Interview with Payvment: Funding, Facebook Credits, and a Business Model Built Around Discovery
Yesterday, Facebook Page ecommerce storefront tab application developer Payvment announced it had closed a $6 million round of Series B funding. The round, led by Sierra Ventures and joined by BlueRun Ventures will be used to hire additional engineering, customer support, marketing, and product integration personnel. We spoke with chief executive Christian Taylor about why Payvment has been so successful, the potential for using Credits as a payment method, and plans for a revenue model based around discovery.
Josh Constine: How fast is Payvement growing?
Christian Taylor: We’re adding more than 250 retailers and roughly 10,000-20,000 products daily. We recently passed the 40,000 retailers mark. Setting up a store is a completely automated process. The main goal when we started Payvment was to make it dead simple for anyone to use, even if you don’t have technical knowledge.
What’s causing this growth?
The driving feature helping adoption is that when you launch a store, your products are available via search from any other Payvment storefront. We’re building the graph of shopping where one store is connected to another. If one store doesn’t carry what you’re looking for, you can jump to the next. The technology that makes us different is a persistent shopping cart that follows you across stores so you don’t have to checkout separately from each. Other companies are trying to build a Facebook shopping cart, but each store they launch is a walled garden.
So the shopping cart saves your added items even if you log out and log back into Facebook?
Yes. And if your website has Facebook Connect, you can copy and paste code into it so a customer can add an item on your site and it will appear in their cart on Facebook.
Payvment recently released an API allowing websites to sync their product database with their Facebook storefront. How has that been received?
Good. For larger brands, if you have 500,000 products, you’re never going to add them all manually. We released a CSV importer which lots of brands are using to import their databases. There’s a REST API for CMS ecommerce platforms, so when a brand adds a product to its database, it’s automatically added to their Facebook store. Also, there’s a sales API, so instead of being emailed information about who to ship items to, you can bring that info directly into your shipping system.
How do you measure success of a Payvment storefront?
We’re seeing brands and retailers doing different things with the store. Some brands want all their products on their storefront so they’re available in search.
One measure of success is generating new Facebook Likes. A core feature is that your storefront connects to your Page’s Like Button, and you can offer a discount to anyone who Likes your Page. Instead of dumping 500,000 products on your store front, some brands offer just a few items but with deep discounts, sometimes up to 80-90% off, for Liking their Page. There’s so much value in that Facebook Like. Similar to traditional ecommerce, where if you can get someone to purchase once, they become a lifetime customer you can communicate with, Facebook is a marketing tool and a great way to acquire new customers.
What’s your conversion rate for people browsing a storefront?
It’s about more than just browsing, with Facebook its about sharing. That can’t be mimicked anywhere else. We’re trying to push users to share when they haven’t found something that they want to purchase but which a friend might. One unique thing we’ve found is younger users using search to find odd ball products, like a humorous t-shirt and sharing it to their news feed like a free virtual gift, but that goes a step further since it links back to the store. We’re looking to somehow build more gaming into Payvment.
People are taking shopping on Facebook seriously. On Black Friday, sales increased by 3x, and 4x on Cyber Monday.
Which of Facebook’s communication channels have been most effective for customer and client acquisition?
Our success with adding retailers has been purely viral. Retailers are a tight knit group and they share the tools they’re having success with. At the bottom of every store there’s a link to install your own store. We don’t do anything with the news feed to acquire new retailers.
For customer acquisition, the share button on every product has been big. There’s also comments and reviews, which are automatically posted to your feed as well. We haven’t done anything at all with wall posts or messages.
What’s been your biggest challenge?
Facebook is a startup too – they move just as fast as we move. We have to constantly stay in sync. If you have something tied to specific features of theirs, it can break, which can be stressful.
Our communication with Facebook now is day and night compared to a year ago. We’re given a heads up if they’re making a change, and we communicate with their engineers directly.
One thing Facebook is doing completely right is letting the ecosystem pick its own winners. They don’t want to bless one game company, and have the rest be like “What the hell?” Some developers take this as Facebook ignoring them, but they’re trying not to show favoritism. Things change when a developer gets to a critical mass of users. If FarmVille goes down, or if Payvment goes down [because Facebook isn't notifying us of Platform changes], the users don’t blame us, they blame Facebook. At that point, [to keep users happy] Facebook needs to have a closer relationship with that developer.
Are you still considering offering Facebook Credits as a payment method in addition to PayPal and major credit cards?
It’s a no-brainer. Our goal is to become the de facto shopping cart on Facebook, so it makes sense for us to eventually use the de facto Facebook payment method. Facebook Credits isn’t there yet. Right now they’re focused on in-game purchases, virtual goods, but we’re communicating with them about realigning. Your payment system could come with you just like your shopping cart. It will be a much more streamlined purchase experience when that day comes. It’s probably the thing I’m most excited about right now — how Credits will affect shopping.
What do you think of Facebook ecommerce tools which lead users away from Facebook to complete their purchase?
Those are pretty much dying out. Before us, ecommerce on Facebook was really just marketing, advertising products. True ecommerce is being able to shop and complete the purchase. Trying to get people to leave and go to your website – nothing frustrates people more than pushing them away from [Facebook, where their friends are]. Retailers are realizing that if they can remove five steps from the process, people will become customers. Other companies don’t have our shopping cart technology, but their spin is “retailers spend so much on their website…”.
What do you think about Yardsellr, who recently received funding?
They’re going for a different section of sales. Similar to Facebook Marketplace, it’s classified ads. If you have an apartment to rent out, you don’t go to Payvment. It’s more for one-off items, not selling a whole stock of lawnmowers, just your lawnmower. From what I’ve seen, I think they’ll be big.
Yardsellr has a Superman Bin for comic books, t-shirts or anything related to Superman. Would you consider creating groupings of stores for different specific product types?
We’re working on discoverability for retailers. Right now there’s search, but we need to find more unique ways for people to start the purchase process. We’d like to be able to put a value on a share. No one has a metric for that right now. If I had to guess, probably about 50% of sales come in through a share from a friend.
What are you going to use the $6 million for?
A year ago we raised $1.5 million when there was no real ecommerce on Facebook, and they said “tell us if people want to shop on Facebook or not”. This round was a blessing, “you definitely have something, retailers are signing on en masse”. There are ten of us for 40,000 retailers, and we have one support person who hasn’t slept in six months. We need engineering to build out social features, and better support. We’re building a shopping mall on a platform that already has a half a billion users, so we need to beef up the company.
With that investment probably come questions about a business model. How is Payvment going to make money?
We definitely know now that we’d like Payvment to always be free, and our VCs believe we don’t need to charge retailers. And if we mark up items, people will buy them elsewhere.
Facebook doesn’t have to charge you to have your business Page, but what Facebook does to monetize is offer discovery through Facebook ads. We want to stick with that philosophy and build a model around discovery, but we can’t dump advertising on people’s stores. We’re not really at the point where we talk about it, but we’re in full agreement of what we don’t want. But if Facebook can make a billion dollars off of discovery, I think it’s very viable.
Would you consider something similar to Yelp with sponsored search results or placement?
Yes, something more along those lines.