UPS invests in e-commerce-as-a-service startup

The company’s minority investment in e-commerce specialist Ally Commerce Inc. is more about research than revenues, according to Rimas Kapeskas, head of UPS’s strategic enterprise fund.    United Parcel Service Inc. has invested an undisclosed amount to acquire a minority share in e-commerce-as-a-service startup Ally Commerce Inc., according to reports from the Wall Street Journal.
   The two-year-old tech company, headed by former eBay Inc. executive Jason Rubottom, helps manufacturers to set up direct-to-consumer websites, rather than rely on existing e-tailer sites like eBay and Amazon. 
   Atlanta, Ga.-based Ally Commerce provides a full range of services, from creating and running a manufacturer’s website to order fulfillment and returns, and has about 30 customers already, including D-Link, Bosch and Electrolux. The company posted $10 million in sales during its first year and has raised a total of $8.4 million in two rounds of funding, according to WSJ.
   For UPS though, the minority investment is more about research than revenues.
   Rimas Kapeskas, head of UPS’s strategic enterprise fund, told WSJ the parcel and logistics giant owns investments in around 20 tech companies with similar interests to those of UPS. By investing in companies like Ally Commerce, UPS gets an up-close and personal look at technologies it would otherwise have to spend money – likely more money at that – to research in house.
   “We want to understand how they’re operating,” said Kapeskas. “It’s a very cost-effective deployment of our capital.”
   And Kapeskas and UPS certainly aren’t blind to the wide-ranging effect e-commerce has had on the delivery industry. “It’s transformed our business,” he said.
   Change and growth often come with discomfort, as has been the case for UPS in recent years as the company has missed investment expectations during a surge in online ordering. It appears unlikely, however, that UPS would purchase Ally Commerce outright, as Kapeskas said the company typically doesn’t acquire the startups in which it invests for research purposes.
   The strategic investment arm of UPS has invested in several startups recently, including 3-D printing manufacturer CloudDDM LLC, which in June co-located its manufacturing facility adjacent to UPS’s Worldport in Louisville, Kentucky.