Goodwater has been tracking e-commerce companies ever since the very first products were sold online, but rarely has there been a company in the space that we’ve been as excited about as Tophatter. We’re excited to announce today our Series B investment in Tophatter, alongside our friends at CRV and August Capital (Fortune article). Tophatter is mastering the characteristics we believe are crucial to the future of e-commerce: innovation in merchandising, digital marketing, and distribution. And the company, whose strong unit economics have allowed it to grow profitably – two words rarely seen together in e-commerce startups – is doing it with one of the best teams we’ve seen in over 25 years of watching the market.
In the Valley, everyone claims to have a great team, but Tophatter is cut from slightly different cloth in that its founder and CEO, Ashvin Kumar, is a technical prodigy of sorts who not only has engineering in his DNA but knows how to apply that to service customers at the highest level (he began his career as an engineering intern at Amazon after all). Ash has recruited almost every engineer that has come through the door, ensuring that they can contribute fully to the company’s mission of delivering one of the most personalized, compelling, exciting, and fun shopping experiences in existence.
To that end, this remarkable team is developing a unique platform customized for each shopper every time he or she comes onto the Tophatter site or uses one of its apps. Tophatter’s technology analyzes thousands upon thousands of data points per day on what people are buying, when, what they’re spending, where they’re from, etc. Then the Tophatter platform applies what it learns so that it can adjust to provide the next shopper an even better, more personalized shopping experience.
This focus on data is central to Tophatter’s ability to elevate the traditional process of buying goods into a shopping experience in which consumers discover goods that they may not have been aware of. Tophatter puts the fun back in shopping and is so different than other e-commerce solutions today. Many bow down to Amazon, which is an amazing destination for commodity goods. But Tophatter aspires to be something else; Tophatter is shopping as entertainment. Its users love that thrill of getting a great deal on a novel item.
But it’s not just consumers who have fallen in love with Tophatter, it’s sellers too. They’ve gained access to a global audience of more than 12 million very engaged shoppers, and they get to move their products very, very quickly. Personalization and gamification drive an 85% sell through rate, which means that from the first seconds their products are listed, they are highly likely to be sold. Contrast that with the typical shopping mall, where goods may sit for months.
If you think about it, Tophatter is essentially building 12 million malls for people, serving up exactly what they want at a price they are willing to pay. Not only is this a faster, easier, more fun experience for consumers than driving over to the mall, hunting for parking and walking all over, manually searching for just the right item, but it also opens new distribution channels for suppliers to get their goods in front of the people most likely to purchase them. And it’s a channel that is growing quickly – expecting to generate $350m of annual sales for sellers this year.
These are just a few of the reasons we are very bullish on Tophatter’s prospects for the future. We hope you will check out Tophatter.com or experience it on one of its apps. It will change the way you shop.