ShipBob raises $40 million for e-commerce fulfillment service

Third-party logistics (3PL) and fulfillment technology provider ShipBob said today it has landed $40 million in venture funding, which it will use to fuel the company's growth and expand a software platform that the firm says allows small e-commerce businesses to compete with Amazon.com Inc. by providing same-day shipping for many online orders.

Chicago-based ShipBob says its customers can access same-day delivery at ground shipping prices by using the firm's fulfillment centers, which are located in cities near the population centers where many shoppers live, including Chicago, Dallas, Los Angeles, New York, and San Francisco. ShipBob's software powers those fulfillment centers, as well as helping its users to predict trends, shopping habits, and geographic insights across multiple sales channels, the firm said.

The financing was led by the California venture capital firm Menlo Ventures, with participation from existing investors Bain Capital Ventures, Hyde Park Venture Partners, Hyde Park Angels, and Y Combinator. The latest investment brings the firm to a total of $62.5 million raised, including a 2017 round of $17.5 million led by Bain and a 2016 round of $4 million led by Hyde Park, according to ShipBob.

Shawn Carolan, a partner with Menlo Ventures, will be joining the ShipBob board of directors. "We love how ShipBob lets smaller, creative merchants affordably offer fast shipping across the country," Carolan said in a statement. "Customers want what they want, and they want it fast, and it takes serious technology to make it look easy."

ShipBob acts as a 3PL for its clients, storing their inventory and supporting software connections to the e-commerce platforms that generate their orders, like Shopify, Magento, Squarespace, and Amazon itself. ShipBob charges its clients for receiving, storage, and fulfillment, then provides additional services such as fulfillment management software, white-label packaging, order kitting, returns management, packing supplies, and shipment tracking data, the company says.

While many 3PLs provide comparable services, ShipBob says it occupies a niche that concentrates on the needs of small business, and that its software provides clients with analytics typically reserved for larger retailers, such as order and inventory management, customer communication, and predictive data and insights.

In an email, the firm said its software saves money for customers by price-shopping among last-mile carriers to find the most effective carrier for each individual order, whether that is the U.S. Postal Service, UPS Inc., DHL, or other local and regional carriers. The new funding will now allow ShipBob to expand those services to additional cities, with plans to add same-day delivery in San Francisco, in addition to its current same-day coverage in New York City, Chicago, and L.A., ShipBob said in an email.

"This investment from Menlo Ventures will be used to scale up operations around all fulfillment centers, along with new hires needed to provide additional engineering, client success, sales and marketing support," ShipBob co-founder and CEO Dhruv Saxena said in a statement. "We are committed to providing ecommerce businesses the ability to build a direct relationship with their customers by selling on the channels they want and not having to worry about fulfillment."