Sources inform ''Globes'' that FiftyOne Inc., which provides a package of payments and logistics products for US lifestyle and fashion retailers to facilitate global online sales, recently met with a Wall Street investment banker about an IPO at a company value of $700-800 million.
FiftyOne CEO Michael DeSimone told "Globes", "We're examining the possibility of an IPO. We've been meeting with bankers for a long time although not about an IPO."
FiftyOne was founded by serial entrepreneur Yuval Tal as an online foreign exchange company, E4X, in 1999, before switching to its current name and business in 2007. It is headquartered in New York City and has a R&D and back office center in Tel Aviv.
FiftyOne's turning up on Wall Street's doorstep is surprising, given its business, in a field with many failures. The 2008 crisis hit the US economy hard. Banks collapsed, companies had to deal with plummeting sales, and people faced personal bankruptcy, as the financial tsunami threatened to wipe out whatever stood in its path. The crisis also created opportunities, one of which was seized by FiftyOne.
In late 2008, US retailers, worried about the domestic economy and falling sales, sought new sources of revenue. FiftyOne entered the picture with a platform that facilitated global sales by US retailers, while maintaining the US shopping experience. The company adapts retailers' websites to domestic markets in other countries, providing payments processing, cost calculations, fraud prevention, and shipments services, and a global returns management center.
"The US economic crash without question played in our favor," DeSimone told "Globes", during a visit to the company's R&D center in Tel Aviv. "Retailers began to see that they could find growth outside the American market and reach customers that were previously beyond their reach. That drew them to us."
FiftyOne has since become well-known among US department stores and major retailers. Its customers include some of the most respected names in the industry, including Macy's, Saks Fifth Avennue, Sears Roebuck, Bloomingdales, GAP, Williams Sonoma, DKNY, and 120 other US brands, which now sell products in more than 100 countries and 40 currencies.
In 2009, a year after the platform's launch, it had $25 million in turnover, and the figure is expected to be many times higher in 2012. FiftyOne's revenue comes from its commission on international sales, and is expected to reach $70 million this year, 75% more than in 2011.
UK labels are next
FiftyOne has achieved impressive sales and revenue growth, and its manpower has increased by over 50% in the past year to 160. DeSimone said, "I can longer remember the names of all our employees. However, the company still only works with US labels seeking foreign sales. "We're definitely looking at options for expansion in other countries, because the technology already exists. I would be happy to enter a new market in 2013, but I'm not sure we can do this. When it happens, I assume that Britain will be our next target," he said.
In July, FiftyOne held a financing round, which brought the amount raised to $40 million. Investors include Pitango Venture Capital, Vintage Investment Partners, Adam Street Partners, Delta Ventures, Seyan Ventures, and On-Line Ventures. DeSimone says that, until a year ago, the financing round was unplanned.
The acquisition of Borderfree, the business unit of Canada Post, completed in October 2011, was not planned either. DeSimone said that Borderfree had agreements with 25 US retailers, including cosmetics chain Sephora, enabling FiftyOne to increase its customer base. "We wanted to have access to these customers. The company only had deliveries from the US to Canada, and we knew that if could offer their customers the chance of reaching customers in 105 countries where the FiftyOne platform operates, everyone would benefit."
"Globes": Will you raise more capital in the future?
DeSimone: "At the moment, I don’t see us raising more capital, nor in 2013, but that greatly depends. If we encounter an extraordinary acquisition opportunity, or an important strategic move, we'll raise capital to complete them."
What about acquiring competitors?
"There are competitors which offer similar solutions in the US, but they are quite small. I follow them quite closely, because the market is large and growing fast.
Is there competition from other directions, such as Amazon.com?
"Most of our customers would not have used a solution like Amazon's as it exists now. One of the good things about FiftyOne's platform is that the retail brand is at the front of activity, not FiftyOne. Amazon, in contrast, does everything under the Amazon flag, and everything is branded under Amazon. That's great if you're a small business somewhere in Minnesota and no one has ever heard of you or will hear of you in Israel. But if you're a chain like Macy's, you won't sell in such a place. Amazon could change its approach, but for now it is strongly promoting itself.
"The biggest competition for me is Australian department stores with good websites against attempts by Macy's, for example, to sell there. This is very tough competition, because these stores know the local market better, because they are there. That is our main competition."
Published by Globes [online], Israel business news - www.globes-online.com - on September 27, 2012
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