Despite the limitations of electronic data interchange (EDI) software, the rapid growth of e-commerce continues unabated. While EDI is a critical technology that suppliers and retailers use to transact with each other, legacy software is a bottleneck to enabling even more trade. Conviction, founded by Roger Kirkness and Chris Grouchy, aims to “enable every business, of any size, to automate B2B commerce” by replacing the EDI software that suppliers and retailers currently use. The startup recently raised a $40 million Series B funding round led by YC Continuity with participation from all major existing investors, including Lachy Groom and FundersClub.
Frederick Daso: What are the specific challenges of implementing a one-click solution to enable retailers to connect and transact with wholesale suppliers? What did you learn from implementing a similar solution for retailers interacting with dropshippers that may or may not apply to wholesale peers?
Roger Kirkness and Chris Grouchy: Our general learning was about the value that could be created for retailers and sellers by automating the process as much as possible and reducing all the bottlenecks between the first partnership conversation and the first order. With drop-shipping and marketplace models, order, inventory, and fulfillment data must flow between trading partners in real time so that the end customer has a great end-to-end e-commerce experience. With wholesale, the same applies, including fast supplier onboarding and real-time transactions, but with additional features such as the ability to streamline the order quote process, support purchase orders and advanced price lists.
Daso: When it comes to scaling up Convictional’s sales and marketing efforts to execute at scale, how quickly will you experiment to find the repeatable methods for the various distribution channels you rely on to reach new customers ?
Kirkness and Grouchy: We apply the same learning mindset to our go-to-market activities as we do to product development. As we grow our sales and marketing efforts, our approach will be to use experimentation and data analytics to better understand who our customers are, what problems they’re trying to solve, and where they’re looking for resources. and collaboration to solve these problems. . We’ll be in the channels retail leaders trust with content, tools, and conversations so we can guide them as they consider transforming their dropshipping, marketplace, and wholesale businesses. Currently, the initiatives we are focusing on are content marketing through our to place and LinkedIn, partnerships and more and more in-person events. We are delighted to participate in Let’s talk shop this year with customers and partners.
Daso: Convictional increased the number of orders by almost eight times and its Gross Merchandise Value (GMV) platform by almost five times. But how successful has Convictional been in reducing vendor churn for retailers?
Kirkness and Grouchy: We consider supplier churn as the number of suppliers who never close a deal after entering into a mutual business agreement with a partner. We recently ordered research this indicates that with Convictional, retailers can increase the number of vendors they onboard per month by 10x. This difference reflects issues with the business as usual process whereby suppliers who would like to sell through new B2B channels like retail, fail to do so due to the high effort traditionally required. About 70% of commercial suppliers connected to Convictional succeed in reaching first order status after successfully connecting to a retailer, which is twice the success rate of suppliers who do not use Convictional and are forced to connect to a retailer’s EDI system.
In short, we’ve made it twice as likely for a supplier to earn money from the retailer program once they’ve signed up, and 10x faster to participate.
Daso: For Convictional to realize its vision of “enabling every business, of any size, to automate B2B commerce,” the focus is on the supplier enablement movement, even more so than in previous stages of the business. How does such a focus change the way retailers operate to fulfill more orders?
Kirkness and Grouchy: When a retailer can onboard as many suppliers as quickly as they want, their business changes in several important ways. First, they can deliver on their promise as a retail brand to their customers to consistently deliver relevant, unique, and fresh products to their target market. From an operations perspective, merchandising teams can really broaden their approach to product assortment planning now that technical barriers and IT project timelines are no longer the bottlenecks for adding new products. We’ve also found that enabling vendors frees up retailer development resources, from dealing with vendor onboarding and data issues to higher value projects that improve the customer experience. There is a direct link between supplier enablement and increased revenue growth and business value for retailers.
Daso: The speed of integration that Convictional offers to suppliers who connect to retailers allows the latter to test which categories of goods are the best to sell. What observations have you been able to draw from this experimentation with retailers such as MADE.COM or indigo?
Kirkness and Grouchy: We have learned that these new product assortments can be launched and tested quickly. In as little as 60 days, a retailer can log into Convictional and start selling third-party inventory from select vendors. After this one-time onboarding, they can get new transactional providers in days. The speed enabled by Convictional makes it possible to experiment with product assortments and greatly transforms the way retailers bring products to market. We strongly believe this is the future of retail. Leaders in this space understand the direct relationship between sourcing and connecting large suppliers and how they serve their end consumers.
So : What features will Convictional dedicate development resources for retailers who choose to stick with IDE? Is there still a large segment of retailers who would prefer to stick with EDI?
Kirkness and Grouchy: Convictional already supports EDI connectivity in the platform, and we are committed to continuing to improve this integration process. Many retailers still use EDI; however, EDI covers only part of the data integration needs needed to support great digital shopping experiences. Rich product content, for example, is something that EDI does not support well, so almost all existing EDI integrations in retail must be supplemented with non-EDI processes. We have learned that retailers more explicitly tolerate EDI than they prefer it. Despite all its flaws, it remains the dominant standard. Our position has been to provide the connection path of least resistance, whether it’s EDI or API.
Daso: How do you two, as co-founders, instil professional qualities such as “learning with grace” and “confidence” within each member of the Convictional team, especially as the company is growing rapidly?
Kirkness: Chris is the one who knows how to learn with grace; I work a little more. Trust is also a challenge because people join the group after having had various professional experiences, not all of which are particularly trust-building. To me, the amount of effort you need to invest in building trust is somewhat proportional to the amount of institutional power you have. One way to build trust is to give everyone a holistic view of what’s really going on in the business. I CC the whole team on investor updates, which means there is no dissonance in “the way things are done” between the point of view that investors see and the point of view that the team sees. Whether things are going well or not well at a given time, integrity and consistency about it translates into trust.
Learning with wise grace is a process. We find that young and ambitious people who join often end up exhausted either on the effort, the hours or both. We started encouraging people to write a personal sustainability plan. Rather than deciding what level of effort is expected and imposing it on people, we focus on self-awareness work that will reveal to everyone what sustainable work effort means to them as a person. Some people work long hours, some work standard hours, and some work unusual hours to accommodate their lifestyle preferences. All of this serves us to enable different types of people to work for the company, and furthermore, for these people, avoiding burnout is sometimes a difficult process. If you know you and the company are aligned, that you’re putting in a sustainable level of effort for yourself, and that you’re devoting time during those work hours to learning, that makes for sustainable learning. Learning isn’t easy, but ultimately you can factor the downtime, thinking time, and supports needed to make it possible into the overall job picture.
When it comes to scaling, we’re mostly focused on working with managers to do the same thing: tell people what’s really going on the same way they would for us as founders. or anyone else, give them all the data and resources we have to solve problems and encourage people to do thoughtful work that will lead them to the answer to how they can maximize their lasting impact . If we model these things and actually do what we say we are going to do, it will positively affect every level of management and the team as a whole. If we fail to model it, not talk about it, and give it language and meaning, it won’t have the desired effect.