The Bowery Capital team is embarking on a ten week journey to cover B2B Marketplaces. We are doing deep dives on various companies, interviewing founders and investors, and learning what it takes to build success in the B2B Marketplace arena. Below is a part of our content series focused on learning from the prior generation of winners. This week we focus on electronics, computer systems, and telecom marketplace E2open. You can read all of the posts in our series by going here.
E2open was founded in 2000 as a collaboration between eight major electronics companies: Hitachi, IBM, LG Electronics, Matsushita, Nortel, Seagate, Solectron, and Toshiba, who started the joint venture to work together to offer modern supply chain software and marketplace solutions. Today, E2open is a leading provider of cloud-based, on-demand software enabling enterprises to procure, manufacture, sell, and distribute products more efficiently. The company is unique in that it offers best-in-class supply chain management software, as well as a complimentary supply-chain goods and services marketplace through E2net, its platform for matching trading partners at different stages of the supply chain process. The value of E2open’s dual offering has led enterprises like Pepsi, Cisco Systems, Dell, 3M, IBM, and others to rely on E2open to gain visibility into and control over their trading networks by leveraging real-time information, integrated business processes, and advanced analytics
E2open addresses the long-standing visibility problems that have plagued supply chain managers. Many OEMs have outsourced vast swaths of their production network to manufacturing specialists. These specialists are in low-cost geographies and they often rely on sub-assembly suppliers, which leads to a level of complexity that has vastly outstripped the ability of Excel spreadsheets and phone calls to manage their networks. Early attempts to solve this problem struggled with ineffective software architectures, however, E2open developed software with specific vertical configurations for the firm’s core customer types. E2open also succeeded by building a strong network of 60,000 trading partners and 2.3 million resellers; the powerful network effects E2open’s widespread reach has created means that new entrants face steep a moat when trying to outcompete the company.
E2open initially went public in July 2012 with revenues of ~$60MM and a reported gross margin of 64%. In 2015, Insight Venture Partners acquired the company for $273MM (a ~41% premium over its pre-acquisition market capitalization) and the company has since grown from 350 employees (as of 2012) to more than 2,000 (as of 2020). E2open operates 33 offices spread across the United States, Europe, and Asia, and with its acquisitions of Cloud Logistics, INTTRA, and Amber Road, E2open has been able to expand its logistics footprint and can now offer customers transportation management systems, global trade management, visibility solutions, and carrier connectivity all on a single platform. This end-to-end offering has allowed E2open to quickly grow its business as the company’s product offering has matured and continued to add more value to its users.
E2open’s success can be attributed to how it helps solve one of the supply chain management industry’s biggest pain points, as well as its short implementation timeline and strong network of trading partners, all of which have combined to make E2open a leader in this sector.
If you liked “B2B Marketplace History Lesson: E2Open” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. Look out for more content on B2B Marketplaces from us in the coming weeks.
Below we have compiled a list of metrics that could be relevant for most B2B marketplaces and hope that it serves as a framework for tracking KPIs for success.