Investors Inject $8.7M into Perishable Shipping Solutions
YOUNGSTOWN, Ohio — Perishable Shipping Solutions closed last week on an $8.7 million Series A round of financing that will allow it to add new fulfillment centers and personnel in several states and further develop its multichannel direct shipping and analytics platform.
The perishable cold and frozen food fulfillment logistics company, co-founded by Danny Catullo, owner of Catullo’s Prime Meats in Boardman, has experienced tremendous growth over the last few years as demand for digital retail and e-commerce has increased, driven by consumer shopping habits.
The investment was led by North Carolina-based SJF Ventures, with participation from Grotech Ventures, Virginia, and Supply Chain Ventures, Maine. SJF’s managing director, David Griest will join Perishable Shipping Solutions’ board of directors, along with Lawson DeVries, managing general partner at Grotech, and Eric Spiegel, retired CEO of Siemens USA, according to an announcement from the company.
In April 2019, Catullo reported business had tripled over 2018. Today, business is up triple over this time last year, Catullo says, and revenue is on track to reach $14.5 million this year.
“Two straight years of almost exactly tripling our business. And we are on pace to triple this year,” Catullo says.
This month Inc. Magazine ranked Perishable Shipping Solutions No. 315 on its 500 list for fastest growing private companies based on percentage revenue growth in 2019 from 2016. In that time, Perishable Shipping Solutions enjoyed 1,445% revenue growth.
In a prepared statement, SJF’s Griest said, “Shipping foods that are frozen or require continuous cold are the hardest to get right – there’s no margin for error. We are impressed with how Perishable Shipping Solutions perfectly solves this key pain point while providing a scalable supply chain solution. Growing e-commerce brands can now focus on their food & beverage products, while PSS handles the back-end logistics for fast delivery to their customers.”
Added Grotech’s DeVries, “Perishable Shipping Solutions is an exciting business for us in several ways. We were attracted by the acumen of the leadership team, the exceptional growth in customer acquisition as well as the synergies with other Grotech portfolio companies. We see strong tailwinds and look forward to great success together.”
Even before the coronavirus pandemic, Catullo was seeing a shift toward e-commerce for perishable food based on consumers’ buying habits. As people buy things online, more want their products delivered in two days, which increases the cost of shipping a package.
By its nature, perishable food has to ship in two days, so shipping was always expensive, Catullo says, but now those prices are starting to come down. And the trend toward consumers buying perishable food over the internet was accelerated by the coronavirus pandemic, he says.
“It was one of the last stops that people were making,” he says. “With COVID, a generation that would never buy food online, or never thought to buy food online, now is at home and needs to find things they want and don’t want to travel to the store.”
That’s also forced many companies to embrace e-commerce when they hadn’t before. While e-commerce was a small slice of the internet pie a few years ago, Catullo is seeing more mid- to large-size brands looking to work with Perishable Shipping.
“It’s a good diversification of their sales to offer e-commerce,” he says. “So, the demand to use our services is just off the charts.”
Even as things normalize and more people go out and shop, “the trend is still up. It never went back to where it was before,” he notes.
During the pandemic, shifting to a direct-to-consumer sales platform is critical for many food business owners when traditional markets were not available, according to the company.
“Digital grocery and specialty food purchases are here to stay. Cold, frozen and foods without preservatives require our specialized handling operations, from receipt of the order to the consumer’s table,” said CEO Mark Nelson in a company statement. “We’re thrilled that our investors recognize PSS’ critical role in this cold supply chain and are partnering to further accelerate our growth.”
From its warehouse on Performance Place and satellite location in Reno, Nev., Perishable Shipping Solutions provides storage and shipping services to more than 120 to 150 companies throughout the United States that sell their products via e-commerce, up from about 100 last year. Those operations are usually run by just a few people and don’t have the relationships with full-line distributors.
With the infusion of capital from the investors, Perishable Shipping Solutions will expand its operations with a nearly 100,000-square-foot distribution center in Sacramento, Calif., which is three times the size of the 30,000-square-foot center the company opened in Reno in 2018, Catullo says. The Sacramento center should be fully operational by the end of September, he says.
The center was originally a food distribution company that served the restaurant industry, which took a tremendous hit during the pandemic. Perishable Shipping hired many of the people who worked for the original company, including warehouse and operation managers, he says.
“We’ve been able to help those people replace those jobs with a new one. These people aren’t going to spend a week without a paycheck,” he says.
The company is also moving its Youngstown operations to a 75,000-square-foot center in Lordstown, just down the street from Lordstown Motors, which he expects to be operational in October. It’s three times as big as the Youngstown location, which the company will keep as backup.
Will all of its locations, Perishable Shipping can reach 93% of the U.S. population in two days with ground shipping, he says. It’s onboarding new clients as it is able to handle the volume, and with the company’s economies of scale, it’s positioned as a much more affordable option for e-commerce logistics for new clients rather than companies trying to set up their own system, he says.
“We’re still able to provide a cheaper cost for those services than they otherwise would be buying for themselves,” he says.
Perishable Shipping is “enthusiastically hiring right now” to build its team, he says. The company currently employs 77 companywide, including 50 in Youngstown, and is looking to beef up its management team with professionals who have operations experience in small parcels and e-commerce, he says.
“We want to be able to add that experience to our team,” he says.
It’s a new experience for Catullo, who is a third-generation owner of Catullo’s Prime Meats. He co-founded Perishable Shipping Solutions in 2016 to help distribute his product anywhere in the country. Since growing the company, he can now hire young professionals and give them a chance to grow their careers by working in a start-up business, he says.
“It’s been rewarding to bring that big city start up culture to my hometown,” he says.
And even with the growth Perishable Shipping has enjoyed, Catullo still considers it start up, because there’s still no telling what the next few years will bring, he says. Leadership is trying to be agile to develop new ways to deal with problems and find solutions to challenges, he says.
In addition to human capital, the investment will allow the company to implement new systems and technologies to its operations, he says.
“Things we may have been doing manually before, we’re now going to be able to afford a system and get people trained to use it on site, which will allow us to grow even faster,” he says.
Such improvements include a data analytics platform that will allow Perishable Shipping to get more information to its clients such as their top-performing SKUs, sales hotspots, what they can improve on and better analytics on what they should be selling their products for.
File image: Danny Catullo, co-founder and operating officer of Perishable Shipping Solutions.
Copyright 2022 The Business Journal, Youngstown, Ohio.