February 28, 2013, 3:25 PM

StellaService raises $15 million and starts charging for its e-retail data

The company measures web retailers’ performance in customer service and fulfillment.

Lead Photo

StellaService CEO Jordy Leiser

For nearly three years, StellaService agents have been e-mailing online retailers with questions, engaging in live chats, and ordering products so they could note how long items take to arrive. Then the company would rate the online retailers by how well they serve their customers and how quickly and accurately they deliver the goods and process returns. E-retailers that scored high became eligible to add the StellaService seal of approval to their web sites.

But the company didn’t charge retailers for the seal, or consumers for the ratings StellaService provides on the shopper-oriented section of its web site, StellaService.com/consumer. The company entered a new phase this week when it rolled out its first revenue-producing product, a service that provides retailers with data on how they—and their competitors—perform. It’s also raised additional venture capital funding so that it can expand its coverage, aiming to makes its data more complete and therefore more valuable, especially to large retailers.

The new product is called Stella Metrics, and it provides retailers with detailed data about themselves and their rivals, says CEO Jordy Leiser. “You can see how long it takes your specific competitor to respond to e-mails during Thanksgiving week, for example, or what exactly does the refund processing speed look like for your competitors on the West Coast in January and February,” he says.

Pricing varies with the amount of data provided. Leiser says a small retailer can obtain a one-time report for a few thousand dollars. But the product is aimed at larger retailers that will subscribe at an annual fee that he says runs “in the low six figures.”

StellaService began testing the new service in the fourth quarter, Leiser says. Among the retailers using it, he says, are Eddie Bauer LLC, No. 98 in the Internet Retailer Top 500 Guide, and One Kings Lane, No. 173. “Not only does StellaService capture how we are performing against the customer service targets we’ve set for ourselves, the greatest value has been the benchmarking data,” says a spokesman for Eddie Bauer, an apparel retailer that sells through stores and the web. “With StellaService, we know where we stand amongst the leading retailers and where the best in class perform across key customer service metrics.”

Meanwhile, StellaService, which has been operating on venture capital funding, announced this week it had raised another $15 million in a Series B funding round led by Norwest Venture Partners. This brings the total raised by the company to $22 million.

The new capital will allow StellaService to measure the performance of more major retailers, Leiser says. He says the company has rated thousands of online retailers, but doesn’t see the need to monitor on a daily basis smaller companies. The heart of its ratings, however, come from its daily testing of the customer service and fulfillment performance of the biggest e-retailers. While StellaService now rates some hundreds of the retailers in the Internet Retailer Top 500, which ranks the leading North American retailers by their online sales, Leiser says the new funding will allow the company to cover more of the Top 500.

That’s important, he says, so that StellaService can show a retailer how it compares with all its major rivals. “In a particular category, for example sporting goods, you need the entire peer set to make the data valuable,” Leiser says. “That’s why it makes sense to raise money. We have to initiate coverage on all these companies so we can go to a retailer and say, ‘Here’s the full set of your competitors.’ Everybody they would want to see is already in there.”

As part of the latest fundraising round, Norwest general partner Josh Goldman joins the board of StellaService. Norwest also has made investments in such online retailers as Gilt Groupe, No. 49 in the Internet Retailer Top 500 Guide; ModCloth Inc., No. 366; and Gemvara.com, No. 633 in the Second 500 Guide; as well as WhaleSharkMedia, operator of online coupon site RetailMeNot.com.

“There is no other objective, third-party rating system or reliable measurement of merchant  quality in the online retail sector today that accurately evaluates customer service,” Goldman says. “StellaService is the first and only company to utilize a consistent, bottom-up approach to rate businesses.”

Leiser says StellaService employs 25 in its New York headquarters. He says the company also maintains a large staff of agents around the country that continually contact online retailers and place orders, but he would not disclose how many.

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