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Announcing our investment in Preezie. Concierge recommendation engine taking in-store retail online.
Preezie co-founders Michael Tutek and Quoc Nguyen were frustrated at the sub-par customer purchasing experience in most e-commerce websites. Michael, with more than 10 years experience in retail and nearly 20 years in sales had the idea to put the beautiful, personalised in-store sales experience online. If you've been to a high-end retailer to buy a big-ticket item, you'll know the value of an experienced sales rep. They'll make you feel welcome, ask insightful questions, educate you on the industry before providing thoughtful and tailored recommendations that meet your requirements. Now contrast that with the modern e-commerce shopping experience where you usually are left with a search bar, a myriad of filters, and poor, impersonal search results. Preezie wants to change this and enable brands to empower shopping experiences based on personalisation, bringing the sales rep experience online.
Preezie is an e-commerce enablement tool that is embedded onto the web page of major e-commerce merchants and offers a much more streamlined, personalised purchasing experience for consumers. The tool is embedded into an e-commerce retailer's website (such as Baby Bunting's here) and puts the user through a series of questions before presenting a targeted set of search results. This is already yielding huge results for e-commerce retailers and improving their end-to-end conversions from ~2% to up to as much as 6**%**. In retail, even a 1% increase in end-purchasing conversion on hundreds of thousands of page views per month (and sometimes millions) is a 10x value proposition for the retailer. Preezie's customer journey workflow has been switched on by some of Australia's leading retail brands such as Baby Bunting, The Good Guys, Snooze, Lorna Jane and they recently signed JB Hi-Fi and is now rapidly expanding their customer base of major e-commerce merchants around the world.
An increasing thematic for us at TEN13 is the platform nature of e-commerce. E-commerce is a US$4.9 trillion dollar market and is based on an increasingly fragmented, decentralised stack of technologies. E-commerce websites are partnering with the best-in-class software tools within the 'stack'. This means merchants are relying on specific tooling such as Klaviyo for marketing, Bolt or Fast for the checkout, Stripe for payments processing, Shogun for landing pages, or increasingly, Preezie, for optimising the customer discovery browsing experience. We are firm believers in this thematic with our investments in Carted, and we're looking to follow this theme with Preezie.
The Global E-commerce market is a ~US$4.9t market and is projected to keep growing to reach ~US$6.4t by 2024.
E-commerce enablement is a major theme in startups and venture capital at the moment. This is, in part, because e-commerce has essentially doubled as a share of retail spend in the US over the early 2020 (COVID-19) period. This pushed forward years' worth of growth to happen 'overnight', and with that growth has come an opportunity for technology companies to support the new spend and capture value as Preezie is already doing.
Especially, e-commerce merchants are now open for business to previously lagging categories of customers like the Baby Boomer generation and some of GenX, who may have been reticent to participate in e-commerce, and the online economy previously have been activated as a result of COVID-19.
The current customer purchasing experience online is mechanical, impersonal, and hasn't really evolved since the beginning of the e-commerce era. It involves using search bars and dropdown menus that look like HTML-based buttons and tables, whilst most search results are typically derived from AND/OR/NOT functions which can exclude many relevant and helpful search results for consumers. Unsurprisingly, this approach results in a purchasing experience devoid of personalisation and treats consumers as a homogenous buying group.
Contrast the experience above with the best purchasing experience you can experience in person. In the case of the latter, a skilled sales rep will help tease out your product requirements, expectations, and use cases before exercising their best judgment to tailor recommendations that best suit your needs. Preezie's platform aims to take the know-how and experience of the most skilled sales reps and bring those to the online buying experience, at a global scale.
The dated approach to the current customer purchasing experience online described above goes some way to explaining the current page view to purchasing conversion of just 1-2% for many e-commerce retailers. This problem is resulting in lower than optimal conversion and depending on their size and scale retailers are leaving hundreds of thousands, and potentially, millions in sales on the table, creating an opportunity for Preezie to bring the experience of purchasing in-person, online.
Preezie's vision is to become the e-commerce enablement platform that gives users the tailored, personalised offline e-commerce purchasing experience, online. This is a big and audacious vision, considering the scale and scope of the global opportunity. If they're successful, Preezie will become a front-facing customer profile (with customer loyalty, discounting, personalisation) enabling an improved e-commerce purchasing experience across the internet.
Preezie's current core offering allows customers to embed their HTML User Experience Customer Flow on a retailer's website, which guides users through to a set of more personalised search results in a given product category driven by a set of highly targeted questions. Their product also allows customers to provide personalised experiences across different touchpoints ranging from product discovery, cart abandonment, or when a user leaves the website.
Preezie is currently used by over 100 major e-commerce brands around the world, some of whom are listed below:
Preezie's core value proposition is very clear (and compelling) - it has consistently increased the end-user conversion from ~2% to 6**%**, creating a substantial uplift in revenues for retailers. In some instances, customers have seen a 3-4x increase in their baseline revenues as a result of Preezie. In a world where e-commerce is a conversion funnel optimisation game, every single percentage optimisation point is truly valuable to each retailer.
E-commerce is a megatrend and a major opportunity with a $4.9t market size. There has been 10 years' worth of adoption growth in e-commerce since the onset of COVID-19. Specifically, there is a myriad of opportunities within the customer purchasing experience and we believe that Preezie's core offering to increase overall conversion through a more engaging user experience has a line of sight to a very large opportunity.
Preezie has grown super fast in a very capital efficient manner and has some incredible traction:
Preezie has grown its contracted ARR more than 5x in the FY21 financial year, placing it in the top few Series A companies from a growth perspective that TEN13 has seen.
JB Hi-Fi, Baby Bunting, Lorna Jane, The Good Guys, and more than 100 major retail customers across Australia and the US have signed up to use Preezie's e-commerce tool. This is a strong validation of their product efficacy, stickiness, and their ability to navigate difficult enterprise sales processes with C-level and VP-level executives and expand accounts once inside.
Not only is Preezie adept at signing up big names, but they've also proven to be able to expand accounts with Tony Bianco, Baby Bunting, and Icon by Design, all increasing their usage over time to name a few. In fact, after launching with Lorna Jane in Australia, 3 weeks later Lorna Jane signed up 5 more regions, namely the US, UK, Singapore, Canada, and New Zealand.
CEO Michael Tutek has worked in retail sales and in business development for nearly 20 years. He deeply understands the retail customer purchasing experience and workflow and has a unique product insight and vision which is yielding a step-change in customer conversion. Quoc is an experienced finance and strategy professional and has had a major focus on building an efficient sales engine with strong unit unit economics, he has been a major driving force behind the team's capital efficiency getting to a Series A and only having spent half of the capital that they have raised so far.
The Preezie have also been able to leverage the skills and experiences from their advisory board which includes Trevor Nelson (former CTO at Pexa, ANZ), and behavioural science expert Kris White who has worked with companies like Visa, Samsung, and Instagram.
Securing Touch Ventures as their lead investor strongly validates what they're working on. Touch Ventures and their largest shareholder Afterpay will, we believe, be able to open a substantial number of international doors and retailers, as well as get them more and more exposure into e-commerce operators both in Australia and in the US. We are super excited to be joining them in the round in this highly competitive round.
With an AU$5.5m Series A round complete, and with the support of their lead investor in Afterpay-backed Touch Ventures (ticker - ASX:TVL), Preezie is fuelled and ready for a proper US expansion and secure market leadership in Australia after having exhibited early signs of success. We are super excited to be working with Michael, Quoc, Luke and the rest of the Preezie team as they bring the beautiful in-store purchasing experience online.
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