In its second-largest acquisition, Amazon buys the company for $970 million.
The software from Boomerang Commerce is being used by e-commerce companies including Staples.com and DHGate.com to optimize online product pricing and bidding on search terms.
Boomerang Commerce—a startup provider of software used in optimizing online pricing in comparison with competitors and in managing keyword bidding in search marketing—has received $8.5 million in venture capital, the company said today.
Boomerang, which launched in 2012, also announced today the general availability of its first product, the Dynamic Price Optimizer, which crawls the e-commerce sites of its clients’ competitors as well as other sites to compile product-pricing data. It then assists its clients in re-pricing their own online products to remain competitive and hit their targeted profit margins. The Dynamic Price Optimizer is being used by online companies including Staples Inc., Groupon Goods and Radio Shack, Boomerang says. Those companies were not immediately available for comment.
A second product, the Dynamic Marketing Optimizer—which crawls the web for data related to search marketing terms and click rates to help clients manage bidding on search keywords—is still in a beta test period and due for commercial release before the end of this year, CEO Guru Hariharan says.
One company that is using the Marketing Optimizer as a beta tester is DHGate.com, a China-based e-marketplace that connects more than 1 million Chinese manufacturers of consumer products, office supplies and industrial supplies with business and consumer buyers across 227 countries. Noah Herschman, chief operating officer of HDGate, says DHGate is using the Marketing Optimizer product in managing paid-search marketing in cooperative advertising campaigns it conducts with its client sellers.
“A lot of our sellers are really good at making products, but we want them to also be really good at marketing,” says Herschman, who was formerly involved in marketing and merchandising at retailers including Amazon.com Inc., Staples Inc., Groupon Goods Asia and eBay Inc. “We’ve educated them on how to sell online with better product listings, and now this is sort of Phase 2, helping them use more sophisticated online marketing tools.”
In testing the tool over the past few months, DHGate has noticed a strong boost in both click rates and sales resulting from more effective keyword bidding in search marketing campaigns, Herschman says. “It’s not just the click rate that goes up, it’s the average order value.” Campaigns run with the optimizer tool have produced up to twice the sales of earlier campaigns that didn’t use the tool, he adds.
DHGate hasn’t tested Boomerang’s price optimizer tool, though Herschman says that might be something its sellers might consider in the future.
Hariharan, who is a former Amazon.com executive whose work included developing the Amazon Web Store e-commerce platform, says Boomerang expects some companies to use both the price optimizer and marketing optimizer tools to get the optimal balance of competing on product pricing as well as with efficient marketing campaigns.
Boomerang provides its software through a software-as-a-service model, which lets clients access it through the Internet without having to run the software on their own web servers. The cost to clients is related to their sales volume, and generally runs above $1 million for a one- to three-year contract, Hariharan says.
Boomerang received its $8.5 million in venture capital from Trinity Ventures and Madrona Venture Group. It says it will use the financing to “aggressively expand its engineering” and marketing teams, and build additional software applications.
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