Our Investment In Rally, The Next Generation Checkout Platform
Today, we are excited to announce our investment in Rally, the leading composable checkout platform for ecommerce merchants. March Capital will be leading Rally’s $12M Series A round, investing alongside our friends at Felix Capital, Commerce Ventures, Afore Capital, Alumni Ventures, and Kraken Ventures.
Observing pain points in the consumers’ purchase journey often helps us shape our investment theses in commerce enablement. Because of the checkout infrastructure’s importance to consumers and merchants, many have tried to win over the category since 2017. Surprisingly, 6-years later it remains a major pain point and therefore, a large market opportunity.
However, with innovation comes opportunity, followed by competition, and eventually saturation. While most poured resources into improving the brand experience of going online, the checkout – a critical layer of infrastructure serving as the connective tissue for customers, merchants, and payment processors – was largely neglected.
Of these platforms, Shopify was an outlier. In 2017, it launched “Shop Pay”, its innovative one-click checkout product, to help consumers streamline the checkout process. While speed to checkout is a problem that platforms help solve for customers, it solves a much bigger issue for merchants. Cumbersome checkout processes lead to abandoned carts – it is estimated the average cart abandonment rate is at an astonishing 70% on the web and 86% on mobile, translating to roughly $18B in lost revenue annually.
With its sleek and user-friendly interface, Shop Pay quickly gained popularity and is now used by more than 60M global users to purchase from many of our beloved brands such as Allbirds, Vuori, SKIMS, and others. However, to use Shop Pay, merchants must also use Shopify’s own branded payment processor, “Shopify Payments”, which opens access to other products (beyond Shop Pay), such as BNPL and Shopify Audiences. As of 2022 year-end, an astounding 88% of US Shopify merchants use Shopify Payments.
Shopify Payments is Shopify’s secret sauce – its biggest revenue generator, growth driver, and a gateway that leads to Shop Pay, which Shopify leverages to gather insight on 60M users’ shopping behavior that no other platform has access to. As such, it’s hard to imagine Shop Pay being available to other commerce platforms (mentioned above), nor would others give up their checkout flow to their competitor. Plus, it’s in Shopify’s best interest to build a closed ecosystem in which they can extract all of the value. But what if…?
Enter Rally, the leading composable checkout platform that helps businesses of all sizes optimize their checkout process, built outside of the Shopify ecosystem, where most of the world’s GMV lives.
Jordan, co-founder & CEO of Rally, founded CartHook in 2015, a checkout platform built for Shopify merchants. After successfully processing $3B in GMV, Shopify cut off CartHook’s API access. Unfortunately, at CartHook’s expense, Shopify was able to successfully closely guard the checkout process. CartHook wasn’t alone in this experience. Countless other instances were and continue to be documented in which successful start-ups built on the Shopify ecosystem had their API access cut-off overnight.
In 2021, Jordan left CartHook and started Rally with his co-founder and CTO, Rok Knez, with a simple mission to make a merchant friendly and platform agnostic one-click checkout solution. Furthermore, given his experience with Shopify, Jordan wanted to create an ecosystem that is governed and owned by its participants, and one where its participants are rewarded for helping build the platform.
I first met Jordan in the summer of 2021. After closely tracking Rally’s progress for over a year and hosting Jordan at the 2022 Montgomery Summit, we decided to lean in.
The rise and fall of other checkout platforms have been well documented in the last twelve months, creating a lot of uncertainty around the market. What’s different about Rally? Rally is (i) purpose-built for merchants, (ii) the only fully platform and processor agnostic solution, and (iii) built by founders with prior success.
First, platforms need to be built with merchants in mind from day one. In the traditional Web 2.0 model, merchants often succumb to the platforms they are on, suffering from pricing pressure and concentration risk as merchants create value. An ecosystem that is owned and governed by merchants where they are rewarded for value creation will have higher potential for longer-term success.
Second, to win the category, frictionless adoption for merchants is critical. Merchants like choices and flexibility, but they’re also inundated with increasing number of software vendors today (i.e., payment processors, back-end platforms, content management solutions, etc.). For any purchase decision they make, it’s crucial for the software to seamlessly integrate with current and future infrastructure. Rally is the only fully platform agnostic solution for merchants, currently integrating with Salesforce Commerce Cloud, Magento, commercetools, BigCommerce, and Swell, with more in the works.
Third, there is no margin for error when it comes to processing checkout and payments, hence getting the product right is essential and incredibly difficult. Leveraging their product experience at CartHook (having processed $3B+ of transactions), Rally has built a best-in-class product that is both merchant and consumer friendly. See how the product compares against others here and here.
Lastly, the humble, product discipline team determined to succeed!
We share Rally’s belief that one-click checkout will be ubiquitous and become the checkout option of choice. With new capital, a superb product, and an experienced and resilient team, we believe it’s an opportune time for Rally to take advantage of recent market developments and win the category in the long run.
We look forward to beginning this journey with Jordan, Rok, and the rest of the team in shaping the next era of commerce with a merchant friendly and platform agnostic one-click checkout solution.
For more information, click here.