Shopify's $100M bet on Klaviyo
Shopify invested $100 million in e-commerce marketing automation player Klaviyo, extending a partnership that makes Klaviyo the preferred product for managing and messaging premium merchants’ customers.
Why it matters: Amid a slowdown in growth post-pandemic, Shopify's been making targeted investments in back-end functions.
- The company paid $2.1 billion in May to buy shipping logistics firm Deliverr, and invested in music and video app Single to provide NFT-based functionality to its merchants.
- For Boston-based Klaviyo, the partnership is a way to help Shopify’s merchants deepen their relationships with customers, Klaviyo CEO Andrew Bialecki tells Axios.
How it works: Klaviyo helps merchants automate its email and text messaging to customers, aiming to be a customer data repository, Bialecki says.
- So when customers "visit your website, they buy something, interact with customer support, write product reviews — all that stuff gets funneled into us," he says, adding the data helps inform email marketing campaigns.
- Klaviyo has signed on some high-profile companies like Unilever, Dermalogica, Solo Stove and Citizen Watches.
State of play: For the last eight years, Klaviyo has been working with Shopify to tie together its customer data software with its payments and logistics technologies.
- The partnership “really lines up our companies together where we’re going to do even more product co-development," Bialecki says.
- Klaviyo will receive early access to Shopify’s new development features.
- Proceeds will help Klaviyo hire more engineers and advance more product development, he adds.
Flashback: In May, the company closed a $320 million Series D round led by Sands Capital. The round valued Klaviyo at around $9.5 billion.
What’s next: Coming soon: a feature that will allow Shopify merchants to buy products straight from a text message, Klaviyo said
- Down the line, Klaviyo may enter more consumer-focused markets, like restaurants, hospitality and entertainment.
- “Every single one of those businesses is going to need a set of customer technologies on the back end,” he says.
Yes, and: The broader digital advertising market is experiencing a slowdown, but Bialecki says he feels his business is insulated from that because its success isn’t tied to consumer spending and metrics like gross merchandise value.
- “For us, the kind of key metric is actually the number of relationships that a business has that are digital,” he says. “And that number just keeps increasing.”
The bottom line: Personalization is key as retail shifts away from what Bialecki calls a "context-free, one-size-fits-all experience."
- “Every retailer out there is gonna need an e-commerce platform and a customer platform.”