Brightpearl is buying Inventory Planner, a market-leading demand planning tool that helps eCommerce vendors to forecast and optimise stock inventory. The relationship between the two stems back a couple of years with Brightpearl leveraging Inventory Planner under an OEM agreement according to Brightpearl CEO Derek O’Carroll.
He commented, “We’re thrilled to announce the acquisition of Inventory Planner. The last two years have shown the importance of demand forecasting expertise for today’s fast-growing merchants, so we’re delighted to be able to offer this best-in-class solution as an extension of the Brightpearl network. We’re also excited about the addition of its experienced and talented team to the wider Brightpearl family.
“Our deal with Inventory Planner signals the first step in our mission to give modern merchants the freedom to easily deploy commerce experiences on their own terms, with access to the very best retail technology products – empowering them to break away from jack-of-all-trades legacy systems.”
Enterprise Times spoke to O’Carroll about the deal. Why did Brightpearl buy Inventory Planner? “It was because of the success of that (OEM Agreement). It proved that our customers are getting a lot more value out of this platform. That they were a lot more stickier with both solutions in terms of the value that they were getting from us. That actually led the business case for purchase the company.”
Acquired but independent
The acquisition signals an interesting strategy for Brightpearl. The existing co-Founder and CEO Oleg Smirnov will remain in his current role. Enterprise Times asked O’Carroll whether that signalled that Inventory Planner would remain independent?
“Yeah, they’re an independent business. They’re 100% owned by Brightpearl. But we want them to operate individually and independently. We will obviously give them certain things like HR policies and things that will help them scale, but we want the division to be run separately. Because customers, our customers, may not want Brightpearl, but they might want Inventory Planner and vice versa.
“Merchants all grow at different paces and have different needs. We don’t want to force our customers into locked contracts or locked technology sets. We just want to give them access to the best of breed when they need to.”
Inventory Planner was found by Oleg and his wife Elena around seven years ago. Elena wrote the original algorithms that drive the technology. She stepped away from the company five years ago when it started to grow rapidly and will remain as an advisor.
The growth was mainly through online app marketplaces such as Shopify and BigCommerce. It is now used by over 1,400 customers in over 22 countries.
Inventory Planner is also growing at 70% annually according to O’Carroll. It has nine employees geographically spread across several countries including France, Russia, Ukraine, the US and the UK! The company aims to get the team together once a year, though whether it continued to do so during COVID isn’t clear.
Will Inventory Planner continue to integrate with other products?
“We will, yes. We recognise that customers today, want to have a pick and mix approach. They want to be able to find the best in breed but know that it works with each other. The alternative is they do an open-source solution, like Odoo and they hire a lot of engineers and that has inherent problems. Or, they tie themselves into a legacy all your can eat system like NetSuite.
“We want to be the third choice, whereby we’re a family of brands, and customers can buy any brand within the family knowing that it works together. To do that, we have to ensure that each brand is optimised to work with other platforms. We’re actually going to run this business as a Chinese wall as well. You will see us maintaining support for competitive platforms.”
Brightpearl will invest in the company and O’Carroll stated, “We plan to increase the team size, in particular, investments in engineering and data science. Over the next 12 months, you will see that team size grow, it will probably double in the next 12 months.”
Smirnov commented, “This evolution of our relationship with Brightpearl will allow Inventory Planner to better serve its current and future clients as we tap into the full potential of our integrated solution and offer a cutting edge demand forecasting technology to the fast-growing merchants.
“We are thrilled to be joining forces with Brightpearl, an ideal partner who shares our values and commitment to building secure and scalable retail operating systems.”
On routes to market
What about sales, will Inventory Planner continue to sell through the same routes?
“Yes, it’s a product-led business and it’s designed so that customers can download it off of key marketplaces like Shopify, BigCommerce or Amazon and we 100% will be maintaining that business model.
“There will be a version of Inventory Planner available through the Brightpearl channel for customers that want more of a concierge service, with professional services or implementation. That will be offered as a premium through the Brightpearl channel. But for Inventory Planner, it’s standalone. We invest and we are optimising the products on that direct to consumer low touch self-service model.”
Initially, Brightpearl will deliver the professional services but O’Carroll indicated that may change next year. O’Carroll commented, “We have a joint solution in the works with a large accounting company, which we will announce next year. When we do that, because they go to market with a big value-added reseller network, we have to launch into that.”
This could be massive news for Brightpearl, it will be interesting to see how that story develops. It will get access to a larger ecosystem of partners that could accelerate growth even faster.
A new type of deal
This is quite a different deal from most acquisitions. In acquiring Inventory Planner, Brightpearl is buying an innovation hub. It will continue to invest and grow the company and help it with the back office growth challenges. While the monetary value of the deal was not made public, O’Carroll shared information to show the deal’s stickiness.
It is an all-cash deal with triggers for payments, options and investment into the business. It means that the Inventory Planner team can focus on what they do best and enjoy. As O’Carroll said, “If I was integrating this business, I would have a real risk of flight. But we’re not and there’s so much opportunity for evolution of product capability in demand forecasting as a category. And that’s what we’re doing here.”
First Inventory Planner but does Brightpearl have ambitions for other acquisitions. O’Carroll commented. “We want to execute this strategy elsewhere around the jobs of work that sits around Brightpearl. To set up independent divisions that are organically funded by us 100% and tell them to innovate. We want to acquire companies that fit this profile. Quite frankly, we feel that there’s an opportunity in the market to come onto the radar because companies are being sold at the moment now for crazy multiples.
“We were able to get a good deal for everyone because of the profile of the business. We can help them get to 10 to 20 to 30 million in revenue. Which they’re pretty close to so that’s what we got to get them to.”
Enterprise Times: What does this mean
With control of Inventory Planner, Brightpearl continues to improve its own inventory forecasting options. Brightpearl will be able to actively expand the 18% shared customers to an even higher percentage.
Maurice Helfgott, Brightpearl Chairman, commented, “I started my career as a Merchant and know-how critical accurate prediction is to getting the right product available in the right place at the right time. Inventory Planner’s customers are delighted with the proven simplicity and accuracy of its easy-to-deploy forecasting solution and we’re confident that Brightpearl’s world-class team will help ensure success for the product with larger customers too.”
This acquisition is no doubt partially funded by the £33 million Series C funding round, led by Sage that invested approx £17 million. It also seems likely that the accounting firm O’Carroll talked about is Sage. Whether the integration is with Sage Intacct, or another application is yet to be seen. If it is Sage it will be a new vertical for Sage Intacct to operate in, Retail. Of course, if that relationship works it could mean that in a few years Sage looks to acquire Brightpearl itself.
What is interesting is that the technology strategy is similar to that of Sage Business Cloud. Brightpearl is building a modern ecosystem of applications, a “cloud” of applications, rather than a platform. Each will remain independent and capable of working with other solutions.
Who will Brightpearl look to acquire next? Its approach, attract some firms that don’t want to be completely subsumed by larger vendors has merits. It is an approach that could be worth watching.