A year before the phrase “social distancing” entered society’s vernacular, Rachel Tipograph—the founder of the e-commerce marketing startup MikMak—stood in front of her board of directors and made a prediction that in retrospect seems all too obvious: the future of e-commerce would be online grocery and liquor shopping.
At the beginning of 2019, grocery and alcohol sales were still mostly offline. By the second quarter, only around 2% of food and beverage sales were expected to occur online in 2019 before hitting 3% in 2022, according to eMarketer. From Tipograph’s view, there was room for disruption—and that was before Covid-19 had everyone shopping from home.
MikMak spent the rest of 2019 building out ways for marketers to use digital ad performance as a way to track e-commerce sales, launching new products in February just weeks before major cities around the world went into lockdown.
Those pre-pandemic bets are now paying off: MikMak has now raised $10 million in Series A funding to accelerate its data analytics road map and expand internationally.
“I built a product that was ahead of the market,” Tipograph says. “And then on March 9, the market arrived.”
The funding, announced today, was led by Wavecrest Growth Partners, as well as existing investors including Luminari Capital and BraVe Ventures. A number of new investors also participated, including Lunch Partners, Bazaarvoice founder Brett Hurt, Hooklogic founder and CEO Jonathan Opdyke, Foursquare CEO David Shim and Kargo CEO Harry Kargman.
Tipograph—who was featured on the 2014 Forbes 30 Under 30 list in the marketing and advertising category—has a track record of being ahead of digital advertising trends. When MikMak launched in 2015, it sought to reinvent infomercials for the digital era in the form of 30-second videos. And while the company had initially focused on helping marketers create and measure “shoppable content,” it pivoted to enterprise software in 2017 to help large brands better measure e-commerce marketing.
“Everything in many ways is placing an educated bet,” Tipograph says. “And MikMak placed a few really smart bets since the beginning of 2019.”
According to Tipograph, the company has had positive cash flow since 2018 and didn’t need to raise money. However, with e-commerce booming during the pandemic, the timing seemed right to accelerate her road map. And while many other online advertising giants like Google and Facebook have focused their e-commerce analytics on consumer insights, MikMak has focused on driving B2B sales through e-commerce websites such as Amazon, Target, Drizly, Walmart, Minibar and Petco. Tipograph says top MikMak clients now traffic across more than two dozen channels, using the platform to link ad spend to consumer demand, inventory and sales.
“When you’re a mass-market brand, you rely on marketplaces and wholesalers to sell and distribute your products,” she says. “And when it comes to e-commerce, even though there’s so much data online, they actually don’t access any of that. So over the last 20 years of e-commerce growth, these behemoth brands still knew nothing about their customers. They didn’t know the content that would work, the description, the ad-targeting, the bundling. It was a total black box for them.”
Since early March, the company has increased revenue by 50% while doubling its headcount. The new round of fundraising will help with expansion in Europe and Latin America before moving into Asia in 2022. (MikMak also recently announced that it would begin hiring employees regardless of location and plans to add another 30 employees by the end of 2020.)
Indeed, e-commerce continues to grow. According to Statista, online retail sales in the U.S. could total $374 billion this year and $407 billion in 2021 while reaching $476 billion by 2024. When it comes to only grocery shopping, data from Adobe shows online grocery sales increased 110% in April, while the purchase of wine, beer and spirits increased 74%. And in June, U.S. online grocery sales grew to $7.2 billion—up 9% from just a month earlier—according to research from Brick Meets Click and Mercatus. In fact, 45.6 million households use delivery and pickup services, while household penetration for online grocery shopping increased to 35%.
MikMak isn’t the only e-commerce company to raise money during the pandemic. In May, San Diego-based Ecwid announced it had raised $42 million to help small businesses with e-commerce efforts. And just last month, Los Angeles-based Scalefast raised $22 million in Series B funding to help brands quickly launch online stores.
The recent e-commerce boom gives brands all the more reason to pay attention to consumer demand. Tipograph says it’s important to understand the audience and the types of ads they respond to. That’s especially true when it comes to gaining or protecting marketshare with products that are in high demand.
“When you’re a mass brand and your customer is out of stock,” Tipograph says, “the customer has no loyalty to you.”