Startup Spotlight

Aiming for One-Click Buying

shopco
Shop.co co-chief Jay Habib wants you to smile and click.
  • Why it matters

    Why it matters

    If successful, Shop.Co’s business model could be a game-changer in online retailing.

  • Facts

    Facts

    • The startup’s website, www.shop.Co, says it has “The world’s first universal one-click buy button.”
    • During first-round financing, Shop.Co raised €2.25 million ($2.54 million). Another round is scheduled for October.
    • Jay Habib, an entrepreneur and business-data processing specialist, and IT expert Manuel Schoebel are the company’s co-founders.
  • Audio

    Audio

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When Jay Habib moved with his family three years ago, he wanted to order a number of things for their new home online. But he was annoyed by the fact that at each online store, he had to go through a lengthy registration process.

“And even then, it took as many as 12 further steps to make a purchase. What a senseless waste of time,” said Mr. Habib, a business-data processing specialist.

And so he came up with the idea for Shop.Co, a Düsseldorf-based online shopping tool that enables users to buy items at online stores worldwide with just a single click.

“Shop.Co transfers to every shop on the Internet the principle of one-click buying that Amazon customers have come to value so highly.”

Tobias Kollmann, E-commerce professor, Essen University

Mr. Habib and his co-founder, IT expert Manuel Schoebel, programed an artificially intelligent system that uses a robot of sorts to register and place orders at any online store after customers sign up with Shop.Co just once. These shops don’t even need to have a cooperation contract with Shop.Co, which also hopes to simplify travel booking with the same method in the future.

Industry experts such as Essen University professor Tobias Kollmann find the business model exciting.

“Shop.Co transfers to every shop on the Internet the principle of one-click buying that Amazon customers have come to value so highly,” said Mr. Kollmann, who specializes in e-commerce and e-entrepreneurship. “Because the technology is browser-based and can be superimposed on every individual website, Shop.Co could become a sort of meta-shop or meta-ordering machine for the entire Internet.”

Before Shop.Co came along, about a dozen outfits tried their hand at creating such a meta-ordering method, including Internet giants like Google, PayPal and Amazon. But their technology works via interfaces that must be approved by the individual online retailer. This means, for example, that an Amazon customer can make purchases only via a click on the Amazon website, and not anywhere else they’d like on the Internet.

“The principle challenge with such business models is integration with the shop,” said Jens Lapinski, a manager at U.S. startup Accelerator Techstars. “If this occurs in a frictionless and scalable fashion, it is potentially interesting.”

Shop.Co’s patented, intelligent “robot” for making orders has convinced a first round of investors, among them a group of five so-called business angels that includes Dieter Heuskel, the former head of German operations at Boston Consulting Group.

“This business model offers the chance to annoy Internet giant Amazon somewhat,” said Rainer Minz, an IT expert and senior adviser at BCG.

Online stores don’t have a to pay a commission to Shop.Co – unlike with platforms such as Amazon. And Shop.Co doesn’t cost buyers anything either. Mr. Habib hopes to earn money like the large American models do: through the purchasing power of the masses of users he hopes to reach.

He is also considering side businesses that would include taking commissions for providing longer guarantees, loans or insurance policies. One possible source of revenue could be commissions from payment handlers such as credit-card companies. It’s also conceivable that customers would immediately pay via Shop.Co. But this would require the startup to have a banking license.

“We’re working on that at the moment,” said Mr. Habib, adding that data security is a particularly important issue. “We don’t sell any data. And our standards for transmission and storage are almost as high as at banks.”

The co-founder is hoping for a large market on the social networks, which are themselves experimenting with shopping options.

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Less clicks, more stuff. Source: Getty Images

 

“Friends and stars rave about cool products there,” Mr. Habib said. “With Shop.Co, followers can buy products directly in the social network – by clicking on to any link to any shop – without the shop having to be directly integrated. We’re currently talking with Pinterest about a collaboration.”

Shop.Co wants to charge 2 percent of sales revenues for its service on social media.

At the moment, Pinterest – just like Facebook and Twitter – is cooperating with online payments processor Stripe on a buy-button. But Stripe’s interface technology requires that every individual online store – in contrast to Shop.Co’s model – be hooked up to the system. Shop.Co is also negotiating with price-comparison portals.

“For us, both are an ideal way to get many users,” said Mr. Habib, who declined to reveal how many users the site currently has.

The service was active in Germany for test purposes only until last August, and has since decided to focus elsewhere.

“Now we’re turning our attention first to the U.S. market,” Mr. Habib said.

Shop.Co has opened an office in San Francisco with 11 people, and Mr. Habib travels there every two weeks.

The 32-year-old son of an Afghan craftsman and a Russian nurse says he always wanted to become an entrepreneur and “do something big.”

During his studies at Germany’s Otto Beisheim School of Management he set up 11 firms, “just for practice,” he said. They included Semesternews.de, a trading platform for commodities, and an Airbnb of sorts for warehouses.

Among other things, Mr. Habib learned the importance of the U.S. market, with its ample venture capital and quickly attainable critical mass.

E-commerce expert Mr. Kollmann agrees. Because of the larger domestic digital market in the United States, a substantial range can be built up more rapidly there. If Shop.Co manages to attain a certain market power, the business model could be monetized favorably.

“The next six months will be crucial for us,” Mr. Habib said.

Starting in July, Shop.Co will also be available via smartphone. A large round of financing is scheduled for October. During the first round, the company collected €2.25 million ($2.54 million) from two main “angel” investors – Dortmund Seed Capital and Tripos from the Pohlmann furniture dynasty.

Both were impressed by the team’s startup experience, the technology and Shop.Co’s head developer, who previously worked at IBM on the supercomputer Watson.

“He certainly wouldn’t have switched to a tiny startup in Düsseldorf if he weren’t convinced by the idea,” said BCG’s Mr. Minz.

 

Katrin Terpitz covers companies and markets at Handelsblatt, focusing on German SMEs and family-owned businesses. To contact the author: Terpitz@handelsblatt.com

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