Founding Partner at Flashpoint Venture Capital

There is a clear tendency toward outsourcing logistics in today's e-commerce. According to the latest Pitchbook report, $7.7 billion was invested in supply chain technology startups in 186 deals in the first quarter of 2021, a 90.6% increase over the previous quarter and a 355.1% increase over 2020.

One of the most time-consuming tasks in e-commerce is ensuring all the logistical processes associated with receiving, storing, picking, packing, shipping, and delivering goods to consumers. The greater the sales, the harder it is to implement these processes independently, and the more expensive it is to maintain storage facilities and personnel.

Online stores prefer to focus their resources on boosting sales rather than handling and delivering packages, so they outsource this work to fulfillment centers. As a business service, order fulfillment is most in demand by online merchants and companies that have shifted their focus to e-commerce sales development since the pandemic.

All the major trends in logistics and order fulfillment are implemented by Amazon, which has become the leading corporation in online sales. Amazon currently has more than 100,000 robots working in its warehouses. This makes it possible to reduce warehouse maintenance costs and increase the efficiency of processes. Hundreds of thousands of retailers sell their products through the Amazon Marketplace. Nevertheless, selling on Amazon comes with certain risks; competitive prices can lower your profit margin, you can be suspended or banned at any time, moreover, it is Amazon’s customers – not yours. As a result, B2C-oriented online merchants seek an alternative in the form of a third-party fulfillment operator that will allow them to sell globally and grow their businesses. In 2020, according to eMarketer,  global B2C eCommerce sales reached $4 trillion. That number is expected to grow to $5 trillion by 2022, and $6 trillion by 2024.

Flashpoint has noticed this trend in fulfillment services for e-commerce merchants targeting the B2C segment and sees growth prospects in companies like OGOShip, Omnipack, and Dostavista. These companies altogether cover all aspects of the logistics chain, from receiving new orders to delivering goods to customers.

 

 

 

 

 

 

OGOship serves the growing online stores by automatically fulfilling their orders with its proprietary software, covering the whole fulfillment process from receiving goods to shipping them. Small and growing eCommerce shops can choose their warehouse location from OGOship’s network. The whole order-to-shipping process is run by OGOship’s software but executed by existing 3PL companies that work as warehouse operators in the OGOship network.

"AS A BUSINESS SERVICE, ORDER FULFILLMENT IS MOST IN DEMAND BY ONLINE MERCHANTS AND COMPANIES THAT HAVE SHIFTED THEIR FOCUS TO E-COMMERCE SALES DEVELOPMENT SINCE THE PANDEMIC"

Similar to OGOship, Omnipack provides a full-stack fulfillment service for medium-sized European online stores, such as Wish, Motorola, FemiStores. Omnipack handles order fulfillment from beginning to end, including collecting items, storing them in temperature-controlled warehouses, customizing packaging, and delivering them to the consumer within two days. The company also takes care of returns management and helps prepare goods for re-use by providing laundry, ironing, and repacking services. It works seamlessly with all of the most popular eCommerce platforms. Integration is quick and trouble-free. Once set up, stores have access to the Omnipack Merchant Portal, which allows them to keep a real-time eye on their whole operation.

Another LogisticTech company which is about to be added to the Flashpoint portfolio is  a service that connects truckers with cargo owners. The company entered the US market in early 2021 and was able to compete in the US market because of a more economical operating cost structure compared to local players: the business has access to cheaper labor markets than in the US, and dispatchers can operate remotely.

Since 2017, when Flashpoint invested into Borzo (previously Dostavista), the company has helped hundreds of thousands of small businesses compete with large enterprises that own internal logistics and delivery systems. Through an easy integration with Dostavista’s platform, a small business can offer same-day delivery at affordable prices to its customers. Dostavista has helped a variety of business segments as its solution supports a range of products, including urgent deliveries of documents, online shopping, food, flowers, gifts, and heavy goods.

Alexander Konoplyasty, General Partner at Flashpoint VC, commented: “We have seen a significant increase in interest in adopting technologies and services that give customers end-to-end visibility into their shipments, workflow management solutions that make operations more efficient, and tools that provide better reporting and analysis to track and improve organizational KPIs. The pandemic has caused a perfect storm for supply chains around the world, and technology can help solve this problem."