This blog post examines the different components of the retail technology ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.
Marketing Platforms Is The Largest Retail Technology Category
Let’s start off by looking at the Sector Map. We have classified 1873 retail technology startups into 21 categories. They have raised $85B from 3189 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that Marketing Platforms is the largest category with 271 companies. This category includes companies that enable merchants to execute and manage marketing campaigns. It also contains customer relationship management tools used to improve customer engagement. Some example companies in this category include Showpad, Sprinklr, Gainsight, and Medallia.
Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.
The Established Quadrant Has the Most Retail Technology Categories
Our Innovation Quadrant divides the retail technology categories into four different quadrants.
We see that the Established quadrant has the most number of retail technology categories at 13, accounting for 62% of all retail technology categories. The Made-to-Measure Customization category has the highest average age, and the Last Mile Logistics category has the highest average funding. On the other hand, the In-Store Management category is low on both average funding and age.
For this quarter’s funding analysis, let’s examine how average funding in the retail technology sector is evolving. The graphic below shows the retail technology average funding across all deals over time by quarter.
As the graphic demonstrates, retail technology average funding deal size in Q1 2019 was at $84M, which increased by 18% from the $71M last quarter. The average funding deal size has skyrocketed in recent years, with the average funding last quarter around 11 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $1B round into Flexport, a $775M round into Takeaway.com, and a $413M round into Delhivery.
As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how funding in the retail technology sector compares to previous years. The graphic below shows the total annual retail technology funding amounts over time.
As the graphic demonstrates, 2018 was a record year for retail technology funding at almost $18B. It represents a 30% increase from the previous year’s funding. In addition, retail technology funding grew at a CAGR of 43% over the past 5 years. Some of the largest funding events in 2018 include a $1.5B round for Go-Jek, a $1B round for Swiggy, and a $717M round for Huitongda.
Last quarter we examined retail technology funding trends and saw that its funding is shifting to later-stage events. Now we are conducting a thorough inspection on our retail tech research platform to compare funding by category. Our analysis reveals two important observations:
The Last Mile Logistics category leads the sector in Q2 funding
The Last Mile Logistics category also leads the sector in all-time funding
We’ll explain these observations with some graphics and discussions below.
The Last Mile Logistics Category Leads Retail Technology In Q2 Funding
To start off, let’s review the amount of funding raised this quarter by each category within retail technology.
The above graphic shows that the Last Mile Logistics category leads the sector in Q2 funding with $1.3B. Its funding is almost twice the funding of the next category, Marketing Platforms at $0.7B.
Last Mile Logistics companies are innovating on the last phase of the supply chain. They work on moving goods from a local retailer to a consumer’s home. Some example companies in this category include Instacart, DoorDash, Bigbasket, and Deliveroo.
So we’ve observed how different retail technology categories stack up in their Q2 funding. But how do these categories’ funding compare with each other historically? Let’s investigate that in the next section.
The Last Mile Logistics Category Also Leads in All-Time Funding
The graph below shows the all-time funding for different retail technology categories. The Q2 funding and growth rates of these categories are also highlighted.
The bar graph indicates that the Last Mile Logistics category also leads the sector in total funding at $19B. This is almost twice the funding of the next category, Marketing Platforms at $10B.
The Last Mile Logistics category is the clear retail technology leader in not only Q2 funding but in all-time funding as well.