True re-invests in Huboo as business accelerates
Over the years Amazon has satisfied the consumer demand for frictionless commerce, fulfilled via rapid, or even next-day delivery. Perhaps next-minute delivery will come through the advancement of drone technologies and legislation. Given this, the logistics industry has been through a sizeable shift to enable brands and retailers to satisfy this consumer demand, although the forgotten businesses during this shift have been SMEs selling D2C. These businesses typically have low volumes, low basket sizes, multiple SKUs and require warehousing flexibility given fluctuation in demand. This all requires modular warehousing and critically a human-machine alliance – both of which our portfolio company, Huboo, are addressing with extraordinary success.
True invested in Huboo’s seed round 10 months ago and have recently re-invested into their Series A round led by Stride and Maersk. We are excited by this business for so many reasons, some of which are outlined below.
Huboo are fundamentally democratising SME fulfilment – a complex challenge which will unlock the estimated £27bn in annual demand for such services (UK). Over the past 10 months the team at Huboo have proven highly capable of scaling their warehousing, technology, and human operations – all of which have been working in harmony during a period of phenomenal growth. The team are now over 100 strong, and the business operates 7 days-per-week (up from 5 days) not in order to satisfy new demand, but in order to ensure the levels of service quality remain during their growth. Forward planning and the appreciation of required service quality during a growth period is recognition of their desire to build a business for the long-term. Looking beyond service quality, during times like these, consumers seek value at all costs, and this also goes for delivery costs. Huboo are now implemented with multiple couriers enabling them to focus on always ensuring the most competitive prices for each parcel. It’s also worth considering that discretionary services are being re-considered post-covid as firms operate under tighter budgets, though in Huboo’s case, logistics is core to any ecommerce offering. This reliance further entrenches the proposition.
Huboo’s proprietary technology has enabled the business to automate onboarding and fulfilment to such a degree that an SME could sign up today via their website, ship goods into their warehouse tomorrow, and deliver goods to customers the next day via the optimal courier for that specific parcel. Now with hundreds of SME clients, Huboo has to remain flexible to unique demands, and that is where the human-machine alliance kicks in. If an SME requires a specific parcel be re-labelled first-class as it’s the customers birthday tomorrow, the human contact point enables for it.
The UK has seen enormous growth in online channels, at a time where business owners have been required to focus more than ever on getting the fundamentals of their business correct. Many of their clients sell on front-end platforms such as Shopify. In considering Shopify’s share price as a proxy for growth it’s clear Huboo have powerful tailwinds behind them (Shopify Inc traded at $400 in Jan, it now trades at $1,000). Huboo enables these business owners to forget about pick, pack and post, to forget about when they may need to scale into a new warehouse, which couriers to partner with, and when to hire new warehouse staff. This is all handled through a simple Saas fee with Huboo.
When we invested pre-covid we were backing Huboo to satisfy the roughly 550,000 retail and consumer SMEs in the UK, of which 25-40% sold online. This number will have considerably accelerated during Covid, improving the investment case for Huboo. What’s more is the pandemic will have expediated the desire for more robust local supply chains and logistics networks – a trend already in place given trade wars and risk of disruption. With Huboo operating local hubs in the geography of distribution (UK, and soon to be Germany) there is defensibility in localisation.
True are excited to have backed Huboo’s Series A, helping accelerate their push into Germany – the biggest ecommerce market in Europe. We continue to support the founding team with introductions to industry experts, and in aiding their existing sales pipelines. Huboo will continue having access to True’s innovation lab which provides access to cutting edge technologies capable of assisting their growth. We believe that Covid-19 has materially accelerated the fundamentals driving this business, and we have confidence in the team to deliver on the scale of the opportunity. With integrations across multiple web platforms and couriers, the platform is agnostic to SME infrastructure.
If you operate a D2C startup in the UK or Germany click here to learn more about how Huboo can support your business.
To read more on how True believe covid-19 is accelerating key trends in consumer behaviour, click here.