UPS backs ecommerce startup

UPS is dipping its toe in the direct-to-consumer market for manufacturers in the US, through a recent investment in technology startup Ally Commerce.

Ally Commerce announced it has received Series B funding from UPS’ Strategic Enterprise Fund, which is the company’s investment arm. The recent funding brings the company’s total to $8.4m.

“UPS invested because the technology that Ally Commerce has developed has the potential to significantly impact ecommerce results for customers in several markets,” said Alan Gershenhorn, UPS executive vice president and chief commercial officer. “The UPS Strategic Enterprise Fund continues to invest in innovative companies that are evolving business models and creating new technologies and revenue streams.”

In its release about the funding round, Ally Commerce discussed the growing importance of the direct-to-consumer market. According to a statistic coming from the  The Wall Street Journal, the direct-to-consumer online sales market is becoming a rapidly growing sales source for brand manufacturers. In fact, it rings in at 34 per cent of total sales, according to a Forrester survey.

“Ally Commerce has built a turnkey solution that handles all aspects of an ecommerce operation and delivers significantly better results to brand manufacturers that are selling direct-to-consumer online,” said Jason Rubottom, CEO of Ally Commerce. “The percentage of manufacturers selling direct is growing at 71 per cent a year.”

Ally Commerce, which was started by UniqueSquared founders Richard Scalesse and Paul D’arrigo, has also experienced immense growth, according to the company, as it has been growing over the past two years as a result of its investments in technology and ecommerce solutions for brands.

Because half of the brand manufacturers in the US outsource their ecommerce business, Ally Commerce steps in to be the partner in the process, ensuring it provides that “digital storefront” to create an end-to-end solution that links the manufacturer right to the consumer.

One of Ally Commerce’s clients is D-Link, a global leader in the manufacturing of computer networking products such as routers, home security cameras, and connected home products. “Last year we switched away from a different company to partner with Ally Commerce on our direct-to-consumer business,” said Andy Lee, D-Link head of ecommerce. “In just one year, Ally grew our revenue by 125 per cent, grew our profit by 254 per cent, and reduced our total cost of ownership by 72 per cent. We anticipate that we will double revenue and profit again in the next year with Ally. I’ve been amazed by what Ally’s technology does to enable this growth.”