Narvar raises $22 million to help internet retailers deliver physical goods without frustrating customers

Battery Ventures led a $22 million, Series B investment in Narvar Inc., a company helping internet retailers keep their customers happy post-purchase, meaning until their packages are delivered, and if need be, successfully returned for an exchange or refund.

Battery was joined by Fung Capital, a logistics-focused fund, and Narvar’s earlier backers Accel Partners and Freestyle Capital in the Series B round.

The San Bruno, Calif.-based startup is already working with major internet retailers including: Neiman Marcus, Nordstrom, Coach, Sephora and Bass Pro Shops.

But what’s so complicated about delivering physical goods? Isn’t this simply outsourced to a handful of mail carriers?

According to Narvar CEO and founder Amit Sharma, retailers on average actually use complicated networks of 15 or more shippers to reach their U.S. customers, not just UPS, Fedex and the USPS these days. That includes regional carriers, and will soon include non-traditional services like Postmates or UberRUSH, he predicts.

Retailers are also increasingly using their own brick-and-mortar stores to fulfill online orders for customers nearby.

At the same time, these online and mobile retailers don’t want to trouble their customers with an overwhelming number of delivery decisions, or for that matter, calls to coordinate with local shops or services to arrange a pick up or return of an item, whether it’s an engagement ring or a new mattress.

The opportunity for retailers to inspire customer loyalty and additional purchases online is already massive.

Online retail sales in the U.S. alone are expected to generate $373 billion this year, and to grow to more than $500 billion by 2020, according to the most recent available forecasts from Forrester Research. And almost three-quarters of people in the U.S. already buy things online, regularly.

Certain categories are picking up steam, too– clothing, accessories and consumer electronics have already been selling in robust amounts online. But now large items like furniture and autos are as well.

Given the continued growth of e-commerce, cross-border and domestically, Sharma said, “Retailers are under pressure to meet ever-growing consumer expectations, but to do so cost-effectively. But not everybody has the economies of scale of Apple and Amazon or has made investments in their supply chain to do what they do.”

Battery Ventures General Partner Roger Lee, now a board member at Narvar, said he expects the company to use its funding to build out its software-as-a-servce, leadership and sales team, and to move into new corners of e-commerce.

Most of the company’s clients to-date have been in clothing, accessories and other non-perishable consumer goods.

Lee said, “Narvar is dealing with logistics, which is almost like a dark art. A lot of engineers want to deal with front-end type stuff. But the supply chain has been under-inevsted in and under appreciated.”

To make deliveries and returns or exchanges a more transparent and friendly experience for e-commerce shoppers, Narvar’s systems have to access and analyze data from all the possible carriers that may handle physical products once ordered from a retailer.

Narvar also uses predictive analytics– crunching up location, routing, weather, seasonal and other data– to give retailers, and their customers, a more precise estimate of delivery times, and as much control as possible over scheduling a delivery.

Sharma said this technology could help e-commerce companies sell business to business, rather than business to consumer, as well as top internet retailers.