Entrepreneurs Ilya Aizen
The idea of business Ilya Aizen hatched since the days when he worked as a consultant at Booz & Company (in 2014 it was absorbed by PwC), where one of his clients was the head of the Russian representation of Corporation Brightstar, selling wireless devices, American Simon Project. “About a year we worked together, I realized that we have common values, and agreed that we need together to do business,” recalls Eisen in an interview with RBC. About a year partners a few times a week met and discussed different businesses: reviewed and trading of pet products, and tourist services. In the end, analyzing the project management advertising and reputation big brands in social media, the Eisen Project and noticed that the data array about users from social networks can have a new use in electronic Commerce. “If you combine this data with retailers, but also, for example, banks and international payment systems, it is possible to obtain information with which to make more targeted advertising, motivating the customer to buy,” says Eisen.
From consulting to the trade
In April 2012 the Aizen and the Project on a parity basis was registered LLC “Freeatlast” (brand Flocktory) and have developed services that would help online stores to increase conversion rates, attract customers and solve other business problems using big data Analytics. Together they spent developing the first few tens of thousands of dollars, but this was not enough, and as an investor to be joined by entrepreneur Nikita Evlakhov, agreed to invest $225 million in exchange for 18% interest. “At that point, I knew Elijah, they saw his approach, and I liked that he calculates all the cents – Evlakhov recalls in an interview with RBC, When they conceived the project, it was very detailed costed with all numbers, exact hypotheses and indicators, there was no moments where you could say “while you’re out.” One of the founders of Flocktory also became her first employee, analyst Dmitry Matskevich. Now owns a platform registered in Cyprus Flocktory Ltd.
By August 2012, Flocktory has created a first product and began to offer its free online shopping. “It was the widget that appeared on the website of the online store after purchase: “Thank you for your purchase, we love you very much, please share the link with friends and if they buy something, you get 15% discount on your next purchase,” says Eisen. After a couple of months according to customer feedback, it became clear that the product really brings new orders. “This was unique for the Russian market technology: so after ordering the man offered to share the experience with friends in exchange for a discount, – told RBC one of the first customers Flocktory, the founder of the online store Mr. Kolgotoff Pavel Doronin. – We had a revenue growth of about 5% through referral traffic” (when one customer recommends the service to another).
In addition Doronin, free to test the product took another 10-15 stores. With the results of their work Aizen and the Project began to look for new investors. In October 2012, the founders went to Kiev on Investor Day Central and Eastern Europe and there found an investor; in December 2012 they closed a first round investment. According to Aizen, the entire amount – $1.5 million – invested Fund Victor Frumkin and John Quinn Digital Venture Partners (get comments Fund RBC failed). Shortly thereafter, in 2013, Flocktory has become a resident of SKOLKOVO. “The project attracted its strong technology and uniqueness, – told RBC head of IT cluster of SKOLKOVO Igor Bogachev. – We have still not appeared of competing solutions with the same strong team.”
Flocktory in numbers
Approximately $1.8 million is in investments Flocktory
12 modules for different tasks offers service
About 250 online stores are active clients Flocktory
More than 200 million rubles of revenue received service in 2015
25 million rubles of net profit earned by the company for the year of 2014
From 15 thousand rubles. up to 200-300 thousand rubles. price varies per module Flocktory
Source: company data, system “Contour “Focus”.
Customers in exchange for data
In the first year of the Flocktory is mainly engaged in referral marketing. The company is providing retailers with the tools to manage “word of mouth” in online Commerce and in parallel analyzed the data. Using the widget of the service, the buyer shared the link on social networks and bring new customers in the online store. Online store for the benefit of, and Flocktory is a data access, based on which we could build and test new software products.
In early 2013, when it became clear that the program works and brings the orders, the founders of Flocktory has introduced a fee for the service. “We didn’t know how much money to take with customers, so first it were some little money,” recalls Eisen. Flocktory first took a fixed rate per module – from 1,1 thousand rbl. a month for the smallest stores, which was about 100 transactions per day to more than 100 thousand rubles. for large. Now the price of each product is based on the number of transactions at the client site and individual settings. Some companies pay for Flocktory raised a number of orders, others pay a combined amount for the use of several modules with all the settings. “Sometimes works well for a combination of modules, which can cost from 15 thousand to 200 to 300 thousand rubles per month depending on site traffic, complexity of customization, the peculiarities of business processes of the customer,” says Eisen.
Among the first really large customers – the company “the Messenger” and the French online clothing store La Redoute. Later they were joined Ozon, Yves Roshes, LaModa, “Eldorado”, “Technosila”. In 2013 the service got a little less than 9 million rubles of profit. But the number of clients increased rapidly, reaching 2.5 thousand companies, so in Flocktory decided to focus only on the contracts from the largest market players, with attendance of over 300 thousand users per month. The service is now actively used by over 250 companies, each of which is accompanied by technical Manager (company has 50 employees – two thirds of them IT professionals). “We began to work with larger clients, because it is better to invest in one person than ten people,” explains Eisen. “If the company is small, they have little sales on the website, and such decisions just do not work: they will have little traffic and conversion,” explains the founder of the platform in the field of referral marketing Admify lion Kangin.
For 2014, according to the system of “Circuit-Focus”, Flocktory has received 73 million rubles in revenue and 25 million rubles net profit. In 2015 revenue exceeded 200 million rubles, says Eisen.
Now Flocktory 12 modules allowing to solve a variety of tasks. They increase conversion and motivate users to purchase, collect feedback and manage, making it possible to exchange targeted traffic via the partner network, as well as customize sites ‘ content for each user, including after his departure from the site. Each of these modules collects a new portion of the user data, which allows the company to build more “smart” products – for example, to determine that the buyer, are currently looking through the website – not just a man from Nizhny Novgorod, and the man who is highly interested in choosing a TV to offer him exactly the product he is looking for. In addition, the module allows you to calculate various behaviors of the user, motivating him to make the purchase. Now in the database Flocktory data are available on 50 million unique users.
In addition to selling individual modules, Flocktory connects clients to internal “ecosystem” that allows you to work with users, traffic and behavioral profiles across the network of partners of the company. For example, many connect module Exchange system private partnerships and exchange of traffic data between online stores. “If the customer bought something in a clothing store, so he likely will be gone in the next few weeks to buy clothes. But at this moment we can offer him discounted products from other categories in the partner stores” – describes the principle of operation of the Exchange marketing Manager store La Redoute Sergey Belov. According to him, due to the Exchange module and the module referral marketing Flocktory from La Redoute in every month comes from a few thousand orders, or from 10% to 15% of the total number of new customers. This La Redoute Flocktory pays an amount approximately comparable to the average cost of such services to promote on the market. Belov refused to give figures.
In 2015, Flocktory has opened two overseas offices – in Spain and Turkey, as well as several offices in Europe on the model of white-label providing local companies the opportunity to use the design under its brand. Now foreign entities Flocktory about 100 customers according to Aizen, on the new market, the company works only with large business.
Money for international expansion of Aizen and the Project left from the first round of investment. The partners planned to start in overseas markets before, but in 2014 this idea was rejected by the Board of Directors, having considered that for the rapidly growing company is more profitable to invest effort in the conquest of the Russian market, than to waste energy in several directions. Aizen now regrets that he insisted. “It was a mistake – we lost the year, – says the entrepreneur. – If we then concentrated our efforts on the international market, now would have been even stronger.” Because of the crisis many online stores in Russia were closed, which resulted in losses to the company, recognizes Aizen. Closed some major retailers, such as E5, “White wind digital” or significantly reduced the speed of “Sotmarketa”, were clients Flocktory. “Imagine you gave the customer two months free of work, gradually began to take with him a little money, then only began to take from him the price at which you earn – and after six months it is closed, says Eisen. – You lost not only the money that this month should have come, but also the money that he would pay the next two years”.
Despite the difficult economic situation in the country, the domestic e-Commerce market continues to grow. According to research Agency Data Insight, in 2015, it rose by 22% compared to the 2014 year and reached 806 billion rubles with the market grows and the demand for smart ways to attract customers. According to the company Rocket Retail, today only 8% of the total number of e-shops in Russia are using technology to personalize customer engagement. “Their number will gradually grow, which opens up opportunities for the development of such services,” – said the marketing Director at Retail Rocket Artem Kazakov.