Today’s discerning customer requires that retailers are able to accommodate multiple sales channels simultaneously, whether it’s in-store, online, or a hybrid (online order, with in-store fulfillment). Traditionally each channel was managed independently for most retailers, creating a disparate situation with inconsistent inventory counts. Dropit solves this issue with its omnichannel retail optimization platform that integrates directly into fulfillment systems. The platform is able to provide retailers with a single source of truth when it comes to their inventory by unifying inventory, allowing brands to reduce the amount of inventory required, sell products faster, trim the fulfillment times for customers, and reduce holding costs. Dropit has focused primarily on mall-based brands in fashion but has recently expanded to consumer electronics.
London TechWatch caught up with Dropit Founder and CEO Karin Cabili to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Dropit announced a $25M Series C funding round, bringing the company’s total funding to $50M. The funding round was led by Vault Investments, a first-time investor who will also be joining Dropit’s board. The round was supported by previous investors such as Tiga Investments, Axentia, Sugarbee and others, including former Macy’s CEO Terry Lundgren, who sits on Dropit’s Board of Directors.
Tell us about your product or service.
Dropit is an omnichannel retail technology company that unifies brands’ in-store and online inventories and distribution channels. The Dropit platform addresses one of the retail industry’s most critical issues – the buildup of excess inventory and product waste that costs retailers billions and leaves a long-lasting environmental impact.
By integrating Dropit’s smart-sourcing technology directly into existing fulfillment management systems, brands can leverage their existing network of physical store locations to sell all available inventory, avoid wasting product, and reduce the environmental impact of high carbon emissions due to last-mile delivery by sourcing orders to locations closest to the customer, without the need to replace legacy systems.
What inspired the start of Dropit?
I come from a family of retail, supply chain, and manufacturing veterans. After founding my first company at the age of 20, I started Dropit to help brands address an endemic problem in the retail industry – the duplication of inventory and costs to support in-store and online channels at once. Inspired by the influx of pandemic-related e-commerce shopping, I pivoted the startup from solely focusing on hands-free shopping to empowering brands to unify online and offline inventories as a way to reduce operational costs and minimize their environmental footprint.
How is it different?
Dropit connects to any legacy system, removing a major barrier for retailers who are often locked into a way of doing things. Dropit has built a platform that unifies retailers’ existing inventory and tech stack. It integrates at any point in the sales or fulfillment chain – one of the reasons it is not in direct competition with any specific technology a retail brand already uses. One of Dropit’s key strengths is allowing merchants new product discovery channels and the ability to consolidate deliveries and pickups to minimize split shipments. Dropit’s view on competitors is unique – by unifying the retail ecosystem Dropit creates balance and in this, we find no competition.
What market you are targeting and how big is it?
Dropit is a solution that connects the entire supply chain to itself. Brick & mortar retailers, e-commerce, inventory and logistics departments, supply chain solutions, connecting the malls themselves to the online world. We see ourselves as team players that advance and enhance individual companies and the retail ecosystem as a whole.
What’s your business model?
Dropit provides software solutions that require no additional CAPEX investment, involve a SaaS licensing fee for the use of its technology, and a low setup fee at the start of the engagement.
How are you preparing for a potential economic slowdown?
We’ve always operated as lean as we could, even after cash injections, so being conservative with our finances is really second nature at this point. Also, being a ”mature” startup, we’ve had the benefit of passing through and learning from the economic changes that came along with the COVID pandemic. The economic slowdown then helped us to drill down to our core, focusing on our solution and making sure that it meets the market need. That helped us to hit the ground running once the economy became sturdier.
Incidentally, as COVID was a main player in the industry during our product development process, I guess it’s not surprising that the platform itself emerged as a tool for girding retailers from such economic slowdowns. All of our solutions are aimed at driving efficiency, cutting costs, and reducing waste, both operationally speaking and waste that impacts the environment. Optimization underscores resilience at every level in retail, so optimization is the best way to prepare for economic slowdowns and maintain strength even in those “act of God” kind of moments, like COVID. In this way, preparing retail companies for economic slowdowns is a central part of what we do at Dropit, and in undertaking that mission, we have the pleasant side effect of having prepared ourselves for those bumps in the road too.
What was the funding process like?
We’ve been fundraising for several years now, so having the experience of previous funding rounds made this latest process fairly straightforward. Thanks to our previous funding rounds and the support of our advisory board, we’ve already put a lot of data-tracking, benchmarking processes, and communications in place. Those really helped us to streamline the due diligence process in Series C. We’ve also been extremely fortunate to have among our shareholders some seasoned retail leaders who helped to read the market and sculpt the most relevant features and solutions for our industry in between funding rounds. This guidance was invaluable in orienting the company’s overall direction and making the value of Dropit apparent to new investors.
What are the biggest challenges that you faced while raising capital?
Constantly changing hats to suit different tasks and occasions is part and parcel of being a woman in business in the UK, but this of course is not without its challenges. At first, it was a bit daunting to switch modes from CEO to fundraiser on a daily (and depending on the day, sometimes hourly) basis. And I discovered that while a woman can never have too many hats in her closet, changing hats every time you need to perform different functions isn’t exactly optimal. So, one of the things I’ve really worked on this past year is becoming more comprehensive, to make one hat more multifunctional, if you will. I’m working to be present for the company’s operations and its many teams while remaining focused on fundraising. I’ve found this means I’m carrying the questions our potential investors ask into my meetings with our R&D, sales, marketing, and operations teams. This allows me to solve problems in a way that benefits both endeavors.
What factors about your business led your investors to write the cheque?
Dropit has set out to solve a macro problem created by the retail industry’s duplication of inventory and lack of ability to combine local store presence with last-mile delivery. One of our key strengths is unifying data and systems. In this effort, we have built integrations with many systems.
What are the milestones you plan to achieve in the next six months?
With the new capital, Dropit plans to bolster its go-to-market capabilities, extend its U.S. sales office in Austin, Texas, grow its team to over 100 employees, and add key hires for open positions across 12 states to support both brand and mall partners.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
First, I think one of the golden rules of startups at any stage is – stay lean! Don’t be afraid to step into different roles when necessary. Besides saving valuable cash resources, this process will bring you invaluable information on what your company truly needs and what it can live without. It helps you to understand best practices in a variety of departments, and that’s information you can’t live without as you expand.
I think one of the golden rules of startups at any stage is – stay lean! Don’t be afraid to step into different roles when necessary. Besides saving valuable cash resources, this process will bring you invaluable information on what your company truly needs and what it can live without. It helps you to understand best practices in a variety of departments, and that’s information you can’t live without as you expand.
Second, startup leaders should not be afraid of change or challenges. Here at Dropit, every time we faced a significant challenge – whether it was having to make drastic budgetary and structural changes in the face of COVID or pivoting our sales team to a new location – precipitated our biggest growth sprints. For example, when the pandemic put one sector of our business on indefinite hold, we countered by investing our energies in our product development. I think we emerged from that uncertain time with more market-worthy and exciting solutions and offerings than we would have had we not faced such a challenge.
Last, and I think most importantly, I encourage all founders to get into fundraising, even if it feels scary or intense. It’s such a valuable learning process – my company always ascended to a new level through the processes, whether the funding round ended up being a slam dunk or not. Fundraising helps founders take account of everything they are doing and really evaluate what’s working (and what isn’t). The potential shareholders look at your company in new ways and their challenging questions invite you to look at your business in new ways too. If you haven’t done so already it’s a great way to set KPIs, refine your offering and G2M plans, proof your product, and build compliance. Whatever the financial result, the gains in knowledge are unquantifiable.
Where do you see the company going now over the near term?
We’re excited about the next phase of growth for Dropit and are confident that we have the necessary infrastructure in place to seamlessly – and quickly – build upon our existing footprint in the United States, Europe, the United Kingdom, and Canada.
What’s your favourite outdoor activity in London?
I’ve loved shopping since I was a kid. These days I don’t shop for myself as much as I used to, but I love browsing aisles for my baby girl. My father, who is a retailer, jokes that anyhow I already shopped enough for myself to keep my favorite stores open for decades. The R&D team also teases me that I am their first shopping database. To be honest though, I’m very proud and happy that my work allows me to use my favorite pastime to advance our business and the Dropit experience.