Fabric Raises $200M to Revolutionize E-commerce Fulfillment

Fabric Secures $200 Million to Challenge Amazon in Retail Fulfillment

Amazon’s dominance within the retail landscape remains substantial. However, a new startup, Fabric, is aiming to level the playing field. The company is developing technology designed to empower retailers – both large and small – to effectively compete with Amazon, particularly in the areas of fulfillment, robotics, “micro-fulfillment” centers, and last-mile delivery services.

Significant Funding Round Reflects Market Demand

Fabric has recently announced a $200 million funding round, achieving a valuation exceeding $1 billion. This substantial investment highlights the considerable demand within the market and the potential to disrupt Amazon’s current position. Elram Goren, Fabric’s CEO and co-founder, indicated the company has more demand than it can currently fulfill.

Goren also expressed interest in expanding the application of their technology beyond micro-fulfillment centers, focusing on network interactions and supply chain optimization.

Investors Back Fabric’s Vision

Singapore’s Temasek, a previous investor in Fabric’s $110 million Series B round in 2019, led this Series C funding. Additional participants included Koch Disruptive Technologies, Union Tech Ventures, Harel Insurance & Finance, Pontifax Global Food and Agriculture Technology Fund (Pontifax AgTech), Canada Pension Plan Investment Board (CPP Investments), KSH Capital, Princeville Capital, Wharton Equity Ventures, and other undisclosed investors. To date, Fabric has raised a total of $336 million.

Expanding into Grocery and Broader E-commerce

Fabric’s current clientele includes prominent names like Walmart, Instacart, and FreshDirect. The new funding will be allocated towards deepening their presence in the grocery sector, assisting these companies in establishing “marketplace”-style operations.

Furthermore, Fabric intends to extend its robotics and micro-fulfillment technology to other e-commerce retailers, broadening its network across the U.S. and Israel, with plans for further international expansion.

A Unified Tech Stack for Diverse Retail Needs

According to Goren, the company utilizes a consistent technology framework for both grocery and general e-commerce applications. Initially focused on groceries in 2015, when e-commerce penetration was around 1%, Fabric has adapted to the current 10% penetration rate, representing a $1 trillion market.

The company’s core objective is to create a more efficient and rapid method for moving goods, recognizing the broader opportunity within the retail sector.

Accelerated E-commerce Growth and Fulfillment Complexity

The growth of e-commerce has been significant for years, but the COVID-19 pandemic dramatically accelerated this trend. Data from McKinsey reveals that e-commerce penetration surged to 35% in 2020, more than doubling the 16% recorded in 2019. A substantial portion of this growth occurred within a few months, mirroring a decade of prior expansion.

While consumers easily find and receive products online, the underlying fulfillment processes remain complex. These processes encompass receiving goods, inventory management, pick-and-pack operations, kitting, customer support, and more. Fulfillment costs represent a significant portion of the total cost of an online product.

Competition in the Fulfillment Technology Space

Fabric competes with other startups focused on improving fulfillment, including ShipBob, Byrd, and parcelLab, all of which have secured funding this year. These companies are challenging established third-party logistics (3PL) providers and, notably, Amazon’s Fulfillment by Amazon (FBA) program, which serves hundreds of thousands of merchants.

Robotics as a Key Differentiator

Fabric’s robotics solution is central to its competitive advantage. The company has developed a fully integrated hardware and software system that can be deployed in customer warehouses or within Fabric’s own facilities to automate item selection, movement, and packing. Goren states this reduces fulfillment costs by approximately 75%, while still utilizing human workers.

The company plans to continue developing its own hardware and explore integration with existing systems used by larger clients.

Micro-Fulfillment Centers: A Strategic Approach

Fabric’s micro-fulfillment concept involves providing shared space equipped with robots for automated operations. This can include deploying robots within larger warehouses that Fabric does not own. A typical 6,000-square-foot micro-fulfillment center can process up to 600 orders daily, including one-hour deliveries.

Targeting Dense Urban Markets

Serving densely populated urban areas represents a significant opportunity for Fabric. These communities typically have higher disposable incomes, limited storage space, and smaller geographic areas for efficient delivery. This demographic will be a key focus for Fabric’s expansion.

Sustainability and Efficiency in Last-Mile Delivery

“We believe the movement to local fulfillment presents an opportunity to make retail and e-commerce more sustainable,” stated Eric Kosmowski, managing partner at the Princeville Climate Technology Fund. “By leveraging existing real estate, sustainable packing materials, and smart inventory management, Fabric’s micro-fulfillment centers could lower last-mile emissions significantly.”