In this week's Dealboard: Nano-fulfillment, lease-to-own, and discount tools get funded.
Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in ecommerce, CPG and retail.
This week, there’s news of investment deals for nano-fulfillment centers, lease-to-own payment programs, a Shopify-focused ecommerce aggregator and discount code alternatives. Plus, brands in travel, beverage and sexual wellness all attract venture dollars. In M&A, there's news of a key merger in the Shopify ecosystem and the latest on the Purple takeover bid.
Check out the details:
The 1M Robotics team. (Courtesy photo)
OpenStore, an ecommerce roll-up that acquires Shopify brands, raised $32 million at a valuation of $970 million, Techcrunch reported. The round was led by Lux Capital, and is a 25% increase in valuation over a $75 million round the company raised in November 2021. Open Store was founded by prominent names in the startup world, including Founders Fund General Partner Keith Rabois and Atomic Managing Partner Jack Abraham. Former DoorDash engineer David Zhu joined the company in May as head of engineering. OpenStore seeks to acquire U.S.-based, direct-to-consumer brands that have $1-$10 million in gross merchandise volume.
Travel brand Monos raised $30 million in a Series B investment round. The funding was led by venn growth partners, with participation from Strand Equity and Michele Romanow. Marcello Bottoli, the former CEO of Samsonite, Louis Vuitton, and Pandora, will also join the company’s board of directors with the deal. Vancouver-based Monos offers suitcases, bags and accessories. Monos said it achieved 4x growth in 2021, and has another 4x growth forecast in 2022. The capital will be invested into new inventory, product development, talent recruitment and channel expansion.
1M Robotics, a startup developing robotic nano-fulfillment centers, emerged from stealth mode with an announcement that it has raised $25 million. A recent Series A funding was led by Ibex Investors, and included participation from existing investors Emerge VC, Target Global and INT3. The Israel-based company makes small (20 square meters), automated dark stores that can be sent within shipping containers, and arrive ready to deploy. These are designed to be put on street corners or other convenient locations, where they serve as distribution points for last-mile delivery.
Kafene, a startup which helps merchants offer lease-to-own payment options at the point of sale, raised $18 million in a Series B round. The funding was led by Third Prime, with participation from existing investors. Kafene said it enables retailers to offer lease-to-own agreements, with a goal of serving underbanked consumers as they make purchases of big-ticket items like furniture, electronics, appliances and tires. It combines an underwriting model that allows financing to be tiered based on risk with a software platform. The company will use the funding to grow its team.
Brightflow AI, a financial intelligence platform for small businesses, said it has raised a total of $19 million in equity funding from investors. This includes a recently-closed $15 million Series A led by Haymaker Ventures, and a $4.2 million seed round led by Bonfire Ventures that was previously undisclosed. The company's platform is designed to forecast sales and automate cash flow management for businesses. It is taking an initial focus on ecommerce, providing integrations with Shopify, Amazon, QuickBooks, Netsuite, Xero, Plaid, Facebook and Google Ads. It raised a further $100 million in debt financing to provide small businesses to provide qualifying businesses with access to capital.
Fondue, which built an alternative to discount codes called CashBack, announced that it raised $10.5 million in seed funding. The funding was supported by Quiet Capital and Hanaco Ventures, as well as Infinity Ventures, Ground Up Ventures, Sugar Capital, Starting Line, R-Squared Ventures, Gaingels and Verissimo Ventures. Available as a Shopify App, CashBack is being used by brands including Steve Madden, Birthdate Candles and Duradry. As opposed to a pre-purchase code, the tool involves a UTM that allows shoppers to “see their CashBack eligibility throughout the purchase journey and then redeem it post purchase in a method they choose: extra store credit, gift cards, cash, and more to come soon,” the company said in a blog post.
Sparkling water brand Aura Bora closed on a Series A funding round that brings its total capital raised to $10 million, Food Business News reported. The funding round was led by Siddhi Capital, with participation from Consumer Ventures, Gaingels, Seaside Ventures and Simple Food Ventures. Along with the funding, Siddhi Capital General Partner Melissa Facchina, Waterloo Founder Clayton Christopher and Brad Barnhorn joined the brand’s board. The brand is looking to expand its distribution, which currently include 4,000 stores such as Sprouts Farmers Market, Whole Foods Market and Thrive Market.
Dame, a sexual wellness company, raised $7 million in a Series A funding round. The round was led by Amboy Street Ventures, with participation from Listen Ventures, Flybridge, Echo and Forest Road Company. It has raised $13 million total. The brand also launched a new product called Dip, which it described as “an unintimidating, inclusive entry point to pleasure for people who are in the early stages of their sexual wellness journey.” Dame said it is posting 100% year-over-year ecommerce growth, and doubled its wholesale business for each of the last two years. Its products are available at its website, and stores including Sephora, Bloomingdales, Nordstrom and Free People.
Muddy Bites, maker of a bite-sized, chocolate-filled waffle cone snack, said it has raised $5 million from investors including Reformation Partners, RXBAR founder Peter Rahal, former RXBAR COO Sam McBride and Scott Semel. As it gains name recognition through viral TikTok videos and influencer partnerships, the brand said its products are now in 5,200 US retail locations, up from 2,300 at the beginning of 2022.
Checkmate, a personalized smart shopping tool, raised $5 million in a seed funding round. Fuel Capital led the funding, with participation from Rakuten Ebates CEO Kevin Johnson, f7 Ventures, Blackbird Ventures, Scribble Ventures, Hyper, and Susa Ventures. Also participating were Liquid 2 Ventures (founded by NFL Hall of Famer Joe Montana), Wischoff Ventures, Exits Capital, Night Capital, Ancestry CEO Deborah Liu, Firstbase CEO Chris Herd and XMTP President Shane Mac. Available as a browser extension, Checkmates takes offers from personal email and the web, and applies them at checkout. The investment will help the San Francisco-based company speed up product development and customer growth.
A screenshot of RetentionEngine. (Courtesy photo)
Retextion, a subscription management platform for Shopify brands, acquired Bellwethr Inc., the maker of churn reduction app RetentionEngine. With the merger, Retextion said it will integrate RetentionEngine’s feature set into its platform for all merchants. The companies are also planning to roll out new feature sets powered by Rentention Engine’s machine learning algorithms, including a new set of dashboards focused on predictive analytics. “RetentionEngine is hands down the best churn reduction tool on the market,” said Gina Perrelli, CEO of Retextion. “We’re thrilled to have the talent and resources to layer powerful machine learning into every aspect of subscriber acquisition, retention and winback.” Terms of the deal were not disclosed.
L’Oréal is set to acquire Skinbetter Science,, a sknicare brand dispensed by physicians. Founded in 2016 by pharmaceutical professionals Jonah Shacknai, Justin Smith and Seth Rodner, Skinbetter Science developed products for anti-aging, moisturizing, cleansing, exfoliating, skin peeling and sun protection. The Arizona-based brand recorded trailing 12-month sales of $95 million for the period ended August 31. Skinbetter’s team will continue to run the brand, with the integration led by Christina Fair, president of the Active Cosmetics Division within L’Oréal USA. Terms of the deal, which is expected to close in the fourth quarter, were not disclosed.
Purple Innovation said last week that it received an acquisition bid from Coliseum Capital Management. This week, it has a response: It will mull it over. The DTC mattress brand adopted a limited-duration shareholder rights plan, known as a poison pill, which is a strategy employed by public companies to hold off acquisitions. Meanwhile, a newly-formed special committee will evaluate the unsolicited bid. The company also disclosed that Coliseum Capital currently owns 45% of the shares outstanding. “The Special Committee adopted the Rights Plan in response to the Coliseum Proposal, Coliseum's substantial increase in ownership of shares of Purple over the last year and the Special Committee's desire to have the time and flexibility necessary to evaluate the Coliseum Proposal,” Purple said in a news release.
Food technology company Grubmarket said it acquired JC Produce, a fresh produce company with a focus on South America and Asia. Founded in 2012 by Jacky Chan, JC Produce grew as a distributor of ginger and garlic, and has over 30 SKUs. Following the acquisition, JC Produce will continue to be run by its current management team and use WholesaleWare, which is Grubmarket’s SaaS platform for wholesalers and distributors. “This acquisition enables GrubMarket to further strengthen our presence on the West Coast as well as our sourcing power worldwide,” said GrubMarket CEO Mike Xu.
Plus, check out peak holiday shopping weekend results shared by Klaviyo, Wayfair and Ace Hardware.
At Amazon, 2022 delivered the "biggest ever" Thanksgiving weekend to date.
ustomers purchased a record number of products from Thanksgiving through Cyber Monday, the company said in a news release Wednesday. Amazon did not disclose sales figures, while sharing that “hundreds of millions” of products were purchased.
"This was a record-breaking holiday shopping weekend for Amazon,” said Doug Herrington, Amazon’s CEO of Worldwide Stores, in a statement. “Customers shopped millions of deals this weekend and we have many more amazing deals to come.”
It came as record sales and traffic were reported for US ecommerce as a whole during the peak shopping weekend.
Despite the growth, Amazon is still expressing a cautious approach that led it to forecast more tepid sales growth over 2021 for the all-important holiday quarter. According to Bloomberg, CEO Andy Jassy said Wednesday that inflation is leading shoppers to seek deals.
“Consumers are spending, but they’re being careful about trying to stretch their dollar,” Jassy said at the New York Times DealBook conference.
This year, Amazon sought to get an early jump on the shopping holidays to reach bargain hunters. It began Black Friday deals on Thanksgiving, as many shoppers turned to their phones after dinner. For Cyber Monday, deals started on Saturday.
Over the Turkey 5, the best-selling categories were home, fashion, toys, beauty and Amazon devices. Electronics including Echo Dot, Fire TV Stick, and Apple AirPods were the best-selling items. Other top sellers included Hasbro Gaming Connect 4, Burt’s Bees Christmas gifts, apparel from Champion, apparel and shoes from New Balance, the Amazon smart plug, Echo Show and Nintendo Switch.
Amazon said that more than $1 billion in sales were generated for US small businesses through the weekend. This includes third-party sellers that offer goods on Amazon’s marketplace and access its logistics services through Fulfillment by Amazon (FBA).
“If the news of Amazon having the best Black Friday weekend in company history is any clue, it was historic for 3P sellers in many ways,” said Jon Elder, who consults with Amazon sellers as founder and CEO of Black Label Advisor.
Elder said that the vast majority of FBA sellers experienced “tremendous” year-over-year growth through the weekend.
“Sellers noticed that customers were hungry for deals like never before and coupons played especially well,” Elder said. “Some sellers opted to not sign up for deals and still experienced historic traffic and sales.”
Sellers also ramped up PPC, or pay-per-click, in which brands and sellers access sponsored product space to appear in prominent positions on the highly-trafficked marketplace.
“With inflation on the rise, it was more important than ever to increase brand awareness through PPC ads, including video ads. Expect to see brands make this a ‘best practice’ going forward,” Elder said.
Despite all the sales ringing up, Black Friday did bring one curve ball, as a glitch in Amazon’s ad tools led to inaccurate reporting of spend that misled brands and advertisers. According to Business Insider, the sitewide reporting error caused agencies and other ad buyers to either overspend, or miss out on sales as a result of underspending. While a spokesperson said the issue was fixed, it caused a state of confusion on retail’s most important day of the year, as many were forced to wait for a fix.
Nevertheless, the weekend's overall results serve as a reminder that the Thanksgiving shopping period remains the largest weekend of the year for ecommerce, even as Amazon has introduced Prime Day and this year’s early October holiday kickoff event, which it dubbed Prime Early Access Sale.
The Prime sale events are “unique to the Amazon ecosystem, but many Americans simply don’t show up for those events as much because of the time of the year," Elder said.
"Black Friday weekend remains king and the numbers prove that."
Here are a few more key data points over the Black Friday-Cyber Monday weekend that were shared this week:
How many sales do the volumes of messages being sent by brands account for? One of the largest platforms is offering hard numbers. Klaviyo, which serves direct-to-consumer businesses, said revenue attributed to its SMS and email marketing messages reached $2.2 billion during Black Friday-Cyber Monday. That represents a 46% increase in dollars over 2021, while total order count reached 34% year-over-year. The growth was even more staggering in SMS-attributed sales alone, which grew 200% in dollars and $190 in order count.
Black Friday was the highest day for message sends, but Cyber Monday closed the gap from 2021, with 47% growth.
This came after businesses using the platform sent a combined 10.7 billion emails and text messages—up 41% from 2021.
While Klaviyo’s growth is likely a factor, it’s a fair bet that a shift toward owned marketing channels following Apple’s App Tracking Transparency played a role in this growth.
A pair of retailers in the furniture and home improvement categories released sales results showing growth.
Wayfair, the furniture home goods marketplace, reported a “low single digit sales increase” over 2021 for Thanksgiving weekend. Over the five days, 73% of the orders were from repeat customers, while “hundreds of thousands” of new customers ordered from Wayfair for the first time. Wayfair said its revenue strengthened following an early November earnings call, in which the company shared its revenue was down 10% quarter-to-date.
Ace Hardware, meanwhile, may known for its local stores, but ecommerce was the focus of its holiday update. Black Friday brought a record online sales day for the home improvement and tools retailer, posting 45% growth over 2021. Cyber Monday also saw a year-over-year jump of 33%. Ace said demand spiked for grills and smokers, electric mowers and snow blowers, while power tools also remained a popular category. In all, Ace saw a 33% increase in ecommerce sales over 2021 during the five-day weekend.
Ace sells through its ecommerce site, but its omnichannel model remains heavily linked to its neighborhood-level stores. The company said that 90% of online orders are either picked up in store, at curbside or delivered by store associates.
“Our continuous investments in the digital and omnichannel shopping experience make it easy for customers to shop Ace any way they prefer," said Bill Kiss, head of digital at Ace Hardware, in a statement.