My cofounder Adam and I have spent the last two years building out Intelligems to help commerce companies optimize their profits. We have loved working on this problem, and today I’m privileged to share that we’ve raised $4.2M to continue working on it — we couldn’t be more excited.
The investment was led by Vinyl Capital and Matchstick Ventures, with participation from MergLane Ventures, SuperAngel.Fund, Techstars Boulder, and several e-commerce founders, including Ed Hallen from Klaviyo.
Born to Optimize
Adam and I ran dynamic pricing at the ridesharing company Via Transportation. We saw extremely powerful results from using data-driven, high-velocity tools to improve our pricing. We believe that, over the next decade, nearly every company should start incorporating more dynamic pricing principles into their operations. Dynamic pricing is a business superpower, and we started Intelligems to make it more widely accessible and accelerate the change — while making money for other online merchants along the way.
Intelligems is the first Profit Optimization suite for e-commerce. Our tools help merchants make the most possible yield from every potential customer that lands on their site. And — thanks to forces beyond our control — it couldn’t be more timely.
After an exciting early-COVID rush to online commerce, the last two years have been brutal for the industry: Inflation has increased costs of raw materials, freight, shipping, and labor; wavering consumer confidence has suppressed demand and spend; changes to iOS have made customer acquisition more difficult and much more expensive. There have already been waves of shutdowns and distressed acquisitions. The game got put on “hard mode” and merchants have no time for error — Intelligems helps make the most of each opportunity.
As Colin Mcintosh (CEO of Sheets & Giggles) put it: “Experimentation is super crucial to us, and now thanks to Intelligems we do price testing constantly across our products- it’s been a game changer. Previously when we launched new products, it was a bit of just finger to the wind. Now, with a bunch of new product lines coming out, we’re using Intelligems to experiment with everything”
If you go to a typical online store, there are probably a dozen mini-factors that play into your buying decision and the merchant’s profit levels. There are product prices and shipping rates; discounts, first-time offers, and clearance sections; return fees and subscription offers; bundles and kits, etc. Currently, most of those are guessed at, or solved within a silo. We help merchants systematically and holistically evaluate, target, and improve these factors.
Our first profit optimization feature was to help test product prices. Previously, merchants had to guess at the right price for their products and had limited visibility into what worked. With Intelligems, they understand the price elasticity across the catalog, and find opportunities to boost margin. SKU Pricing launched in January ’22 and was used by 100+ brands in 2022. In aggregate, we tested $500M of GMV and unlocked $28M in additional margin capture. Notably, one brand discovered that a 5% decrease in price generated 20% more demand — yielding $2.2M in additional profit for the year.
It’s not uncommon for shipping costs to be 10–20% of total order costs for a DTC brand. Intelligems helps answer questions like: Is free shipping worth offering? How much should customers have to spend to earn free shipping? It seems so simple, but can unlock material value. For example, a sporting goods brand found that adding a free shipping threshold increased average basket size by 6% without any drop in conversion — yielding $800k in additional 2022 profit.
In late 2022, we launched a feature to help merchants set up volume discounts, such as buy-more/save-more deals and dynamic bundle offers. These help boost profit vs. normal discounts by encouraging customers to spend more in a given order — they have to “earn” the discount. Moreover, dollar-per-dollar, it’s cheaper to ship larger orders, thus further optimizing margin. Several brands adopted this for Black Friday to make their promotions more profitable while maintaining customer appeal. Early results suggest these sales can increase basket size by 10%+ during promotional periods.
We want to make our tool available to more types of stores and merchants, while continuing to test and measure new ways to optimize profits. In particular, we’re excited to dig into better personalization and discount/offer targeting. We will also use the data we’ve collected — $650M+ of transactions — to recommend improvements automatically.
We exist to help make brands make more money, in the simplest fashion — optimizing components that drive the ideal blend of prices and conversion. The team behind the scenes is incredibly talented and I wouldn’t embark on this journey with anyone else. A special acknowledgment to our team, to our Techstars mentors, ALL of our 25+ investors, and the 500 people who read our update emails and always jumped in to help.
2023, here we come.
And if you're a brand who wants to learn more, book a demo with me on www.intelligems.io!