#BackedbyBCV: Full-stack Cloud Logistics — Announcing Our Investment In ShipBob
A few weeks ago, on a Sunday morning, our family’s NutriBullet smoothie maker broke. I diagnosed that we needed a new blade and immediately jumped on the web to buy one. I first went to Jet.com and Amazon, confident that if in stock, our new blade would arrive Monday or worst-case Tuesday but unfortunately, neither site had the blade I needed. I ultimately ordered the part on NutriBullet’s direct-to-consumer site and hoped for the best, trying to ignore the nagging feeling that my part may not show up by Tuesday. My new blade eventually did arrive — 10 days later!
While the order was placed on Sunday morning, the part was not picked and packed until Tuesday. And even though it was packed on Tuesday, it wasn’t given to UPS until Wednesday. And to make matters worse, the distribution center where my order was packed was 3,000 miles away from my house, so it required another 5 business days (or an entire week) to slowly make its way across the country. In the meantime, my family asked me daily why our NutriBullet wasn’t working and when they could expect to be drinking smoothies again.
I am sure every consumer addicted to Jet or Amazon has experienced the same thing when ordering something from a different site. We as consumers have become accustomed to free or low cost shipping for anything we order and we expect those items to arrive in 1–2 days. Unfortunately, for the vast majority of brands, they don’t have supply chains and fulfillment operations that support an Amazon or Jet-like delivery speed or experience.
Over the past decade, Amazon has been the pioneer in leveraging supply chain and logistics to drive better customer experience. While their front-end experience has largely been unchanged, they have introduced a series of innovations that are all powered by their flexible and modern supply chain: free shipping, free 2-day shipping (Prime), free next day shipping (for some items and geos), and free same day delivery for many items. By doing so, they have raised consumer expectations and changed the playing field for every other seller of goods in the world.
Today, we are excited to announce our latest investment in supply chain and logistics, ShipBob. ShipBob was founded by Dhruv Saxena and Divey Gulati, two entrepreneurs who, frustrated with the existing logistics offerings for their ecommerce startup, enrolled in Y Combinator to build a new solution. ShipBob has built the worlds’ first “full-stack” logistics solution (aside from Amazon). The warehouses, the warehouse management software, the order management software, the pick-pack software, the demand planning and inventory optimization software, and the reverse logistics software are all built by ShipBob and seamlessly integrated, enabling a level of speed and customer service unlike any other fulfillment vendor.
ShipBob works with hundreds of Magento, Big Commerce, Shopify, Jet, eBay, and Amazon merchants who want a fulfillment solution that is tightly integrated to those front-ends and marketplaces and provides an end-to-end experience consistent with their brand. ShipBob built and operates a network of warehouses that are located strategically near major population centers, so that brands using ShipBob can cost effectively deliver their products in 1–2 days. ShipBob’s software looks at demand patterns to algorithmically determine how much inventory should be placed in each warehouse and then for each order that arrives, determines in real-time which warehouse that order should be routed from. Had NutriBullet been using ShipBob, my blade would have arrived in two days, because ShipBob would have picked my order Monday morning in a warehouse near my house and gotten it on a UPS truck by early afternoon. In this way, ShipBob provides an Amazon-like fulfillment experience to hundreds of brands around the country.
As a result, ShipBob has experienced massive growth — scaling at over 500% over the past year. Their vision is working and could only be possible with this full stack approach.
13 years ago, we made our first investment in ecommerce logistics, behind a visionary entrepreneur, Mick Mountz and his company Kiva Systems, which used machine learning and robots to transform ecommerce warehouse fulfillment. Our investment in Kiva led us down the path of investing heavily in a range of supply chain companies that are using software, artificial intelligence (A.I.), and the cloud to redesign core aspects of logistics.
We invested in Symphony Commerce, a cloud-based solution that helps large CPG and apparel brands support both direct to consumer and B2B (e-wholesale) commerce, as those brands undergo the single biggest transformation happening to the world’s physical goods brands — the rise of “brand.com,” brand-owned ecommerce operations. We invested in Onera, which leverages machine learning and A.I. to optimize inventory amounts in physical locations in order to reduce excess inventory and prevent merchandise markdowns and stock-outs. We funded Four Kites, the leading provider of visibility into the trucking and freight industry — allowing shippers to increase their on-time performance and drive faster velocity of goods through their supply chain. We invested in Jet.com which built a fantastic consumer brand, but whose real innovation was leveraging the fact that many 3rd party sellers had the items a consumer sought in a nearby geography, driving down shipping costs and time to levels unmatched in the industry. And we recently invested in Flow.io which is the leading API-driven platform to enable brands to seamlessly sell and ship their products internationally.
We are thrilled to be working with an incredible set of founders in Dhruv and Divey and the team around them. And we are thankful to be co-investing with our friends at Hyde Park Venture Partners and Hyde Park Angels.
Global ecommerce is a $1–2 trillion industry with logistics and supply chain representing about 25% of the cost or roughly $250–500 billion. ShipBob is building the logistics infrastructure of the future and the team at Bain Capital Ventures is excited to be a part of this journey with Dhruv and Divey!