Demand Curve: 7 ad types that increase click-through rates

Stewart Hillhouse Contributor

Stewart Hillhouse writes actionable growth marketing insights as senior content lead at Demand Curve. By night, he interviews marketers and creatives on his podcast, Top Of Mind. Before getting into marketing, Stewart was a semi-professional lumberjack. He also writes at stewarthillhouse.com.

We’ve spent millions of dollars running ads for brands like Outschool, Imperfect Produce and Microsoft. At Demand Curve, we’ve worked with over 500 startups, meticulously documenting growth tactics for all growth channels. This post also incorporates what we’ve learned from our agency, Bell Curve.

Here are seven ad types that have proven to increase click-through rates (CTR), with examples of each. Clone them to test in your own social ad campaigns.

Address common complaints and questions directly in your ads, as they will help eliminate objections upfront and encourage clicking to learn more.

Customer reactions

If you’re selling a consumer product, it’s likely that some of your customers have posted product reviews, unboxings or recommendation videos on their social media accounts. You can use your customers’ user-generated videos in your social ads — with permission.

Search through Twitter, Instagram and Facebook for posts that mention your product. Reach out to the customer and ask them if you can use their content in an ad campaign, and subsequently, compile the most positive reactions into a video ad.

This works well because dramatic faces are attention magnets. Make sure the thumbnail photo shows a strong emotional image. People will click because they can’t help but want to see what provoked the emotion. User-generated reaction videos also highlight your products’ “Moment of Wow.” If users care enough about your product to make a positive reaction video, their energy is contagious. Your ad audience will connect your product with a strong positive emotion.

Customer reactions make for great ads. Image Credits: Demand Curve

You versus the competition

Comparison ads anchor your product against something your audience already knows. This works well for both ads and the landing page your ad will lead to when clicked on. Try positioning your strongest value proposition — the most valuable promise you’re making to your customer — against your generic competitors.

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ServiceTitan acquires Aspire to move into landscaping, raises $200M at a $9.5B valuation

With a lot of us spending more time at home these days, home improvement has continued to be a booming market. Now, one of the big players in that space — ServiceTitan, which builds software that today is used by over 100,000 contractors to manage their work — is getting a little bigger.

The company — which also works with contractors that work on business properties — is acquiring Aspire Software, a software provider specifically for commercial landscapers. Along with that, ServiceTitan is announcing another $200 million in funding, a Series G that values that company at $9.5 billion.

The funding is being led by a new backer, Thoma Bravo, with other unnamed existing investors participating. (That list includes Sequoia, Tiger Global, Dragoneer, T. Rowe Price, Battery Ventures, Bessemer Venture Partners and ICONIQ Capital.)

Los Angeles-based ServiceTitan is not disclosing the financial terms of the deal, but it comes on the heels of the company raising $500 million only in March (when it was valued at $8.3 billion) — money that it earmarked at the time for acquisitions.

ServiceTitan also confirmed that this is its biggest acquisition yet, which roughly puts this deal in the hundreds of millions of dollars. Aspire will stay based in Missouri to build out the company further from there.

Aspire itself has some 50,000 users and sees $4 billion in annualized transactions on its platform across areas like landscaping, snow and ice management, and construction. It has never disclosed a valuation, nor how much money it has raised. The St Louis, MO company was previously backed by growth equity firm Mainsail Partners.

The deal underscores not just how much scale and opportunity remains in building technology to serve the home services space, but also what might be a consolidating trend within that, where a smaller number of companies are building technology for contractors and others in the space working across a number of adjacent and related verticals.

ServiceTitan is already bringing in annual recurring revenues of $250 million — a figure it shared in March and hasn’t updated — and as of that month, it had grown 50% over the preceding year. Part of that growth is based on simply more usage of and demand for its software, but part of it also has to do with the company expanding what it covers.

ServiceTitan got its start in residential plumbing, HVAC and electrical — the areas where the the two founders Ara Mahdessian (CEO) and Vahe Kuzoyan (president) went first because they knew them best from their own family businesses — but expanded into areas like garage door, chimney and other areas, as well as commercial property, on its own steam.

In other markets like landscaping or pest control, the expertise is more specialized, however, so it makes sense to make acquisitions in those areas to bring in that software, and teams to manage and build it, to further diversify the company. (ServicePro, a pest control company, was acquired in February.)

ServiceTitan said that its contractor customers have made more than $20 billion in transactions in the last year, but with the wider industry of contracting repair and maintenance services estimated to be worth $1 trillion, there is obviously a lot more potential. Hence expanding the range of areas covered in the industry.

“Both Aspire and ServiceTitan were born out of a desire to improve the lives of contractors who work tirelessly to serve their communities, but who have historically been underserved by technology,” said Mahdessian in a statement. “Mark and his team at Aspire have more than 500 years of combined experience in the commercial landscaping industry. Just like we built ServiceTitan to solve the problems our fathers faced, it’s that first-hand industry knowledge that has enabled Aspire to build the most powerful software in the industry with the highest customer satisfaction.”

Thoma Bravo has been making some prolific moves to take majority positions in a number of older tech companies in recent weeks (see QAD, Proofpoint and Talend for three examples among others). This, however, is a growth investment that is coming as many wonder when and if ServiceTitan might go public.

I’ll hopefully get a chance to ask Mahdessian about that later but in March he hinted that an IPO might come later this year or latest by the end of 2022, depending on market conditions. This Series G round implies perhaps stretching to the later part of that timeframe.

“As the fastest-growing software solution for the trades with an unrelenting focus on customer success, ServiceTitan is poised to extend its leadership and capture increased market share as the industry exceeds $1 trillion globally,” said Robert (Tre) Sayle, a partner at Thoma Bravo, in a statement. “ServiceTitan’s expansion into landscaping, a more than $100 billion market in the US alone, is an important step on its path to provide all home and commercial tradesmen with the tools they need to grow and manage a successful business. We are excited to partner with ServiceTitan and to leverage our software and operational expertise to accelerate the company’s growth and build upon its strong momentum.”

There are a number of companies playing in the wider home services market that speak to the opportunity ahead. Companies like Thumbtack are digging deeper into home management, providing a bridge to contractors to fill out the work needed (and also providing them with the software to do so), while companies like Jobber and BigChange, which have also raised recently, are also looking to build better software to manage individual and fleets of contractors and their fleets.

ServiceTitan, the biggest of the software players now, is likely going to continue making more deals to grow its own empire, but it added that it will also be using the funding to expand more organically, with investments into customer service, R&D, and to hire more people across the board.

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Consumer Spending Habits Post-Covid

Consumer shifts in how and where people buy products evolved significantly during the COVID-19 pandemic, creating new opportunities for retailers to use new channels, fulfilment strategies and payment options, according to the results of a new Consumer Spending survey and report out from BigCommerce and PayPal.

While a majority of the 3,000 consumers surveyed from the United States, United Kingdom and Australia said they still prefer in-person shopping, 62.5% of respondents reported doing most of their purchasing online. Close to half said they’re discovering new products on social media at least once a month, and 66.7% of respondents said they’ve made a purchase directly through their phone at least once in the past month.

The findings highlight a growing need for retailers to invest in an omnichannel sales and marketing strategy that provides convenient and consistent shopping experiences in-store, online and on social media.

As customers continue to move away from brick-and-mortar stores to digital commerce and increasingly use their phones to make purchases, an omnichannel strategy opens up the opportunity for retailers to reevaluate their sales and marketing strategies to ensure they’re meeting customers where they are the most likely to spend.

“For years, we’ve seen ecommerce continue to gain ground on traditional shopping. Online and digitized experiences have required retailers to quickly adapt to changing consumer shopping behaviours, and this was expedited in the pandemic. Now more than ever, consumers want to be in control of how they pay, and they have a desire for friction-free, seamless digital shopping experiences regardless of which channel they are shopping in.”
– Greg Lisiewski, vice president of Global Pay Later Products, PayPal

How people pay for purchases is also changing. More consumers are using digital wallets both in-store and online. Prior to March 2020, digital wallets were the preferred payment option for 28.3% of online shoppers globally, but that jumped to 35.2% after March 2020. The increase for using digital wallets in-store was even greater, going from 12.1% to 22.8%.

“The pandemic has accelerated profound shifts in consumer behaviour. While in-store remains popular, shoppers are demanding flexible and easy payment options such as digital wallets, and hybridised ways of buying, including Click & Collect.

This BigCommerce/PayPal survey data opens up rich opportunities for merchants. With in-depth understanding of customers’ preferred payment and purchase options, companies can better align their offerings to realise significant sales growth. Rather than looking at this as an either/or, with online and high-street vying for business, the answer is more nuanced. Shoppers are looking for a joined-up experience, across platforms, with their needs at the heard of it.”
– Jim Herbert, GM and VP EMEA, BigCommerce

More Consumer Spending Findings

• While 95.2% of respondents reported making at least one online purchase since March 2020, a slight majority across all regions reported a preference for in-person shopping. Despite that, 32.6% of U.S. respondents, 29.9% of UK respondents and 29.7% of Australian respondents said the convenience of online shopping still trumps any drawbacks, and new options like buy online, pick-up in store (BOPIS) are making it even more attractive.
• As a preferred way to buy, BOPIS has grown substantially since March 2020, with a 373% increase in the U.S., where BOPIS has been slower to catch on compared to other countries.
• The use of digital wallets rose in popularity during the pandemic with a global increase of 24.5% online and 88.7% for in-store purchases since March 2020. Respondents overwhelmingly commented that they’d prefer retailers make digital payment options more available.
• Mid-market merchants are increasingly adopting buy now, pay later (BNPL) solutions for their ecommerce stores with Australia leading the way. Forty-eight percent of Australian merchants, 20% of U.S. merchants and 11% of UK merchants currently offer BNPL options to customers.

  Consumers seem to fall into two main categories when it comes to using these types of solutions: power users and slow adopters. Globally, 46% say they’ve used a BNPL option at least once in the past three months. However, just 10.1% globally say they’ve used it five or more times in that same time period. In Australia, that number jumps to 15.5%. Fifty-four percent of global respondents — and 60.6% of U.S. respondents — have never used BNPL. Most said they were deterred by incurring fees or debt, or that they simply were not familiar with the option.

• Merchants would be wise to educate consumers on the benefits of buy now, pay later solutions, especially interest-free payment options. Young consumers especially are now accustomed to subscription-based payment models. BNPL financing options fall into this same category.
• Consumers are shopping mainly at large retailers or branded ecommerce stores. Of those polled, 58.2% said they shop at department stores, hypermarkets or big-box retailers, while 31.9% said they purchase directly from the ecommerce stores of their favourite name brands.

The full BigCommerce PayPal Consumer Spending Trends report is available from the BigCommerce website, where you can also learn more about BigCommerce’s built-in integration with PayPal.

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Shogun, a front end e-commerce page builder, nabs $67.5M as retailers look for alternatives to marketplaces

E-commerce marketplaces continue to play a major role in how consumers buy goods online and how retailers show off and sell goods to those consumers, accounting globally for 47% of all e-commerce sales. But today, one of the startups that has built technology to help retailers build and run more direct relationships — by way of zippy websites of their own — is announcing a big round of growth funding, a sign that the marketplace model is not for everyone, and that those catering to those retailers are finding traction.

Shogun — a platform to help e-commerce businesses of all sizes built on platforms like Shopify, Magento and BigCommerce easily design and run their own responsive storefronts — has raised $67.5 million. This Series C values Shogun at $575 million, a “nice markup” on its previous valuation, said Finbarr Taylor, the company’s co-founder and CEO, in an interview.

He added that the capital will be used both to continue building out its two main products — Page Builder, a drag-and-drop page builder for Shopify merchants; and Shogun Frontend, an end-to-end headless commerce solution — as well as business development, and to build out new tech, specifically in areas like first-party data and personalization.

“We want to help companies build a destination where they can control the experience,” he said, comparing it to the physical world and the difference between Nike shoes sold at the brand’s own store versus at a big retailer like Walmart. “In a Nike store you can design an experience. In Walmart you cannot.”

Led by Insight Partners — a new investor in the startup — it also included Initialized Capital, Accel and VMG Partners. Accel led Shogun’s previous round — a $35 million Series B — announced less than a year ago, in October 2020. The startup has now raised $114.5 million.

The hike in valuation, and the rapid succession of its fundraises, are two signs of how Shogun has been doing in the last eight months — a time when e-commerce has continued to perform strongly in the wake of the Covid-19 pandemic. Another is the company’s actual growth based on the idea of making front-end tools that used to be cost-prohibitive into something affordable for even the smallest merchant.

One of the selling points for Shogun up to now has been that pages and sites built on its platform run fast: a very key detail in the world of e-commerce where shopping cart abandonment is rife and often hinges on how long people have to wait for something to load.

Page Builder — the mass-market, drag-and-drop site builder for those creating sites on top of Shopify — is now used by around 20,000 business, Taylor said, ranging from small startups through to Fortune 500 companies, with customers including brands like K-Swiss, Leesa, Rumpl, BeardBrand, MVMT and Fila. He said that merchants collectively are seeing GMV (gross merchandise value, or total amount sold) in the “billions of dollars” through their sites.

(For a point of reference, Shogun told me it had 15,000 customers back in October; growing 5,000 in the last eight months is the same amount of growth as last year.)

Shogun’s newer product, Frontend, designed for mid-market to enterprise customers and positioned as a “headless” solution aimed more at web designers and others building more customized experiences, now has hundreds of customers and grew . “Apple’s site is beautiful, but it cost millions to make,” Taylor said. “We want anyone to be able to build those exceptional e-commerce experiences.” Frontend has grown 10x in the last year, Taylor said.

GMV across all of Shogun’s business grew by 255% in the last two years.

The rise of services like Shogun’s underscores a swing we have seen among e-commerce companies that are looking for a more autonomy and control in how they engage with customers. Sites like Amazon have long been seen as a way to tap into a large population of shoppers, as well as solid fulfillment and shipping infrastructure to store, package, distribute and deliver products.

There has even been a sharp rise in “roll-up” plays like Thrasio to help consolidate merchants on these platforms to leverage even better economies of scale on details like marketing, customer analytics and manufacturing, which marketplaces like Amazon do not (yet?) handle.

But none of that still replaces the ability to set your own destiny.

Now, the rise of services like Shopify, BigCommerce and Spryker (also backed by Insight Partners) to help manage the backend; Stripe, PayPal and others to manage payments; and others like ShipBob to manage the logistics, have made it increasingly less difficult to build and run your own online experience. That takes on a stronger priority as your business grows, but even for smaller merchants, the idea of controlling your own customer experience is a compelling one.

Services like Shogun (and others like fit into that latter trend, such as Squarespace or Wix but also others like Duda), which give merchants the tools to build their own e-commerce experiences as they would like them to look, are the front ends for that strategy. Opting to take the “headless” commerce approach, apparently, is an increasing trend.

And that individualism is also where Shogun plans to double down and build more tools for its users, Taylor said.

“It’s all about direct relationships with customers,” he said, pointing out that newer changes in privacy regulation and cookies going away mean retailers can no longer rely on third-party platforms as they used to. “It’s about first party relationships. The future is way more personalized shopping online.”

That vision is also what interested investors.

“Our investment in Shogun underscores the market’s desire to see headless commerce become merchant-focused,” said Matt Gatto, managing director at Insight Ventures, in a statement. “More brands want to be able to build headless progressive web apps in a low-code environment. Those on the forefront of e-commerce want to enable web teams to build truly unique, memorable shopping experiences. Shogun is well positioned to make flexible frontends accessible to brands in a whole new way, and we’re excited to be a partner in this journey.”

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How to engage Digital Doers on Pinterest

Digital Doers are self-described geeks—and proudly so. 3 in 4 of these tech-savvy individuals are men and have used Pinterest as a life planner for up to four years. They love to use the platform for discovery and not only do they feel inspired by what they find, 9 in 10 turn that inspiration into action. Whether it’s a new car or a new hairstyle, they see Pinterest as a place where they can embrace their individuality, not dance to the beat of somebody else’s drum..

Primary Interests

• Technology
• Holidays & Travel
• Sports

Secondary Interests

• Automotive
• Finance

The role of Pinterest to engage Digital Doers

A planning tool

Pinterest plays a role in researching upcoming purchases and shorter-term ideas as well as undertaking bigger projects in the long term.

Visualising aspirations

Pinterest helps The Digital Doers to organise their lives and visually represent their goals and ambitions, which makes them seem more within reach.

Freedom to explore

Pinterest is seen a place where they can enjoy and tap into their own interests, rather than feeling the pressure of ideas being pushed at them by other people.

Value to advertisers

7 out of 10 of Digital Dreamers believe that Pinterest is an inspirational platform and a place for discovery. 9 out of 10 take some form of post-platform action after using Pinterest.

Inspiration

71% feel that Pinterest is an inspirational platform.

Discovery

73% feel Pinterest is a place for discovery.

Action

85% take some form of post-platform action after using Pinterest.

How to engage Aesthetic Seekers on Pinterest

1. They love understanding how things work, so brands taking the creative approach of ‘Product as Hero’ can really cut through.
2. Communicating aspects of product composition and / or features appeals to their desire to get under the skin of things.
3. Instructional or ‘how to’ videos or content appeals to their practical nature, and helps them visualise the outcome of a task.

You can learn more about Pinterest Business here.

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UK subscription box market to be worth £1.8 billion by 2025

The UK subscription box market is set to be worth £1.8 billion by 2025, according to Royal Mail’s new UK Subscription Box Market report. The forecast comes as the subscription box market has seen its value more than double in size (135%) since Royal Mail’s last report on the industry, based on figures from 2017. Consumers spent almost £1.4 billion on subscription box purchases in 2020 and delivery providers made just under 88 million subscription box deliveries to subscribers across the UK.

Subscription box contents are now massively varied from (obviously!) alcohol and food, to razors and sock, to pet supplies. Many are curated boxes with a surprise selection of items each month while others such as recipe boxes can be customised by the recipient. Some subscriptions simply deliver the same items on a regular basis such Pets At Home flea and worm subscriptions. Naturally marketplaces are also keen to get in on the act with many offering regular purchase subscription options to ensure that you never run out of household essentials or your favourite treats.

The popularity of subscription boxes has soared during the COVID-19 pandemic, amid more general acceleration in online retail growth. During the pandemic, 55% of subscription box consumers stated that they signed up for a subscription box service because they wanted to treat themselves. For many, subscription box services helped to ease ‘lockdown blues’ as shoppers could look forward to regular deliveries.

Almost a third (30%) of shoppers are now signed up to at least one subscription box service. This is up from 27% in 2017. Almost three-quarters (74%) of subscription box shoppers are signed up to more than one subscription scheme while the number of subscribers signed up to four or more schemes has risen to 56% (up from 37% in 2017). This increase in the average number of subscription boxes consumers are signed up to is reflective of strong innovation in the market.

The subscription model has become increasingly popular because of its focus on personalisation, convenience and flexibility. Companies are becoming increasingly skilled at capturing feedback from customers to mould product contents to fit individual consumer preferences.

The appeal of subscription boxes continues to be highest among younger shoppers, with 66% of 18-24 shoppers stating that they are signed up to at least one subscription box. Further to this, under 45s subscription box shoppers are signed up to the most subscription plans, with those aged 35-44 signing up to an average of 4.6 subscription schemes. Improving appeal to older shoppers will be integral to further growth in the market over the coming years.

On average, shoppers said that had been signed up to subscription boxes for nine months; up from 5.6 months in Royal Mail’s previous report, as consumers are increasingly used to the subscription model.

Gifting appeal rises as many look to send thoughtful and regular presents to loved ones

UK consumers are increasingly seeking out alternative avenues to treat themselves and others during the pandemic. Between 2017 and 2020, spending on subscription boxes purchased as gifts for others increased by 121%. This segment of purchasing saw particular growth over 2020, driven by the greater difficulty in purchasing physical gifts, and the potential for subscription boxes to represent thoughtful gifts during lockdowns when many friends and family were apart. Almost 60% of shoppers who were surveyed said they had purchased a subscription box as a gift.

Subscription box services also gave customers the opportunity to ‘self-gift’ by trialing new products in categories such as health and beauty, at a time when physical browsing for non-essential categories was limited for large periods of the year. Elsewhere, demand from corporate firms for subscription services also rose as employers offered a ‘thank you’ to those who worked from home during the lockdown.

Reasons that shoppers signed up to subscription boxes themselves include: because they like the subscription model (24%), as a treat (23%), they were not able to visit physical stores due to COVID-19 (17%) and as a result of surplus income due to COVID-19 (15%).

More than a quarter (27%) of all subscription boxes are delivered through a letterbox making Royal Mail’s combined letter and parcel delivery network ideally suited to this business model.

“The subscription box market continues to grow very quickly and the pandemic has provided even more opportunities for businesses to explore new revenue streams or for entrepreneurs to put their ideas into practice. 2020 provided a huge boost to the market and accelerated demand and growth. At Royal Mail, we are perfectly placed to support subscription box businesses and their future growth, whatever stage their business is at.

With the UK’s largest “Feet on the Street” network of over 85,000 postmen and women, Royal Mail is playing a key role in keeping carbon emissions low. A large proportion of subscription items are sent in smaller boxes and so are ideally suited for low emission on-foot delivery by Royal Mail.”
– Nick Landon, Chief Commercial Officer, Royal Mail

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Brexit Disruption – 94% of Online Brands Lose EU Customers Since December

Brexit disruption has had a stark impact on Britain’s ecommerce economy, with 94% of UK online brands saying they have lost EU customers since the end of the transition period on the 31st of December 2020.

Ecommerce platform ChannelAdvisor and research firm CensusWide surveyed 304 Chief Marketing Officers working at UK brands that sell items online. ChannelAdvisor asked if these brands had lost business due to Brexit disruption, such as added complications around border delays and unexpected tax. The overwhelming majority said they had lost EU customers – with two thirds (66%) saying these complications had caused a significant drop in the number of EU customers.

UK’s Post-COVID Ecommerce Boom

While bricks and mortar retail shops may have faced harsh conditions due to COVID lockdowns, brands that sell online have flourished thanks to a surge in ecommerce. 92% of brand CMOs say their brand has attracted a significant number of new customers since the start of the COVID-19 crisis, while 82% say their brand is seeing higher sales than pre-COVID – and more than a quarter (27%) say their sales are significantly higher. Just 16% say sales are roughly the same.

93% of brand CMOs agree that they are more confident in their brand’s future now than before the COVID-19 crisis began in March 2020 – around a third (34%) strongly agree.

Brexit Disruption

Yet this bright future for UK ecommerce could be hindered by Brexit disruption. When asked about overall international sales, more than two thirds (68%) of brand CMOs say Brexit has caused a drop – one in five (22%) say Brexit has caused their international sales to fall significantly. Just 15% say Brexit has caused international sales to rise, while 17% say there has been no effect on sales.

The vast majority of brands say Brexit has caused issues in sending items to international shoppers on time. 73% of CMOs said Brexit has slowed how quickly their brand can deliver purchases to EU customers – a third (33%) say it has caused a significant slowdown in deliveries.

Despite this, brands are confident about overall global revenue growth in the coming year. 91% of CMOs expect international sales to increase over the next 12 months, with a third (33%) saying they expect international sales to rise significantly.

“UK brands are enjoying a phenomenal period of growth and will no doubt play an integral role in the country’s post-COVID recovery. However, the last few months of Brexit disruption have caused a significant headache for the vast majority of these firms, thanks to delays and complications at UK-EU customs. Brands rarely become ecommerce giants without strong international sales and finding a solution to this border disruption will benefit all sides. Leveraging expertise like a third-party logistics provider can overcome fulfilment challenges, or looking to new sources of demand could help plug the gap in demand. In the meantime, it’s inspiring to see that brands are enthused and confident about the coming year. After such a transformative time in the industry, I hope they continue to reap the rewards of ecommerce ”
– Vladi Shlesman, Managing Director, EMEA, ChannelAdvisor

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Shopify drops its App Store commissions to 0% on developers’ first million in revenue

Following similar moves by Apple, Google, and more recently Amazon, among others, e-commerce platform Shopify announced today it’s also lowering its cut of developer revenue across its app marketplace, the Shopify App Store, as well as the new Shopify Theme Store. The news was announced today alongside a host of other developer-related news and updates for the Shopify platform at the company’s Unite 2021 Conference, including updates to Checkout, APIs, developer tooling and frameworks, among other things.

Shopify says its app developer partners earned $233 million in 2020 alone, more than 2018 and 2019 combined — an increase that can likely be attributed, in part, to the COVID-19 pandemic and the rapid shift to e-commerce that resulted. Today, there are over 6,000 publicly available apps across the Shopify App Store, and on average, a merchant will use around six apps to run their business.

Now, Shopify says it will drop its commissions on app developer revenue to 0%, down from 20%, for developers who make less than $1 million annually on its platform. This benchmark will also reset annually, giving developers — and, particularly those on the cusp of $1 million — more earning potential. And when Shopify’s revenue share kicks in, it will now only be 15% of “marginal” revenue. That means developers will pay 15% only on revenue they make that’s over the $1 million mark.

The same business model will apply to Shopify’s Theme Store, which opens to developer submissions July 15.

As the two stores are separate entities, the $1 million revenue share metric applies to each store individually. The new business model will begin on August 1, 2021 and will be made available to developers who register by providing their account details in their partner dashboard.

Shopify says the more developer-friendly business model will mean a drop in company revenue, but says it doesn’t expect this impact “to be material” because it will encourage greater innovation and development.

The changes to Shopify’s App Store follow a shift in the broader app store market around developer commissions.

Last year, amid increased regulatory scrutiny over how it runs its App Store, Apple announced it would reduce the App Store commissions for smaller businesses under a new program where developers earning up to $1 million per year would only have to pay a 15% commission on in-app purchases. Google and Amazon have since followed suit, each with their own particular spin on the concept. For example, in Google’s case, the fee is 15% on the first million the developer earns. Amazon is still charging a higher percentage at 20%, but is tacking on AWS credits as a perk.

Apple and Google, in particular, hope these changes can help shield them from antitrust investigations over their alleged app store monopolies, while also giving developers a better reason to participate in their own slice of the app economy.

Outside of mobile, Microsoft this year agreed to match the 12% cut on game sales that Epic Games takes on its Windows Store, as a means of increasing the pressure on its rivals. With the larger update to the new Windows 11 Store, it will allow developers to use their own payment platforms, while keeping its commission at 15% on apps.

To date, much of the momentum in the market has been focused on lowering the cut of app and games sales. Shopify’s app platform is different — it’s about apps that are used to enhance an e-commerce business, like those that help with shipping and delivery, marketing, merchandising, store design, customer service and more. These are not consumer-facing apps, but they are still marketed in an app store environment.

While the changes to developers’ businesses is the big news today from Unite 2021, that’s not to diminish from the host of updates Shopify announced related to its larger platform.

Among the updates are: the debut of Online Store 2.0, a more flexible and customizable update to Shopify’s Liquid platform (its templating language), which Netflix was the first to test; investments in custom storefronts for faster response times; a new React framework for building custom storefronts called Hydrogen; a way to host Hydrogen storefronts on Shopify called Oxygen; support for more Metafields for products and product variants and custom content that’s built on top; speedier Spotify Checkout; Checkout Extensions (customizations built by developers); easier and more powerful Shopify Scripts; a Payments Platform for integrating third-party payment gateways into Checkout; updates to its Storefront API; and more.

The company today also shared a few more business metrics, noting, for instance, that last year over 450 million people checked out on Shopify, totaling $120 billion in gross merchandise volume. It said its Shopify partners — which include app developers, theme builders, designers, agencies and experts — earned $12.5 billion in revenue in 2020, up 84% year-over-year, and 4x the revenue of Shopify’s own platform.

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Forum Brands raises $27M Series A as crowded Amazon roll-up space continues to heat up

The number of startups acquiring e-commerce businesses, especially those operating on Amazon, to grow and scale is increasing as more people than ever are shopping online.

The latest such startup to raise capital is Forum Brands, which today announced it has raised $27 million in equity funding for its technology-driven e-commerce acquisition platform. 

Norwest Venture Partners led the round, which also included participation from existing backers NFX and Concrete Rose.

Brenton Howland, Ruben Amar and Alex Kopco founded New York-based Forum Brands last summer during the height of the COVID-19 pandemic. Its self-proclaimed goal was to use data to innovate through acquisition.

“We’re buying what we think are A+ high-growth e-commerce businesses that sell predominantly on Amazon and are looking to build a portfolio of standalone businesses that are category leaders, on and off Amazon,” Howland said. “A source of inspiration for us is that we saw how consumer goods and services changed fundamentally for what we think is going to be for decades and decades to come, accelerating the shift toward digital.”

Forum Brands founding team. Image Credits: Forum Brands

Forum’s technology employs “advanced” algorithms and over 60 million data points to populate brand information into a central platform in real time, instantly scoring brands and generating accurate financial metrics.

The M&A team also uses data to contact brand owners “in just three clicks.” But Forum says it already knows which brands meet its acquisition criteria before ever making contact with brand owners.

“The decision to acquire comes within 48 hours and once terms are agreed upon, entrepreneurs get paid in 30 days or less for their brand, with additional income benefits through post-acquisition partnerships,” according to the company.

Its apps leverage analytics to push recommendations to drive growth and financial performance for brands. Then, its multichannel approaches aimed at positioning the brands for “long-term category leadership.”

“We are using a lot of data science and machine learning techniques to build technology that allows us to eventually operate efficiently a large portfolio of digital brands at scale,” Kopco said.

The company is undeterred by the increasingly crowded space based on the belief that the market opportunity is so huge, there’s plenty of room for multiple players.

“We are very much in the day zero consolidation of the e-commerce space, and the market is very, very large,” Amar told TechCrunch. “And based on our data, 98% or 99% of all sellers are still operating independently. So, this is not a winner-takes-all market. There will be multiple winners, and we’ve built a strategy to be one of these winners.” 

Norwest Venture Partners’ Stew Campbell believes that the number of sellers who reach a point where they have trouble scaling either due to the lack of resources or time is only going to grow. And Forum Brands intends to capitalize on that.

“There’s a continued need for more liquidity options for the entrepreneurs behind many Amazon-first brands. Forum helps entrepreneurs recognize value, which can be significant too many,” he said. ”After acquisition, the Forum team drives operational efficiencies and scale to create better customer experiences for shoppers on Amazon.”

Campbell emphasizes that his firm was drawn to Forum Brands’ team, which the company also touts as a differentiator.

Co-founder and COO Kopco worked in a variety of product roles for several years at Amazon and Jon Derkits, Forum’s VP of brand growth, is also ex-Amazon. Overall, three-fourths of its operating team are former Amazonians. Co-CEO and co-founder Howland was an investor for two years at Cove Hill Partners and is a former McKinsey consultant. Prior to founding Forum, Co-CEO and co-founder Amar was a growth equity investor at TA Associates.

Campbell says his firm has seen many other models in this market, “but the Forum team blends long-term mindsets and focus on technology, while bringing operational and M&A expertise.”

If this all sounds familiar, it’s because TechCrunch also recently covered the raise of Acquco, which has a similar business model to that of Forum Brands and also involves former Amazon employees. In May, that startup raised $160 million in debt and equity to scale its business. Thrasio is another high-profile player in the space, and has raised $850 million in funding this year. Other startups that have recently attracted venture capital include Branded, which recently launched its own roll-up business on $150 million in funding, as well as Berlin Brands Group, SellerX, Heyday, Heroes and Perch. And, Valoreo, a Mexico City-based acquirer of e-commerce businesses, raised $50 million of equity and debt financing in a seed funding round announced in February.

Also, earlier this month, Moonshot Brands announced a $160 million debt and equity raise to “acquire high-performing Amazon third-party sellers and direct-to-consumer businesses on Shopify and WooCommerce with established brand equity.” That company says that since its founding in 2020, it has achieved a $30 million revenue run rate. Among its investors are Y Combinator, Joe Montana’s Liquid 2 Ventures and the founders of Hippo, Lambda School and Shift. 

Why Amazon should pay attention to Shein

Led by ex-Amazonians, Acquco raises $160M to buy and scale e-commerce businesses

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Half of retailers would back higher taxes for online retail

New research from Fourth reveals that around half of retailers would back higher taxes for online retail.

It seems that frustrations from trying to recoup 18 months’ worth of losses have caused retailers to push for government incentives that will level the playing field against giants such as Amazon, but are they looking at the businesses behind the giant?

According to the data 46% of retail leaders want higher taxes for online shopping to be introduced, 47% of retail leaders think the UK government should introduce extended shopping hours and 38% of retail leaders want government-funded vouchers to drive confidence back into the high street.

Higher taxes for online retail

It’s understandable that high street businesses are feeling a little left behind when compared to online businesses but would higher taxes hinder ecommerce giants themselves or would the sellers on these marketplaces take the hit? For many retailers, ecommerce came to the rescue in the midst of the pandemic, SMBs, in particular, began flocking to ecommerce channels to keep their own businesses afloat. If higher taxes were introduced who would really feel the effects?

Amazon, for example, has form for passing on tax, in August 2020 they instantly hiked fees by 2% passing on the Digital Services Tax to UK small businesses so what would stop this from happening again?

“Despite many leading brands now having an eCommerce presence, retail leaders are keen to see the government act swiftly to boost the physical retail industry ahead of restrictions lifting. While retail leaders are evolving the in-store experience to differentiate themselves and remain competitive, the future of retail is likely to look very different as a direct result of the pandemic with retailers fighting for talent and revenue. As part of the Build Back Better campaign the UK government needs to consider balancing the competitive advantage of online retail to give the British high street the chance to also thrive in a post-pandemic world.”
– Sebastien Sepierre, Managing Director – EMEA, Fourth

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10club raises $40 million seed funding to replicate Thrasio-model in India

10club, a one-year-old Indian startup that is building a Thrasio-like venture, said on Tuesday it has raised $40 million in what is one of the largest seed financing rounds in the South Asian market.

The round was co-led by Fireside Ventures (a prominent Indian investor in consumer and hardware tech space) and an unnamed global investor, the Indian startup said, without revealing the other firm’s name. HeyDay, PDS International, Class 5 Global, Secocha Ventures, and founders of hardware startup boAt (Aman Gupta and Sameer Mehta) also participated in the round.

10club acquires small brands that sell their products on e-commerce platforms and scales those businesses.

“Great businesses are growing on the backs of e-commerce giants like Amazon, Flipkart, Nykaa and more. They get their foundational years right but find it difficult to scale, and understand that competition is hard to curb.That’s where we step in, allowing you – the entrepreneurs – to enjoy an exit and benefit from years of hard work,” the startup describes on its LinkedIn page.

10club is one of a few dozen firms that is attempting to replicate what is popularly known as the Thrasio-model in India. Mensa Brands, a similar venture by former fashion e-commerce Myntra chief executive, recently raised $50 million in equity and debt. TechCrunch reported earlier this month that UpScale, another prominent player in this space, is in advanced talks with Germany’s Razor Group to raise capital.

New York-headquartered Thrasio, which has raised over $1.3 billion in equity and debt since December last year, had acquired or otherwise consolidated about 6,000 third party sellers on Amazon as of earlier this year.

Pity the folks at Thrasio that must be scratching their heads wondering why they're getting so many hits/mentions from India. https://t.co/N9r2JYWCyp

— Osborne Saldanha (@os7borne) June 16, 2021

“India and online-first brands are at the cusp of the next revolution. We, at Fireside, believe that both VC and acquisition driven model will co-exist going forward and can turbocharge the growth of early-stage brands. Together with the team at 10Club, we will be able to drive this change and enable e-commerce entrepreneurs to realize the full potential of their brands,” said Vinay Singh, Partner at Fireside Ventures, in a statement. As part of the deal, Singh is also joining 10club’s board.

Bhavna Suresh, co-founder of 10club and former chief executive of real-estate marketplace Lamudi, said the startup has already built its foundational pillars of the centralized platform and signed letters of intent worth $15 million from several firms and will deploy the fresh capital to operate the new businesses.

"Thrasio for India" has the opportunity to be a feature not a product
Insurgent, well funded consumer brands can expand mkt + sub-cats by acquiring emerging brands
Marketplaces needn't launch Pvt labels- they can invest in their partner brands instead
Co-founders of…

— Suchita (@suchitasalwan) June 23, 2021

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ShipBob nabs $200M at a $1B+ valuation to help e-commerce companies run logistics like Amazon’s

E-commerce saw a massive surge of activity and growth in 2020; and while we may hear a lot about how big companies like Amazon got even bigger during the Covid-19 pandemic, that rising tide also lifted a lot of smaller boats. And that, in turn, has had a big impact on the wider e-commerce ecosystem.

In the latest development, ShipBob, which has built an operation and tech platform that today works with some 5,000 e-commerce businesses to run shipping and logistics like their bigger rivals, has raised $200 million. ShipBob is already profitable, but it will be using this money to double down on newer areas of business: both in terms of expanding geographically, and technically, with more R&D around software, robotics, and autonomous systems.

“We constantly evaluate the needs of our merchants today, where we believe their needs will evolve in the future, and prioritize what can drive the most impact to help make them successful and differentiate from their competitors,” said Dhruv Saxena, the company’s CEO, in an interview.

Chicago-based ShipBob has confirmed that the round pushes its valuation to over $1 billion, doubling its valuation compared to its last round, a Series D that it closed in September 2020.

Bain Capital Ventures is leading this Series E round, with SoftBank, Menlo Ventures, Hyde Park Venture Partners, Hyde Park Angels and Silicon Valley Bank also participating. Several of these are repeat investors in the company.

ShipBob brings in $40M to help e-commerce businesses compete with Amazon

ShipBob’s business is part infrastructure play, and part tech play, in what Saxena, who co-founded the company with Divey Gulati, described to us as a “full-stack approach.” On the infrastructure front, the company operates warehouses across around 20 locations in the U.S., Canada, Europe and Australia (with plans to use some of this hefty round to expand that list to 10 more centers), from which its customers can store and distribute the goods that they are selling online.

The company then provides a merchant application to its customers to help track that inventory and to help liaise with the warehouses to select items to pick and send to fill orders.

Thirdly, it integrates with a number of shipping companies to then actually send out those orders to customers. Altogether it says it integrates with some 40 partners, ranging from the likes Walmart (to power two-day delivery) and Pachama (to carbon off-set deliveries), plus Amazon, Walmart, Shopify, BigCommerce, Wix, Square and Squarespace so that people setting up sites or selling through those platforms can use ShipBob to handle the orders once a customer has clicked on “buy.”

Fulfillment and logistics are not the most obvious “face” of e-commerce, but to companies that are selling items online (or indeed, offline) that need to be delivered to someone after purchasing, they can be a make or break part of the business model, nearly as important as having a good storefront that works quickly, gets people where they want to be, and offering them things they want to buy. In logistics, the many, various items that are calculated as part of that operation — setting, intake and storage, pick and pack, shipping, and return fees are just some of those items — potentially rack up to a significant cost for the sellers, which they either pass on to the buyers or stomach to compete on price against much bigger players like Amazon. On top of that, it’s almost inevitable that shipping and logistics are not “core competencies” of the companies that heavily rely on them.

And as many have pointed out, Amazon’s success is built in large part on economies of scale, by making a better return because of how much it’s passing through the same system, distributing the cost of operation across more goods.

Companies like ShipBob — and it is not the only one in this space, with others including Amazon, ShipHero, Byrd, OceanX, Shippo, and many more — have essentially built a logistics operation that lets those companies outsource the work of doing that themselves, much as they would use a payments provider like Stripe rather than building a payments flow from the ground up. ShipBob also, by virtue of working with many businesses, creates that economy of scale by bringing their orders and work all together, mimicking essentially what Amazon does for itself.

Saxena says that ShipBob already has a “Prime” style offering for customers — by which he means, a way to provide low-cost or even “free” faster shipping for orders over a certain amount of money — but it will be interesting to see how and if it ever looks to move up the stack and see how it can leverage its logistics control and command to move up the stack and work on loyalty or membership programs for the most dedicated customers.

“Our customers are the brands and we built ShipBob to support their business growth,” he said. “A requisite to supporting their growth is offering fast and affordable shipping across any channel that they want to sell, so we do offer a ‘Prime’ style offering to the brands that we support today. For example, ShipBob merchants can offer affordable 2-day shipping directly through their website and through the marketplaces where they sell, like Amazon, Walmart, Facebook, and Google.”

What will also be interesting to see is how and if the growth we’ve seen in e-commerce in the last year — fueled by a very particular set of circumstances that either closed stores, or kept people away from them, or both — will be sustained, and how that will impact ShipBob. As we pointed out yesterday, there was a 44% bump in COVID-19 online spending in 2020, but in the year before that the U.S. has had e-commerce growth of around 15% as it’s a pretty penetrated market already.

“Due to Covid, e-commerce penetration in the US got pulled forward by 5-7 years and while some of it will revert back as the economy opens up, it is still higher than the pre-COVID levels across nearly all verticals,” Saxena said, citing the company’s own stats that appear to bear this out. “Many consumers who were forced to adapt to online buying are continuing to buy things online. For example, older demographics bought online for the first time and will continue to do so, while younger demographics who bought a considerable percentage of their goods online already, increased that percentage while the size of their buying power increased as well.”

It’s for this reason, and the fact that ShipBob is profitable, that investors are happy to make a bullish investment now.

“The fastest growing ecommerce brands recognize that world-class fulfillment increases revenue and builds customer loyalty,” said Ajay Agarwal, partner at Bain Capital Ventures and a board member, said in a statement.. “These leading brands are partnering with ShipBob as the one-stop cloud logistics platform to manage and deliver their merchandise

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How to engage Conscious Go-getters on Pinterest

Conscious Go-getters live for what’s new and next. Ambitious, entrepreneurial and goal-oriented, they use Pinterest to plan for the future and strive for financial success. Don’t expect them to follow the pack—they lead the way forward. That’s why they’re known as the agony aunt of their inner circle, with friends and family always seeking their honest and forward-thinking perspectives. Plus, these Go-getters really live up to their name, with 9 in 10 taking some form of post-platform action after using Pinterest.

Primary Interests

• Sport
• Entertainment

Secondary Interests

• Food & Drink
• Holidays & Travel
• Fashion

The role of Pinterest to engage Conscious Go-getters

Destination for inspiration

From the latest food trends to untrodden travel destinations, the Conscious Go-Getters nourish their creativity and drive on the platform.

Brand building

Some Conscious Go-Getters use the platform to help inspire their business creativity e.g. photoshoot locations, brand identity and increasing their brand’s social media presence.

Cooler image bank

The imagery on Pinterest feels unique, fresh and edgy in contrast to other platforms; this suits Conscious Go-Getters’ style and personalities.

Value to advertisers

Conscious Go-Getters are likely to be in a purchase mindset when on Pinterest and are more likely to engage with brands on Pinterest.

Inspiration

42% More likely to be inspired by advertising they see online compared to the Pinterest average.

Discovery

44% More likely to be in a purchase mindset when using Pinterest compared to the Pinterest average.

Action

89% Take some form of post-platform action after using Pinterest.

How to engage Aesthetic Seekers on Pinterest

1. Brands that speak to them in a straight-forward and upfront tone means they can form their own opinion, no pressure.
2. Responsive advertising, moving with the times and topics of the day, taps into their need for the latest trends and newest news.
3. Brands highlighting social issues (e.g. mental health) and brands which cater to all (not just in theory) cuts through to this conscious group.

You can learn more about Pinterest Business here.

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Demand Curve: Email marketing tactics that convert subscribers into customers

Stewart Hillhouse Contributor

Stewart Hillhouse writes actionable growth marketing insights as senior content lead at Demand Curve. By night, he interviews marketers and creatives on his podcast, Top Of Mind. Before getting into marketing, Stewart was a semi-professional lumberjack. He also writes at stewarthillhouse.com.

Email has the highest return on investment of any other marketing channel. On average, email earns you $40 for every $1 spent. And the best part is that email is an owned channel, which means you can reach your subscriber directly instead of relying on social media algorithms to surface your content.

At Demand Curve, we’ve worked with over 500 startups, meticulously documenting growth tactics for all growth channels. We also incorporate what we’ve learned from our agency, Bell Curve, which works with Outschool, Imperfect Produce and Microsoft to name a few.

To understand how to use email marketing effectively, we interviewed email marketers at this year’s fastest-growing startups. This post covers the most profitable tactics they use that capture 80% of the value using 20% of the effort.

If people don’t open it, nothing else matters

The subject line of your email is the most important, yet most marketers neglect it until after crafting the body of the email.

The subject line of your email is the most important, yet most marketers neglect it until after crafting the body of the email.

Increase the open-rate of your subject lines by making them self-evident. You don’t want people guessing why you want them to pay attention to your email. If the subject line is unclear or vague, your subscribers will ignore it.

One trick is to write like you speak. Try using subject lines that use informal language and contractions (it’s, they’re, you’ll). Not only will this save character count, it will also make your copy more friendly and quick to read.

Subject lines should be relevant to your subaudiences. Marketers generate 760% more revenue from segmented email campaigns than from untargeted emails.

A good subject line will increase the chances of your email being read. Image Credits: Demand Curve

If you’re collecting emails from multiple areas on your website, chances are the context will be slightly different for each. For example, people who subscribe after reading an article on ketogenic diets should receive emails that further educate them on keto and seeds products relevant to that lifestyle. Sending them information and product recommendations for vegetarians would not be relevant and could lead to them unsubscribing.

To ensure you’re sending relevant emails to the right audiences, segment your audience using tags and filters within your email marketing platform. Each platform will do this slightly differently, but all modern platforms should allow you to do this. When crafting your email subject line, ask yourself: “Would this email make sense to receive for this segment of subscriber?”

Your subject lines should be short and concise. About 46% of all emails are opened on mobile devices, which means the subject line must be short enough to fit on a smaller screen while getting your point across. Fifty characters is approximately the maximum length a subject line can be before it gets cut off on a mobile screen.

Founders, help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

Keeping your subject lines short also makes them easier to scan when your subscriber is looking through their inbox. Including emojis in your subject line can cut down your character count and emulates how friends send text messages to each other. Including emojis in your subject lines will make your email feel less corporate and more friendly.

The Klaviyo EC-1

Designing emails that get read

Once your subscriber opens your email, there are three outcomes that can follow: read, skim or bounce.

Subscribers that read your emails are the most valuable, because they will consume the full contents of your email. Skimmers will only read the headlines and look at the images you include. Subscribers who bounce will open your email, but if nothing catches their attention right away, they will simply delete or close your email.

You’re going to want to design your emails to minimize the number of bouncers, satisfy readers and provide enough high-level information that skimmers still understand your message.

To minimize the number of bounces, choose an email design that catches the eye and is relevant to your brand. Take the Casper email below for example. The starry night background and moon illustration is directly relevant to the mattresses they sell. Visually branded email designs will help elevate your brand perception.

Design your emails to appeal to all kinds of readers. Image Credits: Demand Curve

To optimize for skimmers, write action-focused headlines. Use designs that draw the eye of your reader to key elements. As you can see in the Headspace example, the image of the rising sun pushes your gaze upward to the headline and the call-to-action button. Skimmers should be able to understand the context of the entire email and take action without needing to read the body.

To convert more readers, fulfill the expectation set by the subject line. Readers will be looking for any promises or hints you gave them in your subject line. Be sure to deliver on this promise in the body. Do so in an aggressively concise way — just because they’re reading doesn’t mean they don’t value their time.

Call to actions that convert

The goal of your body copy is to drive people to your call-to-action button (CTA). Your CTA is crucial, because it’s how you convert an email subscriber into a paying customer. To increase the conversion of your CTA, make a valuable promise in your body copy and headers that’s only delivered through your CTA.

Good CTA copy typically begins with a verb that teases what the reader will encounter next:

• Get your free sample.
• Redeem discount now.
• Browse the full inventory.

Low-converting CTA copy is vague or nonactive:

• Learn more.
• See inventory.
• Download.

Your email should only have one CTA. Any more and your conversion will decrease due to unnecessary decision-making. Ensure that the page on your site that your CTA leads to fulfills the promise you made in your body and CTA button.

Recap

Once the focus of the subject line is clear and the desired outcome is chosen, everything else should be crafted to carry the reader step by step through the email, eventually taking them to the desired action.

It’s a good idea to work backward from the desired outcome you want the reader to perform. If the desired outcome is for them to click on a CTA button, frame your subject line, headers and body copy as a valuable promise that can only be achieved by clicking the button.

Consider the experience of your email through the eyes of all three types of subscribers: readers, skimmers and bouncers. Use visual and written prompts that make the purpose of your email clear to all three categories. Failing to do so could lead to unsubscribes and lost revenue.

Email has the highest return on investment than any other marketing channel because you have a captive audience who has opted-in to you communicating with them. Email can drive six times more conversions that a Twitter post and is 40 times more likely to get noticed than a Facebook post.

Help TechCrunch find the best email marketers for startups

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Tapcart, a ‘Shopify for mobile apps,’ raises a $50 million Series B

Shopify changed the e-commerce landscape by making it easier for merchants to set up their websites both quickly and affordably. A startup called Tapcart is now doing the same for mobile commerce.

The company, which has referred to itself as the “Shopify for mobile apps,” today powers the shopping apps for top brands, including Fashion Nova, Pier One Imports, The Hundreds, Patta, Culture Kings, and thousands more. Following a year of 3x revenue growth, in part driven by the pandemic, Tapcart is today announcing the close of a $50 million round of Series B funding, led by Left Lane Capital. Having clearly taken notice of Tapcart’s traction with its own merchant base, Shopify is among the round’s participants.

Other investors in the round include SignalFire, Greycroft, Act One Ventures and Amplify LA.

Tapcart’s co-founders, Sina Mobasser and Eric Netsch, have worked in the mobile app industry for years. Mobasser’s previous company, TestMax, offered one of the first test prep courses on iOS, while Netsch had more recently worked on the agency side to create mobile and digital experiences for brands. Together, the two realized the potential in helping online merchants bring their businesses to mobile, as easily as they were able to go online with Shopify.

Tapcart’s founders Sina Mobasser and Eric Netsch at their Santa Monica HQ

“Now, you can launch an app on our platform in a matter of weeks, where historically it would take up to a year if you wanted to custom build an app,” explains Mobasser. “And you can do it for a low monthly fee.”

Tapcart’s platform itself offers a simple drag-and-drop builder that allows anyone to create a mobile app for their existing Shopify store using tools to design their layout, customize the product detail pages, integrate checkout options, include product reviews, and even optionally add other branded content, like blogs, lookbooks, videos (including live video) and more. Everything is synced directly from Shopify to the app in real-time, so the merchant’s inventory, products and collections are all kept up-to-date. That’s a big differentiator from some rivals, which require duplicate sets of data and data transformation.

Tapcart, meanwhile, leverages all of Shopify’s APIs and SDKs to create a native application that works with Shopify’s existing data structures.

Image Credits: Tapcart

 

This tight integration with Shopify helps Tapcart because it doesn’t have to focus on the e-commerce infrastructure, as the way things are structured around inventory and collections are roughly 90% the same across brands. Instead, Tapcart focuses on the 10% that makes brands stand out from one another, which includes things like branding, content and design. Its CMS allows merchants to create exclusive content, change the colors and fonts, add videos and more to make the app look and feel fully customized.

Beyond the mobile app creation aspect to its business, Tapcart also helps merchants automate their marketing. Through the Tapcart platform, merchants can communicate with their customers in real-time using push notifications that can alert them to new sales, to encourage them to return to abandoned carts, or any other promotions. The marketing campaigns can be automated, as well, which helps merchants schedule their upcoming launches and product drops ahead of time. The company claims these push notifications deliver click-through rates that are 72% higher than a traditional email or SMS text because of their interactivity and branding.

Image Credits: Tapcart

The platform has quickly found traction with SMB to mid-market enterprise customers who have reached the stage of their business where it makes sense for them to double down on customer retention and conversion and optimize their mobile workflow.

“Our sweet spot is when you have maybe a couple hundred customers in your database,” notes Netsch. “That’s a perfect time to now focus less on the paid acquisition portion of your business and more on how to retain and engage those existing customers, [so they’ll] shop more and have a better experience,” he says.

Where is the e-commerce app ecosystem headed in 2021?

During the past 12 months, over $1.2 billion in merchant sales have flowed through Tapcart’s platform. And in 2020, Tapcart’s recurring revenue increased by 3x, as mobile apps grew even faster during the pandemic, which had increased consumer mobile screen time by 20% year-over-year from 2019. Mobile commerce spending also grew 55% year-over-year, topping $53 billion globally during the holiday shopping season, the company says. Tapcart’s own merchants saw mobile app orders at a rate of more than once-per-second during this time, and it believes these trends will continue even as the pandemic comes to an end.

Today, Tapcart generates revenue by charging a flat SaaS (software-as-a-service) fee, which differentiates it from a number of competitors who charge a percent of the merchant’s total sales.

Image Credits: Tapcart

With the additional funding, Tapcart plans to focus on its goal of becoming a vertically integrated mobile commerce suite of tools, which more recently includes support for iOS App Clips. It will also soon release an upgraded version of its insights analytics platform and will offer scripts that merchants can install on their mobile websites to compare what works on the site versus what works in the app.

Later this year, Tapcart plans to launch a full marketing automation product that will allow brands to automate and personalize their notifications even further. And it plans to invest in market expansions to make its product better designed for mobile, global commerce.

The funding will allow Santa Monica-based Tapcart to hire another 200 people over the next 24 months, up from the 70 it has currently. These will include new additions across time zones and even in markets like Australia and Europe as it moves toward global expansion.

Shopify’s investment will open up a number of new opportunities as well, including on product, engineering, business strategy and partnerships. It will also help to get Tapcart in front of Shopify’s 1.7 million global merchants.

5 predictions for the future of e-commerce

“There’s still quite a lot of merchants that need better mobile experiences, but have yet to really double down on the mobile effort and get something like a native app,” notes Netsch. “There’s a lot of different ways and methods that merchants are experimenting with mobile growth, and we’re trying to offer all of the best parts of that in a single platform. So there’s tons of expansion for Tapcart to do just that with the existing target addressable market,” he says.

“We believe brands must be where their customers are, and today that means being on their phones,” said Satish Kanwar, VP of product acceleration at Shopify, in a statement. “Tapcart helps merchants create mobile-first shopping experiences that customers love, reinforcing Shopify’s mission to make commerce better for everyone. We look forward to seeing Tapcart expand its success on Shopify with the more than 1.7 million merchants on our platform today.”

 

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