Tag: Shopify

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How to use Amazon and advertising to build a D2C startup

Matt Altman & Tyler Elliston Contributor
Matt Altman runs the Amazon practice area for VMG Ignite, an eCommerce consultancy that helps early to mid stage CPG companies achieve growth. Tyler Elliston is the founder of VMG Ignite. Clients include Sun Bum, Perfect Snacks, Aloha, Pill Club, Solid Gold, and many more.

Entrepreneurship in consumer packaged goods (CPG) is being democratized. Every step of the value channel has been compressed and made more affordable (and thereby accessible).

At VMG Ignite, we have worked with dozens of direct-to-consumer startups trying to both find product-market fit and achieve scale through Amazon and online advertising.

This article focuses on customer acquisition, particularly Amazon and online advertising, for the direct-to-consumer (D2C) CPG venture. Selling on Amazon, specifically third-party (3P), has become an increasingly important component of the D2C playbook. About 46% of product searches start on Amazon, which makes it a compelling source of sales even for early-stage ventures.

Table of contents

How to find product-market fit 

People say that ideas are a dime a dozen. They aren’t valuable. But finding product-market fit? Now, that’s hard. The gap between an unexecuted idea and proven product-market fit can seem vast. Yet it’s a critical first step because, ultimately, marketing amplifies your product and value proposition.

If they aren’t compelling, marketing will fail. If they’re compelling, even mediocre marketing can often be successful. So start with a great product that people love.

How do you create a great product, you ask? A/B test your product configuration like you A/B test your landing page, copy, and design. Your product is a variable, not a constant. Build, ship, get feedback. Build, ship, get feedback. Turn detractors into your customer panel for testing.

Early-stage D2C companies typically get their first customers through three channels:

  1. Begging your friends and family to buy and promote your product.
  2. List it on Amazon as a 3P seller. Figure out the platform and start selling!
  3. Advertise on Facebook. Start with a daily budget of 10x your price point to get started and start tinkering with creative, audiences, and settings to minimize cost per order.

The companies that succeed are often the ones that iterate the fastest. In his book Creative Confidence, IDEO founder David Kelley and his co-author (and brother) Tom relay a story of a pottery class that was split into two groups.

The first group was told they would each be graded on the single best piece of pottery they each produced. The second group was told they would each be graded based on the sheer volume of pottery they produced.

Naturally, the first group labored to craft the perfect piece while the second group churned through pottery with reckless abandon. Perhaps not so intuitive, at the end of the class, all the best pottery came from the second group! Iteration was a more effective driver of quality than intentionality.

Don’t know how to manage Amazon or Facebook? Here are some best practices:

How to get started with Amazon

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Embedded finance, or why fintech mega VC rounds have become so common

Another day, another monster fintech venture round.

This morning, it was personalized banking app MoneyLion, which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this year. Brex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripe, savings and investment platform Raisin, traveler lender Uplift, mortgage backers Blend and Better, and savings depositor Acorns have also raised massive new rounds this year.

That’s all on top of 2018’s record-breaking year for fintech, which saw $52.5 billion of investment flow into the space according to KPMG’s estimate.

What’s with all the money flowing into the fintech world? And what does all this investment portend not only for the industry and other potential entrants, but also for customers of financial services? The answer is that this new wave of fintech startups has figured out embedded finance, and that it is changing the entire economics of disruptive financial services.

First, this isn’t (really) about blockchain

Let’s get one thing out of the way right away, for whenever the topic of financial services and digital disruption come together, some blatherer always yells blockchain from the proverbial back row (often with a bit of foaming at the mouth I might add).

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India’s Haptik acquires Los Angeles startup Convrg in international expansion push

Mumbai-based Haptik, which operates a conversational AI platform, has already won several high profile clients in India. Now the five-year-old firm, with newly found significant capital in the bank, is attempting to replicate its success in international markets.

On Tuesday, Haptik announced it has acquired Convrg, a Los Angeles-based startup that develops chatbots, to serve customers in North America. The acquisition is part of Haptik’s broader strategy to both expand its technology expertise and team and business overseas, Aakrit Vaish, cofounder and CEO of Haptik, told TechCrunch in an interview.

Founded in 2017, Convrg has made a name for itself by developing several popular chatbots and voice products. Its clients today include Reddit, The GRAMMYs, Aveda, Shopify, Sephora, and Proactiv. The startup had raised only a “small seed round” prior to today’s announcement, Vaish said, declining to reveal any financial details.

Convrg recently hired Timothy Carey, an industry veteran, who now serves as Haptik’s General Manager for the region. Convrg’s cofounders — Audrey Wu, Liz Snower and Amit Gupta — will report to Carey, who until recently held a similar position at IPSoft, another AI-driven firm.

Haptik, which sold majority stake to telecom operator Reliance Jio in a $100 million deal earlier this year, currently offers a chatbot platform. Many players including Coca Cola, Oyo, Samsung, Tata Group, and KFC use Haptik’s chatbots in their customer support services.

The firm has about 90% of its clients in India today, something it intends to change in the coming quarters. “60% of all software is bought in the U.S., so for us that market is critically important,” he said.

“We have done some business in the U.S. in the past, but now we really want to focus on expanding there,” he said. “For that, we need team and dedicated operation there. You can’t expand in the U.S. sitting in India, or on a plane.”

Vaish is already in talks with a handful of other startups and is open to more acquisitions, he said.

Other than that, the firm is currently exploring and developing voice bots as it expands its offerings. Voice bots would help it find more clients, such as those who handle customer services through phones, for instance.

When asked about what he thinks of major giants such as Google and Amazon also expanding into these fields, Vaish said these companies are largely making solutions for users — and not businesses. Besides, the chatbot space is so nascent currently that any effort from any giant helps educate the market, he said.

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How startups can make influencer marketing work on a budget

Ishveen Anand Contributor
Ishveen is the CEO+Founder of OpenSponsorship.com, a marketplace she founded after her experiences being a successful sports agent, to bring transparency and affordability to the sports marketing industry, namely between brands and athletes.

Influencer Marketing has ballooned into a $25 billion industry, yet many marketing managers are left confused by this, because for them, it’s really not delivering the results to justify the hype.

Here’s the thing. Influencer marketing is not a one-size-fits-all marketing strategy such as Facebook or Adwords advertising. Each company needs to take a closer look at what influencer marketing can achieve, where it falls down, and how you can do a better job with this latest form of marketing that delivers, on average, $6.50 of value for every $1 spent.

The analysis below relies on clients and case studies from our experience at OpenSponsorship.com (my company) which is the largest marketplace connecting brands with over 5500 professional athletes for marketing campaigns.

With over 3500 deals to date across clients as big as Vitamin Shoppe and Anheuser Busch, established players like Jabra and Project Repat, and new startups like Brazyn and Gutzy, we have seen a lot go wrong (who knew you could disable comments on a post!) and a lot go right (an unknown skiier’s $100 Instagram, posted right before the Winter Olympics, going viral after he won the Silver)!!

Thanks to our in-house data experts, integrations with IBM Watson, robust ROI tracking tools and 10 years+ of experience combining the learnings of sports sponsorship with influencer marketing, we have gained extensive insights into campaign strategies.

We will share our learnings about what criteria to consider when choosing the best influencer to work with, figuring out how much to pay the influencer, what rights to ask for in the deal, what terms and conditions are reasonable and how to track ROI for the deal.

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Table of Contents

Who is the right influencer? 

At OpenSponsorship, we match brands with athletes for marketing campaigns, with a view to further expand into other areas of media and entertainment such as music artists, comedians, actors. Even within the athlete world, there is the concept of micro-influencers such as yogis, triathletes, marathon runners, all the way to macro-influencers such as NFL Quarterbacks, starting NBA point guards and everything in between.

Our 3 recommendations for picking the right influencers are:

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Fellow raises $6.5M to help make managers better at leading teams and people

Managing people is perhaps the most challenging thing most people will have to learn in the course of their professional lives – especially because there’s no one ‘right’ way to do it. But Ottawa-based startup Fellow is hoping to ease the learning curve for new managers, and improve and reinforce the habits of experienced ones with their new people management platform software.

Fellow has raised $6.5 million in seed funding, from investors including Inovia Capital, Felicia Ventures, Garage Capital and a number of angels. The funding announcement comes alongside the announcement of their first customers, including Shopify (disclosure: I worked at Shopify when Fellow was implemented and was an early tester of this product, which is why I can can actually speak to how it works for users).

The Fellow platform is essentially a way to help team leads interact with their reports, and vice versa. It’s a feedback tool that you can use to collect insight on your team from across the company; it includes meeting supplemental suggestions and templates for one-on-ones, and even provides helpful suggestions like recommending you have a one-on-one when you haven’t in a while; and it all lives in the cloud, with integrations for other key workplace software like Slack that help it integrate with your existing flow.

Fellow co-founder and CEO Aydin Mirzaee and his co-founding team have previous experience building companies: They founded Fluidware, a survey software company, in 2008 and then sold it to SurveyMonkey in 2014. In growing the team to over 100 people, Mirzaee says they realized where there were gaps, both in his leadership team’s knowledge and in available solutions on the market.

“Starting the last company, we were in our early 20s, and like the way that we used to learn different practices was by using software, like if you use the Salesforce, and you know nothing about sales, you’ll learn some things about sales,” Mirzaee told me in an interview. “If you don’t know about marketing, use Marketo, and you’ll learn some things about marketing. And you know, from our perspective, as soon as we started actually having some traction and customers and then hired some people, we just got thrown into it. So it was ‘Okay, now, I guess we’re managers.’ And then eventually we became managers of managers.”

Fellow Team Photo 2019

Mirzaee and his team then wondered why a tool like Salesforce or Marketo didn’t exist for management. “Why is it that when you get promoted to become a manager, there isn’t an equivalent tool to help you with that?” he said.

Concept in hand, Fellow set out to build its software, and what it came up with is a smartly designed, user-friendly platform that is accessible to anyone regardless of technical expertise or experience with management practice and training. I can attest to this first-hand, since I was a first-time manager using Fellow to lead a team during my time at Shopify – part of the beta testing process that helped develop the product into something that’s ready for broader release. I was not alone in my relative lack of management knowledge, Mirzaee said, and that’s part of why they saw a clear need for this product.

“The more we did research, the more we figured out that obviously, managers are really important,” he explained. “70% of customer engagements are due to managers, for instance. And when people leave companies, they tend to leave the manager, not the company. The more we dug into it the more it was clear that there truly was this management problem –  management crisis almost, and that nobody really had built a great tool for managers and their teams like.”

Fellow’s tool is flexible enough to work with specific management methodologies like setting SMART goals or OKRs for team members, and managers can use pre-set templates or build their own for things like setting meeting talking points, or gathering feedback from the colleagues of their reports.

Right now, Fellow is live with a number of clients including Shoify, Vidyard, Tulip, North and more, and it’s adding new clients who sign up on a case-by-case basis, but increasing the pace at which it onboard new customers. Mirzaee explained that it hopes to open sign ups entirely later this year.

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Shopify Ping adds support for Apple Business Chat and Apple Pay

Last year Shopify announced Shopify Ping, a free unified messaging platform for merchants to communicate directly with customers in a chat context. Today, it announced it’s adding support for Apple Business Chat to Shopify Ping.

The real benefit to this is that users can not only use Apple’s business chat product to communicate with customers, the customers can pay directly with Apple Pay right inside the chat client, reducing friction, and making it more likely the person will complete his or her purchase.

As the company wrote in a blog post announcing the new integration, this approach is likely to increase sales. “We know that customers who engage in a conversation with a brand are nearly three times as likely to complete a purchase. Live chat also creates a personal connection between a brand and the customer which builds trust and makes them more likely to come back,” the company wrote.

With Shopify Ping, merchants can manage all of the Apple Business Chat interactions together with its other chat traffic in a single place. This means that small merchants have access to the same rich set of customer interaction tools as some of the biggest merchants on the planet, enabling them to provide a more sophisticated level of service, something that has often been out of reach for smaller businesses without deep pockets.

Apple Business Chat was released last year to provide businesses with a way to use iMessage in a business context. The company has been expanding the product over the last year, and today’s announcement puts it in reach of Shopify’s vast user base.

Shopify announces free customer communication and targeting tool

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Google’s Cloud outage is resolved, but it reveals the holes in cloud computing’s atmosphere

Five hours after Google publicly announced that it was working to resolve an outage in its Cloud computing network that had taken out a large chunk of Google services as well as Shopify, Snap, Discord and other popular apps, the problem seems to be resolved.

The outage hit everything from the ability to control the temperature in people’s homes and apartments through Google’s Nest to shopping on any service powered by Shopify, to Snapchat and Discord’s social networks.

“The network congestion issue in eastern USA, affecting Google Cloud, G Suite, and YouTube has been resolved for all affected users as of 4:00pm US/Pacific,” the company said in a statement.

“We will conduct an internal investigation of this issue and make appropriate improvements to our systems to help prevent or minimize future recurrence. We will provide a detailed report of this incident once we have completed our internal investigation. This detailed report will contain information regarding SLA credits.”

Even though the networking issue has been resolved, the fact that problems with Google’s cloud services could cause outages for several of the world’s most popular applications underscores how thin cloud coverage can be for modern computing architectures.

Most companies have put their entire backend in the hands of one company and while the benefits outweigh the risks most of the time, it’s worthwhile to at least think about contingency planning.

Modern cloud architectures have slashed the cost of creating new technology businesses, but it also means that companies are typically dependent on one service for their ability to operate.

As the world becomes more networked (especially as internet-enabled devices become more prevalent in the home), it’s going to be more important for companies to have a back-up plan in place in case these services go down.

In short, it’s fine to have a dependency — like storage or computing in the cloud — just as long as companies have a way to account for their dependents.

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Shopify quietly acquired Handshake, an e-commerce platform for B2B wholesale purchasing

E-commerce platform Shopify has quietly made an acquisition to continue its expansion of the services and products that merchants can sell and purchase through its platform. It has acquired Handshake, a New York startup offers a commerce platform for businesses that sell wholesale goods.

Shopify has confirmed the deal in a short statement:

“Handshake is now a part of Shopify. We consider acquisitions in the normal course of business as we focus on making commerce better for everyone.” It hasn’t disclosed the value but a source tells us it was under $100 million.

We also received an emailed tip that noted that the acquisition was announced to staff earlier this month, and that the team, is operating as part of Shopify’s extended service tier, Shopify Plus, headed by David Moellenkamp. Indeed, Handshake’s profile on LinkedIn now indicates that it was acquired by Shopify, and Glen Coates, who had been the founder and CEO of Handshake, is now the director of product at Shopify Plus.

Handshake had raised about $23.5 million and was valued in its last round (in 2016 — note that it’s not this Handshake) at just under $54 million, according to PitchBook. Investors included Boldstart Ventures, Emergence Capital, SoftTech VC, Point Nine and others. (We’re trying to find out more on the price.)

The opportunity that Handshake had identified, and now Shopify is targeting, is the end of the e-commerce market for brands and other merchants selling items wholesale, potentially alongside consumer-focused retail efforts.

This is big business: a recent report found that B2B e-commerce sales in the U.S. alone passed $1 trillion for the first time in 2018. As with consumer-focused sales, platforms like Handshakes offer merchants the ability to handle these sales directly, rather than handing off the sales to third-party marketplaces.

Handshake’s customers include the likes of Bugaboo, Williams Sonoma and Roland.

This deal comes at an interesting time for Shopify.

Some weeks ago, we reported on how Mailchimp and Shopify had stopped working together, only to find out days later that Mailchimp had actually also quietly acquired an e-commerce startup to start to build out more purchasing tools for its customers. In that regard, this latest acquisition by Shopify underscores how it’s also growing and expanding its scope — albeit in a way that puts it into closer competition with the likes of Alibaba and Amazon, which themselves have carved out a strong place as B2B marketplaces.

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Facebook pivots to what it wishes it was

In Facebook’s dreams, it’s a clean and private place. People spend their time having thoughtful discussions in “meaningful” Groups, planning offline meetups with Events, or laughing together in a Facebook Watch party.

In reality, Facebook is a cluttered mess of features that seem to constantly leak user data. People waste their time viewing inane News Feed posts from “friends” they never talk to, enviously stalking through photos of peers, or chowing on click-bait articles and viral videos in isolation.

That’s why Facebook is rolling out what could be called an “aspirational redesign” known as FB5. Rather than polishing what Facebook was, it tries to spotlight what it wants to be. “This is the biggest change we’ve made to the Facebook app and site in five years” CEO Mark Zuckerberg said to open Facebook’s F8 conference yesterday.

 

The New Facebook

Most noticibly, that starts with sucking much of the blue out of the Facebook interface to making it look sparse and calming — despite a More button that unveils the social network’s bloat into dozens of rarely-used features. A new logo features a brighter blue bubble around Facebook’s distinctive white f, which attempts to but a more uplifting spin on a bruised brand.

Functionally, FB5 means placing Groups near the center of a freshly tabbed interface for the both Facebook’s website and app, and putting suggestions for new ones to join across the service. “Everywhere there are friends, there should be Groups” says the head of the Facebook app Fidji Simo. Groups already has 1 billion monthly users, so Facebook is following the behavior pattern and doubling down. But Facebook’s goal is not only to have 2.38 billion people using the feature — the same number as use its whole app — but to get them all into meaningful Groups that emblemize their identity. 400 million already are. And now Groups for specific interests like gaming or health support will get special features, and power users will get a dashboard of updates across all their communities.

Groups will be flanked by Marketplace, perhaps the Facebook feature with the most latent potential. It’s a rapidly emerging use case Facebook wants to fuel. Zuckerberg took Craigslist, added real identity to thwart bad behavior, and now is bolting it to the navigation bar of the most-used app on earth. The result is a place where it’s easy to put things up for sale and get tons of viewers. I once sold a couch on Marketplace in 20 minutes. Now sellers can take payments directly in the app instead of with cash or Venmo, and they can offer to ship items anywhere at the buyer’s expense. By following Zuckerberg’s mandate that 2019 focus on commerce, Facebook has become a viable Shopify competitor.

If Groups is what’s already working about Facebook’s future, Watch is the opposite. It’s a product designed to capture the video viewing bonanza Facebook observes on Netfli and YouTube. But without tentpole content like a “Game Of Thrones” or “Stranger Things”, it’s failed to impact the the cutlural zeitgeist. The closest thing it has to must-see video is Buffy The Vampire Slayer re-runs and a docuseries on NBA star Steph Curry. Facebook claims 75 million people now Watch for at least one minute per day though those 60 seconds don’t have to be  sequential. That’s still just 4 percent of its users. And a Diffusion study found 50 percent of adult US Facebook users had never even heard of Watch. Sticking it front and center demonstrates Facebook commitment to making Watch a hit even if it has to cram it down our throats.

Not The Old Facebook

The products of the past got little love on stage at F8. Nothing new for News Feed, Facebook’s mint but also the source of its misinformation woes. In the age of Snapchat and Zuckerberg’s newfound insistence on ephemerality to prevent embarassment, the Timeline profile chronicling your whole Facebook life got nary a mention. And Pages for businesses that were the center of its monetization strategy years ago didn’t find space in the keynote, similar to how they’ve been butted out of the News Feed by competition and Facebook’s philosophical shift from public content to friends and family.

 

The one thing we heard a lot about but didn’t actually see much of was privacy. Zuckerberg started the conference declaring “The future is private!” He spoke about how Facebook plans to make its messaging apps encrypted, how it wants to be a living room rather than just a townhall, and how it’s following the shift in user behavior away from broadcasting. But we didn’t see any new privacy protections for the developer platform, a replacement for its Chief Security Officer that’s been vacant for nine months, or the Clear History feature Zuckerberg announced last year.

“I get that a lot of people aren’t sure that we’re serious about this. I know that we don’t exactly have the strongest reputation on privacy right now, to put it lightly” Zuckerberg joked without seeming to generate a single laugh. Combined with having little to show to enhance privacy, making fun of such a dire situation doesn’t instill much confidence. When Zuckerberg does take things seriously, it quickly manifests itself in the product like with Facebook’s 2012 shift to mobile, or in the company like with 2018’s doubling of security headcount. He knew mobile and content moderation failures could kill his network. But does someone who told Time magazine in 2010 that “What people want isn’t complete privacy” truly see a loose stance on privacy as an existential threat?

Interoperable, encrypted messaging will boost privacy, but it’s also just good business logic given Zuckerberg’s intention to own chat — the heart of your phone. Facebook’s creepiness stems from it sucking in data to power ad targeting. Nothing new was announced to address that. Despite his words, perhaps Zuckerberg doesn’t aspire to make Facebook as private as he aspired to make it mobile and secure. 

Wired reported that Zuckerberg authored a strategy book given to all employees ahead of the IPO that noted “If we don’t create the thing that kills Facebook, someone else will.” But F8 offered a new interpretation. Maybe given the lack of direct competitors in its league, and the absence of a mass exodus over its constant privacy scandals, it was the outdated product itself that was killing Facebook. The permanent Facebook. The all-you-do-is-scroll Facebook. The bored-of-my-friends Facebook. Users were being neglected rather than pushed or stolen. By ignoring the past and emphasizing the products it aspires to have dominate tomorrow — Groups, Marketplace, Watch — Facebook can start to unchain itself from the toxic brand poisoning its potential.

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MailChimp’s Ben Chestnut on bootstrapping a startup to $700M in revenue

The well-known tech startup routine of coming up with an idea, raising money from VCs in increasing rounds as valuations continue to rise, and then eventually going public or getting acquired has been around for as long as the myth of Silicon Valley itself. But the evolution of MailChimp — a notable, bootstrapped outlier out of Atlanta, Georgia, that provides email and other marketing services to small businesses — tells a very different story of tech startup success.

As the company closes in on $700 million in annual revenues for 2019, it has no intention of letting up, or selling out: No outside funding, no plans for an IPO, and no to all the companies that have tried to acquire it. As it has grown, it has been profitable from day one.

This week, the company is unveiling what is probably its biggest product update since first starting to sell email marketing services 20 years ago: It’s launching a new marketing platform that features social media management, ad retargeting, AI-based business intelligence, domain sales, web development templates and more.

I took the opportunity to speak with its co-founder and CEO, Ben Chestnut — who started Mailchimp as a side project with two friends, Mark Armstrong and Dan Kurzius, in the trough of the first dot-com bust — on Mailchimp’s origins and plans for what comes next. The startup’s story is a firm example of how there is definitely more than one route to success in tech.

Ingrid Lunden: You’re launching a new marketing platform today, but I want to walk back a little first. This isn’t your first move away from email. We discovered back in March that you quietly acquired a Canadian e-commerce startup, LemonStand, just as you were parting ways with Shopify.

Ben Chestnut: We wanted to have a tool to help small business marketers do their initial selling. The focus is not multiple products. Just one. We’re not interested in setting up full-blown e-commerce carts. This is about helping companies sell one product in an Instagram ad with a buy button, and we felt that the people at LemonStand could help us with that.