Threecolts raises $90 million to expand its toolkit for third parties selling on marketplaces like Amazon

Amazon rules the roost in e-commerce, with its marketplace outpacing all others in gross merchandise value, reach, and market capitalization. This fact inevitably makes it a big part of how millions of brands and retailers sell products online. Threecolts, a London-based startup founded by a former Amazon executive that creates software for brands and retailers to manage their Amazon sales channel, has attracted some 22,000 customers since its inception in 2021. Now, to fuel its growth, she announces that he has raised $90 million in funding.

The $90 million figure covers a Series A that Threecolts recently shut down; an earlier, never-before-disclosed pre-A investment; and certain debt, with investors in these tranches including Crossbeam Venture Partners, General Global Capital, Stratos and CoVenture. Yoda Yee, founder and CEO of Threecolts, did not reveal how much has been invested in each of these areas, citing competitive advantage and the fact that there have been a number of others, such as Brex, opening up. the way to be less specific when discussing how much and when funding events took place, as this provides too many signals to rivals. He refused to talk about evaluation for the same reason.

Threecolts, however, is profitable and claims revenue has increased 6x year over year. It’s used debt to make acquisitions – 14 in total so far in less than two years, in a wrap-up game that echoes those we’ve seen in other parts of the e-commerce ecosystem (in especially among those that include smaller e-commerce retailers that sell on Amazon).

This high number of acquisitions testifies to the greater fragmentation of e-commerce, but also to the consolidation that is taking place at the moment: a number of interesting ideas, instilled as startups thanks to easy access to funding, have struggled more recently, raising more funds. Now that they come to the end of their trail, or are struggling to evolve, they get caught by those who are able to continue.

Yee previously worked at Amazon coordinating with third parties selling on its marketplaces, and through that he had a bit of an understanding of what Amazon provides, what it doesn’t, and what could be improved.

More importantly, he has seen firsthand that Amazon’s position as both an enabler, but also a competitor to retailers and brands, complicates his relationship with these third parties. Not only does Amazon sell items that directly compete with those that resellers or private label retailers sell on its platform, but ultimately it will create algorithms that result in maximum conversion for Amazon itself, not that from an individual seller. And as a third-party seller, it might boost you, but it might also bury you.

“Because we can focus only on the tools, customers trust us more,” he said. “You just can’t trust Amazon with things like automated repricing. Amazon has its own incentives.

Repricing is just one example here: so are other functions, and beyond that, how Amazon chooses to use the data it collects about how people buy and sell on its platform. It’s not the only startup aiming to seize this opportunity: the inherent conflict that Yee points out has spurred the rise of a number of companies creating tools for third-party vendors, and these are in competition with Threecolts. They include Helium 10, Jungle Scout (which raised a lot of money itself) and more.

But with over 6 million businesses doing business on Amazon, the opportunity is clearly one with room for multiple players, as well as approaches. The core concept led Threecolts to develop (and acquire) a toolset that not only includes tools to monitor and adjust prices, but also real-time listing and inventory alerts, service integrations customer across different channels, API dashboards, third-party data source monitoring, automated feedback and product review monitoring, profit and sales analysis, and more.

Some of these tools complement what Amazon has done a solid job of providing: Threecolts doesn’t offer a competitor to Fulfillment by Amazon, but it does have a tool to monitor FBA fees.

Threecolts claims its 22,000 customers collectively generate more than $30 billion in gross merchandise sales and have collectively added $200 million in profit through Threecolts’ tools, as well as a 200% increase in detail page conversions. .

This list of customers includes big names like Samsung, Panasonic and L’Oreal, but also a long tail of smaller vendors (which account for 70% of Threecolts’ revenue) and even some of the roll-up companies that have acquired successful brands selling on Amazon, trying to create their own economies of scale in supply chains or whatever.

What Threecolts is tracking is indicative of macro trends in the e-commerce space. Yee said Amazon accounts for the large proportion, 90%, of where his customers currently sell, but added that he’s seeing some activity in demand for tools to cover other markets like Walmart, eBay or more localized or vertically targeted sites. He also noted that there has recently been an increase in resellers as customers, compared to those who sell their own original “private label” products.

Although there has been an increase in activity on platforms like Instagram for so-called social selling, this has not caught on in Threecolts’ demands to support these platforms. Yee said the likes of WhatsApp and Instagram show up in conversations, but that has more to do with them as customer support channels, he said.

Crossbeam has carved out a niche for itself by investing in e-commerce startups, especially those that cater to businesses (which can be brands, retailers, or even influencers) that run their businesses online and through marketplaces, so it’s a natural fit as a backer for Threecolts and Sakib Jamal, the senior investment partner who led the deal, told TechCrunch the company is “very excited” about the startup and the deal. ‘opportunity.

“Threecolts’ impressive execution over the past year means sellers can now access a one-stop-shop solution for a growing number of issues, reducing seller fatigue and administrative burdens,” he said. he added in a statement. “Yoda and his team have delivered feedback that is realized in rapid feedback loops for clients of all shapes and sizes, from large enterprises to emerging businesses.”