Ask anyone looking to sell online about their customer acquisition costs compared to a few years ago, and you’ll hear a tale of woe. Channels that were once a cost-effective ground for acquiring customers, like various social networks, have become increasingly pricey real estate. Facebook’s recent broaching of the $1 trillion market cap threshold attests to the fact.
But co-op wants to shake up how online sellers find new customers, and it wants to do so with a spirit of collaboration at a discount. The startup announced a $5.8 million round today that closed earlier this month, evidence that it has found backers for its model that has already collected 500 brands.
That final figure matters because co-op is an almost uniquely collaborative company. Brands that sign up to be part of co-op include its technology on their post-purchase page, allowing for other, related items to be shown to customers who just finished buying something. By including the widget, a company’s product will be shown on the post-purchase page of another company.
That sounds anti-capitalist at the very least, which wouldn’t work in a venture-backed world. So, what’s the twist? The post-purchase page widget shows three or four products, giving it extra inventory that it can sell to its partnered brands. Presto, revenue.
The company’s founder and CEO, Conner Sherline, told ProWellTech that his startup can deliver advertising space at around half the cost-per-action of Facebook and other channels; how the economics of its model scale as more brands join will be fascinating to watch.
The startup also offers software tooling, including a post-purchase survey feature that costs 5 cents per order for customers to leverage.
Sherline’s startup appears to be growing quickly. When it raised pre-seed capital last July, it had around 20 brands onboarded to its service. Today, the company is adding another 50 to 100 each month. At that rate, it could reach 1,000 brands in total by the end of the year, barring any deceleration in its ability to attract new brands to its network.
The startup’s early progress attracted Sugar Capital to lead its latest round, which also saw participation from Bessemer Venture Partners and online e-commerce giant Shopify. The Shopify check is interesting; co-op already exists on the Shopify app store, for example. ProWellTech will keep an eye out for more integrations between the two companies, something that could turbo-charge the startup’s growth.
There are a number of places for co-op to expand into. Sherline told ProWellTech in an interview that its collaborative network is the first thing that the company is working on. But with lots of sales data and a wealth of partners, co-op could build out partner networks aimed at other parts of the e-commerce sales life cycle pretty easily, we reckon.
Regardless, the company now has a multiple of the $1.6 million that it had raised before. Let’s see how quickly it can scale its brand base with the new funds.
