Shopify has invested in Gorgias, a company that is known for building customer service tools for e-commerce websites. With this, the company raised $30 million to take its overall valuation to $710 million.
The new $30 million investment was made by Shopify and Transpose Platform. Gorgias already has investors like SaaStr’s Jason Lemkin, CRV, Alven and Sapphire Ventures’ Rajeev Dham. According to Tech Crunch, Gorgias’ current funding is $72.4 million.
DTC brands need to generate more money from their existing customers.
Romain Lapeyre, CEO, Gorgias
Company Growth
In 2020, Gorgias was helping over 4,500 online stores with customer support tools based on live chat, phone, email, SMS, messaging apps like WhatsApp and social media. It now has over 10,000 stores under its name. Steve Madden, Princess Polly, Olipop and Marine Layer are among some of its prominent clients. Most of its associated companies use Shopify to sell their products.
Gorgias has a staff of 245 employees with physical offices in cities like Paris, San Francisco, Toronto, Sydney, New York City, Belgrade and Charlotte.
Lower margins and higher acquisition costs require businesses to capture more revenue from their existing customers, and customer experience is at the heart of that effort.
Romain Lapeyre, CEO, Gorgias
Rising Cost
Tech Crunch quoted Gorgias co-founder and CEO Romain Lapeyre saying: “Mix in continued supply chain issues and the higher cost of raw materials and direct-to-consumer brands are feeling the margin squeeze at both ends”.
“DTC brands need to generate more money from their existing customers,” he added, hinting at how Gorgias can improve customer experience.
Gorgias also provides a DTC growth playbook, which could raise revenue by 44 percent as per Lapeyre’s claims. “The environment we’re working in has changed quite a bit,” he said.
“The 2020 e-commerce boom that helped fuel our growth up to our Series B has subsided, but it’s never been a more important time to upgrade the customer experience of online stores. Lower margins and higher acquisition costs require businesses to capture more revenue from their existing customers, and customer experience is at the heart of that effort,” Lapeyre added.
Smart Decisions
Learning from Shopify’s mistake to overestimate e-commerce growth, which resulted in recurring losses and 10 percent job cut, Gorgias has “slowed down hiring on the go-to-market side, assessed where we can cut costs and asked the team to be smart about how we use the cash we have on hand”.
The recent funding by Shopify and Transpose Platform will allow Gorgias to develop its Automation Add-on feature. This feature will provide instant answers to one-third of repetitive support queries by customers. Another feature called Revenue Add-on will be added later to automatically identify customers with potential to generate further revenue.
“Both the automation and ticket prioritization will further merchant revenue goals by better identifying shoppers who are ready to buy and by increasing conversion rates through proactive support — an innovation in the current helpdesk market,” Lapeyre said.
“This is made possible by the volume of e-commerce-specific support tickets handled by the Gorgias platform, which are used to train the company’s proprietary algorithms to detect intent and auto-tag appropriately.”
