UPS looking to learn more about marketplace e-commerce sales

Dive Brief:

  • United Parcel Service Inc. is investing in marketplace startup Ally Commerce, which helps brands without retail operations establish direct-to-consumer e-commerce sites, bypassing retailers. Ally has garnered $8.4 million in funding in two rounds, including the UPS investment, which weren’t specified.

  • Ally Commerce was founded two years ago by UniqueSquared founders Richard Scalesse and Paul D'arrigo, who recruited former eBay executive Jason Rubottom to be CEO about a year later.

  • UPS is investing int the startup as a way to learn about the marketplace market, the company said.

Dive Insight:

Marketplaces have been around for a while, but are increasing in importance for brands and retailers alike, and are gaining more attention. Smaller retailers are able to piggy-back onto marketplaces at Amazon and eBay and gain attention from shoppers they would never be able to get on their own.

Many major brands, though, have been reluctant to cede customer-facing portals to marketplaces.

Manufacturers without their own retail operations, though, have great reason to bypass retailers to offer shoppers their goods at lower prices. And that is Ally’s offer to brand manufactuers. UPS is clearly intrigued by the model, noting that e-commerce has had a profound impact on its operations.

Direct-to-consumer e-commerce sales are on their way to being the largest source of sales for brand manufacturers, with just over than a third (34%) of total sales coming through that channel, according to research from Forrester. Manufacturer direct-to-consumer sales grew almost 30% in 2013, compared to 14% growth in e-commerce overall, according to the U.S. Commerce Department.

The investment doesn’t mean that UPS will get into the game itself, according to Rimas Kapeskas, head of UPS’s strategic enterprise fund, but the shipper does want to learn more about this e-commerce model.

“We want to understand how they’re operating. It’s a very cost-effective deployment of our capital,” Kapeskas told the Wall Street Journal. The shipper is keen on research-through-investment in number of e-commerce areas “because [e-commerce has] transformed our business.”

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Filed Under: E-commerce Logistics