Threecolts raises $90 million to expand its toolkit for third-party sellers selling on marketplaces like Amazon
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Amazon rules e-commerce, with its marketplace outperforming all others in terms of gross merchandise value, reach, and market cap. This fact inevitably makes it a big part of how millions of brands and retailers sell goods online. Threecolts, a London startup founded by a former Amazon executive and developing software for brands and retailers to manage their Amazon sales channel, has attracted around 22,000 customers since it opened in 2021. Now, to fuel its growth, it announces that it has raised $90 million in funding.
The $90 million figure covers a Series A that Threecolts recently closed; a previous, never-before-disclosed Pre-A investment; and some debt, with investors in those tranches including Crossbeam Venture Partners, General Global Capital, Stratos, and CoVenture. Yoda Yee, Threecolts founder and CEO, declined to disclose how much has been invested in each of these areas, citing competitive advantages and the fact that there have been a number of others, like Brex, paving the way for when less Discussing how much and when funding events took place because that sends too much signal to competitors. He declined to speak about the assessment for the same reason.
However, Threecolts is profitable and says revenue is up sixfold year over year. It’s used the debt to make acquisitions — 14 total in less than two years, in a roll-up game that mirrors those we’ve seen in other parts of the e-commerce ecosystem (particularly among those that aggregate smaller e-commerce retailers). sold on Amazon).
This high number of acquisitions speaks for the greater fragmentation in e-commerce, but also for the consolidation that is currently taking place: Many interesting ideas that were brought to life as start-ups due to easy access to finance have found it difficult to raise more funds in recent times . Now if they reach the end of their runway or find it difficult to scale, they will be snapped by those able to keep going.
Yee previously worked at Amazon where he coordinated with third-party vendors who sold on his marketplaces, which gave him a good understanding of what Amazon offers, what it doesn’t, and what could be done better.
Most notably, he saw firsthand that Amazon’s position as both an enabler and competitor to retailers and brands makes relationships with these third-parties difficult. Amazon not only sells items that compete directly with those that resellers or private label retailers sell on its platform, but ultimately develops algorithms that result in maximum conversion for Amazon itself, not that of an individual seller. And as a third party, that might empower you, but it might also bury you.
“Because we can focus solely on the tools, customers trust us more,” he said. “You just can’t trust Amazon when it comes to automated price adjustments. Amazon has its own incentives.”
Repricing is just one example here: the same goes for other features, and beyond that, how Amazon uses the data it collects about how people buy and sell on its platform. It’s not the only startup aiming to capitalize on this opportunity: the inherent conflict Yee points to has spurred the rise of a number of companies that make tools for third-parties, and these compete with Threecolts. These include Helium 10, Jungle Scout (which itself has raised a lot of money), and more.
But with more than 6 million companies doing business on Amazon, the opportunity is clearly one with room for multiple players and approaches. The basic concept has led Threecolts to develop (and acquire) a suite of tools that include not only tools to monitor and adjust prices, but also real-time listing and inventory alerts, customer service integrations across channels, API dashboards, and third-party vendors Data source monitoring, automation for feedback and product review monitoring, profit and sales analytics, and more.
Some of these tools complement what Amazon has done solidly in delivering it: Threecolts doesn’t offer a Fulfillment by Amazon competitor, but it does have a tool to monitor FBA fees.
Threecolts says its 22,000 clients generate more than $30 billion in combined GMOs and have achieved $200 million in combined profits and a 200 percent increase in detail page conversions as a result of Threecolts’ tools.
That customer list includes big names like Samsung, Panasonic, and L’Oréal, but also a long line of smaller sellers (which make up 70% of Threecolts’ base and 50% of its sales) and even some of the roll-up companies that were acquiring it successful brands selling on Amazon and trying to create their own economies of scale either in supply chains or something else.
What Threecolts tracks points to macro trends in the e-commerce universe. Yee said that Amazon accounts for the bulk of where its customers currently sell, at 90%, but he added that there has been some activity in requesting tools to cover other marketplaces like Walmart, eBay, or more localized or vertically oriented sites gives. He also noted that there has recently been an increase in resellers as customers, as opposed to those selling their own, original ‘private label’ products.
Although there has been increased activity on platforms like Instagram for what is known as social selling, this has not translated into requests to Threecolts to support these platforms. Yee said the likes of WhatsApp and Instagram are popping up in talks, but it has more to do with them as customer support channels, he said.
Crossbeam has carved a niche for itself investing in e-commerce startups, particularly those that cater to businesses (which can be brands, retailers or even influencers) that run their businesses online and through marketplaces, making it a supporter is ideally suited for Threecolts, and Sakib Jamal, the senior investment associate who led the transaction, told TechCrunch the firm is “very excited” about the startup and the opportunity.
“Threecolts’ impressive performance over the past year means sellers can now access a one-stop-shop solution for an increasing number of pain points, reducing seller fatigue and administrative burden,” he added in a statement . “Yoda and his team have provided returns for clients of all shapes and sizes, from large enterprises to emerging enterprises, that are realized in rapid feedback loops.”