Salsify, a maker of e-commerce software, has acquired Welcome Commerce, an Austin-based developer of chat technology.
Boston-based Salsify sells technology that helps retail brands like Michelin and Anheuser-Busch manage their products across e-commerce platforms such as Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT), or Target (NYSE: TGT). Adding Welcome’s chat technology “is a logical extension” of that mission, says Jason Purcell, Salsify’s co-founder and CEO.
“In addition to helping brands deliver that content, we’re now providing a bi-directional conversation that brings customer information back to the brand,” he adds.
Terms of the deal were not disclosed, but the startups are focusing on a key issue in e-commerce: In an online world of so many choices when we shop, it’s crucial for brands to be able to find the customers who want their product. And since customers encounter brand-name goods on retailer websites, brands don’t typically have this sort of direct contact with shoppers.
When brands are able to engage consumers directly through an online chat, shoppers are three times as likely to go ahead and make a purchase, says Dan Herman, Welcome’s co-founder and president. “They return products less, and (the chats) help them avoid mistakes,” he adds.
Reducing returns is also important to online retailers, which not only lose revenue from the canceled sales but also bear the expense of processing returns. Customers have come to expect free shipping and returns, but that cost U.S. retailers $351 billion in lost sales, according to a 2017 report by consultancy Appriss Retail.
The two companies hope that what is now known as Salsify Chat will be an effective tool for brands as they approach the crucial upcoming holiday shopping season. To entice brands to sign on by Nov. 16, Salsify says it’s offering new customers unlimited chat through Dec. 15, which covers Cyber Monday, the first weekday following the Thanksgiving holiday weekend, which has traditionally been marketed as a time to get big discounts on online shopping.
Welcome was founded in 2011, a year when brands were using dozens of different chat technologies, Herman says. “There was this technical barrier … there was a lot of fragmentation in that space and we saw an opportunity to bring a standard to the market,” he says.
The startup has raised about $20 million since that time, and its leaders see the acquisition by Salsify as enabling them to use those resources to deploy its chat tools more broadly and quickly. Herman and the rest of the Welcome team in Austin will now be part of Salsify.
The six-year-old Salsify has raised nearly $100 million in funding, including a $43 million Series D round in August led by Greenspring Associates. At the time, Purcell told my colleague Jeff Engel that the company planned to invest more in global expansion and hiring.
In many ways, the purchase of Welcome fulfills that goal. It gives the Boston company a foothold in the Austin tech scene. “This allows us to do something that neither company could do on its own,” Herman says.