With online marketplaces like Amazon, eBay and Alibaba having a $700 billion global footprint, it’s not surprising that retailers are racing to implement strategies to get their products into these venues. RevCascade, a New York City startup, is poised to jump in and help any retailer that wants to expand its aisles via online marketplaces. With commodities long covered by plenty of online merchants, RevCascade focuses more on apparel and home fashions: Think endless rows of posh handbags, not paper towels.
The software platform enables brands and manufacturers to place inventory seamlessly with partner online retailers by harnessing the power of drop shipping to lift sales without the risk of acquiring inventory. RevCascade makes it possible for retailers to sell more merchandise through their sites, if brand and manufacturer partners agree to ship goods directly to customers.
Co-founders Andrea Tobin and Josh Wexler have been operating “in stealth” for more than a year, working with dozens of apparel and home goods brands and retailers. Tobin is a designer and founder of the Marla Cielo handbag brand; Wexler is an entrepreneur, responsible for building global companies including Rubicon Project, one of the largest marketplaces for buying and selling advertising.
RevCascade has already raised a few million dollars from eager investors.
You have noted lackluster in-store sales for the past number of months and the upside potential for retailers adopting marketplace strategies. What’s the story?
Wexler: There continues to be an intense focus on what’s ailing retailers and we certainly think physical stores are still important. But marketplaces are here to stay and we’ve predicted that nearly every retailer will operate one. At $700 billion globally, they already represent more than 40 percent of ecommerce sales of the $1.3 trillion global e-commerce market.
Retailers are realizing this as a huge opportunity and the number is only going to grow from the hundred or so operating today. We believe every mid- to high-end retailer in the near future will launch a marketplace with an extended aisle of curated products that complements their in-store business. That’s going to benefit both the retailer and the brands that they sell.
Curation — where brands and retailers work together to offer consumers unique products — will be critical. Everyone can provide their customers endless choices, but to curate products that complement their existing assortment will allow retailers the opportunity to differentiate. So there is an opportunity for the existing brands doing business with a retailer to expand, and there’s an incentive to experiment with new vendors that don’t have a track record.
Andrea, you developed the idea for RevCascade due to necessity, right?
Tobin: That’s right, necessity definitely led to the creation of RevCascade. When I created and launched art-inspired Marla Cielo handbags, I started getting approached by many fashion-forward marketplaces to sell my products. Each marketplace required me to set up my profile, upload my products including hundreds of images and descriptions, update inventory on a daily basis and manage transactions on a one-off basis.
If I sold out of one of my products, I would need to log into every marketplace and pull that style from availability. Each marketplace required a custom packing slip. There was so much friction, we wondered, “What if there was a platform that made this channel very easy to scale?” And [that’s how] the idea for RevCascade was born.
How does RevCascade differ from what’s currently available?
Wexler: Our automation platform enables brands and retailers to master drop shipping, save time and generate new revenue. We automate the business of drop shipping from managing connections and merchandising tools to product information management, inventory updates and transaction management. We take an open integrations approach, meaning we integrate with any existing technology or system. With one integration, a brand or retailer can drop-ship with any trading partner they choose.
You’re currently working with dozens of retailers and brands — did they replace their existing solutions?
Wexler: We’re able to integrate with a retailer’s existing infrastructure, so if a retailer is already operating a marketplace, there’s no need to tear out what they have and start over. Conversely, if a retailer is looking to launch a marketplace, they can utilize RevCascade to power it.
We are now enabling hundreds of connections between the world’s best brands and retailers. With our open integrations approach, our customers have the choice of using RevCascade in concert with their existing systems or as a new solution. As a result, we integrate via RevCascade’s application programming interfaces, electronic data interchanges, file transfer protocols, HTTP, email or even a custom integration with the brand or retailer’s existing systems.
Most integrations take two to four weeks. One major retailer was fully integrated in three weeks and launched its drop-ship marketplace shortly thereafter. Now, less than two months after launching, it’s already on a multimillion-dollar annual run rate.
What’s your business model?
Tobin: Our business model makes it very easy for a brand to plug into any retailer’s drop-ship marketplace, as well as for a retailer to launch, operate and scale its own marketplace. We charge zero upfront fees, so retailers can get started with very minimal risk. We’re able to customize the financial terms. So we might charge a subscription fee or a revenue share depending on the level of service our customers require.
Most people are familiar with software as a service, but you characterize RevCascade as “revenue as a service.” Can you elaborate?
Tobin: We coined the “revenue as a service” term because, more than just software as a service, the power of our platform and the network we’re creating actually delivers incremental revenue to brands and retailers.
What do you see as the major revenue opportunities for brands and retailers in the next 36 months?
Tobin: The reason we are so excited about the RevCascade platform is because there are not very many big revenue opportunities for brands and retailers in the near future. Stores are closing, brands are losing wholesale orders and the current sentiment in the market is one of survival. E-commerce is currently growing 15 percent year over year, which is great, but not enough to make up for the slowdown happening with most retailers.
We know that if brands and retailers embrace curated drop-ship marketplaces in the right strategic way, they will unlock additional revenue that will significantly impact their business at an even faster rate than e-commerce.