Woolworths takes stake in tech startup Longtail UX
Longtail UX, an Australian company that promises to increase the return on investment from online search and digital advertising spend, has raised $2.25 million from Woolworths Group’s venture capital arm, W23, and Global Retail Brands, the parent company of House and other homewares chains, which is owned by Steven Lew.
Announced today, the supplementary equity raise is in addition to a $3 million funding round led by Investec in March of this year. The investment will support the company’s international expansion and the launch of a new digital advertising solution.
Longtail UX specialises in helping retailers reach customers who are searching online for products they stock, but might not necessarily know where to find them.
Recently, it also launched a solution to make digital advertising more effective by personalising the customer experience after they click on an ad online and reducing the cost-per-click for retailers.
Interest in the company has grown in recent months, as in-store shopping has declined in many discretionary retail categories due to the global coronavirus pandemic.
While many retailers have reported a huge increase in online sales, those that had not invested sufficiently in their digital operations in recent years have been forced to fast-track plans to improve their e-commerce and delivery experience and find ways to let customers know they are open for business online.
Replacing store sales with online
Will Santow, co-founder and co-CEO of Longtail UX, said he has heard from some of Australia’s biggest omnichannel businesses in recent months.
“It’s those bricks-and-clicks retailers that need to replace a big chunk of their bricks-and-mortar revenue with online revenue in a hurry [that] are very interested in engaging with us,” he told Inside Retail, Inside FMCG’s sister title.
According to Santow, big businesses with a wide range of products get the most out of Longtail UX’s technology. Woolworths, along with its sister brand Countdown in New Zealand, recently became the first supermarket to come on board.
“They actually have an enormous recipe database which is very ‘longtail’ if you like, so there are some great opportunities there for our technology to be deployed,” he said.
Global Retail Brands has also implemented the technology in addition to investing in the company.
Longtail UX was founded seven years ago by Santow, an Australian online entrepreneur, and Andreas Dzumla, an ex-Googler who worked on some of the tech giant’s early core platforms.
The company currently has more than 70 clients around the world, including local retailers Woolworths, Dan Murphy’s, Booktopia and Adore Beauty.
It recently ended a two-year relationship with Kogan.com, which Santow said resulted in an “eye-popping” return on investment for the online marketplace. According to him, the partnership ended because Kogan.com prefers to keep its technology solutions in-house.
Disrupting the market
Ingrid Maes, managing director W23, said the investment reflects the organisation’s focus on strategic partnerships with game-changing startups.
“At W23 we want to support innovation and foster entrepreneurial talent. The team at Longtail UX is high-calibre, and we know there is a lot to learn from innovators like them who are disrupting the market,” Maes said in a statement.
“Our partnership model will give the team at Longtail UX the freedom to continue doing what they do best, while offering them access to the assets we can bring to the table through the Woolworths Group to help them realise their plans faster.
“In return, our partnership should help the brands within Woolworths Group differentiate their offer and accelerate their ability to meet the changing needs of customers.”
This story first appeared on our sister site Inside Retail Australia.