With the COVID-19 crisis sparking an online shopping explosion, a group of veteran Ottawa tech executives is hoping its new software clicks with merchants looking to boost sales on e-commerce platforms.
Denis Leclair, Fahim Sheikh and Krishna Vemulapali are the founders of Trellis, a one-year-old startup that uses AI algorithms to help Amazon merchants get more mileage out of their ad spending by figuring out which keywords customers are most likely to input when searching for products.
Even in pre-COVID times, the longtime friends and colleagues – who’ve worked together at various Ottawa software ventures over the past two decades – figured they were on to something as merchandise sales on Amazon and other platforms climbed steadily. The pandemic has since shifted that upward trajectory into overdrive.
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“You can see e-commerce has just taken off,” says Sheikh, who studied computer software engineering at Carleton University and started his career at Nortel in the 1990s. “I think that’s where we’re lucky (and) very thankful that we’re in a space that’s done well during COVID. The space is just on fire right now.”
Launched last August and incubated out of the Invest Ottawa pre-accelerator program, Trellis officially debuted its software at the virtual SaaS North conference on Wednesday after months of beta-testing with about 15 customers. The company now has 11 employees and has already landed more than $1 million in seed funding from private angel and institutional investors in Canada, the United States, the Middle East and Asia.
Location drives sales
Trellis is the brainchild of Vemulapali, who recently spent several years developing software for local e-commerce analytics firm 360pi. While it could tell customers where their products ranked on Amazon’s sales charts, the software couldn’t actually help them climb the rankings.
“Your location on the marketplace really drives the sales you get,” explains Sheikh, adding research shows that 70 per cent of Amazon consumers buy from companies on the first page of a product search, while nearly two-thirds of buyers choose one of the first three products they see on page one.
In an effort to boost sales, Amazon merchants can pay for “sponsored” status, meaning the products will appear at the top of the page when customers enter particular keywords. To earn a sponsored position, merchants bid on words and phrases that are most likely to drive traffic to their products.
“As a merchant, the challenge is I have to figure out what keywords to bid on,” Sheikh explains. “Traditionally, this has been done manually.”
Many larger retailers that sell hundreds or thousands of products on the platform pour a lot of energy and money into determining which keywords bring the greatest return on investment, often outsourcing the task to ad agencies.
“It takes a lot of time, a lot of expertise to get this right,” Sheikh says. “What we’ve done is we’ve automated the process.”
Trellis’s high-tech algorithms tap into Amazon sales data to figure out which keywords are likely to generate the most clicks and sales for merchants. The software then calculates and submits bids based on those results.
Sheikh likens the Trellis platform to a self-driving vehicle. “You just have to tell it your goal and hit go.”
Huge market potential
Now out of the testing phase, Trellis is poised to tackle a massive potential market. Amazon alone has more than 2.5 million retailers on its platform, any of which could be future Trellis customers, Sheikh notes.
“That’s the target market we’re going after,” he says. “If we can get 40,000 merchants paying 200 bucks a month to us, that’s a $100-million business right there.”
The company is offering its software on a monthly subscription basis at prices ranging from $49 to $499 a month. The founders expect recurring revenues to grow 30 per cent a month as they ramp up their sales and marketing efforts, and they’re already looking to partner with competing e-commerce platforms such as Wayfair and Walmart as soon as next year.
Sheikh says he expects the company’s headcount to double by next summer as it makes its name in the global market, and the firm will likely seek more funding to boost its marketing efforts. That sales push starts right now.
“You can build all the greatest software in the world, but you’ve got to have customers on it,” he says.