Ever felt uncomfortable making a purchase without trying out the merchandise? Well, a start-up called BlackCart is tackling one of the key challenges with the process of online shopping. That company, which has now closed on $8.8 million in Series A funding, has built a try-before-you-buy platform that integrates with e-commerce storefronts as a solution to the problem. It allows the customers to ship items to their homes for free and only pay if they choose to keep the item after a “try on” period has lapsed. Only last year, this Toronto-based company had raised an amount of $2 million.
The new round of financing was led by Origin Ventures and Hyde Park Ventures Partners and also saw participation from Struck Capital, Citi Ventures, 500 Startups and several other angel investors, including Christian Sullivan of Republic Labs, Dean Bakes of M3 Ventures, Greg Rudin of Menlo Ventures, Jordan Nathan of Caraway Cookware and First National Bank CFO Nick Pirollo, among others.
Realizing the opportunity for a “try before you buy” type of service, Donny Ouyang, the start-up’s founder first built BlackCart in 2017 as a business-to-consumer (B2C) platform that worked by way of a Chrome extension with some 50 different online merchants, largely in apparel. This MVP of sorts proved there was consumer demand for something like this in online shopping. Ouyang credits the earlier version of BlackCart with helping the team to understand what sort of products work best for this service. It makes money way of a rev share model, where it charges retailers a percentage of the sales where the customers have kept the products. This amount can vary based on a number of factors, like the fraud multiplier, average order value, the type of product, and others.
The start-up, as it stands today integrates with various online storefronts like Shopify, Magento, WooCommerce, Big Commerce, Salesforce Commerce Cloud, WordPress, and even custom storefronts. The system is designed to be turn-key for online retailers and takes around 48 hours to set up on Shopify and around a week on Magento, for example. It has its own proprietary technology around fraud detection, payments, returns, and the overall user experience, which includes a button for retailers’ websites.
Since the online shoppers aren’t paying upfront for the merchandise they’re being shipped, BlackCart has to rely on an expanded array of behavioral signals and data in order to make a determination about whether the customer shows any sign of fraud risk. After the customer receives the item, they are able to keep it for a period of time (as designated by the retailer) before being charged.
BlackCart also verifies the user’s phone number at checkout and matches it to telco and government data sets to see if their historical addresses match their shipping and billing addresses.
The company has also expanded beyond home try-on to include try-before-you-buy for electronics, jewelry, home goods, and more. It can even ship out makeup samples for home try-on, as another option.