#4

FEEDONOMICS

HEADQUARTERS: Woodland Hills

CEO: Shawn Lipman

BUSINESS: Product feed optimization for online retailers

2018 REVENUE:

$7.4 Millon

NUMBER OF LOCATIONS: 1

EMPLOYEES: 100 in Los Angeles, plus another 50 remote all over the world.

NOTABLE: The company’s management principles come from “Legacy,” a book about the New Zealand rugby team the All Blacks.

As e-commerce sites continue to attract more shoppers than traditional brick-and-mortar stores, Feedonomics Inc. has emerged to help retailers adapt and succeed in the online market.

The Woodland Hills company aggregates and optimizes product feed data so that clients’ items appear in click-to-buy advertisements on third-party marketplace sites such as Amazon.com Inc., Google Shopping and most recently Instagram Checkout.

Founded by brothers Brian and Robert Roizen in 2013, the company didn’t make any money until 2015, when it took in $300 one month. Its revenue nearly doubled the following year, then nearly doubled again the year after. Now, with revenue growth in 2018 of more than $3.35 million, or 83 percent year-over-year, Feedonomics ranks No. 4 on the Business Journal’s list of Fastest Growing Private Companies. It was selected in August by Inc. Magazine as a top 100 firm on its Inc. 5000 list, a compilation of the nation’s fastest growing private companies.

Much of Feedonomics’ growth can be attributed to good timing to market that coincides with the rise of e-commerce. A report by New York-based digital research firm eMarketer in June forecast that U.S. online retail sales will reach $587 billion in 2019, representing the first time in history e-commerce will account for more than 10 percent of total U.S. retail sales. The report predicts e-commerce sales will hit $970 billion by 2023.

Growth engine

Powering those billions of transactions are product feeds — Excel or XML files that contain information about a retailer’s product, including its item number, image, price and a written description. If that data is incorrect or incomplete, marketplaces won’t allow the item to show up in their pages. Because the sites get paid for the clicks each item attracts, the listings need to be as accurate and detailed as possible.

That’s where Feedonomics comes in.

“(A client) might have product titles in one place and product images in another. Then you might have a totally separate list of prices for the U.S., Germany, France or England. We’re able to marry that all into one master database,” Brian Roizen told the Business Journal. “From there, we’re able to list your products on hundreds of different advertising channels and marketplaces.”

The challenge doesn’t stop there, though. Once a retailer’s products are listed for sale on various channels, the back end must be prepared to properly manage inventory to avoid overselling, and fill orders placed through those different channels. Then the e-commerce site must track each order, notify vendors to ship products and let the marketplace and customer know once products are en route. All are difficult tasks Feedonomics completes for retailers of all sizes.

Take the case of Ambush Skateboarding, a skating and water sports e-tailer that has been selling online since 2001. Before the emergence of companies like Feedonomics, Ambush had its own in-house solution for selling on third-party marketplaces. But with 7,000 active product listings on Amazon.com, 5,000 on eBay and 16,000 on Google, the company got overwhelmed.

“We couldn’t keep track of inventory and were overselling,” said Ambush co-founder Eric Elliot. “It led to a lot of suspensions that turned into a ban (from Amazon).”

After trying a few unsuccessful feed optimization companies in Seattle and Florida, Ambush found Feedonomics in 2015.

“We’ve done well with them, particularly in light of changes in the online retail industry,” said Elliot. “There has been concerted pushback against Amazon, and a lot of key brands, Vans in particular, don’t allow us to sell (their products) on Amazon. That represented dozens of orders a day.”

That Ambush’s total sales numbers didn’t drop significantly when big-name brands including Vans and Hershel stopped selling on Amazon illustrates the amount of extra business brought in from Feedonomics.

“We’re not just providing a technology,” said Roizen. “We do all the heavy lifting for clients, which is really important as these new marketplaces and channels evolve.”

Feedonomics serves clients in more than 30 countries, including secondhand ticket marketplace SeatGeek, Samsung Electronics, jewelry retailer James Ellen, art retailer Society6 and Toms Shoes.

The platform’s pricing is dependent on the size of a client — a small vendor might be charged $500 a month.

Scaling up

Much of Feedonomics’ success has come because it sells a good product in high demand.

“For retailers to have a well-curated and high-quality product feed … has become a prerequisite for e-commerce in 2019,” said Andrew Scarbrough, an e-commerce industry veteran who in 2013 co-founded online marketplace PriceWaiter, which lets customers negotiate product prices directly with vendors.

Scarbrough called product feeds “the lifeblood of e-commerce,” and said companies that don’t optimize their data feeds will almost certainly fall behind competitors in attracting traffic.

Feedonomics is well positioned to grow alongside the e-commerce industry, but scaling the business comes with several challenges that, if handled poorly, could spell the end for unprepared startups.

“I’m a mechanical engineer,” said Roizen. “I see growth challenges as an engineering problem. Every time we solve one bottleneck, it makes another very quickly.”

When the sales team does well, he said, the challenge becomes filling a high volume of orders across multiple platforms. And when the marketing team brings in lots of leads, the challenge becomes demoing lots of prospects.

Roizen said Feedonomics had to learn how to become smarter and more systematic with its internal processes, especially using automation. To that end, the company stood up a new team focused on “process reengineering.”

That team has automated manual tasks like mapping data into Feedonomics’ platform and labelling products with the correct nouns. The company is readying to debut this month a new service called Feed AI, which will automate product categorization.

“Today, roughly 50 percent of all work that we do internally, and that any company does with product data, is categorizing products,” said Roizen. “We’re processing 5 billion products a day, so we’ve been able to amass a massive training set that gives us a great basis to roll (this) out. We’re hoping to eliminate 50 percent of that grunt work.”

Feedonomics Chief Executive Shawn Lipman said culture is largely to credit for enabling the company to scale so smoothly.

An international rugby coach on the side, Lipman built up Feedonomics’ culture based on principles from “Legacy,” a book about the New Zealand national rugby union team, the All Blacks, named for its uniform colors. Over its 100-plus-year lifespan, the team has an unprecedented 77 percent winning percentage.

The book outlines 15 principles including “no egos,” “practice under pressure,” and “create a learning environment,” that Lipman utilizes at Feedonomics.

He said the company’s underlying vision is to empower and create opportunities for its employees to grow in their careers and personal lives, and that these principles help that occur naturally during their tenure at Feedonomics.

That, too, has been a challenge as Feedonomics has grown to 150 employees — about 100 of whom work from the company’s headquarters in the Warner Center in Woodland Hills. The rest live in places like South Africa, Australia and the Philippines, providing 24/7 customer support and account management.

Keeping pace

Roizen called maintaining growth an “existential” challenge for his leadership team.

“If we can’t provide new opportunities for our internal team to advance and solve cool problems, we’ll lose them,” he said.

According to Lipman, geographic expansion is important to maintain Feedonomics’ growth trajectory at this stage, especially considering its decision to not accept funding from venture capital firms — a move he hopes will keep the company’s financial management razor-sharp as it grows.

Regarding operations, he said Feedonomics’ future lies beyond e-commerce.

“It has (future) applications in travel, real estate … banking and finance,” Lipman explained.

He pointed to the data optimization work Feedonomics does for ZipRecruiter, not a retailer but a job listing site.

“Anywhere you have the need to integrate data from multiple sources into a normalized dataset, or the need to take a single dataset and syndicate it out to multiple locations — that’s at the core of what we do. The companies that do that now would be Oracle and SAP,” said Lipman. “We see opportunity down the road to actually compete in that space.”