Commerce in the time of COVID-19: key themes

Evolv Ventures
6 min readAug 25, 2020


Takeaways from an investor roundtable discussion

The points noted here are taken from a group discussion and comments are not attributed to any specific individual, company or firm. The content in this article may only be disclosed, quoted, referred to, published or delivered, in whole or in part, with the consent of the Contributors listed below.

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It’s no secret that the current environment is continuing to see some interesting shifts in consumption behavior and retail strategy. A few weeks ago, Evolv got together with a group of investors from eight firms that spend time in the world of retail technology, commerce, and commercial supply chains to exchange notes. On many fronts, it’s still too early to be conclusive about long term impacts, but we found it extremely fruitful to share hypotheses and burning questions, hear what others are seeing on the ground and in their portfolios, and generally posit the many directions in which this landscape could impact innovation and investment going forward. See below for a few high-level themes that emerged in the dialogue.

Why invest in retail tech, and why now?

  • Catalysis of long term trends: The current environment is catalyzing trends that were already underway, which may mean winners quickly emerge and lagging models fail faster.
  • Whitespace in retail: Amazon still represents a small fraction of total retail sales despite its massive innovation budget. There is still a lot of whitespace for innovators to take and an opportunity to invest in helping the majority of retailers adapt and compete.
  • Increasingly broad influence: The tentacles of what defines commerce are growing to include more of what we previously classified as transportation, finance, real estate, etc. to truly influence all segments of the economy.

The ecommerce tech stack

  • Complexity and fragmentation: Despite Amazon’s dominance and Shopify’s prevalence, for many historically offline or omnichannel brands, the ecommerce tech stack is complicated, fragmented, and difficult to navigate. Sustained crowding as innovators aim to capture current tailwinds could further this complexity in the near term.
  • Optimization software: New and better pure software plays should emerge to provide critical integration between value chain stakeholders, optimize inventory/order mix, and address increasingly complex reverse logistics.

Warehousing and distribution

  • Increasing opportunity for brand investment: As retailers are squeezed, it appears they’re looking to brands to take on more in terms of warehousing, distribution, and delivery to meet demand. Brand-focused enablement tools should capitalize on this.
  • Unit economics: For some capex reliant or logistically complex business models, is venture financing still a tough vehicle to fuel growth? Innovation needed to drive step-function improvement in unit economics may still be forthcoming.
  • Alternative financing models: In analogous sectors, startups have begun to get creative with alternative financing models, still taking venture dollars but funding capex and project finance with debt and other vehicles, or leaning towards licensing models. Could that work in the modern warehousing and distribution environment?

Orchestrating and optimizing delivery

  • Operationally difficult delivery models: As more fulfillment and delivery platforms and channels proliferate in grocery and food-service, the economics of delivery doesn’t appear to be dramatically different than what legacy platforms have experienced: again, step-function change may still be forthcoming.
  • Opportunities for niche plays: Focused platforms that rely on product expertise (e.g. ethnic grocery, healthy or clean prepared foods) could carve out a space for themselves but questions remain on the barriers to entry and defensibility.

Future of physical retail

  • Physical stores become multipurpose: Physical footprints are evolving to serving different purposes, storing less inventory, and including a focus on enhancing the in-store experience. The focus for some verticals will be purely on activations for brand building and experiential marketing. Another portion of the footprint will be devoted to micro-fulfillment or distribution to meet online demand, but we’re still likely to see some excess vacant real estate as the market recalibrates.
  • Temporary physical concepts may grow: As landlords look to fill available retail space, flexible contracts and attractive pricing could appeal to retailers and startups looking to test new concepts with pop-ups.
  • Luxury retail physical footprints: Luxury goods may be especially focused on an enhanced physical store model, with the margin profiles to support high-touch experiential concepts, and the need to diversify their customer acquisition and loyalty strategies in a potential downturn environment.

Restaurants/foodservice concepts

  • Micromarket opportunities: Even with restrictions lifting, the volume of dine-in consumption is likely to stay below historical levels, motivating foodservice providers to build out more permanent grab-and-go infrastructure.
  • New concept tech-stack: Adoption of newer channels and concepts like smart vending and digital stores is curtailed by the need for data and organization to execute on the right strategy e.g. what products to put in what stores, what demand is seen in which markets, etc. Since there is no focused default merchandising solution for these concepts, we may see innovation in that layer of the stack (inventory mix, turnover management, distribution optimization).
  • Cloud kitchens: Ongoing closures amongst small to medium restaurants, uncertainty around what larger chains will do with their physical assets, as well as generally tough real estate dynamics present interesting challenges for this space. In the near term, companies that are focused on solving the technology problem and remaining agnostic to whether the operator is a restaurant, a cloud/commissary kitchen, or a delivery platform may be better positioned.

Returns/reverse logistics

  • A long term pain point: Enterprise brands have been struggling with returns/exchanges in light of growing ecommerce and the current environment should aggravate that just enough to see widespread adoption of emerging tech solutions.
  • Variety of approaches: Existing players are approaching returns in a variety of ways — there’s the fintech approach, a logistics focused approach, a loyalty-heavy approach, etc. There’s a discussion of models based on driving a customer to the store to save on shipping and maximize the opportunity to upsell/drive experiential marketing.

Customer acquisition and loyalty

  • Differentiating from the noise: It’s never been easier to start a direct-to-consumer business with Shopify, various logistics solutions, marketing solutions, and more. Brands will have to think harder about how to add value to the customer to drive retention in this environment. E.g., how do you leverage brand ambassadors, how to do minimize friction in the selling and delivery process.
  • White glove experience moves online: Live, social commerce will mimic the in-person experience as shoppers buy online with virtual consultations, texting services, etc. China and a couple of other countries have already done a good job at this. Solutions emerging in the US present an opportunity to engage store employees that are furloughed.
  • Ecommerce marketing innovation: Tools supporting shoppable ads, click and collect, add to cart functionality, etc. are seeing tailwinds but there may be little defensibility in that space as of now. Solutions can differentiate themselves and remain sticky by not just offering these functionalities but helping brands and retailers better optimize targeting and acquisition, and create meaningful data feedback loops to enhance outbound marketing efforts.

This summary is being provided for informational purposes only and does not constitute (nor should it be construed as) investment or financial advice. Neither Evolv Ventures nor the Contributors assume any liability related to the accuracy or completeness of the information contained in this summary, and they shall under no circumstances be or become liable to any recipient, user or other person for errors, inaccuracies or omissions in the information presented herein, or for any consequences that may be suffered by any recipient, user or other person as a result of the receipt of, or reliance upon, such information.