Forge Retail Pulse: A sneak peek into try-now-buy-later commerce, on-demand warehousing, and the funding floodgates opening for delivery startups
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This week we cover try-now-buy-later commerce, price-conscious shopping, on-demand warehousing, and look closer at the funding floodgates opening for delivery and “quick commerce” startups.
Startup Deals
Try-now-buy-later | One of the main reasons shoppers still prefer brick and mortar over e-commerce is the ability to touch, feel, and try before buying. Well, what if you could try before you buy online? Meet TryNow, which provides technology to online retailers that allow customers to try out apparel, return what they don’t want, and pay only for what they keep. Since the pandemic, TryNow's revenues have grown 6x. The company has helped brands such as Universal Standard, Roolee, Western Rise, and Solid & Striped increase their average order value by 63%, conversion rates by 22%, and return on ad spending by 76%. TryNow recently announced $12M in Series A funding to continue expanding its business.
Price-conscious shopping | Four years ago, Snaptravel launched with the mission of delivering consumers the best promotional prices on travel through mobile messaging. The company had great results, saving customers more than $75M and achieving $1B in total mobile sales. But when the pandemic hit, bookings dropped 80%. In an interesting tale of Covid-19 resiliency, the company pivoted its offerings to launch Snapcommerce, using the same underlying technology and messaging AI to help customers find the right e-commerce products at the right prices. As marketing and promotions often add up to ~35% of the cost of the item, Snapcommerce helps merchants reduce these costs by cutting out the marketing and distribution middlemen and communicating directly with customers through 1:1 messaging channels. Snapcommerce recently raised $85M to expand into new consumer verticals that improve the way people shop on their phones.
On-demand warehousing | What if you never had to worry about warehouse space? Inventory peaks and valleys are common challenges that retailers face and often leave teams scrambling to find warehouse space quickly. With Covid-19 and the boom of online retail, this need is even more apparent. Flowspace offers just that: fulfillment and distribution services, warehouses, and a team of workers that help pick, pack, and ship products. Flowspace also enables 1 and 2-day shipping, using predictive analytics to help retailers optimize their fulfillment networks by identifying precise fulfillment hubs and inventory positioning. Flowspace announced a $31M Series B to expand its fulfillment network and predictive analytics capabilities.
Diving Deeper: Delivery / Quick Commerce
The combined market cap of the three largest delivery platforms, UberEats, DoorDash, and Grubhub is more than $130B, but only one of these delivery insurgents is profitable on a unit economics basis. Yet VC dollars are pouring into delivery startups like never before. Given the market opportunity, changing consumer behaviors, and innovation on the fulfillment and delivery front, we think it's worth exploring.
Startups that can kickstart your delivery journey:
Convenience delivery | Last fall, goPuff made a splash by raising $380M in funding and acquiring beverage retailer BevMo. Now, goPuff is back in the news, raising a colossal $1.2B at an $8.9B valuation. Available in more than 650 US cities, goPuff delivers a wide variety of products in under 30 minutes, charging a flat $1.95 delivery fee. The company has positioned itself as a leader in the "instant needs" category, with strong unit economics, a unique business model that passes the delivery fee directly to drivers, and its focus on Tier 2 and 3 cities and suburbs.
Instant delivery | Gorillas - which became a unicorn in record time by surpassing a $1B valuation just nine months after launch, delivers groceries within 10 minutes. Unlike gig economy models, it employs drivers directly and emphasizes its ability to get fresh groceries and household items to shoppers instantly and economically. Gorillas currently has more than 2,000 products that are delivered through its network of over 1,000 employed delivery riders. With its recent $290M fundraise, Gorillas has ambitious plans to expand. By the second half of 2022, Gorillas aims to serve more than 15 cities across Europe, operating over 60 fulfillment centers or "dark stores."
Urban delivery | Life in cities can be chaotic. Who couldn’t use an extra pair of hands to help pick up groceries, go to the pharmacy, pick up dry cleaning, or even grab the laptop charger you forgot at home? In 2014, Kabeer Biswas started a simple WhatsApp group to help fulfill these requests for Bangalore residents. Inundated with requests, Biswas scaled the group into a business called Dunzo, with the idea of bringing the city to you, no matter where, no matter what, no matter when. Dunzo completes more than 2M transactions a month across nine Indian cities. Compared with other delivery providers, Dunzo has a more attractive cost structure, with the average delivery costing less than $1, and most of its revenue coming from the commissions that its 12,000+ small businesses pay to fulfill orders. Dunzo recently raised $40M from Google, LightBox, Evolvence, Hana Financial Investment, LGT Lightstone Aspada, and others.
Essential Industry Reads
From hosted e-commerce platforms to self-hosted e-commerce platforms to headless commerce offerings, innovation is transforming commerce infrastructure. Red Sea Ventures puts a spotlight on the evolving commerce tech stack, highlighting major trends and players, as well as a market map of key solutions and areas of opportunity. Click below to learn more!
Consumers spent $120B on Shopify’s platform in 2020, almost double the figure from 2019. This constituted more than 40% of Amazon's competing business. Benedict Evans, a former partner at a16z turned technology analyst, uses Shopify's story to illustrate three trends in tech and e-commerce.
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