Hubou, a UK startup that operates a multi-channel fulfillment service for e-commerce businesses of various sizes, has raised £ 1million in seed funding. London-based venture capital firm Episode 1, alongside a number of anonymous private investors, is supporting the majority of the round.
Launched in November 2017 by Martin Bysh and Paul Dodd after the duo conducted several e-commerce experiments, Hubo aims to solve the fulfillment problem most online stores face. The service promises to store your inventory and then “pick up, pack and deliver” it automatically as customer orders are placed.
The idea is that by outsourcing order fulfillment, online stores can focus on the parts of the business where the greatest value is added, such as customer service and the choice of products to develop and / or to sell.
However, according to the founders of Hubo, with the exception of large e-commerce stores, the market is woefully underserved with most service providers overpriced and uninterested in small business services. The only other option, they claim, is Amazon’s “Fulfillment by Amazon” (FBA), which they say is only viable for products sold on Amazon due to discounts offered by the e-commerce giant. .
“The packing boxes and queues at the post office were a horrible side effect of our [e-commerce] experimentation, and we had to get rid of it if we didn’t want to waste hours every day or abandon the whole e-commerce research project, ”says Bysh.
Luckily this is a problem solved, at least that’s what we thought … but we brought in some fulfillment companies and found out that they had no interest in our business, our items were too cheap and our volumes too low. And they weren’t very tech savvy, often basing their business on third-party warehouse management software and limited integrations in the market.
The duo decided to change course. Instead of trying to find the next pure e-commerce opportunity, as their e-commerce experiences had predicted, they started trying to find a way to “break the traditional economy of accomplishment.” The potential price is a “huge chunk” of what Bysh sees as a “multi-billion dollar, largely undisputed” market.
“We researched the market opportunity and determined that in the UK alone the opportunity was around £ 1 billion more or less undisputed execution activity,” he says. .
The key was to create systems flexible enough so that Hubo could work with sellers no matter what they sell, how much they sell and whether the goods are sold new or “re-marketed”. “We have customers who ship a few items a day and others who ship thousands. The price of items ranges from a few pounds to hundreds, ”Bysh explains.
Products supplied by Hubo already include items such as vitamins, CBD oils, headphones, bingo tickets, electronic bagpipes, antiques, coffee, electronics, clothing (new and used). ) and beauty products. Customers include startups, subscription businesses, and individuals selling niche or boutique products.
Bysh says serving this part of the order fulfillment market is made possible through a combination of bespoke technologies and algorithms, leading to “massive process optimization” and reducing customer management costs through signups. , SaaS integration and support.
But it’s not just about optimized, technology-driven processes. Part of Hubo’s proposition is achieved through something as simple as a modular approach the company has designed to organize their warehouses. Thus, each customer has a designated space within a hub and a hub manager that includes his activity.
From a revenue model perspective, Hubo tries to align its own interests with those of the sellers. The startup is offering two months of free storage to all customers for each new shipment of inventory, so if sellers manage and maintain revenue, they will no longer need to pay for storage.
“When a salesperson sells, we pay, which means they mostly pay us when they win. That’s where 80% of the income comes from, ”Bysh explains.
Meanwhile, Hubo generates additional income through a small administrative subscription and optional services, such as packaging. The latter will expand when “Hubstore” launches later this year, offering one-click upgrades and customizations. This will include related services, such as technology to help expand into additional channels and increase sales.