Daily Consumer #11 - B2B Commerce is Moving Online
Plus logistics issues impact Nike's forecast and same-day delivery continues to grow.
B2B Commerce is Moving Online
My primary investment theme right now is around B2B commerce.
B2C commerce unfolded naturally over the past two decades as the convenience of ordering from phones and computers and getting items delivered to homes rapidly changed consumer behavior. Thank you Amazon in particular.
However, businesses didn’t necessarily see the same value in shifting the purchasing of their inventory online. Digital buying required re-training of employees and suppliers didn’t necessarily have their inventory accessible online or any reason to make it accessible.
Why is B2B commerce unlocking now? I see a few core drivers:
A younger workforce. Older workers are retiring and younger workers are taking their place. Younger employees are digital natives and untrained at doing things in the “old way” like sending a fax, answering phones, logging data on paper. Business owners will need to adapt to how their employees are accustomed to working, which is with smartphones and computers.
The pandemic is reshaping supply chain. Restaurants used to primarily order their food inventory by having a sales rep come by their store every week and take down their order on a clipboard. The pandemic made it difficult to send field sales reps to stores - labor became tight and many restaurants temporarily and unpredictably closed their doors. Labor challenges upstream also caused sudden shortages of food inventory. Distributors responded by connecting their ERPs to ecommerce storefronts and allowing restaurants to see and buy their inventory digitally - something that finally offered tremendous value to both sides.
Business operations are being digitized. Over the last decade in particular, we have seen the digitization of just about all industries. Construction sites are using 3D mapping tools, digital blueprint software, and digital task management tools to streamline their builds. Healthcare clinicians are logging patient data directly into EHR software while managing a visit. The workflows of just about all industries have been mapped to software and are encompassing the purchasing needs of the businesses as well. The next step is for suppliers to do their part to get inventory flowing digitally and more programmatically.
B2B checkout now exists. B2C commerce required online sellers to simply accept credit/debit cards, which most buyers already had. B2B commerce is much more complicated. Sometimes payment happens upfront with check or credit card, sometimes it happens on purchase order, sometimes it happens with third-party financing. Often times the buyer (the person choosing what inventory to buy) is different from the funder (the person who reviews the purchase, approves it, and figures out how to pay). However, the infrastructure now exists for B2B payments to flow seamlessly. In the last 5 years, amazing tools have emerged for bank account authentication, credit risk scoring, transaction logging into ERPs, and other payment-related workflows which will finally allow B2B checkout to exist.
I’m picking through different industries now to see which are ripest to move their buying online. Just this year, I have made two un-announced investments in the construction space and restaurant space around this theme. I hope to find many more and would be happy to discuss with those interested in the topic.
A big thank you to Lindsay Walker, SVP Customer Success at Checkout.com, for making some creative agency intros for the Curtsy team!
CommerceNext is next week on Sep 28-29th.
TJ Mahony launches Vinyl, a new venture capital firm focused on “how people buy stuff”. TJ is a good friend and a person in the venture business that I admire. Congrats sir!
TikTok is hiring for their Strategy and Investments team. If you know someone who may be interested, happy to share with Nico, the hiring manager.
Nacelle, a headless commerce company, and Zehner, a leading agency, are hosting a chat about the headless trend.
Facebook reiterated that Apple’s privacy changes will impact its ad targeting business in Q3. Also noted that it had been underreporting iOS web conversions by approximately 15%. Attribution is in flux and will continue to be so in the near-term.
Google will now display new disclosures on ads that allow web searchers to what other ads the advertiser has run with Google, starting with the most recent.
Amazon is continuing to scale its ads business. “The cost per click for Amazon search advertising was $1.27 in August, up from $0.86 a year ago. It’s not uncommon now for brands to be spending 50% or more of their product price on various ad fees to be selling on Amazon.”
WhatsApp launches a business directory in its app in Brazil. Allows users to find shops and services and could be a precursor to an ad format like promoted listings.
Fenty Beauty and The Lip Bar are adding AR try-on capabilities to their ecommerce stores using tech from Perfect Corp.
An early look into “digital sampling”, where photos of models are edited to digitally dress them in many outfits. Creative production is a bottleneck in ecommerce - find a model, organize a shoot, edit the photos, repeat. Will technology simplify parts of this flow?
BNPL is about to surpass credit card as most popular payment methodology in Australia per a Marqeta survey.
Afterpay announces a partnership with Fashion Nova.
Affirm publishes their first Consumer Spend Report. “This year, the top gift Americans plan to give to their loved ones is a memorable experience (42%) – such as tickets to a concert or sporting event – followed by electronics (29%), clothing (25%) and a vacation (26%). 72% of respondents plan to rely heavily on online shopping to avoid crowds.”
Credit Card Marketing. Visa is adding Shipt (free membership for free delivery), Skillshare (free learning content) and Sofar Sounds (access to presale tickets) as exclusive benefits for US credit cardholders. Ecommerce-driven businesses are seeing card benefits as a new channel to reach more customers.
Nike saw revenue grow 16% YoY to $12.25B versus analyst expectations of $12.46B. Digital sales rose 29% YoY. Cited inventory shortages as a significant issue over the next few quarters due to Covid-driven supply chain challenges. “Digital is increasingly becoming a part of everyone’s shopping journey, and we are well positioned to reach our vision of a 40% owned digital business by fiscal 2025.”
Costco saw revenue grow 17% YoY to $61.4B versus analyst expectations of $61.6B. Ecommerce sales grew 11% YoY and their mobile app has surpassed 10M downloads.
Rite Aid saw revenue grow 2% YoY to $6.1B. “Online revenues skyrocketed 183% YoY in the quarter under review on the back of continued strength in on-demand delivery, 3P marketplaces, and BOPIS. Management partnered with Shipt for same-day delivery of non-prescription products in the quarter under review.”
Stitch Fix saw revenue grow 29% YoY to $571M. Has 4.2M active clients, up 18% YoY. Cited strong sales for their women’s, kids, and United Kingdom segments.
Food and Beverage.
A very thoughtful examination of the quickly declining cost curve for lab-grown meat. Plant-based meat is en vogue but will it inevitably become mainstream if it’s more affordable than farm raised?
Impossible Foods debuts plant-based pork which will be available in Hong Kong and Singapore restaurants.
Hyundai is launching a space in Roblox called Hyundai Mobility Adventure. “Aims to familiarize young people with Hyundai Motor products, technologies, brands and future solutions.”
Balenciaga is dropping fashion content in Fortnite. “Players can express themselves with digital Outfits inspired by real-life Balenciaga silhouettes, purchasing them in a virtual version of a brick-and-mortar Balenciaga boutique, and also snag an exclusive real-world hoodie that unlocks the Outfit in-game”
A look into the opportunities and challenges of brand marketing in gaming. “15 years ago, when social media teams were being created, it started out where maybe 1 individual was working on a social media strategy. And now almost every company has a social media team focused on that strategy.”
Doja Cat launches a makeup collaboration with BH Cosmetics.
Tinx, a TikTok star with 1.3M followers, launches a makeup collab with Kiehl’s.
Scott Disick partners with In Common, a haircare brand started by celebrity stylists and will focus on raising their awareness.
Kylie Cosmetics is launching a babycare product line.
JD.com is betting on malls making a comeback in China. But the transactions will still happen online.
Facebook and Bain & Company publish a survey on ecommerce in Southeast Asia. The geo saw 70M new online shoppers since the beginning of the pandemic and 45% of respondents say they shop mostly online now.
A look into the large number of retailers and brands that are trying to crack live shopping. “I really believe that livestream shopping is going to be another arm of retail, one that the Western world has not caught on to yet, says fashion designer Tommy Hilfiger.”
Instagram live shopping has some early case studies. “Beauty influencer Nikita Dragun, meanwhile, attracted nearly 43K of her 8.3M followers to a July 9 Live Shopping video for her Dragun Beauty brand’s DragunFire Color Corrector, which featured a beauty tutorial. The livestream drove 33K product page impressions, and 5K products were added to viewers’ shopping bags.”
FedEx is raising shipping rates by as much as 8% in response to labor getting more expensive. As human-driven logistics gets more expensive, the business case for robotic delivery and fulfillment gets more interesting.
US parcel volume grew 37% YoY to 20B in 2020, up from 15B in 2019. Projected to nearly double by 2026. UPS, Fedex, USPS, and Amazon Logistics are the largest carriers in that order, which Amazon gaining share the fastest.
An in depth look at Amazon Logistics. Has 40K semi-trucks and 70 planes in its fleet today.
FedEx is testing self-driving trucks from Aurora, an Index Ventures company, to haul goods between warehouses in Dallas and Houston.
Berkshire Grey, a warehouse robotics company, debuts a robotic putwall that makes it faster to pick and pack ecommerce orders. “Can increase customer order sortation throughput by up to 300%.”
Marketplaces. A great primer on how two-sided marketplaces grow. Specifically unpacks examples of how marketplaces like Etsy convert demand into supply.
Neobanks. PayPal launches its updated app which introduces direct deposit, bill pay, a digital wallet, P2P payments, shopping tools (likely powered by Honey), crypto capabilities, and a high-yield savings account called PayPal Savings. Wants to be a super-app for financial services.
Payments. Twitter is launching the ability for users to pay one another with Bitcoin. The cryptocurrency addition is coming to Twitter's Tips feature.
Post-Purchase Software. Route announces the launch of its Route for Merchants platform. “Provides online sellers with a full suite of customer experience tools tailored to improve post-purchase practices, including multi-channel package tracking, premium buyer protection, instant order resolution, and seamless customer re-engagement features.”
Resale. Chairish, a used furniture marketplace, shares their first Home Furnishings Resale Report. “66% of US homes now have resale home goods and furniture. 76% of shoppers say they like pre-owned home decor because of the individuality and uniqueness of the pieces.”
Restaurants. Uber Eats is adding a map feature to the app to show users nearby restaurants where they can put in pickup orders. “Says there are 700K local restaurants and merchants on its pickup map.”
Reviews and UGC. Stackla publishes a report on the importance of UGC. “60% of millennials have left an ecommerce store without purchasing because the site didn’t include customer reviews or photos.”
A profile of the 15 minute delivery market. GoPuff is leading the pack.
Doordash expands alcohol delivery to 20 states.
Bed Bath & Beyond expands its partnership with Doordash nationwide to 700 Bed Bath Beyond locations and 120 BuyBuyBaby locations.
Albertsons will be the first grocery chain to pilot Doordash’s DoubleDash add-on delivery service, which allows customers to add items from nearby stores to their initial delivery without an additional delivery fee or order minimum.
Rite Aid partners with Uber Eats across 2,185 locations in 17 states. “Consumer shopping preferences are changing, so we are continuing to evolve our retail business to ensure customers are able to conveniently get what they need to keep their family happy and healthy – whether they visit us in-store or buy online.”
Amazon expands faster same-day delivery in Atlanta, Chicago, Miami, and Minneapolis.
Search and Discovery. Google is in talks with Instagram and TikTok to index their videos on Google’s search engine. I’m skeptical they’ll hand over this content.
Claire’s the ear piercing retailer, is debuting a subscription box for accessories and jewelry which costs $21/month.
Taco Bell launches a subscription service called Taco Lover’s Pass. Allows customers to get 1 taco per day for a monthly fee of $5-10. Article also mentions how Panera and Pret a Manger are scaling their subscription offerings.
Sustainability. Walmart highlight more nutritious and sustainable products with a new "Built for Better" label. 2K products will be tagged to start.
Trust and Safety. The WSJ created some accounts to see what content TikTok pushes to young users. Sex and drug related content was pervasive.
Roku is launching an app to provide Shopify merchants with an easy way to build, buy, and measure streaming TV ad campaigns. Will be the first ever TV streaming app for the Shopify App store. Olipop is an early access user.
Comcast plans to make its own smart TVs, called XClass. Cable TV is dying and Comcast wants a role in a streaming-driven world. Will they be able to shift cable subscription revenue to advertising revenue and app store fees?
Voice-Based Commerce. Amazon will enable Indian users to search for products and check their order status using voice commands in Hindi. “Since the launch of voice shopping in 2020, we are humbled to see by the adoption of voice by Amazon India customers to fulfill their shopping needs has grown by 2x YoY.”
Funding and Exits
Fertility Testing. Bird & Be raises $1.8M from BAM Ventures for its D2C at-home fertility tests for men and women.
Fitness. Hydrow raises capital from Justin Timberlake and Lizzo ahead of its upcoming SPAC listing.
Food and Beverage.
Hydroponics. Gardyn raises $5M from JAB Ventures for its connected home hydroponics system. Is similar to Lettuce Grow which I profiled a little while ago.
Pet Food. FoutainVest Partners, a Chinese private equity firm, acquires Ziwi, a New Zealand-based pet food brand, for $1B.
NFT Screen. Niio raises $15M from L Catterton for its connected frame product and marketplace for NFT artwork from 6K artists.
Speakers. Syng raises $49M from Eclipse Ventures for its spatial-audio speaker. Founder was Jony Ive’s first hire at Apple.
Water Purifiers. Advent, a private equity firm, acquires Eureka Forbes, a water purifier brand, for $600M. “Eureka Forbes is the No. 1 player in an under-penetrated market poised for strong growth over the next several years.”
Alcohol. Pernod Ricard acquires Whisky Exchange, an online alcohol retailer. “‘Ecommerce is a key channel in our long-term strategy,’ Pernod Ricard chairman and CEO Alexandre Ricard said in a statement.”
Provi raises $75M from D1 Capital Partners at a $750M valuation for its B2B marketplace connecting alcohol distributors to bars and restaurants by digitizing how bars and restaurants track inventory and order.
Flippa raises $11M from OneVentures for its B2B marketplace allowing business owners to sell their ecommerce marketplaces, blogs, SaaS apps, with the newest data integration being for Shopify. “Flippa is processing over 4K valuations each month and has over 3M registered users and added 300K new registered users in the past 12 months. Overall transaction volume grows 100% YoY.”
Cartona raises $4.5M from Global Ventures for its Egypt-based marketplace allowing small retailers to discover and purchase wholesale CPG goods. Has over 10K products and 30K merchants who have driven 400K orders.
Bzaar raises $4M from Canaan Partners for its B2B marketplace allowing small businesses in the US to source home and lifestyle goods from over 50 export-ready manufacturers in India who produce over 10K goods. “The company guarantees products arrive within 2 weeks and manage all of the packaging logistics and buyer protection. Also intends to create a credit feature to enable buyers to pay in installments or up to 90 days later.”
ShelfEngine raises an additional $2M from Ellen DeGeneres, Portia de Rossi, Shaun White, Shawn Mendes and Plus Capital for its B2B marketplace allowing grocery stores to more accurately purchase produce.
Grocery Delivery. Picnic raises $703M from the Bill & Melinda Gates Foundation for its sustainability-focused grocery delivery service that operates in the Netherlands, Germany, and France. “Picnic controls the entire supply chain itself and works closely with local suppliers. It also develops its own products with the ‘best’ suppliers in the world. It also delivers everything free of charge in 100% electric cars.”
Live Shopping. NTWRK raises $50M from Goldman Sachs and Kering for its mobile live shopping marketplace focused on limited quantity products and NFTs.
Live Streaming. StreamElements raises $100M from Softbank for its free live streaming tools used by 1.1M creators. “The primary way we generate revenue is through brand partnerships. We offer influencer-driven sponsorship activations that rely on our proprietary technology which already powers the majority of the top creators’ channels and enables unparalleled depth in terms of the measurement brands are looking for.”
Logistics. Cargamos raises $7M from Nazca, FEMSA, and others for its Mexico-based warehouse network enabling same-day delivery. “Cargamos intends to use the funding to build a large fulfillment facility in Mexico City. It also wants to expand its network of mini distribution centers which it calls “pods,” where packages are sorted and sent out for final delivery. The company currently has about 50 pods.”
Sorare raises $680M from Softbank at a $4.3B valuation for its NFT marketplace focused on professional soccer IP. Has partnered with 180 football organizations to date. “Currently has 600K registered users and 150K users who are buying a card or composing a team every month. Sales have grown by 51x between the second quarter of 2020 and the second quarter of 2021.” Trading cards are getting digitized.
Dapper Labs raises $250M from Coatue at a $7.6B valuation for its NFT marketplace, called Top Shot, focused on NBA IP. “Currently has 1.1M registered users. These users have traded more than $780M.”
Recur raises $50M from Point72 at a $333M valuation for its marketplace for NFTs focused on collegiate sports IP. Recently partnered with the Pac 12.
Vestiaire Collective raises $209M from Softbank at a $1.7B valuation for its fashion resale marketplace. “Said orders in the past 12 months have risen by more than 90% globally and have 2x in the US.”
Vinterior raises $11M from Active Partners for its marketplace for curated vintage furniture and home accessories. “Since launching, Vinterior has grown from 12 dealers in London to over 1.8K sellers from over 30 countries, who have sold over $200M in vintage and antiques in the past year. The company has seen 120% YoY revenue growth and has been acquiring buyers profitably for more than a year.”
Gorillas is rumored to be raising $1B from Delivery Hero at a $3B valuation. Operates a 15-minute grocery delivery service in many markets.
Flink is rumored to be raising capital from Doordash at a $2.1B valuation. Competes with Gorillas.
Jiffy raises $28M from Heartland for its 15-minute grocery delivery service based in London. Has amassed 20K customers across 6 delivery zones.
Social Media. Discord, a group-based messaging platform with an initial focus on gaming and over 150M MAU, raised $500M from Dragoneer at a $15B valuation. Is also an Index Ventures portfolio company. Will commerce come here eventually?
Social Commerce. Evermos raises $30M from UOB Ventures for its social commerce marketplace that lets solopreneurs/resellers sell halal products and other items to their local communities. Brands in the marketplace pay a 30% commission, which is shared between Evermos and the seller. “Currently has 100K active resellers in more than 500 Tier 2 and Tier 3 cities in Indonesia.”
Sporting Goods. Colizey raises $9M from Cathay Innovation for its France-based marketplace for sporting goods. Partners with brands and stores to offer 1K brands of goods across 27 sports.
Kavak raises $700M from General Catalyst at a $8.7B valuation for its Carvana-like used car marketplace focused on Mexico. “Has been 2xing its revenue every 3 to 5 months. And over the last 14 months, Kavak has grown exponentially — from 300 to more than 5K employees in Latin America. The startup currently has 40 logistic and reconditioning hubs in Mexico, Brazil and Argentina. Has served “hundreds of thousands” of customers.”
Cars24 raises $450M from DST Global, Falcon Edge and SoftBank Vision Fund at a $1.8B valuation for its Carvana-like used car marketplace in India. “Cars24 is active more than 200 cities in India, and it has sold 400K vehicles to date (both cars and motorbikes) with upwards of 13M monthly visitors on its site.”
Watches. Chronext, a marketplace for new and used watches, plans to IPO on the Swiss stock exchange in Q4 2021. “Chronext generated sales of more than $117M last year and is targeting revenue growth of about 40% for 2021.”
Analytics. Assembly raises funding from Advent and PSG at a $1B valuation for its ecommerce analytics products. “In the last 2 years, Assembly acquired 5 companies, successfully launched 30+ new products to support users, and helped its customers scale revenue more than 125% in aggregate. This results in record growth for Assembly with a 260% increase in ARR since 2019, 230% increase in paying customers, and more than $55B in GMV directly connected to its applications.”
Mirakl raises $555M from Silver Lake at a $3.5B valuation. Allows customers to easily add either B2C or B2B marketplaces to their online stores and websites. Customers include ABB, Airbus Helicopters, Carrefour, Express, etc.
Convictional raises $7M from Lachy Groom for its supplier enablement platform for retailers and marketplaces to power drop ship, marketplace and wholesale business models in one solution. Replace EDI transactions with an API-driven platform.
Influencer Marketing. CreatorIQ acquires Tribe Dynamics, an influencer analytics and benchmarking software company, for $70M. “Applying Tribe Dynamics’ proprietary models, which are the standard in the beauty and fashion industries, to additional verticals will allow us to offer analytics and measurement benchmarks for the entire industry.”
Inventory Management. Flieber raises $12M from GGV Capital and Monashees for its inventory optimization platform that uses analytics and machine learning to help multi-channel brands determine what the ideal stock level would be across all of the sales channels and inventory locations. “Has clients selling in 15 countries and more than 400K products running on its platform.”
Fulfilld raises $2.5M from TenOneTen Ventures for its warehouse management software that helps customers optimize warehouse fulfillment workflows by using data from connected wearables.
Hai Robotics raises $200M from 5Y Capital for its warehouse robotics-as-a-service which automates fulfillment operations. “Hai Robotics has been running over more than 200 projects globally with 2K ACR robots deployed.”
Product Lifecycle Management. Propel raises $20M from Salesforce Ventures for its software that helps manufacturers launch products faster, simplify quality and compliance, and improve their employee user experience.
Retention Marketing. Sendinblue, an email marketing platform, acquires PushOwl, a bootstrapped Indian startup which makes an online marketing tool for ecommerce stores to enable web push notifications used by 25K merchants, for $20M. Also acquires Chatra, a live chat software company, and Metrilo, an email marketing platform, for a combined $27M.
Advance Intelligence Group raises $400M from Softbank and Warburg Pincus at a $2B valuation for its BNPL platform focused on Asia.
ZestMoney raises $50M from Zip for its India-focused BNPL offering. “Has amassed over 11M users and has 25 banking and non-banking financial partners, works with large merchants such as Amazon, Flipkart, Google Pay to offer its BNPL services to customers. Has presence across over 75K physical stores and more than 10K online sites.”
Neobanks. Tag raises $12M from Liberty City Ventures, Canaan Partners, and others at a $100M valuation. Operates a neobank in Pakistan.
Sunday raises $100M from Coatue for its QR code-based payments platform focused on the restaurant industry. “More than 1M people have used the product so far at more than 1.5K restaurants worldwide. Early results show that Sunday transactions yield larger tickets, faster table turns and bigger tips.”
RazorPay raises an undisclosed amount of capital from Salesforce for its Stripe-like payment platform focused on merchants in India and soon Southeast Asia.
Recharge.com raises $35M from SmartFin for its branded payments (gift cards, prepaid credit) products which serve over 3M customers with sales of over $500M growing at 50% YoY.
Product of the Week
Bite launches the world’s first 100% plastic–free deodorant with compostable refills. The scents are also truly incredible. I think this is a must try. Buy it here.