E-commerce fulfillment startup ShipBob has raised $40 million in new funding to expand the warehousing and technology services it offers small- and medium-size brands to compete with Amazon.com Inc. AMZN -1.83%
The Chicago-based company, which launched in 2014, operates five warehouses in major cities where it fulfills customer orders within one to two days for more than 2,000 internet retailers. The company says it has shipped more than 4 million packages for customers that include Interior Define, I Heart Keenwah, baKblade, and Creepy Co.
The Series C funding round was led by Menlo Ventures and includes existing investors Bain Capital Ventures, Hyde Park Venture Partners, Hyde Park Angels and Y Combinator. ShipBob has raised a total of $62 million but would not disclose its valuation.
ShipBob’s software helps the company manage the logistics for orders that come through its clients’ websites and third-party marketplaces, including the Amazon site. ShipBob tracks customer demand and can direct companies when and where to restock inventory so orders can be filled quickly using the cheapest shipping option.
“Our network is optimized to deliver a great customer experience,” co-founder Dhruv Saxena said. “These companies, which are only a year or two old in many cases, are able to provide a customer experience that…other major retailers struggle with,” he said.
ShipBob is operating in an increasingly crowded field offering logistics services to meet the demands of digital commerce.
FedEx Corp. stepped up its services targeting e-commerce for small and medium-size retailers with the launch this year of FedEx Fulfillment. And United Parcel Service Inc. last week launched its Ware2Go service, a digital platform that matches available warehouse and fulfillment services with businesses that want to ship orders fast.
Consumers are becoming “conditioned by the market” to expect the same level of service from all online retailers, said Cathy Roberson, a logistics industry analyst.
“ShipBob and others are there to help consumers get their goods faster, and at the same time they’re helping a lot of these small- and medium-sized players compete against the likes of Amazon,” Ms. Roberson said. By pooling fulfillment services across thousands of small retailers, she said, these services can reduce the cost of warehousing, technology and labor for individual retailers.
Since its $17.5 million Series B funding round last year, ShipBob has expanded from 60 employees to 400. Mr. Saxena said with the new investment he wants to add more engineers to enhance the company’s logistics technology and open warehouses beyond the sites it now operates in Chicago, Dallas, Los Angeles, New York, and San Francisco.
Write to Erica E. Phillips at erica.phillips@wsj.com