Co-op Raises $5.8M to Lower Customer Acquisition Costs

The Rising Cost of Customer Acquisition for Online Sellers

Inquiries to online retailers regarding their customer acquisition costs, when compared to previous years, frequently reveal a challenging situation. Previously affordable channels for customer acquisition, such as various social networks, have become significantly more expensive advertising platforms.

The recent achievement of a $1 trillion market capitalization by Facebook serves as a clear indication of this trend.

Co-op's Collaborative Approach to Customer Discovery

Co-op is aiming to revolutionize the way online sellers connect with potential customers, and it intends to accomplish this through a collaborative model offering discounted rates. The company recently announced the successful closure of a $5.8 million funding round earlier this month, demonstrating investor confidence in its unique approach.

Currently, co-op has already onboarded 500 brands to its platform.

How Co-op Facilitates Brand Collaboration

This number is particularly noteworthy because co-op operates on a highly collaborative basis. Brands that join the co-op network integrate the company’s technology onto their post-purchase pages.

This integration allows for the display of related products to customers immediately after they have completed a purchase.

By implementing this widget, a brand’s products are showcased on the post-purchase pages of other participating companies.

The Revenue Model Behind the Collaboration

Such a system might appear counter to traditional capitalist principles. However, the co-op model generates revenue through a clever mechanism.

The post-purchase page widget features three or four product recommendations, effectively providing additional inventory that can be sold to its partner brands.

Cost-Effective Advertising

According to Conner Sherline, founder and CEO of co-op, the startup can provide advertising space at approximately half the cost-per-action compared to platforms like Facebook and other conventional channels.

The scalability of this economic model as the network expands will be a key area to observe.

Additional Software Tools Offered by Co-op

The company also provides software tools, including a post-purchase survey feature available to customers for a cost of 5 cents per order.

Rapid Growth and Expansion

Co-op is experiencing substantial growth. At the time of its pre-seed funding round last July, the service had approximately 20 brands onboarded.

Today, the company is adding between 50 and 100 new brands each month.

Maintaining this rate of acquisition could lead to a total of 1,000 brands by the end of the year, assuming no slowdown in brand recruitment.

Investment and Strategic Partnerships

The company’s early success attracted Sugar Capital to lead its latest funding round, with participation from Bessemer Venture Partners and e-commerce leader Shopify.

Shopify’s investment is particularly significant, as co-op is already available on the Shopify app store.

Further integrations between the two companies are anticipated, potentially accelerating co-op’s growth trajectory.

Future Expansion Opportunities

Co-op has several avenues for future expansion.

Sherline indicated that the company’s primary focus is currently on strengthening its collaborative network.

However, with access to extensive sales data and a growing network of partners, co-op could readily develop partner programs targeting other stages of the e-commerce sales process.