This startup raised $45 million with the promise it can eliminate the biggest pain points in using Amazon or Shopify and help retailers crack into ecommerce

This article was original published on Insider on June 14, 2021.

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2020 was a landmark year for ecommerce, with eMarketer estimating that online sales grew by 27.6% and surpassed $4 trillion as customer transactions shifted online because of the COVID-19 pandemic.

At the same time, cracks were exposed in how some companies run their ecommerce businesses, with many small retailers transitioning online for the first time.

Omair Tariq and Jim Jacobsen came up with the idea for a business they call Cart.com with these shifts in mind. Cart.com offers brands an all-in-one suite of ecommerce tools including online storefront capabilities, digital marketing, payment processing, merchant financing, customer service, and order fulfillment.

“Ecommerce has been made way too complicated,” Tariq said in a recent interview with Insider. “During COVID, we saw so many brands get destroyed because they just didn’t have the financials, the skill set, capabilities, ecosystem — whatever you might need to solve for the digital part of their organization. And that’s not fair. We want to change that and we want to be the company that they come to.”

Tariq and Jacobsen officially launched Cart.com in November. Tariq, who serves as CEO, was previously the COO and CFO of Blinds.com, which was acquired by Home Depot in 2014. Meanwhile, Jacobsen is serving as the executive chairman and is the founder and former CEO of RTIC Outdoors, which makes coolers, drinkware, and camping gear.

They described Cart.com as a hybrid of Shopify and Amazon, removing the elements of those services that are not so friendly to brands.

“If you think about digital and how people execute on ecommerce today, there are really a couple of different choices they have,” Tariq said. “They sell through a marketplace like Amazon, which has an end-to-end ecosystem, with everything from the factory floor to the customer’s door.”

The problem with using Amazon, though, is that sellers don’t have control over their brand experience, and they don’t get detailed data on their customers, which they could use to build up brand equity and repeat purchases over time, he said.

“On the other hand, you’ve got Shopify, which is a very, very useful platform for brands to go launch their own website,” he said. “But the challenge with Shopify is that, on average, a merchant that’s doing $5-$10 million a year has to connect up to 27 different plugins within Shopify, so the ecosystem is very fragmented.”

Cart.com combines the two companies’ services, Tariq said, by offering an end-to-end ecommerce solution with services that can be purchased all together or à la carte, depending on what the client needs. Users pay a subscription fee, the calculation of which depends on the services being used. For example, Cart.com might charge a percentage of gross merchandise volume if it’s building an online storefront for a company, but then charge per order if providing shipping services.

Cart.com has made a series of acquisitions in order to make these services possible, buying store software platform AmeriCommerce in December 2020 and direct-to-consumer moving box brand Cheap Cheap Moving Boxes in February.

The company has also raised two rounds of venture funding: a $20 million seed round lead by Bearing Ventures in November 2020, and a $25 million Series A led by Mercury Fund and Arsenal Growth in April.

Blair Garrou, managing director at Mercury Fund and a Cart.com board member, said the firm was excited to invest in the startup because it felt it solved the problem of integrating ecommerce tools into one place.

“There’s a real market opportunity to bring a federated, ecommerce-as-a-service platform together, where brands and retailers have a one-stop shop, to essentially function almost as a cafeteria plan and pick exactly the best-of-breed apps and services they need, all in a unified console,” he said. “And that’s just a very different proposition for people working with Shopify or people being hamstrung by Amazon.”

So far, Cart.com said it is powering ecommerce operations for 2,000 businesses, including wholesale food distributor KeHE and toy maker Duncan. It is also working with Dollar General on its B2B operations and Miller Lite on some marketing and online storefront capabilities, Tariq said.

The CEO added that Cart.com is currently employing close to 100 people and is predicting an annual run rate of more than $80 million for 2021.

The Shopify model is hot right now

Tariq said that Cart.com is not seeking to compete directly with Amazon or Shopify; he instead sees the company more as being complementary to the overall ecommerce ecosystem.

IN fact, Tariq expects that many of its clients are selling products on Amazon, and they might be using some of Shopify’s website tools to sell directly to consumers, too.

“We are just providing the capabilities for our brands to have the same level of end-to-end ecosystem off of Amazon that they have on Amazon so that they can be successful,” whether they are selling on the marketplace or not, Tariq said.

“There’s not reason for them to be forced to go through a marketplace to take full advantage of an ecosystem,” he added.

But even if not a direct competitor, it makes sense that Cart.com would aim to emulate aspects of Shopify, which in 2020 reported 86% revenue growth over 2019, reaching $2.9 billion, as well as 96% growth in gross merchandise volume, reaching $119.6 billion. Gross merchandise volume, or GMV, represents the total sales conducted via the Shopify platform.

Shopify’s big competitor BigCommerce similarly had a strong 2020, reporting revenue growth of 36% year-over-year.

And, in February, Amazon acquired Australian ecommerce startup Selz, which offers website-building and payment tools that are similar to those offered by Shopify.

Cart.com’s business model also fits in well with the trend of Amazon rollup companies. Players like Thrasio, Perch, and GOJA are acquiring third-party Amazon sellers and rolling them into their own businesses, essentially creating “the 21st century version of Proctor & Gamble,” attorney Paul Rafelson of ecommerce firm Rafelson & Shick, PLLC told Insider in March. These rollup companies then use their marketing capabilities and other resources to help drive brands’ sales higher.

These companies are raising large amounts of venture capital. Perch, for example, has raised more than $900 million and has been valued at more than $1 billion, while Thrasio has raise dmore than $1.75 billion and is reportedly in talks to go public via SPAC.

Tariq and Garrou both said that they envision the future of retail being a mix of Amazon-like marketplaces and brands selling directly to consumers.

Garrou said: “I think the future is much more about the brand and the retailer knowing their customer and owning that data so they can continue building trust with that relationship, so that the customer comes back and is a repeat customer and is a happy customer.”