The Amazon age is presenting retailers with a Prime problem. Consumers are continually expecting faster and faster delivery speeds — but the cost of delivery isn’t getting any lower. For retailers that aren’t Amazon, that means delivering on the promise of fast delivery can often break the bank.
Enter Shipium. The Seattle-based supply chain tech startup announced a $27.5 million series A raise this week, one that the company is touting as “the largest venture-backed series A for a supply chain software startup in industry history.”
New York-based private equity firm Insight Partners, an investor in other e-commerce and delivery companies such as Shopify (NYSE: SHOP), Bringg and ParcelLab, led the funding round. Shipium will use the money to continue building out its data-driven last-mile delivery orchestration platform, which is on pace to break 100 million shipments processed by year’s end.
According to Shipium, the last mile is typically the biggest operating cost in e-commerce, often totaling around 12% of annual online sales. At the same time, offering free and fast shipping in the vein of Amazon Prime is key to success. It’s one of the few ways companies can position themselves to compete in the age of quick commerce.
Watch: Last mile delivery in an omnichannel global market
Shipium solves that problem for retailers with a complex data modeling platform. It streamlines decisions that are typically made by human data analysts, automating them using machine learning and logic.
The result is that the company links fragmented decision makers across its customers’ supply chains. In doing so, Shipium facilitates communication among shippers, carriers, distribution centers and other touch points, enabling its software to pick the cheapest and fastest shipping method.
“Prime is the problem for everyone else because it focuses on what customers want, like faster and cheaper shipping options and a better delivery experience,” said Shipium co-founder and CEO Jason Murray in a statement. “Modern technology that unifies decisions throughout the supply chain in service of those last-mile goals is the only way to compete for customer growth and loyalty. This series A funding indicates that the industry is understanding this. We’re excited to extend our offerings to retailers in order to give consumers what they want.”
Murray founded Shipium in 2019 after a 19-year stint with Amazon (NASDAQ: AMZN), during which he served as a senior manager for both inventory planning and Fulfillment by Amazon technology. He eventually worked his way up to vice president of the company’s forecasting and supply chain department before linking up with fellow co-founder Mac Brown, who helped build the supply chain and fulfillment software of e-commerce startup Zulily for seven years.
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“This is not an easy software to build, so we will always be biased toward product and engineering because of that complexity,” Murray told TechCrunch. “We are also leaning in on the pickup of e-commerce as a result of COVID, and it is just imperative we go after it as soon as possible. Ultimately, we want our platform to be a bridge of legacy tech and a version that is simple and usable by the retailers.”
Shipium’s growth comes during a time when e-commerce is heating up to unprecedented levels. E-commerce sales accounted for a record 19.6% of worldwide retail sales in 2021, yet there is still plenty of room to grow. Experts forecast that by 2025, nearly one in four retail sales globally will be made online.
“The pandemic has accelerated e-commerce growth to unprecedented heights, but major retailers continue to grow in both revenue and market share, largely due to its superior shipping experience,” said Brad Fiedler, vice president of Insight Partners. “Jason, Mac and the team’s background positions them as the foremost experts on how to help the rest of the retail industry compete for customer growth and loyalty. Insight Partners is excited to invest in Shipium to further help change the landscape of the e-commerce industry.”
Insight’s investment follows the $8 million seed funding round Shipium secured in June, led by Trilogy Equity Partners. Now, less than a year later, with another $27.5 million in tow, the platform is in a better position than ever before to solve the Prime problem.
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