Investors back fulfillment startups as pandemic e-commerce boom rolls on

Two e-commerce fulfillment startups gained significant venture capital backing today when ShipHero announced a $50 million round and Sendle raised $35 million, both citing hot demand from retailers trying to meet consumer demands in the pandemic-driven e-commerce boom of the past year.

New York-based ShipHero, which defines itself as an e-commerce fulfillment technology and outsourced fulfillment provider, said the backing marked its first institutional funding and was led by high-growth tech investor Riverwood Capital. The company took on outside backing after its revenue tripled in 2020 alone amid growing demand on e-commerce customers during the pandemic, the firm said.

ShipHero now plans to expand its nationwide network of U.S. warehouses from three to 10 by the end of 2021. The firm says it uses those facilities to offer outsourced fulfillment service to direct to consumer (DTC) brands and merchants. It also provides a warehouse management software-as-a-service (SaaS) platform for companies that want to ship from their own facilities.

Prior to the investment from Riverwood, ShipHero had avoided taking venture capital or strategic funding, CEO and Founder Aaron Rubin said in a release. "We have always been focused on long-term impact and on building a solid software-driven and high-quality foundation, and for years staying independent gave us the most flexibility in how we achieve that impact," Rubin said. "Our market opportunity has expanded significantly, and we have a great opportunity to accelerate our offering to clients as they digitize their businesses. The industry has raised a lot of capital recently and we were approached by high quality investors.”

In an unrelated round, Australia-based Sendle raised a $35 million “series C” backing to expand further in the U.S. The funding round was led by Afterpay-backed AP Ventures alongside returning investors including Federation, Full Circle, and NRMA.

Sendle says it is a 100% carbon neutral shipping carrier designed for small businesses, and that it use the money to drive investment in building out its U.S. network of logistics, delivery, and technology partners. Like ShipHero, the startup saw record growth as Covid-19 accelerated the shift to e-commerce, including a tenfold increase in 2020 compared to the previous year for its small business package volumes in the U.S.

“Package delivery is the backbone of today’s e-commerce ecosystem,” Hein Vogel, CEO of AP Ventures, said in a release. “As ever-more people shop and sell online, small business shipping will only grow in importance. For small sellers, it's a critical part of being able to compete on a level playing field.”