In 2010, global ecommerce sales were $572 billion. In 2020, it was $4.2 trillion, and it’s expected to grow by $11 trillion between 2021 and 2025 – accelerated by the pandemic, which drove many businesses online even in categories that were historically resistant to ecommerce (i.e. Amazon now sells live fish!). Software is eating the world, and nowhere is that more obvious than in our shift to ecommerce: anything you can buy, you can now buy online.
The growth of the ecommerce market is the result of existing retailers moving their business online and internet-native incumbents growing. And increasingly, a new generation of merchants that don’t need physical storefronts and can go from idea to store quickly. Software has made it dramatically easier to launch an online storefront, but there’s much more involved for the budding ecommerce entrepreneur.
With a modern ecommerce software stack, running an online storefront is still difficult. How does a business market effectively to potential customers? How do they issue refunds? What about targeted discounts? How does the business owner ensure the product shows up on time and in the right packaging to showcase the company brand? The way most ecommerce merchants do this today is via a robust application ecosystem that sits on top of an ecommerce platform. These numerous applications cater to the specific needs of these online shops – whether that is marketing support, customer service, or affiliate referrals. And these applications have become sizable businesses themselves – in 2020, and on the Shopify platform alone, apps generated $12.5 billion in revenue. Merchants often use over a dozen apps to help run their store.
While these applications have become a critical part of best-in-class ecommerce operations, they introduce a tremendous operational burden for merchants. For one, it’s logistically complicated to manage operations across so many different service applications – an issue exacerbated as app sprawl continues. Furthermore, it’s very difficult to stitch these apps together to react to changes in one or trigger workflows in another. Second, it’s hard to have a cohesive picture of how a store is actually running (especially across different platforms), as storefront data along with marketing and sales metrics now exist across all the disparate apps. For instance, “do the customer emails I send to past customers offering discounts result in more repeat sales vs the landing page discounts I offer to first-time site visitors” is a very reasonable question that has been almost impossible to answer for most merchants until now.
Alloy Automation is the operating system for ecommerce brands to automate their businesses. They have built over 200 integrations into all the key ecommerce tools and an easy-to-use interface that allows stores to stitch together workflows and leverage these apps to their fullest. Whether a store owner wants to issue a refund based on a customer support ticket, send someone an incentive for being a loyal customer, or customize packaging before it’s shipped, Alloy makes it simple. Alloy makes it dramatically easier for stores to serve their customers by giving owners and managers a better picture of their business operations in the form of an analytics dashboard, while also freeing up their time to work on what they love to do most: building brands and products that people love. Alloy’s customers rave about how much time and engineering resources the product has saved them and how it’s made it so much easier for them to actually respond to their customers in a nuanced, flexible way.
At the end of the day, we invest in founders and we’ve been incredibly impressed with Alloy’s founding duo from the start. We’ve gotten to know Sara (CEO) and Gregg (CTO) over the course of two years, and every time we meet with them we leave more excited and impressed by their vision, energy, and how quickly they’ve iterated and improved the product. I sometimes use the term “Productivity Per Unit of Time” (PPUT) to think about how fast founders execute, learn, iterate, and adapt as key indicators of their chances of building an iconic company. Sara and Gregg have an insanely high PPUT and are on their way to building an amazing company.
We’re leading Alloy’s Series A and are excited to join the Alloy team on their journey. We are confident that Alloy will be one of the iconic names in the ecommerce industry. And if you’re interested in building with this stellar team, they’re hiring.