Telstra is backing messaging-based mobile commerce as a growth area as its venture capital arm takes part in a $US85 million funding round for startup Snapcommerce.
The telco giant believes a growing number of people will use SMS and messaging services such as Facebook Messenger to transact online through the Toronto-based startup’s platform which uses a chatbot powered by artificial intelligence to enable users to book hotel rooms and make other purchases.
Snapcommerce, which personalises the mobile shopping experience and allows users to tap into promotional prices, expects to hit $1 billion in mobile sales in 2021.
Telstra Ventures lead an initial funding round for the startup in 2018 before contributing to this latest $US85 million ($110 million) raising. Partner Yash Patel said the venture capital firm was a big believer in the future of messaging-based mobile commerce.
“It’s similar to what we’ve seen in Asia with the rise of apps like WeChat, where you use them to hail a cab, to buy electronics, to book a doctor’s appointment all through messaging applications,” he said. “We think that trend of conversational commerce through messaging is going to be very disruptive in the Western market, especially in North America, Australia, the UK and English-speaking markets.”
Mr Patel said Asia had always had a mobile-first outlook on how consumers interact with businesses and because of that had natively developed ecommerce experiences through messaging with “super apps” such as WeChat and Grab.
“We are a bit behind by a few years because we had broadband internet. We started off with desktop and web 2.0 and so I think we’re just starting to get into mobile first commerce,” he said. “When you come through Snapcommerce, you do not download a mobile app — you don’t even have a website — so there’s no friction or noise there. It literally is just a conversation.”
Snapcommerce was started by Henry Shi and Hussein Fazal in 2017 and was initially called Snaptravel because of its travel focus but is now broadening its focus.
Mr Patel said while travel was Snapcommerce’s first application, the latest round of funds enabled the startup to “double down” on its success in travel and expand into other areas such as electronic goods and other consumer goods that might be bought via online marketplaces such as EBay.