With stores closed and consumer confidence plummeting, most of the retail industry is in dire straits right now, and with all the uncertainty around the impact of COVID-19 on the economy, the environment for startup funding is similarly bleak.
Still, in recent weeks, several retail-adjacent companies have announced funding rounds in the tens of millions, and there’s reason to believe they won’t be last to do so during the current crisis. Key to their success? A focus on the areas of business that are more essential now than ever, including e-commerce logistics, supply chains and customer experience.
On Tuesday, Shippo, a shipping software company for e-commerce businesses, announced a $30 million Series C funding round that will help the company expand and bring its services to new merchants. While it raised the capital in late 2019, according to TechCrunch, the timing means the company is well-positioned to tap into the wave of businesses now relying on online sales to stay afloat — many of whom will need simplified shipping processes to get up-and-running. “We’re seeing a whole lot of retailers moving online almost overnight,” tweeted Shippo co-founder and CEO Laura Behrens Wu.
E-commerce sales accounted for 11% of total U.S. retail in 2019, according to the Census Bureau, but as more consumers stay home, that balance is rapidly shifting. One study by Adobe Analytics found that overall U.S. e-commerce rose 25% between the first 11 days of March and March 13 to 15. (President Donald Trump declared the virus a national emergency on March 13.)
The surge hasn’t made up for brick-and-mortar losses for the lion’s share of retailers, but many analysts expect the shopping habits that consumers are developing now will outlast the lockdowns, which means businesses will have to prepare for a new normal.
Logistics will be a major part of that transformation: Global venture fund 500 Startups polled investors about their funding plans post-COVID-19, and found that 32% were interested in increasing their investments in the logistics sector (behind only health care and remote work solutions). Some companies have already gotten ahead of this: Instabox, a Swedish logistics technology company whose clients include H&M and Ikea, announced a 36 million euro ($39 million) financing round on Wednesday. In late March, cross-border logistics provider Forager raised $10 million in its Series A.
Customer experience is another area that’s remained indispensable despite the ongoing disruptions. One beneficiary of this is Glassbox, an Israeli company headquartered in London that provides tools to help organizations understand and analyze how customers are engaging with their sites and apps. On Tuesday, the company announced a $40 million Series C funding round, bringing the capital it has raised to date to $70 million.
According to Ad Exchanger, Glassbox signed a deal with an undisclosed large fashion retailer in Q1, and despite the current financial headwinds across almost all industries, it is seeing companies pushing to invest in digital transformation.