Behind the scenes of our investment in DataHawk — Composable analytics for marketplace merchants

In 2020, $490bn worth of gross merchandise value was sold on Amazon last year. 40%+ of total e-commerce sales in the US happened on the platform. The “Wild West” days of small Amazon merchants are gone — We have now entered a phase of professionalization and consolidation of 3rd party sellers. Thrasio, the first Amazon merchant aggregator, led a wake of roll-up players looking to increase the bottom-line performance of these merchants by:

1) Standardizing operations across sellers in well-defined verticals with stable or rising consumer demand

2) Improving production efficiency and forecasting accuracy

3) Streamlining SEO and advertising best practices

Thrasio was quickly emulated across the world. In Europe, 21 aggregators have launched since 2020. $1bn worth of funding was raised on September 1st alone.

in 2020, $490bn worth of gross merchandise value was sold on Amazon last year. 40%+ of total e-commerce sales in the US happened on the platform. The “Wild West” days of small Amazon merchants are gone — We have now entered a phase of professionalization and consolidation of 3rd party sellers. Thrasio, the first Amazon merchant aggregator, led a wake of roll-up players looking to increase the bottom-line performance of these merchants by:

1) Standardizing operations across sellers in well-defined verticals with stable or rising consumer demand

2) Improving production efficiency and forecasting accuracy

3) Streamlining SEO and advertising best practices

Thrasio was quickly emulated across the world. In Europe, 21 aggregators have launched since 2020. $1bn worth of funding was raised on September 1st alone.

And 8 out of the top 10 FBA aggregators already use DataHawk to optimize their business.

This major shift is already creating rising merchant competition on the marketplace, driven by 3 forces:

• Progressive outpacing of consumer demand likely to lead to aggregator consolidation
• Saturation of advertising markets within Facebook and Google pushing advertisers to find new avenues for digital growth

While Amazon will eventually increase the volume of ad placements available by attributing a larger share of listings to PPC, aggregators and large brands will have no choice but to bid against each other with increasingly complex paid performance tools.

Bleu Capital’s investment in DataHawk is a bet on the unavoidable necessity to build up data-driven advantages in an increasingly competitive environment. To do that, merchants will have to extract data from marketplaces, combine them, and exploit them better and faster than others. As the e-commerce space continues to expand, DataHawk is positioned to become the data analytics source for SMB and enterprise players.

The Amazon ecosystem is entering a phase of consolidation and data has a central role to play

Less than 20 years ago, Amazon was just a bookseller, and Jeff Bezos had narrowly avoided bankruptcy in the wake of the 2000 Dot-com burst. Fast-forward a few years, and the e-commerce behemoth now claims 40.4% of all e-commerce sales in the country. Nowadays, you can find almost everything on Amazon and get it delivered in days, including your next house. Behind these marketplaces, 1.5 million active sellers list products on Amazon, amongst which 25,000+ make over $1M in sales. It’s fair to say that the growth of 3rd party marketplaces blew far past our most optimistic expectations.

In the 2010s, these merchants enjoyed a consumer demand often outpacing the supply, giving them the ability to secure strong organic traffic and good return on advertising spend through Amazon’s paid marketing solutions, without much effort. What mattered was maintaining a good rating ( >4.5 rating) and securing the prime badge to generate solid traffic to their SKUs.

Simultaneously, Amazon’s PPC advertising tool was able to offer higher rates of returns, at a time where advertisers were starting to see a slowdown on traditional paid social channels. Imprecise tracking and attribution — iOS 14 changes have been killing Facebook Ads performance — lower intent browsing, and higher CPMs accelerated this trend further last year.

For CPG brands, Amazon provides better returns than the likes of Facebook, Snapchat, or Google Ads, without having to dive deeper into consumer journeys and top-of-funnel marketing. In short, you get to reach customers at their highest possible point of intent. Amazon’s marketing revenue hit more than $3Bn in Q2, up by 87% year-over-year. Amazon ad revenue surpassed 10% of the US digital ad market in 2020 according to eMarketer.

And even more capital is bound to get reattributed to the platform this year. Amazon brands, resellers, agencies and aggregators are now looking to capture market share from their competitors through better operations, and more importantly, a distinct data advantage. Amazon organic sales and paid ads placements are slowly becoming more competitive and have seen growing saturation caused by a rising amount of advertising dollars being poured into the platform.

McKinsey & Company recently highlighted how CPG marketing departments will need to integrate more sophisticated analytics and prediction tools into their ad stacks. Consumer-packaged-goods (CPG) companies can deliver 3 to 5 percent growth in net sales and improve marketing efficiency by 10 to 20 percent with the addition of an analytics software suite.

“CPG companies need an AI engine, a 360-degree view of consumers, and a fit-for-purpose marketing technology stack to deliver the right message, to the right consumer, at the right moment — all the time.”

Why DataHawk will win: Product, Team, Client backing and Track Record

Going back to our investment in DataHawk, It’s no secret that 3rd party e-commerce sellers tools have been around for a few years now. Jungle Scout and Helium 10, leaders in the space, have already achieved significant traction — Earlier this year, Jungle Scout closed a $110M round and Helium 10 was acquired by Assembly in 2020. So we sought to understand why DataHawk could outperform its competitors by providing a better product and user experience for sellers across platforms.

While determined by a multitude of criteria, our investment decision can be boiled down to the following three arguments:

1. DataHawk has better data quality and an ability to easily integrate into a seller’s external database
2. It’s one of the most impressive teams we have met
3. Their vision of composable analytics and insights built on top of the data matches exactly this need

Let’s dive deeper into this.

Better data quality, composability and scalability

As part of our diligence process, we conducted calls with multiple agencies and brands with a strong presence on Amazon. The feedback was unanimous in saying that DataHawk has the best quality of data amongst its competitors, systematically ranking it above incumbents Helium 10 and Jungle Scout. And where most competitors lock that data on their platforms (leading to a lot of frustration amongst sellers), DataHawk has taken a composable approach to the problem by allowing its users to extract and exploir that data on the visualisation tool of their choice. It also has a larger historical database to track changes in prices, review, ratings, sales — and total data ownership. With DataHawk, sellers also have the ability to export literally any data to a spreadsheet.

And this is validated by DataHawk’s impressive client base. Roll-up players predominantly choose DataHawk over other analytics tools for its advanced data collection and visualization capabilities. While the tool could seem almost too granular for smaller sellers, it provides the sort of data that large scale CPG clients will increasingly need to compete with data-driven competitors.

The team has spent the past 3+ years building a proprietary scalable infrastructure and data collection and historization technology. It’s been built from the ground up for scalability. DataHawk offers insights for the top 100 selling products of 20,000 categories, which means a very large amount of data points that get updated daily.

Killer team

Early-stage investing also requires investors to place a large emphasis on evaluating the team and its ability to scale the platform. And what we saw internally was very impressive. It’s no hasard that DataHawk’s name contains the word “data”. The team’s data analytics capabilities and reporting tools show a lot of maturity, and are on par with that of a late stage venture. We had a collective “What the f***” moment when we received access to their data center, and multiple more as we dug deeper into the company’s roadmap and growth plan.

At the same time, Isaac, Othmane and Sylvain had been able to maintain the agility of a seed project and roll-out features at a light-speed pace. Since June, they have demonstrated an incredible capacity to iterate rapidly, with key product launches coming up in the next few months and a new platform expansion with the launch of Walmart. After 2 years, DataHawk’s eCommerce analytics and optimization software suite already covers the following areas:

1. Search Engine Optimization: Increasing organic traffic to products’ listings is the bread and butter of building a profitable eCommerce business.
2. Product Analytics: DataHawk provides a solution for effortless monitoring, timely alerting, and gathering of powerful intel on the smallest changes on product data,
3. Market Intelligence: DataHawk has built Market Research and Intelligence capabilities that help brands analyze markets, categories, search queries, and competitors
4. Advertising: DataHawk provides a powerful advertising analytics solution to help brands better monitor, analyze, and increase the performance of their ads and increase their return-on-ad-spend.
5. Finance: Having an accurate overview of financial performance across multiple distribution channels is critical for any eCommerce business.

Traction

The company’s numbers will do the talking better than us: DataHawk grew 300% year-over-year, boasts a team of 35 employees, and processes multiple billions in Gross Merchandise Volume (GMV) from its users and customers. More importantly, their very high net retention showed good customer satisfaction with the product.

Here are some of the brands already using DataHawk:

• Leading global brands like Ekaterra (the tea division of Unilever)
• Many of the most prominent Amazon brand aggregators like Unybrands, Boosted Commerce, or Olsam.
• Multiple leading global agencies like Tinuiti (the largest independent performance marketing firm across the triopoly of Google, Facebook, and Amazon) or GroupM
• Hundreds of emerging direct-to-consumer brands and resellers on Amazon.

What lies ahead for DataHawk

This financing round will give DataHawk the capacity to hire more than 80 new employees over the next 12 months, add support for additional eCommerce channels, and enhance AI & recommendation capabilities. Additionally, this funding paves the way for a planned US office expansion, as over 60% of DataHawk customers are US-based.

The company plans to expand on its current software capabilities for brands selling goods on Amazon and Walmart. This fresh capital infusion will also help DataHawk increase its multi-channel capabilities by supporting brands on other online distribution channels.

About DataHawk

Launched in 2018, DataHawk has built a proprietary technology that collects and processes millions of data points daily. This data is then processed, analyzed, and displayed on intuitive dashboards, helping DataHawk users extract exceptional insights on their business performance, benchmark it against the competition, and access recommendations for further improvement. The company had previously raised $1M in Seed financing in 2019.