M13 has long been a believer in the shift toward multichannel retailing. We’ve seeded ideas ranging from being one of the first merchants selling pants online at Bonobos to selling stylish, comfortable, and eco-friendly shoes at Rothy’s to giving consumers a healthy way to feed themselves throughout the day at Daily Harvest.
These brands have been able to digitally connect with and sell to customers, thanks to innovations in the infrastructure supporting e-commerce businesses. The internet has democratized access to the tools needed to sell online, regardless of location, company size, or product type. Platforms like Shopify and BigCommerce have given turnkey access to millions of merchants to sell their products to eager shoppers across the globe.
But what happens after you hit “purchase” on your order? Enter the carriers that were built long before the birth of the internet: UPS (c. 1907), DHL (c. 1969), and FedEx (c. 1971). These legacy carriers were not built to serve the needs of today’s fast-growing e-commerce merchants, especially when it comes to additional complications of getting international parcels to customers overseas.
We’re excited to announce our newest investment in Passport, a modern international shipping carrier that helps e-commerce brands by managing all of the digital, regulatory, and logistical complexities of cross-border shipping in one simple solution.
Passport is a software-enabled and asset-light carrier focused on e-commerce. The company doesn’t own any trucks, ships, or warehouses, but rather uses its proprietary logistics network and 3PL partners to ensure packages get from seller to buyer in the most efficient manner. E-commerce brands use Passport’s software to enable in-cart duty and tax calculation and provide parcel tracking and customer service for the shopper. No more getting a DHL slip on your door asking you to come into the office to pay your duties and taxes before receiving your package. No more waiting in the endless international customer service queue with UPS when your package is delayed. Passport allows brands to finally deliver an enjoyable customer experience for international orders.
Prior to the COVID-19 pandemic, consumers were slowly moving toward purchasing online. From 2015-2019, e-commerce sales as a percentage of total retail sales in the U.S. methodically climbed from 7.5% to 11%. However, the previously expected continued linear growth of e-commerce penetration has now drastically increased post-pandemic. Previous estimates placed e-commerce penetration at 22% of total retail sales by 2030—that figure is now estimated to be 34%.
Cross-border e-commerce as a share of the total global market is estimated to be 20%, around $700 billion. The percentage of cross-border e-commerce transactions is also expected to see continued growth. A recent study shows that of e-commerce companies that currently do not sell to international customers, 90% plan to do so in the next three years. In the same way that the internet democratized access for merchants, it’s doing the same for consumers—allowing brands to build a global fan base on Day One.
Passport represents a horizontal technology solution that has significant industry tailwinds and can help speed those tailwinds itself. The company is solving a massive problem for DTC brands and enabling them to serve international customers. Multiple Passport customers described international shipping as a “nightmare” due to the complexities dealing with different countries. Unfortunately for many brands, the shipping nightmare results in a lot of revenue potential being left on the table. A recent study on cross-border consumers showed that four of the top five reasons that individuals abroad don’t convert from U.S. websites have to do with shipping. Put simply, Passport’s software enables brands to sell to customers who want to buy.
We are thrilled to partner with Passport Co-founder and CEO Alex Yancher. Alex’s family immigrated from Russia when he was young. Growing up, he recalls how much of a headache it was to send U.S. goods back home. After a stint at Facebook, he co-founded an e-commerce company called Lynks, a personalized shopping service to help people abroad buy U.S. products. After seeing the opportunity to improve the shipping experience, he decided to start Passport.
Congratulations Alex and the entire Passport team on your $12 million Series A funding! We’re proud to have led this round and invest alongside our friends at Resolute Ventures, Precursor, RiverPark, and Republic.