Raising Another $230 Million, Yotpo Rides E-Commerce Wave To Become A Marketing Hub For Brands
As the e-commerce boom continues, a little-known company that powers customer reviews and engagement tools for a range of well-known brands has reached unicorn status.
Today, New York-based Yotpo said it has raised $230 million in Series F funding with a new post-money valuation of $1.4 billion. The round comes less than a year after the e-commerce marketing company raised a $75 million Series E round in August. The new funding—led by Bessemer Ventures and Tiger Global—will be used for organic growth across engineering, sales and international expansion while Yotpo also explores targets for additional acquisitions.
“Two months into Covid, it became very clear to us from the data that something really big is happening in e-commerce,” Tagrin says. “And then we decided to move to play offense. This one round also is about playing offense.”
Founded in 2011, Yotpo has been the platform powering customers reviews for brands like Patagonia, MVMT, Away and Burton. But now, a decade later, it sees opportunity far beyond that—expanding into everything from loyalty and SMS to visual user-generated content and referrals. All of these, Tagrin hopes, will enable the company to let brands further consolidate their marketing stack from a dozen or more vendors to just one. Tagrin, who describes the e-commerce boom as “one of the largest changes of our generation,” says Yotpo plans plans to hire another 250 people this year to help fuel product growth.
While e-commerce was already accelerating before the Covid-19 crisis, a recent report from Adobe Analytics found that the pandemic produced “a rare step change in online spending” equal to a 20% boost. In fact, the report predicts that e-commerce will become a trillion-dollar industry as soon as next year, with the first two months of 2021 seeing consumers spending $121 billion—a 34% growth over the same period in 2020.
Tagrin has also has seen massive growth on the revenue front: Yotpo made between $5 million and $7 million five years ago, but is now bringing in $100 million in annual recurring revenue. The company’s software also lets brands integrate with e-commerce platforms operated by Walmart, Shopify, Google, Instagram, Mailchimp, Pinterest and Twitter.
“In retail, it was all about location, location, location,” Tagrin says. “That’s how you win. In online it’s all about consumer attention….Everyone is fighting over consumer facing. And that’s what we do. But the problem with consumer attention is that brands must provide a great consumer experience.”
One of those companies looking to boost attention through engagement is 1-800-Flowers, which has evolved from using Yotpo for managing customer reviews to making it part of how it engages more frequently with customers. Amit Shah, the e-commerce flower company’s president, says an engaged user community makes the brand more attractive to newer customers. Shah—who was previously the CMO of 1-800-Flowers until last year—says he also looks at “return on engagement.”
“We are gamifying and providing an operating system around rewarding those digital breadcrumbs,” he says. “We think it’s absolutely in the right wheelhouse and any ability to deepen engagement including rewards, loyalty, and then a channel of communication like SMS is essential to how this operating system starts amplifying engagement at scale.”
GoPro is yet another Yotpo client. Last year, GoPro company began evolving into a subscription-oriented and direct-to-consumer business, and GoPro CMO Aimée Lapic says a “significant portion” of customers now through GoPro’s website. Through Yotpo, GoPro gives its customers peer-to-peer reviews reviews of its flagship camera, and to date it’s added more than 3,500 reviews globally.
“Customers trust other customers, and when it comes to carefully researched purchases, like a GoPro, giving them an authentic online experience is critical to our success,” Lapic says.
Yotpo is also helping younger companies grow. When Brooklinen brought on Yotpo as one of its first software partners five years ago, the Brooklyn-based bedding company had just three employees who were tasked with fielding thousands of customer reviews manually via email. Since then, Yotpo has been used to field tens of thousands of Brooklinen reviews and also has helped to power its loyalty platform. Justin Lapidus, Brooklinen’s SVP of growth marketing and digital product, says that while Shopify has been the hub for e-commerce Yotpo has evolved from being a spoke to being in some ways a hub of its own. (Brooklinen now has 100 employees and in the past year hit the milestone of a million customers.)
“They’re one of the longest standing software partners we have one also one of the most important in our stack,” Lapidus says.
Yotpo has a bad camera review to thank for its inception a decade ago. According to Tagrin, the idea for the company came after he bought a digital SLR camera for his friend’s birthday—only to be told by his teacher that “we bought the crappiest camera we could have bought.”
“I went back to the website and I saw that basically my decision was based on reviewers that don’t know anything about me,” he says. “Then we set to solve that.”