E-commerce is a major part of every retailer’s strategy these days, so the technology makers and platforms that help them compete better on the digital screen are seeing huge growth in business. In the latest twist, commercial equipment — a provider of e-commerce APIs that large retailers can use to build customized payments, check-out, social commerce, marketplaces and other services — has closed $140 million in funding, a Series C program called CEO Dirk Horig has confirmed to me the value of the company at $1.9 billion.
The funding is being led by Accel, with previous investors Insight Partners and REWE Group also participating. Munich, Germany-based CommerceTools exited REWE, a huge German retailer, and one customer – and in October 2019 announced a $145 million investment led by Insight.
This latest round represents a massive increase in its valuation since CommerceTools was valued at nearly $300 million.
The reason for the big bump is, of course, the wave of interest in digital transactions from online shopping. E-commerce was already growing at a steady pace before 2020, representing more than half of all commerce transactions by some estimates. The COVID-19 pandemic turbo-charged that ratio, with many retailers switching exclusively to Internet sales, and consumers ecstatic at home to shop with a single click.
While companies such as Shopify have addressed the needs of smaller retailers, providing them with an alternative or complement to listings on third-party marketplaces such as Amazon’s, Commercetools has developed a niche for large retailers and many more specific, large-scale needs and investments. built his business. The budget that they can have to build their digital commerce solution.
It today offers about 300 APIs, around nine “buckets” of services, and a wide network of integration partners, Horig said, and drives sales power of about $10 billion annually for its customers, including Audi, AT Includes the likes of & T, Danone, Tiffany’s. & Company, John Lewis and many others.
“Our main focus is the retailer with a gross merchandise value of over $100 million,” Horig said. “That’s when it gets interesting.” But he added that the strength of the market’s growth is such that CommerceTools is also seeing a lot of business from smaller companies that need more functionality to address their rapid growth. “So we sometimes have clients that start at $5 million in GMV and quickly go up to $50 million. With that scale, they also have specific needs, so the lines get a little blurry. (And it also explains why investors are so interested: there’s plenty of evidence the market is growing and growing; and with smaller retailers capturing the larger trajectory, which represents a lot of scale for CommerceTools. .)
Horig is sometimes credited as the person who first coined the term “headless commerce”, which originally meant APIs that a company, or its own team of strategists, developers, and designers, had developed on their own. Can be used to build customized check-out and more. Rather than fit into the template provided by the tech company that powers the checkout, shopping experiences.
But as the API economy continues to grow, and the world of non-tech companies using the technology continues to mature, it has gained mass market appeal, and so CommerceTools is far from being the only one in the sector. Is. In addition to Shopify (which has its own version targeting larger businesses, Shopify Plus), others include Spryker, Swell, Fabric, Chord, and Shogun.
CommerceTools uses the funds to tap into some of the scaling and consolidation taking place in e-commerce overall, to expand its business organically, but also to make some acquisitions to bolt on new customers and new technology. Will do It will be interesting to see where the consolidation will take place, and which startups will raise funds at their scale: There’s a lot of excitement in the space right now because it’s so excited, and that will funnel more money to more startups.
Case in point: When I first got wind of this funding round, CommerceTools told me it was in the middle of a deal to acquire a company. In the end, that company decided to remain independent and made some more investments to try to grow on its own. Horig said it is now pursuing another target.
In fact, it is also the driving force that has taken CommerceTools to where it is today.
“The opportunity to invest in a rapidly growing, innovative commerce platform was one we could not pass up,” said Ping Li, partner at Accel, in a statement. “CommerceTools provides e-commerce enterprises with the technology they need to generate revenue in the rapidly growing global e-commerce market.”