Toronto-based digital logistics startup Swyft, which connects merchants to existing courier networks, has closed a $3 million CAD seed round.
The round was funded by Trucks Venture Capital, Golden Ventures, Panache Ventures, and other strategic angel investors. Participating angels included Marcelo Cortes, co-founder of Faire, Mudit Rawat, founder of Nexus Commerce, Derrick Fung, co-founder of Drop, and Kuljeev Singh, founder of ResQ. The equity raise brings Swyft’s total fundraising to date to $3.5 million CAD.
Kazmi previously worked for Amazon, where he said he saw how important same-day delivery was to consumers.
Swyft, which launched in March, attributed the interest it generated during this funding round to increased traction in ecommerce and desire for same-day delivery during COVID-19. The startup plans to use the capital to hire in sales and engineering roles, and expand its software to reach new clients and work with more ecommerce platforms. Kazmi hopes to grow Swyft’s team from four to 12 or 13 employees by the end of the year.
“We built our product by laser-focusing on solving the needs of our customers and this allowed us to grow rapidly and deliver real value,” Aadil Kazmi, Swyft’s founder and CEO, told BetaKit, calling the backing of the startup’s new investors “a huge stamp of approval.”
“We’ve built plug and play integrations with all the major ecommerce carts where anyone with zero technical ability can get started with affordable and reliable same-day delivery,” said Kazmi.
Swyft’s application integrates with merchant shopping carts on ecommerce platforms like Shopify and Magento, helping retailers tap into “an otherwise inaccessible” pool of courier companies, which Kazmi said often use outdated software that makes same-day delivery difficult.
Swyft grants courier companies free access to its software, and in return, they join Swyft’s marketplace, creating a network of warehouses and delivery drivers.
Kazmi previously worked for Amazon as an engagement manager, where he said he saw, firsthand, how important same-day delivery was to consumers. As a result, Kazmi decided to build Swyft, an “Amazon-like” product that can “democratize” access to same-day delivery for non-Amazon merchants.
“We believe Swyft can build a meaningful business that impacts the future of transportation,” said Reilly Brennan, general partner at Trucks Venture Capital, a San Francisco-based fund focused on transportation technology entrepreneurs. “Merchants that use Swyft will be able to give their customers the kind of shipping options that not even Amazon can offer today. Swyft is the future of same and next-day shipping for merchants large and small and undoubtedly impacts the future of how goods move.”
Swyft’s software serves online sellers of all sizes, improving delivery experience via features like real-time tracking and predictive estimated times of arrival. It also permits drivers to communicate directly with customers to reduce the risk of missed deliveries.
According to Kazmi, Swyft’s clients range from Puma and Under Armour to “your local corner store.” Thus far, the startup’s “bread and butter” has been delivering cosmetic, apparel, and coffee products.
“Swyft’s software-first approach to helping both ecommerce merchants satisfy customer demand while also streamlining supply chain workflows to support this new demand, made this an attractive opportunity,” said Ameet Shah, general partner at Golden Ventures.
“[Swyft’s] asset-light software-only approach is one of the most scalable I’ve seen in the rapidly growing tech-enabled logistics and supply-chain market.”
Kazmi argued that Shopify wants to become a “build a business in a box” platform, and he sees Swyft as a potential piece in this strategy. The Swyft CEO predicts that once the ecommerce giant builds out its fulfillment network, it will shift its focus to last-mile delivery—Swyft’s domain. In the immediate term, Kazmi views integrating Swyft’s delivery service with Shopify as an important play. Longer-term, the startup hopes to build integrations with other ecommerce platforms like eBay and Walmart Marketplace.
“I was very impressed by the vision that the Swyft team had around same-day delivery,” said Rawat, Swyft angel investor. “Their asset-light software-only approach is one of the most scalable I’ve seen in the rapidly growing tech-enabled logistics and supply-chain market.”
“The problem today in last mile logistics is that everyone is working on building asset-based networks,” said Kazmi. “What that means is you either buy up a bunch of warehouses, or you invest a ton of marketing dollars in acquiring, training, onboarding, and managing pools of gig economy workers, as Uber or Instacart does. It’s been proven that both of these models don’t scale and they’re not profitable.”
“Our entire position is that we use software,” said the CEO. “We built a software solution to power logistics couriers to do more and do better. They use our SaaS software to gain operational efficiencies and streamline a lot of their back office processes.”
Since COVID-19, Kazmi said he has seen demand for ecommerce “go through the roof.” Physical distancing measures and government mandated closures of brick and mortar stores in response to the pandemic have led many Canadian retailers to shift their focus to ecommerce.
According to the most recent available Statistics Canada data, on a year-over-year basis, retail ecommerce in April more than doubled. Seasonally adjusted figures suggest Canadian retail ecommerce grew 56 percent in April, following a 16.3 percent increase in March, while overall retail sales have fallen by approximately one-third since mid-March, when the shutdowns began.
“Where we expected ecommerce to be in 10 years is happening right now,” said Kazmi. “And I would say the same thing for same-day delivery.”
“When customers reach the checkout page, and they see same-day delivery, the conversion rates go through the roof and people end up buying more,” he said.
Swyft claims that with same-day delivery, some of its merchants have increased average order value (AOV) by as much as 31 percent. AOV is a performance metric typically calculated by dividing total revenue by number of orders.
“Merchants now are starting to look at same-day delivery as a real core part of their strategy,” added the Swyft CEO.
Image source Matthew Henry via Burst