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Why did Seattle’s SoundCommerce buy this Oakland-based AI marketing company?

  • Mike Pearl

Don’t look now but this retail data platform created by former Amazonians seems to be eating and expanding.

SoundCommerce, a Seattle-based retail data startup funded by several venture firms, including Seattle-based VCs Voyager and Alliance of Angels, is already in an acquisitive mood. It formed just before the pandemic back in 2019, and last month it swallowed up Oakland’s Outlier.ai.

SoundCommerce presents itself as a sort of all-in-one data solution for online retailers, promising to pull in and crunch all relevant customer data from “everywhere.” Outlier, by contrast, had a simple value proposition: It said it would use AI to identify anomalies, both good and bad, in your cloud data or from an SQL database, and analyze the changes for you, so you either know how to take advantage of them or how to fix the underlying problems.

Steve Davis, an industry veteran who had been Outlier’s chief revenue officer for less than a year, was also snatched up in the acquisition deal. “I’m excited to join SoundCommerce at a pivotal moment in the company’s upward trajectory, as SoundCommerce leads the retail industry to profitable growth,” Davis said in SoundCommerce’s statement announcing the move.

Indeed, news of “profitable growth” would be music to the ears of longtime players in the retail game, who are in the process of being clobbered by inflation. Higher-ups in brick-and-mortar retail businesses like Target are watching workers band together in unions, perhaps taking inspiration from the successful unionization of an Amazon warehouse in April.

No doubt, a company like SoundCommerce, whose sales pitch is mainly to direct-to-consumer brands, is a tantalizing prospect during these shaky times. The motley collection of clients SoundCommerce boasts about on its website includes the venerable flower delivery service FTD, Eddie Bauer, and Constellation Brands — owner of alcoholic beverage brands like Corona and Modelo — all of which are, according to SoundCommerce, “changing the way people shop online by removing the middleman.”

This means funneling a whole lot of user data from across the internet landscape — ”Every event from first click to doorstep” according to a company slideshow — into coherent, actionable data that brands can use to present relevant and even unexpected product offers to users. And if SoundCommerce really can do everything it says, then it can make a sale at a cost-per-conversion rate that works out to be economical. This means data comes in from sources as disparate as Google Analytics, Amazon Web Services, FedEx and Shopify, and gets aggregated into something retailers can, apparently, actually use to increase profits. It’s no wonder they needed Outlier: It was yet another collection system capable of crunching ever more data.

Rather like Shipium, which promises to bring giant-scale, ultra-fast order fulfillment to mom-and-pop businesses, it seems SoundCommerce is trying to scale up the ambitions of smaller retailers — or businesses that don’t conceptualize themselves as retailers at all — and spur them to imagine competing with the likes of Amazon. This makes sense considering that, like Shipium’s co-founder, Eric Best, the co-founder and CEO of SoundCommerce, is a former Amazonian.

Constellation Brands, which, yes, is selling booze via the direct-to-consumer model, makes for perhaps the simplest explanation for SoundCommerce’s apparent growth. “For decades, Constellation Brands, Inc operated as a traditional distributor-based wholesale business,” says a post on the SoundCommerce website. “When the pandemic turned this model on its head in early 2020, CBI faced their new reality head-on and began their journey into the Direct to Consumer world.”

“For the first time ever we’re looking at how to engage consumers and have them consider direct purchases,” Jon Troutman, Constellation’s Vice President of direct-to-consumer marketing told SoundCommerce.

With supply chains and other issues jeopardizing profitability by causing problems where rubber meets road, it’s easy to see companies like Constellation starting to channel their inner Amazon. Best told Geekwire last year that as brands take flight, they start out thinking about product design and marketing, but that “as they scale, it’s inevitable that they have to shift their focus from front office concerns to back office concerns. We’re really trying to catch these brands as they grow into that moment.”