May 24, 2013


ChannelAdvisor: Riding The E-Commerce Megatrend

Today ChannelAdvisorpulled off its IPO, raising $81 million. So far, the shares are up about 34% to $18.70. That’s pretty good in light of today’s bear move in the markets.

“I got the kernel of the idea for ChannelAdvisor while at Yahoo ,” said Scot Wingo, who is the CEO and founder. “We had a small business tool for eBay sellers. But we saw that large brands were using it like IBM and Sun Micro.”

He began to wonder: Perhaps e-commerce would develop around marketplaces, comparison sites and search engines? And how about building software to help companies manage this?

Yes, it was a breakout idea. Consider that ChannelAdvisor now has about 2,000 customers, which include biggies like Lowe’s, Ann Taylor, AT&T and Bed Bath & Beyond . From 2010 to 2012, revenues went from $36.7 million to $53.6 million.

And the momentum is likely to continue for some time. In the US, the penetration of e-commerce is only 10% of the total retail market. Yet if you look at other countries, such as in the Asia, the rates can be over 20%.

No doubt, another driver is mobile, which continues to grow at a staggering rate. And yes, even social platforms could be a factor, such as Facebook , Twitter and Pinterest.

Now a key to ChannelAdvisor’s success is the business model. The company charges a base subscription and then takes a share of the revenues. “It’s a way to align our interests with our customers,” said Scot. “The number one priority of our customers is to grow. This is also priority number two and three.”

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