Loop Commerce, a company that has developed an alternative checkout technology for e-commerce sites that allows customers to more easily buy gifts for friends without having to worry with product details like size or color – or even recipients’ shipping addresses – is today announcing an additional $16 million in new funding. The round, co-led by Houzz, Chegg, and Audible investor Oren Zeev and Wicklow Capital, comes largely from the company’s previous investors and brings the startup’s total raise to date to $30 million.
As before, Loop Commerce focused on bringing in a number of strategic investors versus traditional venture capital.
Others in the round included PayPal; Don Katz (EVP at Amazon); Mark Carges (former CTO at eBay); Dan Rose (Facebook VP, partnerships and strategy); Ken Seiff (former EVP e-commerce at Brooks Brothers); Michael Scharff (former SVP at Toys R Us and Best Buy); Chuck Geiger (CTO of Chegg, former CTO of PayPal); Roy Rubin (founder at Magento); Andrew Fine and Silas Chou (through Novel TMT), who has holdings in retailers including Michael Kors, Tommy Hilfiger and Ralph Lauren Europe; Dovi Frances (managing partner at SG); and Mohan Gyani (board member at Blackhawk Networks).
Launched publicly in the second half of last year, Loop Commerce today has over half a dozen large, enterprise customers including Macy’s, Lancôme, Urban Decay, Diane von Furstenberg, Johnny Was, Relax the Back, and Thomas Dean, and is in the process of onboarding other retailers it’s not yet permitted to disclose.
Though not a consumer-facing company, its product does reach online shoppers who often turn to gift cards when they’re not sure what to buy for a friend, as well as those who end up abandoning their e-commerce purchases when they realize they don’t have their friend’s address.
The latter problem was actually what prompted CEO Roy Erez to create Loop Commerce in the first place, he says. Without a shipping address, he realized that there he was, credit card in hand and ready to buy, but couldn’t complete his transaction. It was a frustrating experience, Erez explains.
With Loop Commerce’s checkout in place, however, customers can simply provide a friend’s email address instead. And they can add things to a cart without needing a specific SKU as you would traditionally in online commerce. That allows them to complete and pay for a transaction, while leaving the final selection of product and data entry up to the gift recipient.
What’s interesting about Loop Commerce is that, while it’s still early days, so far it has not yet eaten into gift card sales, its customers report. Instead, the company is adding incremental revenue to e-commerce retailers’ bottom line by bringing in those who would have otherwise perhaps not bought at all.
Specifically, it’s helping retailers sell otherwise hard-to-gift items, like shoes, cosmetics, apparel and accessories, which often require a friend to know your sizes or your style preferences. Six out of every 10 purchases are these sorts of items, notes Erez.
Retailers like the product not only for the additional revenue, but also because 52 percent of gift recipients are brand-new customers, while a quarter of the gift givers are also new. Plus, Loop Commerce is seeing a 20 percent increase in average order values, as recipients have the option to spend beyond the gifted amount.
Because the system emails the gift recipients to point them to the retailer website, it’s also popular among consumers who need a last-minute gifting option. The system is also popular with male shoppers, with retailers reporting they’re seeing twice as many transactions coming from male shoppers as they would normally.
Currently sold as a software-as-a-service, Loop Commerce charges a percentage on a per-transaction basis. However, in the future, it plans to release a premium business intelligence system for retailers offering them more data about shoppers and their purchases.
The company won’t disclose revenue or customer numbers, but says that “hundreds of thousands” of consumers have interacted with its product since launch, including, but not limited to, transactions.
The additional funding will be put toward across-the-board hiring to expand the Menlo Park-based team of 30 and continued product development, which includes support for mobile web arriving in a couple of months.