Toronto-based e-commerce software aggregator Carbon6 Technologies, whose core business model included acquiring numerous other companies, is now the one being bought.
“Carbon6 was founded to simplify success for sellers and suppliers, starting with a focus on Amazon.”
Kazi Ahmed
Carbon6 is set to be acquired by Minneapolis-based retail supply chain solutions company SPS Commerce for $210 million USD ($301 million CAD), roughly 40 percent of which is SPS Commerce stock.
The transaction is expected to close within the first quarter of 2025, Carbon6 told BetaKit. Carbon6 confirmed to BetaKit that all current employees would stay on through the acquisition.
The American retail supply chain giant estimates that the purchase will bring an additional $7 million USD in revenue for Q1, and $40 million for the year. It says the acquisition will help break even SPS Commerce’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q1 and grow it by approximately $5.5 million by the end of the year.
Carbon6 aims to provide a suite of software tools for merchants selling directly to Amazon and through its third-party marketplace, while also supporting merchants with support and education to grow their businesses. The company’s approach includes acquiring, building, and integrating software solutions to create an “all-in-one” platform for Amazon merchants to manage their sales.
“Carbon6 was founded to simplify success for sellers and suppliers, starting with a focus on Amazon,” said Kazi Ahmed, co-founder and CEO of Carbon6. “With its specialized offerings, augmented by SPS Commerce’s network, we believe the combined company will deliver unmatched solutions for first-party and third-party sellers.”
In an interview with BetaKit, co-founder and board member Naseem Saloojee said that Carbon6 didn’t originally set out to sell. After an “extensive process” of conversations with potential venture investors and private equity firms, the team connected with SPS Commerce.
“We said, let’s put off the idea, let’s change our plan … and instead team up with a company that we thought could fulfill all of our objectives,” Saloojee said.
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One of Carbon6’s most valuable offerings, in SPS Commerce’s view, are tools that automate invoice disputes for first-party sellers and help third-party sellers claw back more lost revenue caused by fulfillment errors. According to SPS Commerce, adding these tools to its arsenal for Amazon e-commerce merchants will help grow its revenue recovery portfolio.
“This acquisition not only expands the reach of the SPS Commerce network, it also strengthens our ability to optimize invoice deduction disputes by leveraging data from the SPS network,” Jamie Thingelstad, CTO of SPS Commerce, said in a statement.
“By streamlining access to standardized, reliable data suppliers can reduce resolution time and help prevent invalid deductions from occurring in the first place,” Thingelstad said.
Founded in 2021 amid the pandemic boom in online retail, Carbon6 had previously raised a total of about $102 million CAD ($75 million USD). In 2022, Carbon6 secured a sizable $88-million CAD Series A to buy and build more software tools for online sellers, capping off an acquisition run of 16 companies in 16 months. However, the round was an undisclosed mix of equity and debt.
Carbon6 made its last publicly disclosed acquisition in August 2024, when it bought Washington, DC-based artificial intelligence (AI)-powered retail analytics platform Junglytics for an undisclosed amount. The purchase allowed Carbon6 to boost its AI arsenal, claiming to offer its Amazon merchants data-driven analytics through a conversational AI interface.
SPS Commerce has been on its own shopping spree recently: in August, the firm acquired US company SupplyPike, whose revenue loss prevention software aligned with SPS Commerce’s newfound focus on preserving revenue along the e-commerce supply chain. Saloojee told BetaKit that this acquisition was part of what made Carbon6 eager to join forces with SPS.
RELATED: Carbon6 acquires American firm Junglytics to provide AI tools for Amazon sellers
American e-commerce activity has shown robust growth, at more than double the growth rate of total sales overall in Q3 2024, according to Department of Commerce data. North of the border, Statistics Canada numbers indicate a surge in retail e-commerce sales in 2024.
However, Saloojee said that economic headwinds and challenges to e-commerce merchants provide a unique opportunity for Carbon6 and SPS Commerce’s revenue recovery products.
“Our sellers, our customers, are finding that it’s a lower margin environment for them over the past couple of years than it was in the past,” Saloojee said. “Leaning in on that back office opportunity with revenue recovery [and] deductions management is now more important than ever.”
The co-founder added that he was grateful for the company having grown up as a Toronto-based startup and making its stamp on the Canadian landscape.
“When I look at the Canadian tech ecosystem, we’ve seen a number of companies with great promise,” Saloojee said. “I think something that we haven’t seen to the greatest extent is a substantial number of … nine-figure tech exits, and so I feel a lot of gratitude that we’ve been able to get there.”
Feature image courtesy Carbon6.