There are few universals in business but one is that every company is selling something – a product, idea or service. UK-based technology company eCommera’s service is primarily to help retail companies sell more online.
Through its trading platform and user dashboard, eCommera effectively allows companies to outsource the operation of e-commerce components and provides information to allow businesses to decide how to develop pricing and other sales strategies.
E-commerce is expected to increase in importance for all businesses. Investment bank Goldman Sachs said by 2019 more than half of growth in US retail would come from e-commerce as opposed to physical stores compared with a fifth currently.
To fund its own global growth plans, eCommera has pulled together a consortium of two of the most successful venture capital firms, the world’s biggest advertising agency and a Scottish retail entrepreneur.
ECommera was started in early 2007 because Scottish entrepreneur Tom Hunter was unhappy at the slow pace of e-commerce sales across his retail companies. He said: "The future of retail is undeniably multichannel – clicks and mortar.
The internet is nirvana for entrepreneurs. I was frustrated my companies’ chief executives were not getting e-commerce fast enough so I asked my business partner [Paul Davidson] where I should get advice and he said his school friend was at BT [UK phone operator British Telecommunications]."
The friend was Andrew McGregor, who became chief executive of eCommera after co-founding the business alongside online retail entrepreneur Michael Ross.
Sir Tom said three-quarters of his companies, through his investment vehicle West Coast Capital, now used eCommera’s service – House of Fraser expects online sales of £60m
(€73m) this year, up from zero three years ago. West Coast Capital and Icelandbased retail conglomerate Baugur initially funded eCommera before the credit crunch hit and West Coast bought out its Icelandic peer.
McGregor said the decision to raise more third-party funds last year was always planned. He said: "The intention had always been to broaden the shareholder base as our aspiration is to grow, and that needs access to capital and other sectors beyond retail."
In July UK-based VC Frog Capital led the £5.5m investment round. Mike Reid, partner at Frog, said it later invited US peer Draper Fisher Jurvetson’s ePlanet fund to complement its technology and financial resources. eCommera then met WPP Group and, after the advertising agency introduced opportunities to show that the strategic investor could be useful to the business, a price for selling 10% of the company was agreed on the same terms as Frog to align interest between the corporate venturing unit and independent VC.
Mark Read, chief executive at WPP Digital and head of strategy for the agency, which has made 16 corporate venturing deals, said it was important "to see if it is a good investment with or without us" before deciding whether to invest. However, he said WPP was interested primarily in the strategic advantages of corporate venturing.
Read said: "For WPP it is about connecting our 134,000 staff with innovation. Technology is changing the advertising industry and not all innovation can be found inside our businesses. Corporate venturing is a way to get engaged and insights in a lower-cost and more practical way than starting up businesses ourselves or buying one directly.
"Although WPP owns only 10% – we would prefer 20% – and has an observer role on the board, we pretend we own 100% in order to facilitate introductions. We have no more rights than any other investor as we try not to overcomplicate things."
Read said having eCommera associated with WPP Digital was a point of difference and offered brand endorsement when dealing with other clients.
Although there have been no direct customer wins from a WPP account, one of eCommera’s most recent wins was the London 2012 online store, which is expected to be the primary destination for Olympics merchandise. It was built and is operated by the company for customers round the world outside the US and Russia. eCommera is about to open an office in France, to expand into Europe beyond its London base where it has 22 customers. McGregor said the company had global ambitions as "it only takes one or two multinational customer wins and that will take us international".