Flow, a new company geared to ease the logistics of cross-border e-commerce conducted by brands and retailers and “localize” the shopping experience for consumers, revealed a $13 million Series A investment from Bain Capital Ventures.
Officials said the funds will be used for marketing, expanding the business and providing more features for merchants including different shipping carriers, payment methods and translation providers.
“It’s an à la carte solution,” said Rob Keve, cofounder of Flow, along with Mike Bryzek.
“Whether it’s a brand like Warby Parker or a retailer like Saks Fifth Avenue, the internationalization of their web sites continues to grow,” said Scott Friend, managing director of Bain Capital Ventures.
According to Friend, Flow solves “one of the most significant challenges” of international e-commerce confronting retailers. “They’re automating the process to eliminate the friction experienced by merchants and the uncertainty felt by consumers when shopping internationally.”
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Flow cofounders Keve and Bryzek met in 2014 because, by sheer chance, they selected the same trainer to work out with, close to their homes in New Jersey — Keve training for marathons, Bryzek, a triathlete. Aside from exercising, they found further common ground discussing the technology-based companies they created. Keve founded the Fizzback customer feedback firm and Bryzek cofounded Gilt Groupe, the online discount site.
Based on those experiences, they recognized the business opportunity to address “the pain points” retailers have with international e-commerce, such as integrating with shipping carriers and payment methods, and to alleviate the frustrations customers have dealing with currency conversions and the often unexpected costs associated with tariffs, taxes and shipping.
Generally, retailers and brands don’t get much business on their web sites from customers abroad, but Flow’s mission is to streamline international e-commerce and increase revenues for retailers and brands.
According to Keve’s statistics, on average, about one-quarter of the traffic on web sites is international. Of that traffic, only 0.2 percent to 0.8 percent turn into actual transactions. With domestic web site traffic, Keve noted, the conversion rate is roughly 10 times higher.
“Our technology has fundamentally improved conversion rates of retailers who typically lose customers to the fears and uncertainties of cross-border commerce,” said Keve. “Consumers enjoy a localized shopping experience that mirrors shopping from a domestic merchant.”
The company started operations last December, though Keve said he’s not ready to release the names of any clients and will announce a few large clients in the second quarter of this year.
Flow’s major competition comes from Borderfree, a large, nine-year-old company working with scores of retailers. Borderfree went public in 2014 and was later purchased by Pitney Bowes.
According to Friend, “There’s room in the market for something that’s modern, very merchant-friendly and technology-friendly, meaning retailers and brands like it because it’s easy to integrate and it’s modular.”
In addition, “Legacy players have historically taken the position of holding the merchandise first and cross-docking in their warehouse, physically taking the merchandise,” Friend said. “With Flow, it’s now done with software.”
“Our company is entirely software-driven,” added Keve. “It’s built to take costs out and it works for any merchant in any country.”
Flow utilizes virtualization software to simplify the shipping and artificial intelligence to better understand the products and categories and assess duties and taxes to different destinations. Keve also said that clients are charged a subscription fee for the software platform, as opposed to being charged based on revenue sharing.
Flow is owned by management and the investors. In addition to the Bain Capital Ventures investment, Flow previously secured funding from Brian Lee of The Honest Company, Alexandra Wilkis Wilson of Gilt and GlamSquad, Alexis Maybank of Gilt and Project September, Shan-Lyn Ma of Zola and David Tisch of Spring.
Bain Capital Ventures invests from seed to growth in enterprise software, infrastructure software and industries being transformed by data. Bain has helped launch and grow more than 200 companies since 1984, including investments in Rent the Runway, Jet.com, DocuSign, Kiva Systems, LinkedIn, Rapid7, SolarWinds, SurveyMonkey, Taleo and TellApart.