One of the more fundamental challenges is attracting the customer to the shop. Once the consumer is in door — physical or digital — there are a whole lot of things the savvy merchants can do to draw the conversion. Smart pricing, clever merchandizing, a good understanding of the customer's wants, clever payment options. But in many ways the magic just really can't start happening until the consumer has been captured so to speak. Before a single sale can ever be made, all retailers have the same first problem: getting the bodies in the building.
And while there are any number of strategies for bringing the customers to the door, ReplyYes has decided to take a rather different approach. Instead of waiting for the customer to come to the commerce, ReplyYes is bringing the commerce to them.
Recently emerged from stealth out of Seattle, ReplyYes wants to make commerce conversational and a bit more outgoing. The concept is pretty simply and straightforward. ReplyYes allows users to sign on to one of their streams, which as of now are limited to two product groups: vinyl records and comic books (there are plans to add more streams, according to the site). During that sign up process it asks various questions about their preferences and background (in its current instantiation those questions are mostly about music).
And then, using AI-directed chatbots supplemented by some human supervision, ReplyYes texts its users with an offer to buy an album.
Users can reply “yes” to purchase the item, or if they don't want to buy they can also aid the bot in learning more about them by responding “Like” or “Dislike.” If the interaction between man and machine gets any more complex from there, the machine steps off and a human worker takes over the chat.
ReplyYes is a spinoff of Madrona Venture Group, which first piloted a version of the text-based commerce with Peach, an on-demand delivery app also backed by Madrona. Peach would send users a text once a day - eventually around their preferred mealtime - and ask if they would like to purchase a particular dish from a particular location. The service started so strongly on Peach that they decided to work to build a purer eCommerce application around it.
"There's something with messaging that just feels intimate," said Madrona Managing Director Scott Jacobson. "It's very much more of a conversation than email."
And though vinyl records may seem a somewhat esoteric place to start their up-and-coming contextual commerce business, in just 8 months they've managed to sell $1 million worth of records.
Madrona Venture Group, which launched ReplyYes about eight months ago in its startup lab, calls the business model "conversational commerce."
The concept began with Peach, a food-delivery service backed by Madrona that sends daily texts asking if customers wants to order a particular lunch dish — say, Chicken Tikka Masala from Seattle's Cedars Restaurant. Peach did so well, Madrona started ReplyYes, which has sold more than $1 million worth of vinyl so far and on Thursday added graphic novels to its menu of collectibles.
"It’s ridiculously frictionless,” CEO David Cotter said. Before heading things up at ReplyYes, Cotter was a general manager at Amazon and a SquareHub co-founder.
Or at least it can be, Cotter noted, since this type of service must be rolled out carefully and selectively. Consumers, who find much of their social media streams and inboxes already clogged with opportunities to buy, are wary of feeling spammed.
"The challenge is always showing thing and to consistently send products that match customer tastes. You are only as good as your recommendation engine."
And those recommendations made by the AI, Cotter notes, are really only half the battle because though the entirely automated chat process has gotten a lot of press lately — as Cotter sees it, a human touch is still very much necessary.
“Companies that try to create tech at the chat level that is 100 percent machine, they’re going to fail and they’re going to miss the nuances of communication,” he said. “If you’re going to embark down this path, it’s critical that you think about the hybrid solution.”
The goal, notes Cotter, is actually more complicated than just conversion, or giving a customer a slightly more conversational way to basically hit a "Buy Now" button - and much more about using the entire retail process as a useful whether or not it ends in the preferred manner.
“We’re a very mixed model in that way,” Cotter said. “In the eCommerce world, people who come to your site and don’t buy are often a negative, whereas for us, we really are investing in the long-term relationship.”
And customers are not the only long-term relationship ReplyYes is working on developing; it has also emerged from stealth with a bang and is now looking to make lifelong friendships with investors as it tries to grow and expand its offerings. It popped out of stealth with $2.5 million in funding with investment from Madrona, Francois Kress, the CEO of Carolina Herrera, and Lorne Michaels' investment arm.
Up next for ReplyYes? Expansion, particularly onto Facebook and Twitter, for its chatbots. It is also looking for its next good for geeks after records and comic books. We hear shoes are popular...