ShipBob, which provides shipping and fulfillment services for e-commerce companies, has raised $17.5 million in a Series B round led by Bain Capital, VentureBeat reports.
ShipBob will use the capital to open more fulfillment centers and increase its headcount:
- The company is hiring additional engineers to build out its software platform. The platform helps retailers decide where to place inventory by identifying ShipBob warehouses close to their areas of highest demand.
- ShipBob will use data to build warehouses in areas with higher shopper density — enabling e-commerce companies to ship more quickly, and cheaply, to the bulk of their customers. CEO Dhruv Saxena told the Chicago Tribune that the company analyzes order data to find optimal locations for its warehouses.
ShipBob’s solutions cater to smaller e-commerce players, which have a huge need for fulfillment services. The company provides complimentary order management tools for businesses selling across multiple channels, such as Amazon or Shopify. By offering affordable fulfillment services, ShipBob can help smaller retailers hold their own against retail giants like Amazon and Walmart, which have the advantage of high-volume shipping discounts, or in-house logistics networks.
It’s likely the logistics industry will be disrupted by more startups like ShipBob, as demand for free and fast shipping heightens. Large logistics companies have traditionally geared their services toward large retailers, providing them with added services and the aforementioned volume shipping discounts. This has created an opportunity for logistics players to sell services to a largely underserved market of smaller players, which are increasingly looking to fight costs as more consumers demand free and speedy shipping. ShipBob’s latest raise is demonstrative of the need for such services, and we expect to see dozens of new players moving into the space in the near future.
Amazon Prime’s free two-day shipping has led to an industry paradigm shift. Online retailers — small and large — are increasingly offering the perk to keep from losing customers to the behemoth marketplace. But free shipping comes at a steep cost: Rising shipping expenditures are eating away at retailers’ margins.
Larger retailers that can better afford to eat the cost of free shipping are battling to gain an advantage over Amazon. But most retailers, particularly small ones, lack the resources necessary to compete with the massive online retailer. This has set off a race in the logistics industry: Large logistics providers are creating new services for small retailers, while logistics startups aiming to address the same market are growing in numbers.
Stephanie Pandolph, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on free shipping that:
- Provides an overview of how consumers’ demand for free shipping is shaping the retail and logistics industries.
- Examines the technologies that may be implemented as a result of companies seeking to lower shipping costs.
- Discusses various strategies to implement with free shipping for small and large retailers.