April 2, 2014, 10:56 AM

E-retail software seller Speed Commerce ditches its distribution business

The software provider is divesting its legacy software and consumer electronics distribution business in order to focus on e-commerce technology development. It had been selling in retail through its Navarre Corp. segment since 2012.

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Speed Commerce, a provider of e-commerce software for web sites, order management, fulfillment, customer contact centers and web marketing, will divest its retail distribution business in order to focus completely on technology development and support, it announced this week.

In the first nine months of fiscal 2014, net sales in the distribution segment were down by 7% year over year, while e-commerce services revenue was up by more than 150%, the company says.

“This planned divestiture is consistent with our goal of leveraging the company’s competitive advantages and superior customer solutions in the fast-growing e-commerce services sector,” says president and CEO Richard Willis. “It further allows us to substantially improve our margin structure, reduce overhead associated with the retail distribution business and align the entire organization around a common vision and purpose.”

Speed Commerce had been distributing software, consumer electronics and accessories through third-party resellers, including Symantec Corp. and Kaspersky Lab Inc., as a legacy business from its Navarre Corp. division. Navarre merged with the software development company Speed FC Inc. in 2012 and the new company renamed itself Speed Commerce.

The distribution segment has also been marketing and selling software from the vendor’s proprietary Encore line of products directly to consumers, retailers and distributors. Those products are mainly in the categories of print, personal productivity, education, family entertainment, and home and landscape architectural design software.

In the second quarter of fiscal 2014, net sales for Speed Commerce’s distribution business reached $90.4 million, a 6.6% decline from $96.8 million in Q2 2013, the company reports. Net sales for the entire business in the same period, meanwhile, increased 14.3% to $119.0 million from $104.1 million in Q2 2013. “This $14.9 million increase in net sales was primarily due to our increased business in e-commerce and fulfillment services segment of $21.3 million,” the company reports in its latest filing with the Securities and Exchange Commission.

As well as using the funds to build out its e-commerce technology and services, Speed Commerce says it is planning an unspecified acquisition in early 2015.

Speed Commerce is No. 5 among top fulfillment vendors in the Internet Retailer Top Tech 2014, which ranks vendors by the combined web sales of their e-retailer clients. Three retailers in the Top 500 and four in the Second 500 report using Speed Commerce software for fulfillment. 

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