ShipBob Raises $200M at $1B+ Valuation | Ecommerce Logistics

The Rise of E-commerce and the Growth of ShipBob

The year 2020 witnessed a substantial increase in e-commerce activity and expansion. While large corporations like Amazon experienced significant gains during the COVID-19 pandemic, this positive trend also benefited numerous smaller businesses.

ShipBob Secures $200 Million in Funding

ShipBob, a company specializing in shipping and logistics solutions for e-commerce businesses, has successfully raised $200 million. The platform empowers approximately 5,000 online retailers to manage their shipping operations with capabilities comparable to those of major industry players.

Strategic Investment for Expansion

Despite already being a profitable enterprise, ShipBob intends to utilize these funds to bolster its operations in two key areas. These include geographical expansion and technological advancements, with increased investment in research and development related to software, robotics, and autonomous systems.

CEO Dhruv Saxena on Future Priorities

“We continually assess the evolving requirements of our merchants and prioritize initiatives that will maximize their success and provide a competitive advantage,” stated Dhruv Saxena, CEO of ShipBob, during a recent interview.

Valuation Doubled in Less Than Two Years

ShipBob’s latest funding round has resulted in a valuation exceeding $1 billion, representing a doubling of its value since the Series D round closed in September 2020. The company is headquartered in Chicago.

Investors in the Series E Round

Bain Capital Ventures spearheaded this Series E funding round. Participation also came from SoftBank, Menlo Ventures, Hyde Park Venture Partners, Hyde Park Angels, and Silicon Valley Bank, with several investors returning from previous rounds.

A Full-Stack Approach to Logistics

ShipBob’s business model combines infrastructure and technology, described by co-founder Dhruv Saxena and Divey Gulati as a “full-stack approach.” The company operates a network of warehouses across approximately 20 locations in the U.S., Canada, Europe, and Australia, with plans to add ten more facilities using the new funding.

Key Components of the ShipBob Platform

• Warehousing and Distribution: Customers can store and distribute their products from ShipBob’s strategically located warehouses.
• Merchant Application: A dedicated application assists merchants in tracking inventory and coordinating with warehouses for order fulfillment.
• Shipping Integration: ShipBob integrates with numerous shipping carriers to ensure efficient order delivery.

Seamless Integration with Major Platforms

ShipBob integrates with over 40 partners, including Walmart for two-day delivery, Pachama for carbon-neutral shipments, and popular e-commerce platforms like Amazon, Shopify, BigCommerce, Wix, Square, and Squarespace. This allows businesses using these platforms to easily leverage ShipBob’s fulfillment services.

The Importance of Fulfillment and Logistics

While often unseen by consumers, fulfillment and logistics are critical components of a successful e-commerce business. These processes – including storage, picking, packing, shipping, and returns – can significantly impact a seller’s costs and competitiveness.

Cost Considerations in Logistics

Logistics expenses, encompassing storage, handling, shipping, and return fees, can represent a substantial portion of a seller’s overall costs. Sellers must either absorb these costs to remain competitive or pass them on to customers.

Leveraging Economies of Scale

Amazon’s success is largely attributed to economies of scale, reducing operational costs by distributing them across a large volume of goods. This allows for more competitive pricing and efficient service.

ShipBob as a Logistics Outsourcing Solution

Companies like ShipBob offer a viable alternative to building in-house logistics capabilities. They enable businesses to outsource these functions, similar to utilizing a payment processor like Stripe instead of developing a payment system from scratch.

Creating Economies of Scale for Smaller Businesses

By aggregating orders from multiple businesses, ShipBob achieves economies of scale, mirroring the benefits enjoyed by larger companies like Amazon.

ShipBob’s “Prime” Style Offering

ShipBob currently provides a “Prime” style offering, enabling customers to provide low-cost or free faster shipping for orders exceeding a certain value. The company is exploring opportunities to expand its services to include loyalty or membership programs.

Supporting Brand Growth

“Our customers are the brands, and ShipBob was created to support their growth,” Saxena explained. “Offering fast and affordable shipping across all sales channels is essential, and we provide a ‘Prime’ style offering to the brands we support.”

The Future of E-commerce Growth

The recent surge in e-commerce, driven by the pandemic, raises questions about its long-term sustainability. While online spending increased by 44% in 2020, prior to the pandemic, U.S. e-commerce growth averaged around 15% annually.

Accelerated Adoption and Lasting Changes

“COVID accelerated e-commerce penetration in the U.S. by 5-7 years,” Saxena noted. “While some of this growth may revert as the economy recovers, overall online sales remain higher than pre-pandemic levels across most sectors.”

Demographic Shifts in Online Shopping

Saxena added, “Consumers who were new to online shopping during the pandemic are continuing to make purchases online. Older demographics have adopted online shopping, while younger demographics have increased their online spending and purchasing power.”

Investor Confidence in ShipBob’s Potential

ShipBob’s profitability and growth prospects have attracted significant investor confidence.

Bain Capital Ventures’ Perspective

“The fastest-growing e-commerce brands recognize that world-class fulfillment drives revenue and builds customer loyalty,” said Ajay Agarwal, partner at Bain Capital Ventures and a board member. “These brands are partnering with ShipBob as the leading cloud logistics platform to manage and deliver their merchandise.”