitter Space is open to everyone, so I hope you’ll join the chat.

Thanks for reading,
Walter Thompson
Editorial Manager, TechCrunch+

You’ve sold your company. Now what?

Scaling a company from conception to acquisition is a real accomplishment, but it’s not the finish line, according to investor and frequent TC+ contributor, Marjorie Radlo-Zandi.

“You may wonder if the acquirer truly understands your products, values, culture or the customer needs that drive the business,” she writes. “Staff will wonder if there’ll be a place for them as a part of another company.”

In her latest column, she shares “six guiding principles that will set a transaction up for success” and help you achieve your full earnout.

Enterprise e-commerce in 2022: As TAM expands, the platform wars are heating up

Image Credits: Getty Images

E-commerce platforms have onboarded new merchants at a fast clip since the pandemic began, and there’s no sign of a slowdown, according to market intelligence platform PipeCandy.

“The top enterprise e-commerce platforms have added more than 10,000 merchants,” according to co-founder Ashwin Ramasamy, who compared the relative performance of Shopify Plus, Salesforce Commerce Cloud, Drupal Commerce and four other players.

“That’s immense, especially as the year is still far from over, and these platforms already have just 1,000 merchants shy of last year.”

Use DORA metrics to support the next generation of remote-work models

Liwa, UAE - Laptop glows outside a tent pitched on the dunes of the Empty Quarter desert

Image Credits: Edwin Remsberg (opens in a new window) / Getty Images

Non-technical CEOs often rely on someone else’s assessment to find out how good their developers are. But without data, that’s a pretty subjective process.

Startups that don’t use DORA (DevOps research and assessment) metrics have a harder time measuring a software delivery team’s performance. For example, a group that has a high failure rate may cover their deficiencies (for a time) by deploying quickly.

Remote work is the new normal, especially for engineers, says Alex Circei, CEO and co-founder of development analytics tool Waydev. But using DORA metrics, CTOs, CEOs and HR managers can “get back on the same page to support their tech teams and business outcomes.”

Climate tech is a hot investment in 2022 — next five years could be even hotter

Engineer climbs a wind turbine

Image Credits: Monty Rakusen (opens in a new window) / Getty Images

Is the recently passed Inflation Reduction Act creating tailwinds for climate tech startups?

Reporter Tim De Chant found that deal count for climate tech startups increased by 15.4% in Q2 2022, “and the average value per deal has held steady at $23.6 million, more than triple what it was five years ago.”

Tax credits and other incentives in the IRA could spark interest in funding for property tech, recycling, ecosystem monitoring and companies that pull carbon dioxide directly from the atmosphere.

“In other words, investment opportunities in climate tech are just warming up,” he writes.

For LatAm payment orchestration startups, market fragmentation is a blessing in disguise

In Latin America, e-commerce is plagued by high fraud rates. Scarcely 20% of adults have a credit card, and many who do aren’t able to use them internationally.

It’s also true that e-commerce is growing faster there than in any other region since the pandemic began. According to one study, online sales in LatAm will generate $379 billion in 2022, a 32% year-over-year increase.

“The payments landscape in Latin America seems hopelessly fragmented and riddled with fraud,” says Rocio Wu, a principal at F-Prime Capital.

“However, we believe that fragmentation actually offers a huge opportunity for vertically integrated payments orchestration startups to capture a lot of value.”

TechCrunch+ roundup: Dotcom crash history lessons, post-M&A strategies, climate tech heats up by Walter Thompson originally published on TechCrunch

Enterprise e-commerce in 2022: As TAM expands, the platform wars are heating up

Once every few months, we take a look at the world of enterprise e-commerce platforms to see how things are panning out, and our last assessment was pretty illuminating.

Here are some stand-out statistics: 2022 is turning out to be a phenomenal year for enterprise e-commerce platforms. The pandemic was a reckoning for big corporations ambivalent about e-commerce, and the result of that ensuing clarity is evident in enterprise e-commerce adoption.

The top enterprise e-commerce platforms have added more than 10,000 merchants. That’s immense, especially as the year is still far from over, and these platforms already have just 1,000 merchants shy of last year. This year promises to be the year of net-new additions for enterprise e-commerce platforms.

Image Credits: PipeCandy

However, such e-commerce companies are quite complex. Multistore setups, multicountry website versions, integrations with heterogenous back-end systems across online stores — it’s all par for the course.

Enterprise e-commerce in 2022: As TAM expands, the platform wars are heating up by Ram Iyer originally published on TechCrunch

For LatAm payment orchestration startups, market fragmentation is a blessing in disguise

In the vast and varied lands between Patagonia and the Rio Grande, a region entrepreneurs and investors like to call “LatAm,” there are 38 different countries using 39 different currencies.

Only 19% of Latin American adults own a credit card, and 70% of credit cards in Brazil, Argentina and Chile can’t be used internationally. Local payment methods account for 68% of online sales, and, depending on the region and merchant networks, merchants must integrate dozens of payment service providers. Meanwhile, cash voucher systems like Brazil’s boleto bancário and Mexico’s Oxxo payment network account for a significant share of Latin American consumer transactions.

Fraud is also a major problem for online merchants in Latin America. Since the onset of the pandemic, Stripe observed that fraud rates at businesses in Latin America were 97% higher than in North America and 222% higher than businesses in the Asia Pacific.

In fewer words: The payments landscape in Latin America seems hopelessly fragmented and riddled with fraud.

To help prevent payment fraud, a solution should aggregate multiple providers and data sources into a single decision engine.

Meanwhile, the failure of one-click checkout startup Fast and questions about Bolt’s revenue suggest payment orchestration in the U.S. will remain dominated by the likes of Shopify and Stripe. Bolt and Fast wanted to bring Amazon’s one-click experience to all online vendors. After all, 75% of shopping carts are abandoned before payment, thanks in part to lengthy checkout processes.

But incumbents like Stripe and Adyen already dominate distribution channels, and they can easily extend a one-click solution. Meanwhile, checkout-only startups’ thin margins suffer under payment incumbents’ vertically integrated solutions, as well as from the “incentive wars” that payments, BNPL and checkout players wage on price-sensitive merchants.

So if one-click checkout startups are struggling to make headway against incumbents in the single-currency, highly digitized and concentrated U.S. market, it might seem impossible for a payment orchestration startup to succeed in the fragmented markets of Latin America.

For LatAm payment orchestration startups, market fragmentation is a blessing in disguise by Ram Iyer originally published on TechCrunch