OrderGroove raises $20 million to help brands build subscription services

OrderGroove, which assists brands and retailers with their subscription models and retention rates, announced today a funding round of $20 million.

The New York-based startup provides a software as a service (SaaS) that works on both standalone platforms and platforms that are integrated within an existing ecosystem. “We work with Salesforce, IBM, and all the major ecommerce platforms to amplify the technology our customers already have,” founder and CEO Greg Alvo told VentureBeat in an interview.

The startup has more than 100 customers, including GNC, L’Oréal, Nestlé, PetSmart, Toys “R” Us, and Walmart, that subscribe to the service on an annual basis. OrderGroove provides data and analytics to determine “frequency ambiguity” (or how often a consumer needs a product delivered), and profitability, by monitoring shipping costs for example. It is also working on integrating the software into multiple channels.

On top of its technology, OrderGroove has a team of data analysts and marketers that are testing different consumer experiences. “In many cases, our customers need to be handheld through the transformation of how to talk to a consumer in a more ongoing relationship versus a purely transactional one,” said Alvo. “Amazon figured this out, Dollar Shave Club figured this out, and we help all of our companies figure this out.”

The startup has spent a little over 500,000 hours in research and development so far and is planning on using this new round of funding to further refine its product. “We want to invest within subscription, but also beyond subscription,” said Alvo. “In the same way the future of driving is driverless cars, we think the future of shopping is frictionless forms of commerce.” What Alvo means by “frictionless forms of commerce” is finding a new and more exact way of anticipating what the consumer wants and needs. This sounds a bit creepy — I mean, how could a software know what I need before I myself know that I need it?

The founder did not want to elaborate on what this new form of commerce is, as his team is still carrying out R&D. It will however target offline retail stores, which according to Alvo represents about 90 percent of commerce. With regards to competitors, Alvo underlined that they are the first of their kind in this sector, praising Amazon along the way. “Amazon is helping drive our business,” he said. “They’re doing some very exciting innovations that create opportunities for us to test and release to our clients.”

This new round of funding was led by National Securities, whose portfolio includes Lyft, Palantir, and Coursera. Lerer Hippeau Ventures, SWaN & Legend Ventures, Western Technology Investment, Silicon Valley Bank, FYRFLY Ventures, and Scott Booth (the founder of Lead Edge Capital) also joined. Founded in 2010, OrderGroove has raised a total of $37 million to date. It will use the new money for product development and hiring in product innovation, data science, sales, and marketing. Approximately 70 employees work there today.