All posts in “e-commerce”

Frontier Car Group raises another $58M for its used-car marketplace for emerging economies

We’ve seen a large wave of used-car sales startups launch across developed markets like the U.S. and Europe, disrupting a marketplace that has largely been untouched for years. Now a startup focusing on the used car-sales opportunity specifically in developing economies is ramping up its activities.

Frontier Car Group, a Berlin startup that has built a used car marketplace targeted specifically at countries outside of Western Europe and North America, is announcing $58 million in funding — $41 million in equity and $17 million in debt funding — to continue expanding its business into Africa, Latin America and Asia, where it has sold 50,000 vehicles since launching at the end of 2016 and is on track to do $200 million in annualised revenues per year.

The Series B brings was led by Balderton Capital and TPG Growth (both of which participated in Frontier’s previous $22 million round), with Fraser McCombs Capitaland Autotech Ventures — two automotive-specific funds — also participating.

Frontier is not disclosing its valuation with this round but a source close to the company said the demand to participate in this round was high and led to two unsolicited Series C term sheets — each for around $100 million — and both on a pre-money valuations of over $200 million.

Developing markets continue to be a huge focus for tech companies when their home countries become to competitive or growth there starts to slow, and that trend has inevitably tipped into startups also targeting those markets from the very start.

Sujay Tyle — Frontier’s 24 year-old American CEO (who comes with an impressive record: he went to Harvard aged 15, and has a degree from there in Economics; and he has also been a Thiel Fellow), who co-founded the company with Peter Lindholm (COO), and André Kussmann (CTO) — said that the choice to launch first and only in countries like Mexico and Nigeria, two of Frontier’s largest markets, was borne out of a couple of reasons.

“I fell in love with the Auto1 model,” he said, in reference to another Berlin startup that earlier this year laid claim to the highest-ever venture round raised by a European startup when it landed €460 million from Softbank, “and I could see how it could be applied to emerging markets. Emerging markets represents nascency.”

Used car marketplace startups in countries like the US or in Europe have been focused on making it easier or faster or more flexible to own a used car — examples being the well-capitalised Fair.com, the now-public Carvana, and Auto1. Frontier’s service (which has different branding in each market) is modelled on these. It first gives would-be sellers online quotes for how much their car might sell for. It then inspects and buys in the vehicle at that price. Would-be buyers then use an app or web to browse stock and arrange for financing.

Tyle says that one of the bigger challenges in developed markets for this model is simply competing against others doing exactly the same thing as each other, leading to a lot of price competition. In contrast, not only is the market less crowded in the countries where Frontier operates, but similar to Uber, Frontier appears to be playing on the idea that alternatives are less good than what Frontier represents.

“The number one channel for car theft in Mexico is classified advertising,” claimed Tyle. “People make deals in cash, but if you show up to a public location with $5,000, that’s a dangerous value proposition. Also, it takes a lot of time and is onerous.”

On the side of supply, he says Frontier is also providing a service that didn’t exist before. “Smaller dealers have a lot of trouble finding cars in these markets, where there are no auction houses or services to import vehicles, so for car dealers, we can provide them with a source of inventory, which also means we have a big impact,” he said.

Frontier has made some lucrative sourcing deals that have helped it get a leg up in some countries. In Mexico City, for example, it has the contract to sell ex-Alamo rentals — “a very lucaratve business,” he added.

If you’ve been following the used-car and automotive startups, you’ll know that it’s been a bumpy road for the space overall. Some of the notable fallen stars have included Beepi, Vroom (which is still going but has shuttered some operations and laid off staff), Carspring and Hellocar in the UK, among others. Tyle said he expects Frontier to be Ebitda-profitable by Q2 of 2019.

“Balderton first invested in FCG a little under 2 years ago and it is staggering what the team have achieved in such a short time, getting to significant scale and building a platform that is capable of being leveraged in many different operating environments,” said Daniel Waterhouse, a partner at Balderton Capital. “We are excited to further support the company and look forward to the next chapter of this extraordinary story.”

Mark Norman, Managing Partner at Fraser McCombs Capital, said in a statement: “Fraser McCombs Capital is excited to support the FCG team and their unique software and data platform to transform the used vehicle buying and selling experience in key growth markets around the world.  We’re pleased to bring our global automotive investment and operating experience to the board.”

Local marketplace OfferUp takes on eBay with launch of nationwide shipping

OfferUp, the mobile marketplace for buying and selling locally, is expanding its sights beyond your neighborhood. Today, the company is announcing an expansion of its service that will now allow sellers to ship their items nationwide to interested buyers, potentially netting them a larger audience than if trying to sell only within their local community.

The feature to browse the items outside your area will appear in a separate “shipping” tab in the new version of the OfferUp app for iOS and Android, arriving today.

When sellers list an item, they’ll have the option to toggle on a switch to “sell & ship” nationwide. They then pick the item’s weight from the options that appear (up to 20 lbs). Items must also be under $500, and are shipped via USPS. Buyers are kept up-to-date on the item’s status through the app, as well.

Listing items for nationwide shipping is free. Sellers are paid after the item is sold, less a 7.9 percent fee, which goes to OfferUp. (This is less than eBay’s standard 10%).

The transaction fee represents a new revenue stream for OfferUp, which before had offered paid tools to promote items for sale, but not a cut of transactions.

The company declines to say how much it makes from its existing paid offerings and ads, or if it’s turning a profit. Likely it needs to enter into transactions like this, to grow its revenue and justify its $220 million in VC investment.

The move will also pit OfferUp in more direct competition with eBay, which it already outranks in the App Store’s Top Charts where it’s No. 3 to eBay’s No. 8 in the Shopping category. While eBay still has a much larger user base – 171 million globally active buyers, as of its most recent earnings for example – OfferUp has managed to grow to over 42 million uniques during the past 12 months, just here in the U.S.

The company claims to reach buyers and sellers across the country, and not just in urban metros. And it claims its buyers are interested in a range of products, as opposed to favoring those in a single category or two.

“I think that’s why people come back so often,” says OfferUp co-founder and CEO Nick Huzar, when explaining why users will return to the app, on average, 2 or 3 times per day. While furniture is popular because it’s a local marketplace, he adds, OfferUp users browse all kinds of things – from electronics to clothing to baby needs and even cars.

“It’s not like Amazon where it’s very intent-based – where you know what you want. OfferUp is more discovery-based. You go in there and you kind of look around and you find that thing you didn’t think you wanted that you end up buying,” Huzar says.

The app has also grown in popularity because of its systems to make transactions more trusted than those on Craigslist, which has been one of OfferUp’s bigger competitors to date, along with Facebook’s Buy/Sell Groups. Users on OfferUp can optionally verify their identity with Driver’s License uploads, and/or by confirming their phone number, Facebook or email. Users can also rate transactions, and see sellers’ response rate to questions, among other things.

The shipping feature has been in testing for a few months prior to today’s nationwide launch across the 48 contiguous U.S. states. To gain access to the option, you’ll need to update to the latest version of the OfferUp app on iOS or Android.

Kidbox raises $15.3 million for its personalized children’s clothing box

Kidbox, a clothing-in-a-box startup aimed at a slightly younger crowd than StitchFix, has raised $15.3 million in Series B funding to expand and scale its business.

The round was led by Canvas Ventures, and includes participation from existing investors Firstime Ventures and HDS Capital, as well as new strategic partners Fred Langhammer, former CEO of The Estée Lauder Companies Inc., and The Gindi Family, owners of Century 21 department stores.

To date, Kidbox has raised $28 million.

The company was founded in October, 2015, then shipped its first box of clothing out of beta testing during the back-to-school shopping season the next year.

Similar to StitchFix, Kidbox also curates a selection of around half a dozen pieces of clothing and other accessories (but not shoes), which are based on a child’s “style profile” filled out online by mom or dad. The profile asks for the child’s age, sizes and questions about the child’s clothing preferences — like what colors they like and don’t like, as well as other styles to avoid — like if you have a child who hates wearing dresses, for example, or one who has an aversion to the color orange.

“Those answers feed into a proprietary algorithm — we’re very data science and tech focused,” explains Kidbox CEO Miki Berardelli. “That algorithm hits up against our product catalog at any given moment, and presents to our human styling team the perfect box for — just as an example, a size 7 sporty boy. And from there, the styling team looks at the box that’s been served up, the customer’s history, if they’re a repeat customer, the customer’s geography and any notes [the customer] added to their account,” she says.

The box is then put together and shipped to the customer.

Berardelli previously worked at Ralph Lauren, Tory Burch and was president of Digital Commerce for Chico’s (Chico’s, White House Black Market and Soma). She joined Kidbox in September 2016 after meeting founder Haim Dabah while he was searching for Kidbox’s CEO.

“It resonated with me as a consumer, as an early adopter of all things digital, and as a multi-time operator of e-commerce businesses,” she says, of why she decided to join the startup.

Today, Kidbox’s boxes are sent out seasonally for spring, summer, back-to-school, fall and winter. However, unlike StitchFix, Kidbox isn’t a subscription service — you can skip boxes at any time, and you’re not charged a “styling fee” or any other add-on fees.

However, if you keep the full box, Kidbox donates a new outfit to a child in need through a partnership with Delivering Good, a nonprofit that allows customers to choose the charity to receive their clothing donation.

At launch, Kidbox carried around 30 kid’s brands. It’s since grown its assortment to more than 100 brands for kids ages newborn through 14, including well-known names like Adidas, DKNY, 7 for All Mankind, Puma, Jessica Simpson, Reebok, Diesel and others.

Kidbox launches its own private labels

With the next back-to-school box, Kidbox will insert its own brands into the mix. The company will be launching multiple private labels across all ages, and every box will get at least one own-label item. The brands will include everything from onesies for babies to graphic tees to denim to basics, and more. 

“We believe we’ve identified a void in the children’s apparel marketplace,” notes Berardelli. “The style sensibility of our exclusive brands will all have a unique personality, and a unique voice that’s akin to how our customers describe themselves. It’s all really based on customer feedback. Our customers tell us what they would love more of; and our merchandising team understands what they would like to be able to procure more of, in terms of rounding out our assortment,” she says.

On a personal note, a customer of both Kidbox and Rockets of Awesome, two of the leading kid box startups, what I appreciate about Kidbox is the affordable price point — the whole box is less than $100 — and its personal touches. Kidbox ships with crayons and a pencil-case for kids, and the box is designed for kids to color. It also includes a print edition of its editorial content, and sometimes there’s a small toy included, too.

Kidbox rival Rockets of Awesome is a little pricier, I’ve found, but has some unique pieces that make it worth checking out, as well.

With the new funding, Kidbox aims to further invest in its technology foundation, its data science teams, its own labels, its customer acquisition strategy and marketing.

The company doesn’t disclose how many customers it has or its revenues. Instead, it notes that the Kidbox “community” — which includes fluffy numbers like Facebook Page fans and people who signed up for emails — is over 1.2 million. So it’s hard to determine how many people are actually buying from Kidbox boxes.

Kidbox has potential in a market where brick-and-mortar retailers are closing their doors, and e-commerce apparel is on the upswing. But it — like others in the space — faces the looming threat posed by Amazon. The retailer has also just launched its clothing box service, Prime Wardrobe, which includes kids’ clothing.

“Kidbox is at the head of a trend that sees a world in which every person will have their own personalized storefront for literally anything — be it kids clothing, furniture or weddings,” says Paul Hsiao, general partner at Canvas Ventures, about the firm’s investment. Hsiao has also led investments in Zola and eporta while at Canvas, and in Houzz while at NEA.

“Kidbox is growing at atypically high multiples. I think it is because of their deep connection with their customers — the kids, the parents and grandparents,” Hsiao continues. “The Kidbox team is also remarkable at logistics. Sounds boring, but e-commerce is fundamentally a logistics business,” he adds.

Kidbox is currently a team of 35 based in New York.

eBay’s mobile app can now fill out your listings for you

Ebay is rolling out an app update designed to make it easier to list items for sale on its online marketplace. Instead of filling out detailed forms on your mobile phone’s small screen, you can now scan the barcode on the item in question or type a description, choose the item’s condition, then click “list your item” to make the listing go live on eBay’s site.

After scanning or entering the description, eBay’s app will do a one-to-one match to its catalog to help to fill in the necessary information for that product. It will also offer sellers a pre-populated stock photo, eBay’s price recommendation and its shipping recommendations,

The change is meant to reduce to a matter of seconds the number of steps it takes to list. And if the process is less cumbersome, eBay hopes more people will choose to sell on eBay as opposed to the growing number of resale apps like OfferUp or LetGo, which are currently ranking higher than eBay on Apple’s App Store.

Facebook’s Marketplace has also likely had some impact on eBay’s sales, especially in terms of local sales.

Despite the increased competition, eBay is still seeing more than 13.4 million listings added to its site every week from the eBay mobile app alone.

The app’s newfound ability to quickly list the item uses technology like structured data and predictive analytics to pre-populate listings with the information required, instead of relying on sellers to type it in themselves.

This use of technology is something the company believes is a competitive advantage over newcomers to the space, in addition to its ability to provide access to millions of shoppers around the world.

“At eBay, we’re dedicated to delivering a seamless and efficient selling experience for both first-time and seasoned sellers alike,” says Kelly Vincent, eBay’s VP of Consumer Selling Product & Engineering, in a statement about the app’s revamp.

“This latest update continues to leverage eBay’s structured data, which helps catalogue the 1.1+ billion items on the platform, to instantaneously populate product details, pricing and shipping information in the listing flow. Not only does the catalogue facilitate a superior listing experience, it enables buyers to easily find the great deals offered by our sellers,” she added.

Vincent also noted that eBay’s use of structured data and other new technology will make its way to other products and features this year, but didn’t say what those may be. However, the focus for now seems to be enabling sellers.

Ebay’s updated app with the barcode scanning feature for listings is rolling out now on both iOS and Android.

GoPro launches Trade-Up program to swap old cameras for discounts

GoPro is willing to take that old digital camera stuffed in your junk drawer even if it’s not a GoPro. Through a program called Trade-Up, the camera company will discount the GoPro H6 Black $50 and Fusion $100 when buyers trade in any digital camera. The company tried this last year for 60 days, but as of right now, GoPro is saying this offer does not expire.

This offer works with any digital camera including old GoPros. It clearly addresses something we noticed years ago — there’s often little reason to buy a new GoPro because their past products were so good.

GoPro tried this in 2017 for 60 days and says 12,000 customers took advantage of the program.

The service is reminiscent of what wireless carries do to encourage smartphone owners to buy new phones. It’s a clever solution though other options could net more money. Users could sell their camera on ebay or use other trade-in programs. Best Buy lets buyers trade in old cameras, too, and currently gives $60 for a GoPro Hero3+ Black and $55 for a HD Hero 960.

GoPro is in a tough position and this is clearly a plan to spur sales. The company’s stock is trading around an all-time low after a brief upswing following a report that Chinese electronic maker Xiaomi was considering buying the company. The company also recently started licensing its camera technology and trimmed its product line while introducing a new, $200 camera.