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OrderGroove lands $6.7M to help brands retain customers

Fung Capital, Lerer Ventures, and others invest in NY-based startup powering subscription commerce

Financial trends and news by Bambi Francisco Roizen
November 5, 2012 | Comments
Short URL: http://vator.tv/n/2b74

Even though, we live in a world where millions of items are at our fingertips, there's nothing like sticking with the same brand for all sorts of items, from cosmetics to socks to underwear. When you find something you like, stick with it.

And, if retailers were to provide a way in which their customers could subscribe to buy items on a monthly basis, they might actually be able to keep them happier and more loyal. In the last few years, one company has emerged to let retailers and business-to-business product companies do this and it's getting more funding to fuel its service.

Manhattan-based OrderGroove announced Monday that it's raised $6.7 million in a Series B round of funding, led by San Francisco-based Fung Capital USA, NY-based Lerer Ventures, Legend and SWaN Ventures, Allegro Venture Partners, Bee Partners, as well as former CEO of Walmart.com, Raul Vazquez. Founded in 2008, OrderGroove raised $1.625 million in a prior round.

OrderGroove essentially is a backend technology enabler for large consumer and business-to-business product companies that want to increase customer retention. OrderGroove allows their customers to offer subscription services to their clients. 

"We power subscription and membership programs in a white-label format," said Greg Alvo, founder and CEO of OrderGroove.

"We integrate into an e-commerce platform to allow clients to offer their customers a subscription to frequently-purchased products."  

So when a person checks out when buying a product, they can also subscribe to receiving that product. 

In addition, OrderGroove powers "discovery clubs" for clients so their customers can discover new products when they get released. It's not only convenient for customers, it's a nice service to offer them.

And, in this day and age when retailing can be a cutthroat business, there's nothing like differentiating oneself through customer service. For the discovery club, OrderGroove asks their clients' customers what their favorite products are and over time, those customers can receive a personalized package with new products that are similar to what they've purchased in the past.

OrderGroove currently works with more than 60 brands, such as Grainger, L’Oreal, Jockey, NBTY, Freshpair and Lot18. Alvo said that OrderGroove has been able to help customers increase purchases by 2x to 4x. Alvo wouldn't get into the economic details, only to say that OrderGroove has a performance-based model and only charges its customers when products or subscriptions are sold. 

Why would brands work with OrderGroove? Besides providing the underlying technology to power subscriptions, OrderGroove also works with its customers to drive up subscriptions and discovery club memberships. So while many companies are focused on helping brands acquire customers, OderGroove is focused on helping brands keep them through subscription services and discovery clubs.

According to Gartner, subscription commerce will generate revenue for 35% of the Fortune 2000 by 2015. 

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