We’re entering the peak season for shopping, and along with it a big rush on e-commerce services and getting packages before the 25th. Timely news, then, that MetaPack, a London-based provider of delivery management technology, is picking up a round of £20 million ($33 million). The funds will be used to take MetaPack international — with acquisitions a key focus — and to swing at the biggest e-commerce retailer of all, Amazon. Or, in the words of MetaPack’s CEO and founder Patrick Wall, “help retailers stay ahead of the Amazon proposition.” Index Ventures is the sole backer in this deal.
MetaPack’s business has two parts to it, consumer-facing and enterprise-facing. Its technology sits behind the feature that you see when you order something and select options (and delivery pricing) for a parcel. Its tech also powers pricing and availability for different parcel carriers to the business itself so that it can select the most cost-effective option for how to deliver that parcel and then analytics on how performed and overall cost breakdowns — an important part for retailers to get right to have parity or even a better experience than a shopper might get on Amazon.
MetaPack’s sales have been growing on average 60% annually for the last four years. Now more than 75% of the UK’s top 100 retailers are clients of MetaPack with some 400 million parcels delivered in total to date. Clients include brick-and-mortar companies like John Lewis but also pure-play e-commerce storefronts like eBay and ASOS.
Metapack has actually been around since 1999, and this is the company’s first major rase from a VC, but not the first high profile investment. In 2011, it picked up a £2 million investment from the former, iconic head of Tesco, Sir Terry Leahy, which valued the company at about £20 million ($33 million). (Prior to that, Metapack had received a small $467,000 Venture round in 2006.)
Although Metapack is not revealing revenue or current valuation, it’s a testament to its growth that the round getting announced today is the same as its valuation was in 2011.
Wall tells me that the investment is getting spread across three areas that point both to MetaPack’s own business strategy, as well as changing tides in the delivery business.
Part of the investment will be going towards international expansion through acquisitions, starting first in Europe, to bolt on relationships with local parcel delivery companies; and to establish business with local retailers. Who might MetaPack buy? Right now a key competitor, Wall says, is XLogics based in Germany, which may either mean a bid for them, or another company to get more competitive with XLogics.
Another priority is to invest in core technology and new products. The majority of MetaPack’s business is based on supplying delivery data covering the transfer from retailers’ warehouses to their customers. But increasingly Wall says that the delivery chain in the “global commerce trade lanes” is getting shorter, with more demand for deliveries to come straight from the factory or company that supplied the retailer.
“We see that coming as a development,” he says. “Right now have 700 suppliers shipping direct from the UK for major retailers, but where the market will go eventually is that companies will ship form the source.” That will inevitably lead companies like MetaPack to work more in countries like China, where most of its work today involves helping retailers export goods in bulk to their own warehouses.
The other area will be to look at more sophisticated forms of delivery. Wall points to the rise in same-day delivery services from companies like Amazon and eBay as setting a new standard for what customers now expect from their online shopping. “Today you see the emergence of same day and we think that there will be more of those services, also shipping directly from retail stores and more complex multichannel supply chains.”
That will also likely lead MetaPack to the U.S., where its main business today involves helping U.S. retailers export out of the UK. “We have the world’s largest label library,” — that is, the labels that you put on parcels and the subsequent integration into the parcel carrier networks — “we provide that plug in and can help us retailers export all over the world,” he says.
As for why the choice to go with a VC now and for that VC to be Index, it was a mutual understanding of what the opportunity was in this space, and also the fact that Index has in its portfolio a number of e-commerce companies and enterprise software companies that complement MetaPack’s business.
Dominique Vidal, the Index partner (and former Yahoo exec) who led this investment and now joins its board, notes that what MetaPack is doing is akin to developments in the payments market. “They bring to delivery what payment service providers brought to the payment market: choice for the customer and the merchant,” he says. “It is a long term trend. Most merchants need to offer better services to their customers. Delivery is pretty painful for most merchants they need to bring specialists to help them.” Other board members include Sir Leahy, Iain McDonald, David Burtenshaw and Mike O’Connell; Bob Willett, former CEO of Best Buy, who is also chairman.