(We originally posted this in 2020. You can read more of our original ideas in our archive.)
Problem: Purchasing today is based on email and websites. This is an extremely clunky interface which requires users to choose rather than dynamically or intelligently surfacing content.
Solution: A service where purchasing commerce is as easy as sending a text message. Users could text their personal digital assistant something as simple as “Buy my any toilet paper less than $10 from the store” or “Send flowers home to my partner” and a variety of back-end APIs would put in the work to make it happen. Unlike commerce directly online via websites, this platform would be conversational, native to where most people already are (i.e. in iMessage, WhatsApp, or other chat services), and primarily driven by NLP rather than browsing. In this sense, websites would customize products and carts to user preferences rather than forcing users to dig around and find it themselves.
There are currently a few competitors in this market already: MessageBuy (Founded by Darren Pierce) and Dirty Lemon (founded by Zak Normandin). Below is a description of each:
At MessageBuy, we provide patent-pending text messaging software for Online Retailers. Our Text Message Commerce SaaS platform allows retailers to engage with their consumers 1:1, upsell on existing orders, and drive repeat purchases. We are the first SaaS company to transact commerce "inside" text messages for Online Retailers.
Unlike MessageBuy, Dirty Lemon has not open-sourced their infrastructure for selling (yet). Instead,
Normandin was spending up to $30,000 a day on Instagram ads…. Massive ad spend quickly led to widespread recognition. But instead of selling products through as many channels as possible, Dirty Lemon beverages could only be bought by text message. This created a mystique around the product and increased demand. “When you restrict distribution,” says Normandin, “and people are seeing a lot of something, it naturally creates demand no matter what the price point is. That was part of the appeal. The fact you couldn’t buy it everywhere. It was like a secret.”
Customers are supposed to visit Dirty Lemon’s website to link a credit card and delivery address to their phone number. Ordering bottles of water is then done simply by texting the designated number. Customer service agents are there to help in case of any problems.
While MessageBuy has not seen much success (there isn’t much traction on any social media sites), Dirty Lemon has sold over 2M bottles since 2015 with their purely SMS sales play.
There are several values to SMS sales rather than website or email purchasing:
SMS messages have a 98% open rate compared to 20% of emails.
75% of consumers are comfortable receiving SMS messages from brands as long as they opt-in to messaging.
64% of consumers think businesses should contact them via text messages more often.
75% of consumers want to receive texts with special offers.
SMS also allows the company to collect data, stay in touch with customers, and win back those who churned.
Most recently, CBInsights described that “Dirty Lemon doubled down on this technology by acquiring the chatbot company Poncho in 2018. ‘We’re testing this with beverage right now,’ said Normandin, ‘but the technology that we’re developing could apply to beauty, personal care, home goods, anything that has a high velocity that you’re reordering on a regular basis.’” That, I argue, would be the playbook for this business: using text messages to sell high velocity items in an easy to use way.
According to GrandView research, “the U.S. SMS marketing market size was valued at USD 3.5 billion in 2018 and is expected to register a CAGR of 20.3% from 2019 to 2025. SMS marketing helps organizations eliminate paper costs and denote a fast and convenient means to interact with target customers.” Statista corroborates those numbers, writing that by 2022 the A2P (application-to-person) and P2P (person-to-person) SMS markets will be $40.2 billion and $43 billion respectively. It seems everyone is bullish on SMS, so why not build a business where that is the core value proposition?
Monetization: SaaS or IaaS: offering this Software or infrastructure as a Service.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)