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Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in the ecommerce and consumer goods landscape.
This week, aggregators show there’s still willing investors in the market to support the acquisition of DTC brands, and moves on the fulfillment and retailer side aim to bolster European ecommerce capabilities.
Here’s the roundup:
Singapore-based Carousell acquires Refash
Carousell and Refash are joining forces.
Recommerce platforms serving Southeast Asia are teaming up in an acquisition deal announced last week.
Singapore-based Refash, which was founded in 2015, will continue to operate as a standalone brand, keeping its name and team.
“We see immense opportunity in teaming up to make selling even simpler for anyone time-starved who has underused clothes in their wardrobes,” said Quek Siu Rui, cofounder and CEO of Carousell, in a statement. “With our reach and expertise in using technology and AI to create seamless buy-sell experiences for secondhand, we are excited to partner and accelerate the growth of Refash.”
Terms of the deal were not disclosed.
The Athlete’s Foot acquires AsphaltGold
With the move, The Arklyz Group will add Asphaltgold to the portfolio of The Athlete’s Foot. This follows the acquisition of The Athlete’s Foot by the Switzerland-based Arklyz Group last year.
Asphaltgold will continue to operate its platform throughout Europe, and a store in Germany.
"The acquisition of Asphaltgold was a strategic decision for us," said Arklyz Group CEO Param Singh, in a statement. "The business has a global online presence and access to exclusive brand collections which is something we truly admire and will be utilizing this component."
Terms of the deal were not disclosed.
Dough Ecommerce Capital and Byrne Capital Ventures partner to acquire DTC brands
Here’s a deal that forecasts coming acquisitions.
This brings together Byrne’s expertise in M&A and investment strategy with Dough’s expertise in the ecommerce space. The latter is backed by ecommerce firm Metacake, and has worked with brands such as Tony Robbins, Old Spice, Groove Life and Gibson Guitars.
“We're looking forward to scaling our acquisition efforts and increasing the value of portfolio brands through this partnership,” Dough cofounder Ken Ott said in a statement.
Future acquires WhoWhatWear
Here’s a deal that could play a role in shaping fashion media, where brands and retailers are frequently covered.
Founded in 2006 by Katherine Power and Hillary Kerr, Who What Wear boasts 12 million monthly online users and 10 million social media followers, according to the companies. Kerr also hosts the popular Second Life podcast, which will continue to be a part of the business.
“Since our launch in 2006, Who What Wear has been and will continue to be a pioneer in every form of digital content, from website and social media to live stream shopping, podcasts, and more,” Kerr, who will continue to lead the brand along with President Brianna Mobrem Chief Revenue Officer Shayna Kossove, said in a statement. “We have created an enduring brand that will live for generations to come.”
The deal comes a year after Future acquired Marie Claire. Following this acquisition, Future said it will become the sixth largest beauty and fashion publisher in the United States.
Terms of the deal were not disclosed.
Wayflyer raises $300 million in debt financing
Wayflyer cofounders Jack Pierse (L) and Aidan Corbett (R) (Photo: Business Wire)
Wayflyer has its second funding in the first half of 2022.
The ecommerce growth platform announced that it secured $300 million in debt financing. The financing was led by J.P. Morgan, with Neuberger Bermann acting as a mezzanine provider.
Founded in 2019 by Jack Pierse and Aidan Corbett, Wayflyer provides non-dilutive financing for ecommerce businesses that allows them to secure ad space and inventory. It also offers a marketing analytics platform.
The news comes after Wayflyer raised $150 million in a Series B round in February. That funding was also led by J.P. Morgan.
Aggregator Agora Brands raises $83.5 million for DTC acquisitions
The round was led by Maverix Private Equity, with participation from Palo Alto-based Foundation Capital and Victory Park Capital. With the deal, Maverix Managing Partner Michael Wasserman Foundation Capital Partner Jonathan Ehrlich are joining the board of directors at Agora Brands.
Agora primarily acquires DTC businesses operating in the Shopfiy ecosystem with annual revenues of $1–20 million. Founders continue to operate the brands, while accessing shared services and expertise from Agora. It has already acquired businesses in categories such as automotive, apparel, personal wellness products and home goods.
The aggregator was founded by Jesse Horwitz, Ben Cogan and Ray Cao, who have experience building and exiting Harry's, Clearco and Hubble, among other businesses.
“We've been pursuing an aggressively high-growth strategy, and this will help us grow even faster,” Cao said in a statement. “It will also help us strengthen our operational infrastructure, including growing our centralized support functions such as finance and HR, and a portion of this capital will go toward developing technology that will drive automation and institutionalize processes under the Agora banner."
Nexite raises Series C for in-store intelligence
The round was led by Pitango Growth and Saban Ventures, with participation from existing investors Battery Ventures, Intel Capital, Pitango First and Vertex Ventures.
Tel Aviv-based Nexite aims to bring analytics typically used in ecommerce to the realm of physical stores. Using a patented NanoBT (bluetooth) tag, its connected merchandise platform draws from data on items’ location, availability and performance. It also aligns this with data on customer journeys.
"We're providing complete transparency into the physical sales funnel and by doing so, we're creating a lexicon for in-store intelligence to optimize sales per square meter based on customer engagement data," said Anat Shakedd, co-founder and CEO at Nexite, in a statement. "We're introducing terms normally associated with ecommerce like abandonment, engagement and conversion into the physical realm.
To date, the company has raised $100 million.
Fulfillment platform byrd raises $56 million in Series C
The round was led by supply chain-focused investment firm Cambridge Capital, with participation from Speedinvest, Mouro Capital, Elevator Ventures and other existing investors.
Vienna-based byrd makes order fulfillment software that is used by warehouse operators, and integrates with Amazon and Shopify.
The company already has a presence in the UK, France, Germany, the Netherlands,
and Austria. Recently, it launched new warehouse locations in Italy and Spain.
Following the funding round, the company plans to expand its current teams, and launch in Sweden, Denmark and Poland later this year. It aims to have a network of 30 warehouses in 10 countries, with 400 employees.
“byrd is one of the fastest-growing companies we have seen, at what we think are the strongest unit economics in the industry,” said Matt Smalley, a principal at Cambridge Capital, who is joining byrd’s Board of Directors, in a statement. “We were convinced by their tech-driven approach and proprietary warehouse management software, which enables byrd to run an asset-light fulfillment network. byrd’s broad coverage of the European market, excellent customer momentum and strong satisfaction with both retailers and warehouse partners appealed to us right away.”
byrd previously raised $19 million in a Series B round announced in July 2021.
Recurate raises $14 million for resale
Branded resale tech platform Recurate raised $14 million to help build a new suite of services and integrations.
The New York-based company was founded in 2020, and powers resale platforms for 40 brands, such as Steve Madden, Frye and Mara Hoffman. It is aiming to grow to more than 100 brand partners by the end of the year.
The funding round was led by Jump Capital. It includes participation from Gradient Ventures, XRC Labs, Victress Capital, Revolution's Rise of the Rest Fund, and AngelList Early-Stage Quant Fund, as well as executives from Brooks Brothers, Chubbies, and Klaviyo.
Following the funding round, the company is planning a host of new product additions in areas including data analytics, inventory, sustainability, merchandising and product recognition.
"Third party marketplaces have fostered a projected $77 billion industry for resold goods. Recurate provides the logical evolution for this appetite to flow through the brands themselves," said Yelena Shkolnik, Partner at Jump Capital, in a statement. "We expect the ease of purchasing and listing goods through brand sites will bring brands many new customers, help them retain existing customers and ultimately bring millions of consumers to the circular economy."
The company has now raised a total of $17.5 million.
DTC skincare brand Aavrani raises Series A
Led by Skara Ventures, the funding will help the brand expand distribution, add new categories, address supply chain challenges and build its team.
Tidio raises $25 million for automated customer service
Customer service automation platform Tidio raised $25 million, according to TechCrunch. The round was led by PeakSpan Capital, with participation from Inovo Venture Partners and InPost CEO Rafał Brzosk.
San Francisco-based Tidio uses a combination of live chat apps, chatbots and analytics to help companies scale customer service, and has ecommerce-focused integrations.
Here’s what makes it unique in customer service tech, according to Techcrunch:
Customer service automation platforms like Tidio aren’t exactly cutting edge. To name a few, there’s Ultimate.ai, a data-ingesting, bot-builder platform and Ushur, which offers a service for businesses to create AI-based communication flows. Ada also slots into the category — it features chatbots powered by a natural language processing engine.
What makes Tidio stand out, co-founder and CEO Tytus Gołas asserts, is its simplicity in terms of implementation and structure. Tidio integrates with third-party services including email providers, Facebook, Instagram, WordPress and Shopify, allowing teams to manage customer interactions from a shared inbox. Plans range from free for two users to $332.50 per month (billed annually) for unlimited users and other extras.
Saara closes seed round to reduce returns
Ecommerce tech company Saara closed on a seed funding round to help DTC brands reduce product returns.
The round was led by South Asian VC firm 021 Capital, with participation from 9Unicorns and Lets Venture.
The Silicon Valley-based company developed an app that uses AI and machine learning to help brands manage and reduce returns. Called EcoReturns, it is available on the Shopify App Store, and will soon be available on Magento, WooCommerce and more.
“With this capital from our investors, Saara will continue to assist direct-to-consumer brands increase their profitability, introduce more market-disrupting products to build a stronger ecosystem,” said Sachin Garg, Saara's founder and CEO, in a statement.
Garg built the app to help brands turn returns into a profit center rather than a loss, and reduce environmental impact.
Terms of the round were not disclosed.
Trending in Economy
The company is pulling back after breakneck pandemic expansion. Will it sacrifice the shopping experience along the way?
Amazon is in a period of rebalancing.
The company has long scaled at a relentless pace as it sought to not only provide a marketplace for commerce, but the infrastructure that enabled it, as well. Amazon found another level of overdrive over the last two years, as demand spiked to unseen heights during the pandemic and the company tried to build to keep up.
This wasn’t necessarily a period that saw the kind of invention that Jeff Bezos made an existential tenet of the company, but it nonetheless seems to be shaking out as a cycle that included risk and fallout.
In this case, the risk was not a new device like a smartphone or a move to bend the future to Amazon's will like drone delivery. Rather, it was an expansion that took its already-vast operations to new heights.
Nowhere was this more evident than the company’s logistics network. As CEO Andy Jassy described it to analysts Thursday on an earnings call, the company doubled the size of a fulfillment network it took a quarter-century to build in two years. It also built out a last-mile delivery network that was the size of UPS, which is one of the top two carriers in the U.S.
In 2022, all of that expansion ran into 40-year-high inflation, war in Ukraine and a pullback in demand for goods amid reopening. The company first admitted the problem: It had overbuilt.
But the solution is not to tear down. It had to keep expanding as only Amazon does, while still cutting back in a period of “belt-tightening,” as executives have put it.
That’s evident in watching developments out of the logistics network alone. Amazon pulled out of some areas, and canceled plans to expand into some new warehouses. Yet, as Business Insider reported, it still added 79 million square feet – a footprint that is equal to half of next-closest competitor Walmart’s entire distribution network. It is also expanding Buy with Prime, a new program that will allow direct-to-consumer brands to offer Prime benefits, and, by extension, access to Amazon’s logistics network. Another service, called Amazon Warehousing and Delivery, is designed for upstream storage, necessitating more space to be made available in the network.
At the same time, it will seek to keep doing more for consumers.
Jassy indicated as much when he was prompted to outline his priority areas. Beyond cost-cutting, he said speed is the second highest priority for Amazon. As if to conform this, he said later in the call that one-day shipping is getting off the ground in North America.
Selection is another priority area. At Amazon, that phrase translates to a few things, but top of mind is “expanding the third-party seller marketplace.” Third-party sellers accounted for 59% of sales in Q4. Beyond sales, Amazon’s work with the sellers who post their products on the marketplace is also lucrative for the company. Amazon allows these sellers to tap its logistics network to offer Prime through the Fulfillment by Amazon program. Its business segment called third-party seller services grew 20% year-over-year in the fourth quarter, right in line with the massively profitable cloud computing division Amazon Web Services.
Price, Jassy said, is another area of importance, especially with the consumer pullback on discretionary purchases being observed amid inflation.
“I think pricing being sharp is always important,” Jassy said. “But particularly in this type of uncertain economy, where customers are very conscious about how much they're spending, having the millions of deals that we put together with our selling partners in the fourth quarter was an important part of the demand that you saw.”
Finally, Jassy cited a priority of improving the customer experience. He said Buy with Prime would give subscribers the ability to use their benefits across the web, and noted that virtual try-on for shoes brings change to the shopping experience.
But it’s in this area that the tradeoffs that may be happening under the surface may rear their head again. GlobalData Managing Director Neil Saunders noted that online shopping generally is becoming “more difficult" on Amazon.
“While the Amazon marketplace is far from a terrible place to shop, it has become more complex and cluttered with a multitude of products, delivery options, and prices levels for shoppers to sift through,” Saunders wrote in note released at the time of the earnings call. “The result is that impulse buying has dropped and that more people are migrating away to other retailers. This is not yet a serious problem as erosion has only happened at the margins, but it is something Amazon will need to address and arrest to prevent further decline.”
Taking a rhetorical step further, the journalist John Hermann wrote this week that a “junkification” of Amazon is taking place, while arguing that “everything is going according to plan" for the company.
He placed the growth of the third-party seller marketplace at the center of this trend. But it also comes as Amazon grows its advertising business, with many taking note of a growing number of ads on the platform. The company also wants to keep growing Prime, and is now using content such as Lord of the Rings and NFL’s Thursday Night Football as key acquisition channels. Both had “record” signups of new Prime members, CFO Brian Olsavsky said.
“We see a direct link between that type of engagement and higher purchases of everyday products on our Amazon website,” he said.
It will have to do each of these things at once, while entering a period that will require it to be “more targeted with its growth ambitions,” as Saunders put it.
"Since its inception, Amazon has had a culture of throwing dollars at many different things to see where they led and what they could learn," Saunders said. "That approach worked well for a younger, fast-growth business. It works far less successfully for a more mature entity. In our view, management deserves credit for recognizing this and quickly responding. However, the shift requires a lot of care because Amazon needs to find a new balance between being ambitious and innovative and being more frugal with its spending – which will be very challenging."
Jassy said the changes of the pandemic made its logistics a "different network." That may be true of the whole company. Rather than an isolated cycle of overbuilding and pulling back, this may prove to be a period that changes Amazon altogether. The bets will still be there, but the risk will be magnified with fewer dollars that don't pay off to go around. As hinted by the logistics buildout of the pandemic and even Buy with Prime, they also may look more operational.
Less delivery robot, more delivery optimization.
As Jassy put it: “We're going to be very thoughtful about how we streamline our costs, and I think you see a lot of that, but we're also going to continue to invest for the long term.”
The recipients of those investments will say a lot about where it wants to head in this next year.