Why we invested: Fabric
One of the largest growth accelerations driven by COVID is the exponential increase in e-commerce as a percent of retail spend. According to Digital Commerce 360, e-commerce represented 21.3% of all retail purchases in the US in 2020, up from 15.8% in 2019, representing a 44% year-over-year growth. That trend has continued into 2021, with e-commerce as a percent of retail growing 39% in Q1 ’21 versus 2020. The increase in e-commerce, which has been likened to moving up the growth curve by 10 years over a single calendar year, has left many retailers scrambling to reconfigure their digital presence.
Most businesses are typically built on commerce platforms that were introduced in the early 2000s. These platforms are monolithic in nature, making them highly complex and inflexible. This rigid structure has led enterprises to build significant custom code over time to adapt their online presence to emerging trends. These trends include the rise in mobile device use, the need for more flexible inventory management systems to handle omnichannel purchasing behavior, and the adoption of multiple payment preferences and gateways. The reliance on custom code has led many enterprises to suffer from massive lag time, poor customer experiences, and high development and maintenance costs. Even Shopify, which has built a great platform for small businesses, is a predominantly monolithic platform that lacks the flexibility needed by medium and larger enterprises.
These challenges have led to significant interest in “Headless Commerce.” Headless Commerce decouples the front end of a website from the backend using an API (making it “headless”). This solution provides more flexibility in changing the user experience without affecting the “backend” — cart, catalog, search, etc. Modern headless commerce architecture (see Headless 2.0 below) is more aptly described as “Modular Commerce.” In this structure, all elements of the commerce platform, both front and backend, are connected through APIs as individual applications, allowing the business the flexibility to buy and build elements of their commerce stack and change them without affecting any other part of the infrastructure. This control enables companies to quickly upgrade experiences across new platforms, handle inventory and checkout across new modes of purchasing, and handle any other change in customer behavior without overhauling the entire commerce platform. Shifting to a Modular Commerce infrastructure is one of the most important decisions for almost all CXOs selling digital goods, whether B2C or B2B.
This is why we are incredibly excited to announce our investment in Fabric, the best-in-class headless commerce platform that allows businesses to shift off legacy platforms and create modular commerce applications to create the best and modern e-commerce experiences. Fabric has been a rocket ship since the team publicly launched in October 2020. The company quickly garnering a reputation among e-commerce businesses as the best headless commerce platform and counting large enterprise customers, including GNC, Build Direct, BarkBox and Counter Culture Coffee, to name a few.
We first met the Fabric Team after spending several months diligencing the commerce infrastructure and the headless commerce market. It became very clear that customers view Fabric as the premier platform and team. Fabric’s approach is significantly different from other headless platforms, many of which focus on SMBs to provide a layer on top of Shopify or just the storefront. First, Fabric provides modular commerce-as-a-service, not just an API layer. In addition to a full suite of APIs for multi-channel commerce, Fabric has built world-class commerce applications to help handle all digital commerce needs. Customers can not only switch to an API-based commerce infrastructure, but also add Fabric’s best-in-class applications to work alongside any other applications or customized builds.
Second, Fabric’s approach is significantly more flexible than other headless platforms. Fabric allows its customers to transition to headless commerce over time instead of re-platforming all at once. The number one concern we hear from CTO’s about shifting to headless is the risk of rip and replace due to needing to re-platform the entire infrastructure, leading to downtimes and reliability issues. Since Fabric is fully modular and cloud-based, companies can shift their infrastructure piece by piece, making the transition smoother and de-risking a large-scale migration. For the mid-market brand, Fabric is the last commerce platform they will ever need since it helps businesses scale along the way instead of forcing future platform migrations. Given what we publicly know about Shopify’s platform, building a robust, scalable, and high throughput system (Shopify+) as an extended offering would always be challenging. This is why Fabric chose to design its systems in a way that can scale up and down easily
Finally, Fabric is plug and play, meaning they do not require an army of developers or custom code to get the flexibility of headless commerce for large businesses. Retailers and B2B sellers should not spend millions of dollars or thousands of engineering hours to switch to headless commerce. Fabric’s low code configurability is a significant step forward for companies that often have limited technical resources.
Beyond the product, it is the team that sets Fabric far apart from the competition. CEO Faisal Masud and Co-founder/CPO Ryan Bartley first worked together at eBay and later Staples, where Faisal was CTO, and Ryan led Staples Applied Innovation organization. There, they experienced the difficulty of operating an enterprise business that sold omnichannel to both B2B and B2C companies, including how difficult it was to maintain a proper infrastructure. Together they led a custom in-house build to shift Staples to a headless infrastructure. Through this new development, Ryan and Faisal acquired intimate knowledge of how a true enterprise-grade headless commerce platform should operate, including structuring commerce applications. Faisal also brings additional industry and leadership experience, including seven years in leadership positions at Amazon, where he spent time in both the AmazonWarehouse and AmazonBasics divisions, and prior COO experience at Wing — a GoogleX moonshot.
In addition, they have the vision and leadership qualities to attract top talent. The Fabric team includes CTO Umer Sadiq, who has 13 years of experience at Amazon, VP of Engineering Rachana Desai, previously Director of Engineering at Twilio, and Head of Fabric Digital Services Nessa Garcia, who previously worked on digital transformation at Staples with Ryan and Faisal.
At B Capital Group, we look to drive value for our portfolio companies through our international presence and our global partnership with BCG. The accelerating shift to digital commerce is one of the most significant opportunities for both B2B and B2C companies globally, but one that requires the proper infrastructure to take advantage of. We are incredibly excited to partner with the entire Fabric team as they enable the future of commerce.