Shopify Ecosystem

Our journey from product-market fit to series A

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Today, we’re raising a $14M series A to transform customer service into a profit center using conversational commerce.

For the past 4 years, we’ve been building Gorgias with Alex and our amazing team. Both of us are automation nerds and our initial idea was to automatically respond to simple support questions. Over the last 2 years, we’ve been focusing heavily on helping Shopify merchants manage all their customer service in one place. We’ve grown from 0 to 2000 customers, including fast-growing brands like Rothys, MVMT and Steve Madden.

Today, we’re raising a $14M series A to transform customer service into a profit center using conversational commerce.

I’m not a fan of celebrating fundraising events too much, as it’s more of a promise than an achievement in itself, but I want to take advantage of this milestone to reflect on what we’ve learned:

The direct-to-consumer revolution has only started

Over the last 10 years, Amazon has reached an impressive 50% market share in eCommerce. They were able to do it thanks to 3 key pillars: customer experience, logistics and pricing. As a result, they grew 10x in the last 10 years.

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Source: Statistica

However, as we’ve been building Gorgias, we’ve witnessed a second trend that has been quieter until last year: brands are going direct to consumers. It happened because of two key factors. One, millennials want to buy from brands they can relate with. For instance, Rothy’s makes shoes out of recycled plastic bottles. Two, brands want to build an experience that they control. That’s why Nike decided to pull out from Amazon last week.

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Rothy’s makes shows out of recycled plastic bottles

This direct-to-consumer shift actually started around 2013. Around that time, Shopify started empowering more and more entrepreneurs to launch their own brand online. Ad costs on Facebook, Instagram and Google were relatively low, which allowed for lots of eCommerce entrepreneurial success stories like MVMT Watches.

As more and more brands launched, competition on ad buying has become fierce. The new battleground is no longer Cost of Acquisition but Lifetime Value.

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CAC is growing faster than eCommerce: merchants are focusing on LTV

Lots of merchants using Gorgias are now focusing on building a brand. They create differentiated products, they want to interact directly with their customers over online communities like the 310 Nutrition Facebook group with 300,000 members.

Brands are bringing Main Street back, and want to offer a real alternative to Amazon. Apps like Shopify (storefront and soon fulfillment), Klaviyo (email marketing), Yotpo (reviews) and us too at Gorgias have been working on empowering merchants to build large scale and independent businesses.

The future of customer service: use customer service to sell

Here’s how we want to help merchants with customer service. The pillar value proposition of Gorgias has been to allow to provide the best customer experience through a 360 degree view of the customer. Agents can respond to chats, emails, Instagram comments while seeing previous conversations, and order data. This way, customers get assistance faster. Everyone wins.

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Why merchants use Gorgias today: respond to your customers with context

Though, we think there’s a larger opportunity for merchants. As a visitor is going to browse a online store during Black Friday, some objections are going to pop up in their mind. Is this shoe the right size? Will it fit?

In 2020, we want to empower merchants to grow through conversational commerce. Support teams can now leverage all the context they have about the customer to guide them toward the buying journey.

One of the challenges here is that support teams are already under a lot of pressure during the holiday season. People wonder if their order will arrive on time for Christmas, or how they can return this gift that was not the right size. That’s why we’re also focusing on automating the first response to these questions. This way, agents have more time to assist visitors with their purchase.

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The incredible team behind the Gorgias 🚀ship!

We’re super grateful to the whole team that has joined the adventure, it’s been a hell of a ride from the first customer to the 2000th. Jason has been incredibly helpful as our main investor so far. Today we’re excited to welcome Auren, Tod and Jeff from Flex Capital, along with François from Alven, Andrew from Klaviyo as part of the team.

At each stage of the journey, there’s a new product-market fit to find and new challenges ahead, this fundraising is the beginning of this new chapter to generate more sales through conversational commerce.

PS: if you run an eCommerce store, give Gorgias a try and let me know whats you think

CEO and Co-founder at Gorgias

Special thanks to our friends at Gorgias for their insights on this topic.
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