Thought Leaders in E-Commerce: Bolt CEO Justin Grooms (Part 5)

Sramana Mitra: Can you talk me through the business model evolution of the business? This is probably before your time, but when the company was selling the checkout software, were they charging on a Software as a Service basis?

Justin Grooms: When the company originally started selling the software, it was a packaged product. By the way, we still sell the product today and people love it. Initially, it was a checkout software where you would hand off your entire checkout process to Bolt. We’d provide all the requisite services such as fraud prevention, fraud identification, and payment processing. We’d charge a couple of percentage points for every transaction that was successful and used the services we provided. That’s how we fund it. So it was a consumption model.

Sramana Mitra: Okay, so it was not Software as a Service, it was a consumption model.

Justin Grooms: It was a consumption model. That’s right.

Sramana Mitra: These customers were okay with your building this network and harnessing the network, right?

Justin Grooms: The reason is the benefit for the retailers, and we still see this to this day. Shoppers with a Bolt account convert at a higher rate, generally with higher AOVs. Individual merchants, even very early on when we’d only be attached to maybe only 1%-4% of shoppers at a retailer site, we’d recognize that a small percentage of shoppers were converting at significantly higher rates than everyone else.

So, early retailers wanted our network to grow. We still see the same type of data. Retailers generally want our network to grow.

Sramana Mitra: Okay, got it. Very interesting. And the model is still the same, it’s still a transaction fee-based model?

Justin Grooms: In general, it is, except now we just charge an extremely small fraction of a percent of successful transactions that use our network. We allow retailers and the very attractive large retailers to use their preferred fraud providers to use as many different payment processors as they want. They don’t need to go through us. It is truly one one of those rare situations where I think that it’s the scale that makes the model work and that we can take microscopic portions of transactions.

But since we’re doing for so many retailers, it works for them.

Sramana Mitra: And what is the competitive landscape? Whom do you compete with in deals?

Justin Grooms: Definitely our biggest competitor is a retailer. Historically has been a retailer saying they’re not going to do anything, right? They’re not going to upgrade how they manage identity.

Sramana Mitra: How are you positioned? Do you position as a consumer identity manager? Is that how you position yourself?

Justin Grooms: That’s exactly, it’s a shopper identity solution. With that identity comes a lot of useful information, including different ways of paying, shipping, security, credentialing for authentication, a whole bunch of services that we deliver with that comprehensive shopper identity. But the larger retailers really see us as an identity solution solving one of their biggest issues, which is how do I get to know my shoppers so that they will come back and I can develop a relationship with them that’s intimate and curated.

Sramana Mitra: I see. So you don’t position as a marketplace, you position as an identity software.

Justin Grooms: It’s a marketplace of shoppers for sure.

Sramana Mitra: Are you offering some customers and your customers, the businesses, the retailers, a way to market into your millions of consumers?

Justin Grooms: No, we never do.

Sramana Mitra: That means it’s not a marketplace. A marketplace’s value is to offer access to customers. What you’re offering is managing the identity and by managing the identity, increasing the conversion rates, perhaps, but you’re not offering them marketing solutions.

Justin Grooms: Well, where we are indirectly offering them a marketing solution is that, we get about 40%-50% of shoppers that we recognize in a retailer’s site and who will credential in and opt in to share their profile with that merchant. Then that merchant is able to turn around and develop a longer-term outreach and marketing campaign with their shoppers.

So, guests, strangers, or just maybe repeat shoppers hit their site and are just unidentified for the merchants. We are able to dramatically increase the recognition rate and the opt-in rate of shoppers saying, “I do want Casper to know who I am and I want them to be able to market to me and I want them to have my payment information convenient and available for a transaction. I want them to know when I move addresses and go somewhere else that they ship my mattress to the right spot and not the house I lived in two years ago.”

So in that regard, it is marketing teams that are some of the most interested in what Bolt is doing because they spend a lot of money getting people to their website and knowing who the shoppers are early on. Having an intimate relationship with those shoppers then puts the marketing teams of individual retailers right where they want to be, which is, “Now I know who to market to and have permission to market to them. They’re expecting to hear from me; they want it.”

That is a huge benefit that they see.

This segment is part 5 in the series : Thought Leaders in E-Commerce: Bolt CEO Justin Grooms
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