Solving the ‘prime problem’: Shipium raises $27 million to help online retailers compete with Amazon

Shipium founders Mac Brown and Jason Murray. (Shipium photo)

Delivery speed is a top priority for online shoppers. But it can be difficult for non-Amazon retailers to get products to your doorstep within days or hours.

Shipium has a solution – and investors love what they see.

The Seattle logistics startup just raised $27 million to fuel the growth of its software that helps e-commerce stores manage fulfillment. The Series A round, led by Insight Partners, follows an $8 million starting round raised in June.

Shipium aims to solve the “Prime problem,” a phrase it uses to describe the struggle to meet consumer expectations set by Amazon’s fast shipping capabilities.

The founders of the company know something about that.

CEO Jason Murray spent nearly two decades at Amazon, leading supply chain teams and overseeing thousands of employees as vice president. Co-founder Mac Brown was also an early Amazon employee; he and Murray started three days apart in 1999. Brown later joined Zulily, where he served as vice president of supply chain and fulfillment software for the online retailer in Seattle.

Shipium’s services work with existing systems and help companies make fulfillment decisions, such as deciding which shipping option is fastest or cheapest, or which box size is most optimal.

“You have to find a way to provide an engaging delivery experience to prevent Amazon from eating your market share,” Murray said.

The startup targets mid-sized retailers who have their own infrastructure, but can’t afford to build the kind of software giants like Amazon and Walmart use to coordinate and optimize e-commerce operations.

“We’re essentially giving them the technology that allows them to compete with Amazon,” Murray said.

Amazon CEO Andy Jassy spoke about the company’s shipping capabilities in his annual shareholder letter published Thursday. “Delivering a significant number of shipments in one day is difficult (especially for the millions of items we offer) and initially expensive as we build the infrastructure to scale this efficiently,” wrote Jassy. “But we believe our 200+ million Prime customers, who will tell you very clearly that faster is almost always better, will love this.”

RELATED: How Global Supply Chain Problems Could Be an Opportunity for Seattle Shipping Technology Companies

Since its launch in late 2019, Shipium has processed approximately 10 million shipments and is on track to process more than 50 million by the end of this year.

Murray said the 30-person company is considering expanding its software into “physical infrastructure” such as truck and warehouse space.

He added that the recent chaos in the supply chain has been positive for Shipium’s business. “The way to fight [supply chain problems] is with the diversity of your carriers and systems that adapt dynamically via static rules,” Murray said.

Shipium is the latest software startup to face the tailwinds of the e-commerce boom during the pandemic as more retailers look for back-end solutions to support online demand. Others from the Seattle area that have raised funds in recent years include Flexe, Logixboard, Stackline, Fabric, FlavorCloud, Pipe17, Pandion, and SoundCommerce. Some of those companies are run by former Amazon employees.

“The pandemic has accelerated e-commerce growth to unprecedented heights, but major retailers continue to grow in both sales and market share, thanks in large part to their superior shipping experience,” said Brad Fiedler, vice president of Insight Partners in a statement. “Jason, Mac, and the background of the team position them as the foremost experts on how to help the rest of the retail industry compete for customer growth and loyalty.”

Existing donors, including Trilogy, Good Friends and PSL Ventures, took part in the final round. Total funding for Shipium to date is $38.7 million.

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