Cloud-based e-commerce platform Logicbroker on Tuesday secured a massive $ 135 million fundraiser led by K1 Investment Management. The Connecticut-based company plans to expand its comprehensive drop-shipping and marketplace services, which it offers to vendors, retailers, brands and 3PLs.

Logistics is no longer just an expense for companies, it is a revenue driver. Whereas previously companies viewed logistics simply as a tool for moving and delivering goods, they now see logistics innovations as a growth strategy that can help them manage the ever-increasing volume of packages moving through the market.

One of these innovations is drop shipping. One of the many logistical issues a business faces is the number of touchpoints a package has to go through before reaching the customer: it has to be shipped by the supplier (often in multiple modes), unloaded at the warehouse, stored and returned to the final consumer.

Drop shipping eliminates these touch points by completely excluding the retailer from the fulfillment process. The retailer never sees or touches the product. Instead, he buys the item from a supplier and has it shipped directly to the customer, reducing the burden on the retailer’s supply chain.

Logicbroker takes advantage of the automation of this process for companies. The company grows 80% year-over-year revenue and handles $ 5 billion in gross annual merchandise for more than 4,000 brands, including Mars Wrigley, Samsung and Coca-Cola (NYSE: KO ), in five regions of the world. Logicbroker’s platform connects these businesses with retailers such as Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT), Walgreens (NASDAQ: WBA), and Kroger (NYSE: KR).

Last year, the company closed with $ 2 billion in gross goods value (GMV), and it is currently on the verge of ending 2021 with nearly $ 6 billion in GMV.

“Partnering with K1, a team that shares our passion for modernizing digital commerce, allows Logicbroker to grow globally,” said Peyman Zamani, CEO of Logicbroker. “With K1, we will continue to provide the latest technology and solutions to our customers and help them succeed wherever they choose to sell and however they choose to ship.”

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Jennifer Raber, Director of Digital Retail Business Activation at Walgreens, explained her company’s decision to switch to Logicbroker: “Walgreens switched to Logicbroker because of its modern technology, its ability to meet the demands. corporate compliance and the fact that our suppliers would not have the full cost to participate in the Walgreens drop-shipping program.

The popularity of drop shipping continues to grow rapidly. Valued at just over $ 160 billion in 2019, the global dropshipping market is expected to reach nearly $ 600 billion by 2027 at a compound annual growth rate of over 18%. And in a 2019 survey of more than 180 retail and manufacturing executives, vice presidents and senior executives, 88% of those surveyed agreed that drop shipping was “inevitable for their long-term success.” “.

“Given the enormous growth in global e-commerce, K1 sought to invest in a cutting-edge software platform that is fueling digital transformation in the industry,” said Simon Yu, senior vice president of K1.

Of course, like any shipping method, drop shipping has its drawbacks. One of the challenges that drop shippers face is overcoming poor communication between supply chain partners, which can occur if a company outsources its fulfillment process to suppliers, as is commonly seen. would do when drop shipping.

Another is gaining visibility. Without the product making its way into the dropshipper’s supply chain, it can be difficult to maintain visibility into the entire process, which can lead to delays and inefficiencies.

That said, drop shipping can also be a major boon for omnichannel sales. According to Customer Think, two-thirds of retailers say drop shipping increased their revenue by 14% or more, depending on industry and sector.

It can improve customer service too – Total Retail notes that 84% of retailers reported better customer service after deploying drop shipping in their omnichannel operations.

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