eCommerce Juggernaut's View on B2B
$100mm investment and profitable!
Greetings, fellow B2B technology trailblazers!
This week I had the pleasure of speaking with Stefan Hamann, founder and co-CEO of Shopware. Shopware is a Germany based eCommerce provider that powers over 100,000 mid-large size brands (of which a surprisingly large percentage are B2B businesses—more on this below).
Those familiar with Shopware often think of it as a “Shopify of Europe” but Hamann is eager to grow Shopware’s customer base stateside fueled by a recent $100mm investment from Carlyle and Paypal. I chatted with Stefan about Shopware’s first ever outside investment and their focus on B2B as a key differentiator to the competition. Within that, what is different about B2B and how is that shaping their priorities going forward.
In this interview:
A look at how Shopware has been run as a profitable business since 2000. 💶
Why take on $100mm in outside investment from Carlyle and PayPal after 23 years? ❔
Stefan shares his vantage point as an early pioneer of eCommerce. We dig into how Shopware has been able to evolve and innovate through multiple cycles of online business. 🌐
Shopware’s innovative B2B implementation with Thyssenkrupp’s legacy ERP system.🏗
What growth trends have emerged in B2B vs B2C 📈
Breaking down Shopware’s user base of premium users and those using the opensource community edition. 👨💻
Coming to the US market to take on Shopify!
What happened to Shopify’s attempt at logistics offerings?
Why Shopware’s focus is on mid to large size brands and how vertical SaaS solutions can leave these businesses wanting more. 🌱
First Time Fundraise After 23 Years 📅
Stefan ran Shopware as a profitable business, reinvesting proceeds into improving the technology and expanding across Europe for 20+ years. Then in February of last year, Shopware announced a big $100mm raise from Carlyle and Paypal, its first ever outside investment.
I discussed taking on outside private equity investment with Hamann and dove into why now, after over 20 years of operations, was the right time to add fuel to Shopware’s fire. Hamann recalled a pivotal moment in 2018 when they decided to revamp their technology platform entirely. This strategic shift involved building a new technology foundation, embracing emerging technologies like AI and 3D configuration.
Reinvesting profits with no outside investment for 20+ years definitely bucks the trend we see in most B2B SaaS providers and marketplaces which tend to be pre-profit and reliant on funding from venture and private equity investors.
The primary objective behind this substantial infusion of capital is to fuel an ambitious growth strategy. Founder Stefan Hamann explained that the company had consistently experienced annual growth rates between 30% and 40% since its inception. This new injection of funds will facilitate scaling efforts, marketing endeavors, and expansion of Shopware’s presence in the United States. Given the current growth areas in eCommerce, B2B will surely be a focus for Shopware in the United States.
Thyssenkrupp Is Using Shopware’s ERP? 🗜
I asked Stefan to provide some insights into Shopware's collaboration with Thyssenkrupp. What stands out to me here is Thyssenkrupp's decision to utilize Shopware's integrated ERP solution.
Hamann explains that Thyssenkrupp’s decision was influenced by the fact that integrating with Thyssenkrupp's existing SAP ERP system across various countries would have been an extremely time-consuming and complex process. It was a practical choice to leverage Shopware's integrated ERP.
To make this integration work, Shopware created a dedicated API layer designed specifically for data integration. This API layer focused solely on data, including price updates and stock availability. It ensured a smooth synchronization between Shopware's eCommerce technology and Thyssenkrupp's existing ERP.
I’ve seen B2B distributors run into a lot of challenges getting data out of their ERPs. From there, getting data back into the ERP can often be even more of a headache! Shopware being able to implement this API layer integration for Thyssenkrupp really is a standout solution that distributors should take notice of. I see API layer solutions like this as key for opening up B2B businesses to other tech integrations as potential new partners can build into this API.
B2B May Already Be 50%+ of Business 🚧
Hamann shed light on the growth between B2B and B2C within the eCommerce landscape, echoing observations made by Mirakl CEO Adrien Nuessenbaum in a previous Distribution Technology interview.
With B2B now comprising approximately 45% to even 50% of their customer base. This rapid growth underscores the robust presence of B2B in Shopware's portfolio.
Hamann emphasized the significance of understanding the intricacies of B2B businesses. Each B2B company possesses unique processes and business models, demanding a deep technical comprehension and a tailored approach. The key is to listen, comprehend, and architect digital solutions that align with each B2B customer's specific needs. B2B is far from one size fits all and simply creating a separate B2B front-end experience won’t cut it according to Hamann.
Instead, they seek to infuse B2B’s digital interactions with the human-to-human element that’s been a cornerstone of the B2B industry for generations.
Where Vertical SaaS Doesn’t Work 🚫
I spoke with Stefan about what some of the key considerations are behind Shopware’s emphasis on mid to large-sized businesses and his thoughts on the growing vertical specific B2B SaaS sector.
Hamann raises a crucial point about the limitations of vertical-specific players.
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