Editor's note: Este artículo está traducido al español.
Las Vegas-based e-commerce operator Neato is expanding its reach.
Anthony Connelly
Neato functions within a unique business model it has dubbed “2P.” Instead of first-party sales, which would be a brand selling to a retailer, or third-party sales — a brand selling on a retail platform — Neato acts as a middleman with brands to sell their product in online marketplaces for them, said Anthony Connelly, founder and CEO of Neato.
“When there’s a one and a three, there has to be a two, right?” Connelly said. “So we consider ourselves a second party. We have partnered exclusively with brands by buying and selling their product on these marketplaces for them. They sell to us at a wholesale margin, just like they would if they were selling directly to places like Amazon, and then we sell it for them.”
Neato, which was founded in Connelly’s garage in 2018, helps middle-market to enterprise brands manage and grow their presence on major marketplaces worldwide, he said.
The platform currently operates on nearly a dozen marketplaces in the U.S., Europe and Canada, Connelly said, including Walmart Marketplace, Amazon and now TikTok shop.
Neato sells at a retail margin and keeps the spread, and in return for that exclusivity, gives its client brands a suite of 18 services that they would otherwise have to pay for at multiple agencies or build internally, from brand management and customer service to marketing and advertising, Connelly said.
“It’s basically like having a little mini e-commerce department at your disposal at any time,” he said. “We consider ourselves kind of part of the brand, and we like to call ourselves like the ‘giant easy button.’ … Doing this on Amazon makes your life hard. We’re just kind of an easy button. You plug us in and we can go.”
Online marketplaces all have their own rules and regulations, and it can cost a lot of money for a brand to sell on those like Amazon, Connelly said. When brands sign a contract with Neato, however, the company takes over “their entire retail relationship,” he said.
“So if they’re selling directly to Amazon, instead of Amazon putting in a purchase order, we put in a purchase order,” he said. “If they’re selling on Amazon, they will stop shipping in product on Amazon, and they will start taking our purchase orders and selling us the product, again at wholesale. Then we list the product on the marketplace. We sell it for them.”
Neato pivoted to its unique model when the company saw a need for brands to have representation and partnership on Amazon, particularly during the COVID-19 pandemic, said Spencer Jacobs, co-founder and president of the company.
Spencer Jacobs
“We really believe in … being a joint venture combined business with our brand partners,” Jacobs said. “‘Skin in the game’ is the tagline we use in many of our discussions. Because we buy, sell and own that inventory, we are an integrated partner that simply can’t go away overnight, and that allows us to be very key into an extension of our partner’s business.”
Neato allows brands to continue doing what they do well, as the increasingly growing demands of e-commerce may be out of their skill set, talent and investment.
“They just get the ability to service a really tough marketplace like Amazon, without the noise and challenges that change every single day,” Jacobs said. “And operating leverage is a real thing, and we hear a lot from our brands, how challenging it is to do by themselves. But, as a whole, we do things extremely well all together.”
Neato has now expanded its footprint in Las Vegas, following a nearly $25 million investment by Advantage Capital through the Nevada New Market Jobs Act, which according to the state of Nevada’s website is meant to attract private investment and provide low-cost capital to small businesses located in “economically distressed parts of the state.”
Neato’s approximately 50,000-square-foot warehouse near the Harry Reid International Airport began functioning earlier this year and now functions as the company’s headquarters and hub, Connelly said.
A new office on Pilot Road, another nearly 10,000 square feet of space, houses the majority of its Las Vegas-based employees. Of Neato’s more than 100 employees, 65% are in Las Vegas, he said.
“We try to find as much local talent as we possibly can,” Connelly said. “We are a Las Vegas-hiring company first. … We wouldn’t be here without the talent that has been here in Las Vegas. We started in Las Vegas with six people, and we’re now at least 60 or 70 here in the city.”
A Neato operation center in Chicago will also hopefully be up and running by the end of the year, Connelly said, expanding the company’s warehouse space even further.
The warehouses in Las Vegas and Chicago are “ins and outs” facilities, Connelly said, meaning truckloads of inventory come in, are processed and go out to the appropriate marketplace. They’re the site for what he called “e-commerce prep,” including bundling and multipackaging and marketplace-specific preparation for platforms like Amazon, Walmart and TikTok.
“This new separated office headquarters and flagship warehouse allows us to really invest into our people and our brands in different ways than we did in the past, given just (the) size and scale and scope of what those facilities now offer,” Jacobs said.
Las Vegas has the fulfillment and operations infrastructure necessary to support a business like Neato, Connelly said, and the local government has done well diversifying the economy beyond hospitality alone.
Southern Nevada is also attractive because of the number of conventions it draws, he said, and the fact that it’s the perfect place to host clients of the company.
“I’m a big, big believer that logos don’t work with logos, even though, when you look at a website, that’s what you see,” Connelly said. “You see somebody’s logo on a website like, ‘We work with these 10 brands.’ It’s like people work with people, and you have to want to work with those people. … We’re probably the No. 1 destination for if you have to come visit us twice a year.”
Nevada is an extremely business-friendly state for entrepreneurship, Jacobs said, with a unique talent pool and support from the top-down. Neato has partnered with organizations like the Las Vegas Global Economic Alliance and others, he said.
“We’ve just found great partnership in a very welcoming state,” said Jacobs, who originally moved to Las Vegas to attend UNLV. “And I think that’s allowed us to have a lot of the success we’ve had, because the city is very interested in helping us succeed.”
Neato has evolved a lot in the eight years since its conception, and Connelly said one indicator of the company’s growth seems to be the size of the brands it partners with. Its largest brand is currently illy, one of Europe’s leading coffee companies.
The Advantage Capital growth round will support, in addition to the facilities in Las Vegas and Chicago, the expansion of Neato’s AI agent stack and its growth into other marketplaces, a news release said.
“Moving forward, we’re hoping to double revenue this year, post the investment,” Connelly said. “That’s the ultimate goal, and then who knows after that, right? We’ll find out where this is going to go.”
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