A startup called BlackCart faces one of the major challenges in online shopping: the inability to try or test the goods before making a purchase. The company, which has now closed down $ 8.8 million in Series A financing, has built a pre-purchase trial platform that integrates with e-commerce storefronts, allowing customers to send items home for free and pay only if they choose. Save the item after the “try” period has elapsed.
The new funding round was led by Origin Ventures and Hyde Park Ventures Partners, and was attended by Struck Capital, Citi Ventures, 500 Startups and a number of other angel investors, including Christian Sullivan of Republic Laboratories, Dean Bakes of M3 Ventures, Greg Rodin of Manlo Ventz ‘S, Jordan Nathan from Caraway Cookware, and National Bank’s first CFO, Nick Pirolo, among others.
The Toronto-based company raised $ 2 million last year.
BlackCart founder Donny Oyeang previously founded the Reiko online training market before joining the VC Stage Fund, Caravan Ventures. But he was inspired to return to entrepreneurship, he says, after experiencing a personal problem in trying to order shoes online.
Realizing the opportunity for a “try before you buy” service, Ouyang first built BlackCart in 2017 as a consumer business (B2C) platform that worked through the Chrome extension with about 50 different online merchants, mostly in clothing. .
This type of MVP has proven that there is a consumer demand for something like this in online shopping.
Ouyang credits the previous version of BlackCart by helping the team figure out what kind of products work best for this service.
“I think in general try before you buy, anything that is a medium to higher price, lower frequency of purchase, when the customer makes a considered purchase decision – these are really good deals,” he says.
Two years later, Waiang took Blackcard to 500 start-ups in San Francisco, where he moved the business to the B2B business they currently offer.
The launch now provides a pre-purchase trial platform that integrates with online storefronts, including those from Shopify, Magento, WooCommerce, Big Commerce, SalesForce Commerce Cloud, WordPress and even custom storefronts. The system is designed to be a turnkey for online retailers and lasts about 48 hours for installation on Shopify around a week in Magento, for example.
BlackCart has also developed its own proprietary technology around fraud detection, payments, returns and the overall user experience, which includes a button for retail sites.
Because online shoppers do not pay in advance for the goods to which they are shipped, BlackCart is forced to rely on an extended range of behavioral signals and data to determine if the customer represents a fraud risk. As one example, if a customer were reading a lot of help desk articles about scams before placing an order, this could be marked as a negative signal.
BlackCart also verifies the phone number of the user at the checkout and matches it to Telesco and government data systems to see if their historical addresses match their shipping and billing addresses.
Once the customer receives the item, they can keep it for a period of time (as determined by the retailer) before billing. BlackCart covers any fraud as part of its value proposition to retailers.
BlackCart makes money through a rotating stock model, where it charges retailers a percentage of sales where customers kept the products. This amount can vary depending on a number of factors, such as fraud multiplier, average order value, product type and others. At the low end, it is around 4% and about 10% at the high end, says Ewing.
The company has also expanded beyond home experience, and has included pre-purchase experience of electronics, jewelry, home products and more. It can even send makeup samples for home experience, as another option.
After being integrated into the site, BlackCart claims that its merchants typically see conversion increases of 24%, average order values climb by 51% and bottom line sales growth of 27%.
To date, the platform has been adopted by over 50 medium to large retailers as well as e-commerce start-ups, such as the prestigious sneaker brand Koio, the clothing startup Dia & Co, the online mattress startup Helix Sleep, the Caraway cookware startup, Among other things. It is also under NDA with a top 50 retailer that it has yet to publicly name, and has signed contracts with 13 others waiting to go up.
Soon, BlackCart aims to offer a self-uploading self-upload process, Oyeang notes.
“It will be later, at the end of the second quarter or early third quarter,” he says. “But I think for us, it’s probably going to be 80% self-service, and then bigger organizations will want to hold them in hand.”
With the additional funding, BlackCart aims to immediately pay the merchant for the items at the checkout, then reconcile later in order to be more efficient. It was also one of the most sought after features of the merchants.
Funding will also allow BlackCart to expand its 10-person deployment remotely to around 50 by the end of the year, including engineers, product experts, customer support and sales staff.
More broadly, it aims to rapidly exploit the growth in the e-commerce market, driven by the epidemic of COVID-19.
“[We want to] Take advantage of the convenient macroeconomic situation to focus as quickly as possible, “explains Ewing.” We hope to reach around $ 250 million in transactions through our platform by the end of 2021. And that will be driven by engineering leasing and sales, and just raising it, “he says.
In the longer term, Ewing contracts to add to the BlackCart platform additional features that appeal to the consumer, such as on-demand returns where a courier arrives at the home to pick up your refund, for example.
“Our firm is excited to partner with BlackCart because it is trying before it buys the standard in online shopping,” said Present Shokela of Origin Ventures, which now sits on BlackCart’s board, as a result of the new funding. “Its underwriting technology provides merchants with peace of mind, and its best consumer experience provides significant sales and conversion lifts. Local digital generations expect to be able to shop online just as they would in a retail store, and BlackCart is the only company to provide that experience,” he adds.