GigaOM » e-commerce

Fab nabs $150 million in new funding as part of Series D round

Eliza Kern — Wed, 19 Jun 2013 04:25:31 +0000

Fab has raised $150 million in new funding, as it looks to fulfill its ambitious mission of becoming the world’s design store. The pre-money valuation for the company in this round is $1 billion.

Investors in this round include new participant Tencent, which is adding a board member to the company, as well as Atomico, Andreessen Horowitz, ITOCHU Technology Ventures, and existing investors. The new funding is just the initial part of the Series D, and the company said that it expects to close further funding as part of this series in the next few months. The company just raised $105 million last July.

Fab just announced an ambitious plan in April to move beyond flash sales and become a comprehensive design store. We wrote about shift at the time, and what that expansion means for Fab:

With this pivot, Fab isn’t completely changing its product as much as it is changing what the Fab brand means. Instead of selling merchandise from other retailers on its site through flash sales (sales of limited quantities of items for limited time periods), Fab is expanding to include products designed by Fab, products designed by others, and ventures like custom furniture and a brick and mortar store in Europe. The company wants to be one of the “next great iconic shopping brands,” it wrote Tuesday, and that shopping experience will maintain the design focus that the company was founded on.

The company said that its new goals, which incorporate design in everything it does, could help make it the “emotional e-commerce” company, compared to other companies like Amazon. Goldman’s blog post, which will be available on his blog, explained why they need to raise such a large round:

“Differing from the “commodity commerce” players, Fab is the pioneer in Emotional Commerce, helping people discover and buy the meaningful stuff in their lives, like the chairs they sit on, the table they dine at, the plates they eat from, the glasses they drink out of, the pen they write with, the notepad they write in, the art on their walls, the bracelet on their arm – the emotional products in their lives. That’s Fab.

I want to be really clear on this as I’m sure there are skeptics who will ask and wonder why Fab needs so much money. Fab is focused on the long term. We are focused on creating “Wow!” shopping experiences that will result in customers making 20+ purchases from Fab within a couple of years. We are focused on being the global brand that represents emotional commerce for decades to come. Fab is not about a single transaction. Fab is about creating Wow! experiences in everything we do, from the unique merchandise we offer, to the user experience on our website and mobile apps, to fast delivery and a delightful out-of-box experience, to the follow-on customer service. We truly believe that it takes investing in Wow! in order to build the next $10B+ E-commerce company, and that’s what we’re doing.”

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Stripe tweaks its payment tech for the collaborative consumption economy

Kevin Fitchard — Wed, 05 Jun 2013 22:54:58 +0000

The internet and mobile economies have spawned the collaborative consumption business model, but the payments systems we have in place haven’t kept up. A company like eBay, AirBnB, Uber and or Lyft isn’t just a single business entity but a big collection of small networked entrepreneurs, and for every single credit card transaction on their websites there are a lot of different people that need to get paid.

Online payments provider Stripe, however, is trying to solve that problem in a simple way. In a blog post on Wednesday, Stripe said it would now split transactions into multiple accounts, rather than just dump any payment into a single bank account. So take a service like Lyft: when a customer pays for a ride, the total is automatically divided between the driver and the Lyft itself. There’s no waiting for Lyft to cut you check or credit your bank account at the end of the week.

Some of Stripe’s bigger customers like Lyft, SideCar, Exec, Postmates and Shoptiques have already integrated the new payments features. But any Stripe customer can access split payments by tapping into Stripe’s updated API. For each payment recipient there a 25 cent fee per transaction.

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DIY digital magazine platform Glossi adds new tools, with paid subscriptions coming soon

Laura Hazard Owen — Wed, 05 Jun 2013 13:00:12 +0000

When I was 12 or so, I subscribed to Sassy, Seventeen, Teen, and Jump, and sometimes I’d try to draw and write my own teen magazines — but I never got much farther than making a table of contents, because it was a lot of work and I had zero readers.

If digital magazine publishing platform Glossi had been around at the time, though, who knows: You might be reading Laura magazine today. It worked for 14-year-olds Livia Lange and Olivia DeMirjian, two eighth-graders who live in Studio City, Calif. and started publishing Liv magazine on Glossi last year. They’re now up to six issues and thousands of readers.

Social shopping site ThisNext launched Glossi in beta in December 2012, and hundreds of individuals and brands — magazines like Cosmopolitan and Lucky, celebs like Olivia Palermo and Rachel Zoe, and plenty of non-famous people — are now using it to make their own digital magazines. The web platform, which is still invite-only, lets users drag and drop text, video, images, audio and animations into a template, then publish and share it.

“There are 5,000 images posted every second across Facebook, Tumblr and Instagram,” Glossi CEO Matt Edelman told me. “Visual content is driving social communications and engagement more than text content by leaps and bounds. That is only going to continue to grow” as tablets proliferate.

On Tuesday, Glossi announced a bunch of new features designed to make creation and sharing easier. Creators can now embed Glossis into their websites or Facebook pages and can more easily share them across Twitter, Facebook and Pinterest. They can add e-commerce links to their magazines. And marketers can run Glossi creation contests from their Facebook pages — something that Lionsgate recently did for the launch of the second Hunger Games movie, Catching Fire. While Glossi’s creation platform is still web-only for now, all Glossis can be viewed through the company’s iPad app.

The next step is monetization. Edelman says Glossi will launch a premium product later this year that will let users sell their Glossis and also include advertising in them.

For now, everyday users like the creators of Liv magazine have a larger distribution platform than they once would have.”Our friends are always telling us they share it,” the girls told me in an email. “We’ve grown so much we had to convert what was once a backyard playhouse into an official office.”

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GrubHub, Seamless merge, creating one giant online delivery service

Kevin Fitchard — Mon, 20 May 2013 14:28:45 +0000

Chances are you’ve contemplated late-night pizza or Thai food delivery, you’ve run into GrubHub or Seamless (or both, depending on your city). Chicago-based GrubHub is the largest of the e-commerce engines that power independent restaurants’ delivery and takeout orders, and New York’s Seamless is among GrubHub’s biggest challengers.

Now the two have decided to merge and build the mother of all delivery and takeout portals. The companies said combined GrubHub and Seamless will have a presence in more than 500 cities and more than 20,000 restaurant clients. In 2012, the companies said they processed a combined $875 million in gross food sales, bringing in $100 million in revenue (though neither has taken the unusual step of accepting Bitcoin as payment like competitor Foodler.)

The companies didn’t reveal any financial terms of the deal, nor did they unveil a name for the combined the company. GrubHub co-founder and CEO Matt Maloney will become CEO of the merged entity, while Seamless CEO Jonathan Zabusky will become President.

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Head of Groupon Goods Faisal Masud is leaving to take a new job

Eliza Kern — Sun, 05 May 2013 01:01:56 +0000

Two months after firing its CEO, Groupon is facing another setback: The executive in charge of Groupon Goods, the part of the company that has provided a bright spot in an otherwise struggling daily deals business, has resigned, sources close to the situation have told us.

Faisal Masud, the vice president of Groupon Goods, will be leaving the company later this month, the sources said. One of the sources said he has taken a top position at Staples.

Groupon Goods, which was started in 2011, is one of Groupon’s newer businesses and is its first push into more traditional e-commerce. It sells discounted goods from companies like Dell, and is separate from Groupon’s traditional local coupon business. Masud was hired away from eBay in 2012 to help build Goods, which Groupon announced in April had reached an annual run rate of $2 billion in global billings. Groupon as a whole had $5.38 billion in gross billings for 2012, the company reported in February.

“As we’ve discussed before, growth of Goods … has impacted our overall margins as it has grown materially over the last few quarters, reaching an impressive $2 billion annual billings run rate in Q4,” then-CEO Mason said in the company’s fourth quarter earnings call in February.

The company’s stock has been pounded since it went public in late 2011 — at one point it was trading in the 20s, but more recently has fallen into the mid single digits. Part of the issue for investors has been questions about the reliability of the company’s accounting — last March, for example, Groupon had to restate its earnings after a higher-than-expected number of customers demanded refunds.

But also driving the downward pressure on the stock price is investor skepticism about whether the company can become more than a simply a daily deals site. Many analysts think that model has limited potential, because users can easily tire of the daily email blasts, and for merchants, the deals don’t necessarily translate into a greater number of loyal customers.

Masud’s job has been to help the company become a much broader e-commerce company, a “searchable marketplace,” as Groupon executives referred to it on a recent earnings call. Our sources said Masud’s departure was prompted by tensions between the emerging e-commerce side of the company and Groupon’s local-coupon roots. Before joining Groupon, Masud was head of global shipping and fulfillment for eBay, and before that spent five years at Amazon.

Groupon told us it had no comment. We also reached out to Staples, and will update the story if we hear back from them.

Groupon has been in the spotlight most recently with the high-profile departure of CEO Andrew Mason. Cofounder Eric Lefkofsky and fellow board member Ted Leosis have been named interim co-CEOs while the company searches for his replacement. The company will report its first quarter earnings on Wednesday. The stock closed at $5.84 on Friday.

Update: On Tuesday Staples announced that Masud had joined the company as executive vice president for global e-ecommerce. The full press release from Staples can be found here.

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Belly lands big national chains as loyalty platform customers, including McDonalds

Kevin Fitchard — Thu, 25 Apr 2013 17:01:21 +0000

Belly started out empowering local businesses to create loyalty programs of their own, allowing them to compete with the sophisticated customer retention campaigns of the big nationwide chains. But it turns out that those big chains are interested in Belly’s loyalty platform as well.

The Lightbank and Andreessen Horowitz-backed startup on Thursday revealed it is expanding its scope from small and medium-sized business to large enterprises. The company said it’s currently working with 40 national chains, which have installed its loyalty card scanning system in 500 locations. Belly said those chains collectively represent 40,000 restaurants and stores nationwide, though it didn’t reveal the names of the names of specific companies.

But a quick glance on Belly’s merchant map in Chicago reveals plenty of big names: McDonalds, Chick-fil-A, 7-Eleven and Domino’s Pizza among them. For instance, McDonalds is offering up rewards like a free regular fries or free cookie after accruing a specified number of Belly loyalty points.

Belly’s system is pretty simple. Belly members either order a universal loyalty card with a QR code or download the Belly app to their smartphone, which displays the QR code on screen. All merchants have an iPad set up at the register or other convenient location, and customers scan their card or app into the tablet to accrue points for every visit. Get enough points and you can pick prizes. Those can come in the form of free goods, discounts or sometimes more off-the-wall rewards, such as a personal serenade from the store’s owner.

Belly has attracted interest from businesses nationwide, but its hometown of Chicago remains its biggest market with more than a thousand locations using the Belly system. As a Chicagoan, I’ve seen Belly pop up everywhere. My wife and I use it to get free booze at our local liquor store, and we’re saving up our points so we can get a free cooking lesson from the chef of our favorite local restaurant Bistro Dre.

While I love the idea of unique tailored rewards programs for local businesses, it’s easy to see the appeal for Belly to go after the national chains. Chicago has many e-commerce companies that were founded on the principle of targeting small, local merchants, but they’ve been shifting their focus to the national retailers and brands.

For instance, fellow Lightbank startup Boomerang has abandoned its original local-business focus and to turn its peer-to-peer gifting service into a viral marketing platform for big brands like Ghirardelli and Starbucks. Even suffering e-commerce giant Groupon(grpn) (see disclosure) has strayed from its local business focus to offer an increasing number of daily deals for national chains.

Disclosure: The author’s spouse is employed by Groupon.

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Social shopping pioneer Modcloth plots mobile strategy for digital fashion

Eliza Kern — Sat, 20 Apr 2013 20:00:40 +0000

I’ve talked with a lot of companies recently about the challenges in making traditional shopping and e-commerce more social, and there’s one name that everyone mentions as the de-facto success in social shopping: Modcloth.

What started as a hobby around vintage clothing turned into a business led by husband and wife team Susan Gregg Koger and Eric Koger in 2006, and it has now become a dominant online fashion retailer known for its distinct style and vintage appeal. But what makes Modcloth unique is the way it’s continually married technology with fashion to build a strong social community around the brand, experimenting with everything from crowdsourced fashion to video hangouts with stylists to build the kind of user passion you see with companies like Lululemon or Nastygal.

Modcloth just launched its first native iPhone app on Thursday, and I sat down with CEO Eric Koger to talk about the company’s strategy when it comes to building a mobile audience and using social platforms to build its notoriously passionate audience. The company had just finished recording a Google Hangout in the office with Lumineers singer Neyla Pekarek, who wears Modcloth onstage, and Koger sat at the conference table with the company pug Winston on his lap.

“We’re very experimental in basically all that we do,” he said. “We put our customer first in the merchandise we’re bringing from the very beginning of the site, placing small bets on a wide assortment of things, and then figuring out what she really loved, and wherever possible bringing those items back in production.”

Modcloth CEO Eric Koger with the company’s mascot Winston the pug on his lap.

And the experimental approach applies to how the company uses technology as well. Modcloth started out with a website that was optimized for mobile, and said that still makes a lot of sense since the site sees so much referral traffic from Facebook (its top referring site) and Pinterest (its second-highest referrer). When a user finds an item through Pinterest, re-directing them to a native app was tough. So the company started on HTML, and just launched an iPad app in February. Now, the company is finally going native on iPhone.

Koger said it’s always a challenge to figure out how to serve up high-quality images of the different products on mobile while taking into account a user’s connection speed. But figuring out mobile is obviously important: the company has seen a 129 percent increase in mobile traffic over last year, and 178 percent growth in mobile revenue.

And one of the tricks to keeping sales strong? Modcloth is famous for its “Be The Buyer” program, which takes a sample from a designer and puts the photos online, then allowing users to vote on whether the company should produce the item — sort of like the original Kickstarter, but for dresses. And despite concerns from the fashion industry about putting samples out for the world to see (and potentially be copied), Modcloth has turned the program into a success. The company said sales are twice as high on the crowdsourced items as the regular ones.

“It’s a variety of things,” Koger said. “The invested community that helps to get it produced becomes sort of an advocate for the product, having that logo on the dress serves as a form of social proof, and it’s usually just a really cute product.”

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Bitcoins burning a hole in your pocket? Try ordering some takeout

Kevin Fitchard — Wed, 17 Apr 2013 22:04:11 +0000

You can already spend Bitcoins on hand-crafted goods on Etsy, and you can keep romance alive on OKCupid using the crypto-currency. Now, thanks to Foodler, you can order food with Bitcoin from more than 17,000 restaurants nationwide.

Paying for food online with Bitcoins isn’t new. Pizzaforcoins has famously set up a site that takes Bitcoins in exchange for ordering a pie from your local Domino’s. Some entrepreneurial food purveyors online, such as Bitcoin Coffee, also deal in the digital currency. (For a detailed explanation of how the Bitcoin economy works, check out my colleague David Meyer’s comprehensive post.) But what’s interesting about Foodler is its scope.

Foodler is an online delivery and takeout portal a similar to GrubHub that hosts menus and handles orders for restaurants in 48 states, and it has made Bitcoin another option for payment alongside credit cards, debit cards and cash on delivery. You can’t pay for a pizza or your mu shu pork order with Bitcoin directly to the delivery guy, but Foodler has set up an account portal that generates a unique deposit address and QR code, which customers can use to deposit their Bitcoins. Using the current USD exchange rate, Foodler turns them into FoodlerBucks, which can then be used to pay for orders and even tip through its online portal or mobile app.

It might sound like a marketing gimmick, but Foodler CEO Christian Dumontet said the company is firm believer in innovation, whether it’s technological, economic or, in the case of Bitcoin, both.

“We understand that Bitcoin users are a small, but influential, group of early adopters and Bitcoin orders will likely be a small percentage of all Foodler payments this year, but as early adopters ourselves, we are excited to support the community and help it grow,” Dumontet said in an email. “We were surprised to receive our first Bitcoin payment from a customer in San Francisco just hours after making it available in our system – prior to any kind of public announcement.”

Of course, given the recent nosedive in Bitcoin value, some people may be reluctant to part with their Bitcoins just yet – it would take four times the amount of Bitcoin to buy an $8 burrito today than it did last week. Still, Dumontet isn’t letting the volatility of the crypto-currency phase him. He said would Foodler would hold on to the some of the Bitcoins it does receive, instead of immediately cashing them in for U.S. dollars, and it plans to participate in the Bitcoin economy by seeking out vendors that accept the currency.

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Sector RoadMap: Content personalization in 2013

Mark Mulligan — Wed, 17 Apr 2013 14:54:59 +0000

Content owners, whether they are publishers, retailers, or marketers, are always looking for new ways to deliver a unique experience to their customers. We call this content personalization. Key trends in this area are led by a collection of technologies that we call post-programming curation. These technologies use the best of behavioral tracking, collaborative filtering, audience targeting, and dynamic content presentation.

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eBay’s PayPal and Magento join hands to offer a mobile payment service

Kevin Fitchard — Wed, 10 Apr 2013 16:00:01 +0000

When eBay bought Magento in 2011 it gained an e-commerce platform that merchants could use to create custom online stores, but eBay has largely kept Magento separate from its most famous e-commerce acquisition, PayPal. That’s now changing, though, as the two are announcing a partnership to integrate PayPal’s m-commerce and mobile payments technology with Magento’s service.

In an upcoming blog post Wednesday, PayPal CTO James Barrese said his company is creating two new extensions for Magento’s 150,000 merchants. The first, called In-Aisle Selling, hooks PayPal’s point-of-sale mobile payments service Here directly to a merchant’s store. Here lets a salesman to take a credit or debit card payment anywhere in the store with PayPal’s triangular magnetic reader, while Magento’s ordering and inventory system pulls down all purchase and customer details.

The second extension is called Order Ahead, which lets merchants set up shop in PayPal’s mobile app. In January, PayPal launched a pilot project with one of its key mobile payments customers, Jamba Juice. Customers could access Jamba Juice’s menu from the app, place an order while waiting in line or before they arrived — even make special substitution requests — and of course pay for their drink.

Barrese said the pilot was a success and now it’s expanding Order Ahead, starting with Magento merchants. Stores can use specialized templates to create their menus or catalogs and synchronize their opening hours and locations with PayPal’s ordering system. Merchants can then manage the pre-orders through a simple console available in the extension or directly integrate Order Ahead into their existing point-of-sale systems using Magento’s APIs. Customers can pick up their orders either by presenting their names, order numbers or the QR code on their e-receipts.

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