Waves of bundled Amazon Commerce startups, which have floated nearly $15 billion in funding, have flocked to the e-commerce market and rushed out of the e-commerce market in the past several years. Now, it looks like a new wave of new tides on the model is on the rise. Today, a startup in Berlin called Everstores — which is seeking to acquire and consolidate Shopify for its direct-to-consumer business, says it has raised €18 million ($17.5 million at today’s rates) in funding, money it will use to continue investing in data science and operational tools — and to purchase and integrate D2C brands.
In the hack, three companies captured, and according to co-CEO Christopher Herskind (who co-founded the company with two other companies, Carlos Lopez as co-CEO and CTO Kirill Martynov) — about 100 million data points from about 500 D2C brands backed by Shopify which has signed up as potential acquisition candidates.
Now, armed with €8 million in equity and €10 million in debt, the plan is to increase that number with a more public launch. Earlybird Venture Capital leads the equity part, while Viola Credit leads the debit part, which we understand is structured as an “accordion” that can expand up to 60 million euros. Also co-funded were seed investor Pecos Capital and founding angels and individuals from KKR and Goldman Sachs. The company has now raised €20 million in total, including a previous round of incorporation.
If Everstores’ business model sounds a bit familiar, it’s because it not only resembles that of the previous assembler, but is nearly identical to the latest variation on the idea, which is also being pursued by OpenStore, an American startup launched in 2021, which itself has announced a huge slice From funding only last week Its value has jumped to nearly $1 billion.
OpenStore’s rapid growth speaks volumes for the competition, but also the validation of others in the same field as Everstores. There are thousands of companies that build Shopify-based storefronts, in total approaching $200 billion in GMV per year (Shopify’s GMV last quarter was $46.9 million), and many of them hit the wall when it came to scaling.
The presentation here is that Everstores (or OpenStore or others) can provide capital to these D2C brand owners, and apply economies of scale to all the different and potentially costly aspects of running an e-commerce business – supply chains and logistics; Big Data Analytics Personalization and Other Technology – To do what individual small stores would have found difficult if not impossible to do on their own.
Hirskind’s reference to how much data his company has already collected is noteworthy for several reasons. First, he talks about the company’s core thesis about why this business model is better than yesterday’s aggregate play represented by the likes of Thrasio, SellerX, and others, which relies on choosing Amazon-based businesses: the data one can get from a Shopify business is inherently more complete, and thus is better.
“It’s all about the data,” he said in an interview. “In Shopify, merchants have insights for their customers because they own the customers. On Amazon, you have product and demand data, but you don’t really know who your customers are. That’s the key distinction. Without knowing who they are, knowing the true cost of customer acquisition is difficult. It is difficult to evaluate these commercial activities, and therefore to scale them up.”
He believes there are other market-specific reasons why independent online businesses are better candidates for consolidation than merchants on Amazon.
For example, Amazon is already doing a solid job in areas like supply chain management and logistics, which leaves little room for improvement. “It will be difficult for us to do something to improve operations,” he said.
On the other hand, taking a chain of businesses based on Shopify, many of them still use a mix of services for their marketing, supply chain, inventory and logistics needs. Hirskind estimated that for B2C e-commerce companies, between 20% and 30% of their costs are associated with e-commerce and B2C marketing, so there is an opportunity to create more efficiencies there.
The other interesting point to note about Everstores’ data is how much data it already has – 100 million data points currently – despite only capturing three companies so far.
Herskind said that since it opened its platform as a private beta, about 500 companies have logged in and registered their information to begin submitting data to Everstores to form part of the latter’s assessment of companies. This speaks to the demand among themselves in search of a way out, but it is surprising how open these companies are to the idea of sharing data on how they are doing.
Herskind notes that even in cases (most of them, as it happens) where Everstores aren’t interested enough to go into a merger and acquisition process, she suggests keeping the data streams open so you can continue to assess the situation.
This likely also opens the door for the company that builds other products using that, which brings to mind companies like Zenitawhich has also turned third-party crowdsourcing data into a thriving business in the world of freight rates.
It’s worth watching if Shopify merchants are really keen on selling, or whether this is just a hangover from previous incarnations of spin-offs. The market has gotten so hot for FBA-based traders that companies that would initially have been considered 2-3 times earnings (EBITDA), intense competition at the peak of the market drove these multiples to sales at 8-9 times earnings, Hirskind said. Did collectors learn the lesson from this, or will the same inflated pattern repeat, is the question for both the dealers and the collectors themselves.
‘Which – which [inflation] It also led to the disintegration of the business model.”
One thing the old and new incarnations of the collectors have in common is their insistence that they bring in a lot of technology to influence their very obvious financial plays.
“We have approached everything from first principles and with a core belief that technology can deliver better results across the board. We are excited to work at the frontiers of this space, bringing the smartest engineers and data scientists together to solve these open problems with us,” Martynov said in a statement.
“We believe that D2C is an essentially attractive opportunity where structural problems in space can be meaningfully resolved through data and software. Everstores technology platform allows the highest potential brands to identify and capture the full value of this potential through their operating system. We are proud to support the Everstores founders On their mission to open up the D2C asset class at scale with their leading technology platform, Tim Rehder, partner at Earlybird, noted in a statement.