Global e-commerce enables direct-to-consumer (DTC) brands to sell their products in hundreds of countries at the same time. However, shipping these goods can be problematic with duties and taxes, different tax rates, and currency conversion issues.
Shopify’s Oberlo brand estimates 2.14 billion people will shop online in 2021, and Statista said the average order value for an international sale is $ 147, a premium of 17% versus the average domestic sales of one in the US resident seller. It has also been found that retailers who offer international shipping are growing 60% faster than those who don’t.
The statistics for worldwide sales are compelling, but the challenges are formidable.
Global e-commerce shipping and logistics company FlavorCloud was founded to help local sellers achieve global success. The 3-year-old announced Tuesday a Mucker Capital-led Series A investment round valued at $ 6.3 million. Mucker partner Omar Hamoui will join the FlavorCloud board.
Additional funding from the deal came from Rise of the Rest and Willow Group. Rise of the Rest is also an investor in FreightWaves, the parent company of Modern Shipper.
“We live in a global market. However, it is consistently difficult for DTC e-commerce brands to offer their products to an international audience, ”said Rathna Sharad, founder and CEO of FlavorCloud. “FlavorCloud makes it easy to ship to anyone in the world with a seamless customer experience that has an incredible impact on helping these DTC brands expand globally. We created a platform that really changes the game. ”
The DTC e-commerce market is valued at $ 4.5 trillion, but many companies are unable to enter this global market due to the complexity of moving goods across borders – especially smaller packages that may represent one-time sales.
“FlavorCloud has tapped into an underserved and massive cross-border market that has grown explosively over the past year as the pandemic accelerated nearly every aspect of e-commerce. They stand out for simplifying a complicated yet critical process of international shipping and logistics for DTC brands, including reverse logistics and supply chain optimization, ”said Hamoui. “We believe that FlavorCloud is well positioned to grow rapidly as the global e-commerce and retail landscape continues to evolve around the world.”
“We grew up in cross-border logistics and have a completely different point of view because our mission is to make every brand a global brand.”
– Rathna Sharad, Co-Founder and CEO of FlavorCloud
FlavorCloud’s platform enables customers to easily pay customs duties in advance and to optimize the process of moving goods across global shipping networks. The company works with over 200 carriers and has close ties with top providers such as FedEx (NYSE: FDX) and UPS (NYSE: UPS).
“Internationally it became the number one growth driver for… brands. This was an accelerator for our cross-border activities [growth]”Sharad told Modern Shipper, adding that FlavorCloud saw four times sales growth and three times customer growth in 2020 compared to 2019.
Sharad said there is no dominant provider in the world. FedEx, UPS, DHL, Pitney Bowes, and a number of other providers offer services to handle tariff and customer complexity, but few are built right into brands like FlavorCloud. This connection enables FlavorCloud to provide the end customer with the information they need to make an informed decision about shipping.
“We grew up in cross-border logistics and have a very different point of view because our mission is to make every brand a global brand,” said Sharad.
Sharad is an engineer who worked with trade customs organizations, developed cross-border optimization programs, and created the Microsoft ad platform that became Bing Ads. Describing its platform as an “Anywhere To Anywhere” technology, the company handles everything from customs papers and tariff collection to regulatory compliance, labeling, documents and shipment tracking. It also offers guaranteed landing costs so businesses and customers know exactly what they are paying for shipments. Returns management, automated collection and storage services are also part of the platform.
“We are finding that brands in different parts of the world have the same shipping expectations thanks to Amazon (NASDAQ: AMZN) [regardless of where they are in world]”Said Sharad.
FlavorCloud uses Artificial Intelligence (AI) to ensure that the cost landed estimates are correct – 99% of the time, the company said. According to Sharad, algorithms also help generate accurate shipping costs so that customers can tell the difference between three-day and ten-day shipping, for example.
According to Sharad, businesses can face expensive customs bills when products are tied to borders. Customers cancel the order – usually due to a lack of transparency about the delay – and the company pays the bill. To illustrate this, she found that 40% of orders that were not placed were due to shipping costs. With a deeper understanding of these costs, companies can convert these taxes into sales.
“Our algorithms are built into the e-commerce experience behind the scenes. For example, the customer would see $ 8 shipping options in 10 days or 10 days [other options such as $15 three-day shipping]”Said Sharad.
The other important differentiator for FlavorCloud is the extensive knowledge of the goods. If you know what the product is made of – e.g. B. a cotton shirt or a linen shirt – the classification of this item may change when changing customs. A more accurate product description results in more accurate customs duties, so brands can more accurately reflect correct pricing to customers. According to Sharad, FlavorCloud ensures that the goods are properly classified, resulting in lower and more accurate customs and duties costs.
“FlavorCloud also understands the goods and the different values of those goods,” she said. “We understand the landed costs from start to finish. Our customs experience enables us to offer consumers better margins. “
FlavorCloud can deliver to more than 200 countries and has relationships with package flight networks as well as first- and last-mile providers. According to Sharad, as the company builds its client teams, 75% of the new funds will be used to build the employee scale. The rest will be used to further improve the AI and machine learning technologies and further improve the overall experience.
Click here for more Modern Shipper articles by Brian Straight.
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