Daily Consumer #2 - Same-Day Delivery Scales Up Globally
Plus I announce my most recent ecommerce investment.
My Work
Index leads Okendo’s Seed Round
This week, I get to announce a recent investment that ties into this newsletter well. I led the seed round in Okendo, a Sydney, Australia founded company. Okendo provides brands with a software platform to collect data directly from their customers. The core use case centers around collecting reviews today but will soon encompass far more (stay tuned). I’ve been very impressed by how much traction the company has amassed with little funding, how strong the product is, and how much customers appreciate the product. All of this stems from Matt Goodman and Matt Garven’s tremendous effort - onwards team! You can read more here.
News
Advertising. Google partners with GoDaddy. Partnership will enable GoDaddy ecommerce customers to share their product listings with Google Search, Shopping, and Youtube at no cost and in just a few clicks. Google is pushing hard to become the top of funnel for ecommerce.
Advertising. Twitter has a great quarter earnings-wise with ad revenue up 74% YoY to $1.2B. Twitter plans to introduce a “buy button” on advertisements in the future so that users can buy things directly on the platform without leaving. “We will continue to work to make sure that we can help clear transactions, whether they are across borders or within the same geography, reducing the friction as much as possible. Commerce is an important part of our long-term strategy.”
Advertising. Snap shares their research report on the intersection of AR and ecommerce. Found that 62% of US consumers who have used AR when shopping claim that it encouraged them to make a purchase. The company seems to really believe in this trend and is acquiring companies to build out capabilities like Screenshop and Vertebrae. CEO reiterated their plans to build out AR shopping capabilities on their earnings call yesterday, which went well.
Advertising. GoPuff is an early mover to sponsor college athletes after the National Collegiate Athletic Association deemed it legal for student-athletes to monetize their images. Partnering with Opendorse to reach these students and will aim to partner with them to promote GoPuff on social media. Is there much arbitrage in this channel?
Affiliate. Still going to the likes of Wirecutter, Tom’s Guide, etc. to figure out what to buy? Future PLC, a media conglomerate that owns many of these sites, is seeing strong traffic and performance with revenue up 89% YoY and total GMV of $960M in 2020. Makes a small commission from the retailer that they send their traffic to whenever someone buys (known as an affiliate fee).
Amazon Rollup. Thrasio, the leading acquirer of Amazon brands, shares some perspective on video on how they go about vetting and buying brands.
Apparel. SheIn becomes the largest fast fashion retailer in the US, overtaking H&M and Zara. Leading the pack by making fast fashion even faster. Generated $10B of revenue in 2020, which was reportedly its eighth consecutive year of revenue growth over 100 percent. Adds 1K new products per day, compared to Missguided and Fashion Nova who release 1K new products per week.
B2B Commerce. Fastenal, a $31B distributor of industrial and construction products, sees 61% YoY growth for its ecommerce business to $1.5B revenue. Ecommerce is now 13% of total sales. B2B commerce will come online across industries and is a trend that we’re closely following at Index Ventures.
B2B Commerce. Faire is profiled by Forbes. Matches 200K retail buyers with 20K brands offering their products on the platform. Now expanding into Europe and already present in 15 countries on the continent.
Consumer Demand. US ecommerce sales are expected to grow 18% in 2021 to $933B and should cross $1T in 2022. Ecommerce should cross 20% of all retail sales in 2024.
Consumer Demand. India and Brazil are the fastest growing ecommerce markets at ~27% YoY growth.
CPG. Pepsi tries to adjust to ecommerce and the general shift towards consumers staying in their homes longer which they expect to be permanent. From Pepsi’s latest earnings call:
Shopping behavior is changing. eCommerce in a broader sense is going to continue to be a preferred way of shopping — something that a lot of families tried during the pandemic. We're seeing those families sticking to that behavior, so that is going to be a permanent trend. PepsiCo predicts that consumers will continue to spend more time at home than before the pandemic. The ‘home as a hub’ is also a trend that we're seeing more. I think consumers are venturing out, but they're still doing a lot of their activities at home, and we foresee a flexible working model where consumers are going to spend more time at home.”
CPG. WestRock, a $13B market cap packaging supplier, partners with Liquibox to enable a new form of packaging for liquids brands. “Bag-in-box is one of the fastest growing segments in the liquid packaging market, expected to reach over 2B liters of global volume annually by the year 2024.” Maybe something for Pepsi to explore.
CPG. Pet food spending is on the rise after a wave of global pet adoption. From General Mills’ latest earnings call:
"The other thing I would say is, for pet is a little bit more straightforward, and frankly, there are more pets than they were before. And that is certainly true here in the U.S., it's true in other parts of the world as well. But particularly in the U.S., 85% of those new pets are in homes that already contained one pet. And so these are people who are used to having pets. And so the amount of pet food that's going to be consumed over the next few years, we think, is going to be elevated in addition to the fact that the fastest-growing part of pet continues to be the natural segment, which is where our Blue Buffalo competes.”
CPG. More consumers are cooking at home and plan to continue. From McCormick & Company’s latest earnings call:
"…our proprietary consumer survey data supported by external research tells us that consumers are enjoying the cooking experience. It provides a creative outlet, makes them feel adventurous, reduces stress and connects the family, and they feel home cooked meals are healthier. In a recent consumer survey from May 68% of U.S. consumer survey state they are cooking more today than pre-pandemic, and 78% claim, they would maintain or increase their level of cooking at home as things return to normal next week with no meaningful difference between those vaccinated and those not.”
Grocery Delivery. Uber rolls out its grocery delivery offering to 400 cities around the US and partners with Albertsons. Under the hood, this seems like a deepening investment in the Cornershop team and operation, which they acquired a majority of in 2019 and bought outright last month. Shots fired at Instacart.
Grocery Delivery. Instacart hires Fidji Simo, a long-time Facebook executive who was last in charge of the Blue app, as CEO last week. At the same time, Instacart is ramping up its in-app advertising business, which generated $300M revenue last year and plans to grow to $1B next year. Trade promotion, the practice of CPG’s paying grocers for in-store marketing or better shelf placement, is a large vein of advertising dollars and Instacart is looking to digitize it.
Headless Commerce. BusinessInsider profiles 5 startups pioneering the headless commerce trend, which is a shift away from monolithic platforms like Shopify towards an API-based architecture.
International Retail. Sea Group tops the list of public ecommerce companies that are expected to grow the fastest over the next 2 years.
International Retail. BigCommerce partners with Mercado Libre giving BigCommerce merchants the ability to sell across Latin America to the 133M consumers on Mercado Libre’s Marketplace. Some similarities to what Shopify is doing to help their merchants get discovered.
Live Shopping. Youtube begins to test live shopping. A matter of time before this form of online shopping catches on in the US?
Live Shopping. Ulta partners with live shopping startup Supergreat and has hosted 27 livestreams in the Supergreat app to date. So far, livestreams have each received 700-1K viewers and 2.5K comments per 30-minute event. Ulta’s work with livestream shopping remains experimental. Ulta is also researching live-streaming opportunities with their other social channel partners Instagram, Facebook and TikTok.
Live Shopping. Elle Beauty partners with startup Verishop to stream beauty shopping events. Viewers get a 15% discount to shop the livestreams.
Logistics. Pitney Bowes plans to roll out AmbiSort picking robots across all of its fulfillment centers over the next 5 years. Will fulfillment and last-mile delivery eventually be fully automated? Will this resultantly lower prices for online shoppers? An optimistic case to make.
Logistics. Axlehire launches its last-mile delivery operations in Chicago, its 10th market. With Fedex, UPS, and USPS struggling to keep up with demand from shippers, new logistics companies are emerging to meet the need.
Payments. Facebook is expanding Facebook Pay. US-based customers will be able to make purchases from Shopify-powered businesses using the payment method.
Resale. Madewell partners with ThredUp to launch a Preloved section on their storefront where they will sell pre-owned jeans. “We don’t think this is going to be a revenue driver, to be frank. But it’s something our customers are really hungry for, and we want to push circularity and sustainability as a big part of our business.”
Restaurants. Eric Feng makes the astute observation that restaurants are increasingly ecommerce companies as consumers order from apps instead of calling or walking into locations. Online ordering is 48% of Chipotle’s sales and 75% of Domino’s.
Same Day Delivery. GoPuff is investing in cloud kitchens by hiring 100 employees to staff up new sites. A first step to adding freshly-prepared food to its menu of items available for <30 minute delivery. GoPuff may be the largest company to be “under the radar” in ecommerce. They are increasingly on a collision course with Doordash to delivery anything quickly - from convenience items, to grocery, to now hot food.
Same Day Delivery. Doordash continues its category expansion by partnering with Rite Aid and Petsmart to deliver pharmacy and pet products. In Q1 2021, non-restaurant categories accounted for 7% of total orders and grew 40% QoQ. Doordash also partners with Bed Bath & Beyond.
Same Day Delivery. Gorillas, the fast-growing same-day delivery business founded in Germany, expands its service to NYC. They have raised $335M to date and promise 10 minute delivery for a flat fee of $1.80. Next stop, San Francisco, LA and Chicago?
Same Day Delivery. Jokr, another same-day grocery delivery business, also launches in NYC. See funding section for more info.
Same Day Delivery. Meanwhile, Food Rocket launches its 10 minute grocery delivery service in San Francisco.
Trust & Safety. The US Consumer Product Safety Commission sues Amazon for selling unsafe products. Most of the products come from third-party sellers that are based abroad. Trust is a pre-requisite for ecommerce, and there is only so much a marketplace can seemingly to make sure a seller is sending a certified and safe product to a buyer. A better trust layer for ecommerce is something that I’m personally on the lookout for.
Trust & Safety. Resale sites like GOAT and Ebay are trying to scale up their authentication teams that verify a product is legit before it passes from seller to buyer. The challenge is that these talent pools aren’t deep.
Funding and Exits
Brands
Apparel. Zegna plans to go public via SPAC with IIAC at $2.5B market cap. Most luxury fashion houses, like Chanel, are family-owned. Zegna will continue to be majority family-owned after this listing with the Zegna family retaining 62% ownership.
Apparel. LVMH buys a 60% stake in Off-White, the luxury streetwear brand started by Virgil Abloh (who actually works at Louis Vuitton).
Apparel. Spanx is searching for a buyer that would value the company at $1B. Bodywear is still a good market, but consumer demand seems to have shifted towards Skims, which is outfitting American athletes at the summer Olympics.
Fitness. CityRow raises $12M from JW Asset Management. Sells connected rowing machines.
Food. Nobell Foods raises $75M from Andreessen Horowitz and Breakthrough Energy Ventures. Is pioneering a new way to make dairy products from plants, specifically by growing and extracting casein, a protein unique to milk, from soybeans.
Food. Athletic Greens raises undisclosed round from SC Holdings and announces that their subscription-based daily nutrition brand is at $100M of annualized revenue.
Food. Little Spoon raises $44M from Valor Equity Partners. Sells baby food on subscription.
Food. Fynd raises $350M from SoftBank, Blackstone and others for their fungi protein-based products which today includes dairy-free cream cheese and meatless breakfast patties. The meatless protein trend continues.
Personal Care. Pangaea raises $68M from Eurazeo to scale their men’s personal care brands globally. Pangaea’s brands are available in 70+ countries, a result of their investment in in-house logistics and payments capabilities.
Marketplaces
Group Buying/Social Selling. DealShare raises $144M from Tiger Global to scale it’s India-based group buying platform. The model is that the more people that participate in a group buy, the lower the cost of the product will be. Many similarities to PinDuoDuo, the China-based pioneer of group buying that is a $130B market cap company today and the fastest growing ecommerce business of all time.
Group Buying/Social Selling. Trell raises $45M from Mirae Asset, H&M, and others at a $120M valuation. Provide a video-based social commerce app in addition to seller tools. Is used by 18M creators in India to reach 50M MAU.
Group Buying/Social Selling. CityMall raises $23M from General Catalyst and Jungle Ventures. Enables micro-entrepreneurs in India to set up their virtual stores on WhatsApp and sell products to their close networks using ecommerce tools and customer analytics.
Group Buying/Social Selling. Youtube acquires Simsim, an India-based social commerce marketplace. The app intertwines influencers who promote products via video content, SMBs who supply the products, and consumers who purchase.
Group Buying/Social Selling. Taager raises $6M from 4DX Ventures, Breyer Capital, and others. Is pioneering social selling in Egypt, a model where independent sellers (think stay-at-home moms) sell products via social channels with Taager taking care of the product purchasing, logistics, and payment. Meesho is the India-based pioneer of this model and is growing very quickly.
International Retail. Bukalapak files for IPO and aims for $6B valuation. Is the Amazon of Indonesia, albeit competing with Tokopedia, Shopee and Lazada for the title.
Logistics. Fetch Package raises $60M in equity and debt from Ocelot Capital. Helps 700 multi-family communities manages package delivery by allowing residents to schedule delivery to their door.
Rental. Cocoon raises $3.4M from Kering for its handbag rental service. Does renting status-seeking items deliver the same satisfaction as owning them?
Resale. Back Market raises $335M from General Atlantic valuing the company at $3.2B. 5M customers use the marketplace to buy refurbished cell phones.
Resale. The Luxury Closet raises $14M from GMP Investments to scale its online luxury resale marketplace. “We expect one in six transactions to be pre-owned by the end of the decade.”
Resale. Vinted raises $303M from EQT Growth at a $4.5B valuation. Operates a P2P marketplace in 12 European countries + the US with 45M users.
Resale. Etsy acquires resale marketplace Depop for $1.6B. In 2020, Depop generated $650M of GMV and $70M of revenue, each increasing over 100% YoY. Approximately 90% of Depop's active users are under the age of 26. A background on acquirer Etsy here.
Resale. Flyp raises $3M from Next View to scale its consignment-based resale marketplace.
Same Day Delivery. GoPuff is rumored to be raising $1B at a $15B valuation.
Same Day Delivery. GoPuff acquires Liquor Barn to scale up it’s same-day alcohol delivery capabilities. GoPuff now operates 450 inventory hubs across the US including 275 fulfillment centers and is opening 30 micro fulfillment centers per month.
Same Day Delivery. Rumors that GoPuff is trying to acquire Dija, a same-day grocery delivery business in London (backed by Index). If it happens, this would be GoPuff’s 2nd acquisition of a same-day delivery business in the UK after acquiring Fancy in May.
Same Day Delivery. Jokr raises $170M from GGV Capital, Balderton, and Tiger Global. Building a vertically-integrated grocery delivery service that promises items to consumers within 15 minutes and launched recently in NYC. Started by the former founder of Foodpanda which was acquired by Delivery Hero.
Same Day Delivery. Zomato, a leading food delivery player in India (similar to Doordash), completes their IPO and is trading at a $12.2B valuation. Perspectives from the CEO here.
Same Day Delivery. Swiggy raises $1.25B from Softbank and Prosus Ventures at a $5.5B valuation. Primary competitor to Zomato. Will use the capital to scale up its non-food business.
Same Day Delivery. Getir, a same-day delivery company based in Turkey, raises $550M at a $7.5B valuation from Silver Lake, Mubadala, and others. Plans to continue expand out of its Turkish hub and across all of Europe. Same-day delivery is top of mind in Europe…
Same Day Delivery. Getir acquires Blok, a same-day grocery delivery business based in Barcelona.
Used Cars. Cazoo plans to go public via SPAC at a $7B valuation. Used cars are a $660B market in Europe and consumers are starting to get comfortable buying online.
Wholesale. Faire raises $260M at a $7B valuation from Sequoia Capital. They are the pioneering marketplace matching brands with independent retailers for offline distribution. Hit $1B in run-rate GMV and are beginning to expand to Europe where they crossed a $50M GMV run-rate. Notably, 70% of their European sales are for US-based brands, signaling a potential global network effect…
Wholesale. GudangAda raises $100M from Asia Partners and Falcon Edge to scale up its marketplace that allows SMBs to more easily order and receive products from suppliers. Used to >500k SMBs in Indonesia and driving >$6B GMV.
Wholesale. Brokrete raises $3M from Xploration Capital to enable construction material suppliers to sell online.
Software
Advertising. Teikametrics raises $40M from Intel Capital, GoDaddy, and others. Provides software to automate ad campaigns on Amazon and Walmart and is used by 2.5K customers including Timberland and NutriBullet.
Drop Shipping. Wix acquires Modalyst for an undisclosed amount. Modalyst allows merchants to add products that get shipped direct-from-supplier when purchased. Wix seems to be in catch-up mode on ecommerce and is using M&A as a way to build out capabilities.
Ecommerce Platform. VTEX goes public at a $3.5B valuation. Provides 2.5K enterprise scale merchants with an ecommerce platform purpose-built for Latin American markets. Latam ecommerce is having its moment.
Fraud Prevention. Riskified plans to go public at a $3B valuation. Provides fraud prevention software, including chargeback protection, to merchants like Wish, Wayfair, and others.
Headless Commerce. Fabric raises $100M from Stripes Group at a $850M valuation. Offers enterprise-focused ecommerce APIs that are used by GNC, Restoration Hardware and BarkBox. Used to build B2C storefronts as well as B2B, a trend mentioned in the news section above.
Logistics. Stamps.com is acquired by Thoma Bravo for $6.6B. Stamps is a leading provider of software to buy and print shipping labels. They facilitate 26M package shipments per month and have driven $36B of postage printing over their history.
Logistics. RideOS is acquired by GoPuff for $115M. RideOS provides fleet management software that helps fleet operators position and utilize their vehicles more effectively. Useful for GoPuff as they scale up their vertically-integrated last-mile delivery fleet.
Logistics. Loop raises $65M from CRV for its software product that helps merchants more seamlessly manage product returns and exchanges.
Resale. The Renewal Workshop raises $6M from Rubio Ventures, Closed Loop Partners, and others for its technology and operation services used by brands like The North Face to sell resale clothing.
Retention Marketing. Sendlane raises $20M from Five Elms Capital for its multi-channel (email and SMS) marketing platform for brands.
Retention Marketing. Octane AI raises $5M from Javelin Venture Partners and General Catalyst for its marketing platform that encompasses shopping quizzes and SMS.
Retention Marketing. Okendo raises $5.3M from me/Index for their product that helps brands collect reviews and other firsthand information from consumers.
Wholesale. Choco raises $100M from Left Lane Capital at a $600M valuation. Germany-based company that provides restaurants with software to digitize their inventory ordering. Now facilitate $900M of annualized GMV.
Fintech
Buy Now, Pay Later. Hokodo raises $12.5M from Mosaic Ventures for its BNPL offering. “Merchants using Hokodo see an average 40% increase in revenue and achieve unprecedented levels of customer satisfaction”.
Checkout. Bolt raises $333M at a $4B valuation. Provides software to enable one-click checkout for merchants like Forever 21, Lucky, and others.
Warranties. Extend raises $260M at a $1.6B valuation from Softbank. They partner with ecommerce merchants to offer product warranties at checkout, similar to what Affirm does for BNPL. Customers include Peloton and BlendJet.
Product of the Week
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