Fulfillment businesses face many challenges. On the one hand, fulfillment costs are often the single most important cost factor for e-commerce businesses, ranging to up to 70% of the average order value in e-commerce including all related 3PL services. While especially bigger retailers have significantly lower fulfillment costs, they are still the biggest margin killer even before material costs in e-commerce. At the same time, fulfillment is not a highly profitable business. Despite high costs from a merchant’s perspective, EBIT margins are often below 10%. That shows that fulfillment is still a very manual business – the work is ultimately done by blue collar workers, making personnel cost the most relevant cost category. While this alone indicates a need for an increase in efficiency for fulfillment service providers and their customers alike, there is another factor making the task even more urgent: the shortage of blue collar workers. This causes new challenges: on the one hand, 3PLs might be forced to keep their operations stable with a constant work overload, on the other hand the shortage drives wage increases eventually resulting in even higher fulfillment costs.
But whenever challenges like the above arise, technology might be a good answer to find the necessary efficiency potentials. This is where NIMMSTA enters the equation.
We believe NIMMSTA can be part of the solutions to all these problems. It develops an industrial smart watch, serving as a scanning device and allowing for hands-free picking and assembling processes. On top of that NIMMSTA offers a flexible workflow management system and easy integration into existing WMS or ERP systems.
Here’s why we invested:
- Team: Andreas and Florian are textbook entrepreneurs. Both are engineers by training and founded their first engineering business which runs profitably today directly after their studies. They bootstrapped NIMMSTA not only to MVP stage but far beyond, taking care of product design, first customers and significant sales numbers already and having a clear vision of what’s to come next.
- Problem-Solution-Fit: We stated the problems the industry is facing in our introduction above. That implies huge pressure on fulfillment. NIMMSTA’s solutions allow for an up to 50% increase in efficiency which again depending on each customer’s individual situation enables it to either increase the order volume while keeping the workforce stable or even reduce workforce if cost pressure is too high but still be able to serve the same amount of customers.
- Market Size: The global 3PL market size sits at roughly 1.000 bn USD, varying from source to source. Conservatively assuming that only 20% of the 3PL market is warehousing & fulfillment while transportation makes up for the rest, that still leaves a total addressable market of 200 bn USD with a savings potential of 30%, respectively 60 bn USD that NIMMSTA can bring to the table. However, NIMMSTA’s potential is not limited to fulfillment but offers use cases beyond that, e.g. in manufacturing (e.g. assembly lines). Furthermore, NIMMSTA is developing software that will address an even bigger share of warehousing and fulfillment. Risking to state the obvious: NIMMSTA’s market is huge!
- Vision: What makes NIMMSTA so exciting to us is that Andreas and Florian think of it as a software company. While the scanning hardware itself already eases the industry’s pain, the even greater potential lies in the software for which the scanning devices are an enabler. NIMMSTA not only makes implementation into existing WMS systems incredibly easy but also allows its customers to build individual workflows which are then displayed to each worker on its smart device’s again individualized display. But NIMMSTA’s vision goes beyond: once the devices are implemented that opens a whole new area of warehouse analytics and optimization software based on first hand picking data, enabling NIMMSTA to provide valuable SaaS use cases to its customers while deepening its own value proposition.
- Future of supply chain: Supply chain operations is still a people dependent business. Fulfillment and picking is a great example for that. And NIMMSTA is a great example that digitalisation can and should mean enabling human workforce not necessarily replacing it. We do believe in warehouse automation and robotic solutions but many interesting technologies are still in their very early days. However, the industry needs solutions that provide value as of today and meet operational needs in today’s reality. Taking a look into the future, we believe that in robotized warehouses there will be human tasks for many years to come and more human-robot collaboration than competition. And regarding all the manual tasks that will stay relevant: NIMMSTA is here to improve human work.
We’re happy to invest in NIMMSTA’s pre-seed round along other angel investors and logistics experts like Marco Prüglmeier and Rolf Adam.