I’m excited to announce that Kaspien has raised $13.5MM in equity funding from the public markets through Aegis Capital. This fundraising round comes at a pivotal point in our journey as Kaspien transitions from our “Growth” phase into our “Scale” phase.
As CEO of a mission–driven company, I like to start my conversations with our mission statement, which is to optimize and grow brands on today’s leading online marketplaces, such as Amazon and Walmart. This funding takes us one step closer to that mission.
Here is how Kaspien intends to deploy the newly raised funds to fuel our growth:
The future of eCommerce is digitally native brands managed through an omnichannel approach across multiple distribution channels – marketplaces such as Amazon, Walmart, Target, etc., online shops through platforms such as Shopify and WooCommerce, and brick and mortar. I look forward to the day where brands are managed in a centralized manner across various distribution channels, as opposed to the manual aggregation of performance from multiple channels.
Although there are advantages to be gained simply by diversifying, there are even greater performance gains found in holistically managing inventory across multiple ecommerce sales channels. Why keep inventory at Walmart that’s not selling when you might run out of stock on Amazon?
Secondly, the future of eCommerce is global. More international brands are seeing demand for their products in the US and vice versa. The distribution problem extends beyond multiple marketplaces. Instead, it should really be called “Global Distribution Channels Online and Offline.” This is true omnichannel.
Finally, this diversification extends beyond demand generation channels. The future of eCommerce is supply chain diversification through multiple warehousing and logistics solutions. COVID reminded the world of eCommerce that putting all your eggs in one basket is never a good idea. Amazon might restrict you, your carrier might be backlogged, a manufacturing facility might close due to a COVID case, etc. You need to be able to seamlessly shift between Amazon’s warehouses, to 3PLs, to potentially your own warehouse to keep up with the pace of demand. The future of eCommerce is managing supply demand in as real-time as possible, across distribution channels, and on a global scale.
All that I’ve mentioned above is almost impossible to do (especially at scale), without the backbone of a strong technology infrastructure that utilizes the power of data, prescriptive insights, automation, and artificial intelligence to efficiently manage the entire value chain. Deciding which products to sell, managing demand through ad management tools, managing a diversified supply chain, recovering lost dollars from Amazon, managing pricing and unauthorized sellers – all of it requires a strong technology infrastructure that fuels growth and efficient operations, thereby giving you an edge in a fragmented and competitive market.
That’s where Kaspien comes in. Kaspien’s Marketplace Growth Platform of software and tech–enabled services is built to help brands scale. Our platform – powered by data, insights, artificial intelligence, and automation – provides all the applications needed to run a marketplace business in a one–stop shop. More importantly, it is vertically integrated across the entire value chain and fully extensible to multiple service providers, providing the only solution needed to build a global omnichannel business.
Our platform also lends itself to network effects. The more brands we have on the platform, the more data and insights we collect; the more data and insights we collect, the more services, marketplaces, and service providers we can onboard; the more we do that, the more brands come onto the platform, and the flywheel continues, benefiting all our customers.
A big part of our investment will be continuing to fuel this growth platform, making it more automated, more intelligent, and utilizing data and insights to both optimize and grow our customers’ presence on multiple marketplaces globally.
The beauty of running Kaspien’s various businesses on top of our Marketplace Growth Platform is that it gives us the economies of scale required to build next generation brands on marketplaces. Our strategy of diversification across various business models empowers us to capture more GMV and better leverage our assets for profitable and efficient growth. In 2020, we introduced three business models that sit on top of our marketplace growth platform.
Retail as a Service: In this model, Kaspien buys inventory and sells it on marketplaces, such as Amazon, Walmart, and eBay, as a third-party seller. Additionally, we support dropship integrations with various suppliers and distributors, as well as incubate our own brands. At the end of fiscal year 2019, Kaspien had a total of 6 incubated brands: JumpOff Jo, Brilliant Bee, Big Betty, Domestic Corner, Coy Beauty, and Keto the Great.
Agency as a Service: In this model, Kaspien serves as an extension of a partner’s eCommerce team, providing full service and managed services for inventory management, marketing management, creative services, brand control, tax, compliance, and other marketplace growth services. Kaspien charges a subscription fee and receives a percentage of the revenue generated.
Software as a Service: In this model, Kaspien provides partners access to software through its platform of proprietary technology to empower partners to self-manage their marketplace channel. Kaspien charges a subscription fee and receives a percentage of the transaction.
Today, we’re excited to announce the fourth pillar of our strategy – brand acquisitions, once again utilizing our platform of software and tech–enabled services. As part of brand acquisitions, Kaspien will deploy capital to buy brands and grow them via the Kaspien platform.
In 2020, we operationalized our Subscriptions business, which includes our Agency, Managed Services, and Software segments. 2021 is about fueling that business. We’ll be adding more resources to grow the topline of the business, increasing the lifetime value of our customers while also continuing to reduce the cost to acquire new ones. In addition, we’ll acquire other service providers that complement our value proposition to brand partners.
We’re excited about this new phase of Kaspien’s growth, and we look forward to sharing our results as we continue down this journey of optimizing and growing brands on today’s leading online marketplaces. Welcome to “Scale.”