Brightpearl is a vendor of multichannel ecommerce software that has been growing steadily since it was founded in 2007. They now have more than 1,400 customers in 30 countries and handled more than $4 billion of gross merchandise value (GMV) in the last year.
I wanted to find out more about them, for three reasons. First, they have been very successful in both the UK and the US. That’s not common in this industry.
Second, a key strength of their system is its ability to manage the financial aspects of a business – it does accounting, in other words. Other multichannel systems do some of that too, but few make it the core of their software. You don’t even need a separate accounting package if you use Brightpearl.
And third, it’s not easy for a software company to maintain great customer support, particularly when their system sits right in the middle of business operations. Just a small technical glitch or communication delay can be enough to cause significant business problems, and earn a negative review. But Brightpearl has an excellent reputation in the Web Retailer directory.
So I caught up with James Scott, President of Brightpearl Inc. in the USA, to find out what makes this company so unique.
BREAKING NEWS: Today Brightpearl announced new funding of $11 million to accelerate the growth of their US business. That’s a fourth reason to find out more about them!
Andy: Tell me about Brightpearl. How did it get started?
James Scott: Brightpearl was founded by Chris Tanner and Andy Mulvenna. They were studying at university together in the UK and sharing a dorm room. They started longboarding, which is like skateboarding but with a longer board. They started manufacturing longboards in their room at university, and it gradually gathered momentum.
They were making more and more of these skateboards, and eventually built a company called Lush Longboards, which became the third-largest longboard brand in the world. As they were building it, they started to hit upon the challenges of growing a small business.
They realised they needed some software to help. They looked at what was available in the market, and couldn’t afford the traditional ERP systems. They’re very expensive and need consultants to implement them, which was beyond their budget. Accounting packages like Sage and QuickBooks were just too lightweight: they didn’t have enough depth of functionality.
Chris was studying computer science, and he started to build software to help them run Lush Longboards. This was very, very powerful, very broad, and went right back into the supply chain, through to customer management, order management and fulfilment and all those necessary functions. Having this software is how they made the business so big.
Other businesses started to ask how them how they could get their hands on the software, so they let a few business friends use it as well. In doing that they realised that there was a bigger opportunity, so they sold Lush Longboards and used the money to spin out Brightpearl as its own company. They took on some investors at that point as well, and Brightpearl was founded in 2007. Retail is in our DNA because it’s been there right from the beginning.
You’ve been in the ecommerce software industry for many years, why did you decide to join Brightpearl?
When I was at ChannelAdvisor [James was Managing Director for the EMEA region] we worked with a lot of small and medium sized companies, as well as larger brands. Every week I would have a discussion with a customer who would say, “Look, we really like what ChannelAdvisor does in terms of listing and handling the marketing side of my business, but I need more back office functionality. I need to be able to scan goods in and out of my warehouse. I need a tightly integrated CRM system. I need fulfilment and purchase orders.”
They used to ask me what companies I recommended. I did a ton of research, but just couldn’t find something out there that would help. I’d find lots of individual companies that solved each piece individually, but when you try and plug those all together and get it working it was nigh on impossible. So I just hit a brick wall and told people, “Sorry, I just don’t see anything out there.”
One day I learned about Brightpearl. I immediately knew the market opportunity was there, that the need was there. Brightpearl solved all those problems that I’d been hearing from customers for many years. For me it was really clear that the opportunity was a big one, and that I could help build a company that helped a lot of entrepreneurs and small business owners.
On a personal level I love knowing that what I do every day helps entrepreneurs and founders to realise their own goals and dreams. When you’re working with the big brands, the people you’re interacting with aren’t typically the owners of the company, and they may have been there for only a short period of time. They’re not as vested in the company’s success.
The small and midsized businesses are typically still being run by the person that founded them. They founded the business because they’re passionate about a product or an industry, or maybe they’re building something that helps their local community, or raises funds for a charity. They’ve got a mission and have done really well, but then they’ve hit some barriers to achieving that vision.
So I find it really interesting to learn about their stories, and extremely rewarding to help get them back on the right track and growing again. That’s what gets me out of bed in the morning. It fascinates me every day that a business that sounds extremely niche actually represents a multimillion dollar business because of their scale – particularly in the US. It’s amazing how many businesses are out there that are never going to be national or global brands, but can build very big successful businesses just by doing one thing really well.
What does Brightpearl actually do for a business, in layman’s terms, and what makes it different from other vendors?
It’s cloud software that helps support midsized retailers. It is focused on doing what they do best which is finding great products, delighting customers and ultimately growing the business. The platform does that by integrating data from across the business into one place, including customer data, order data, inventory data and accounting data.
This is a real-time business management system which sits at the core of our customers’ businesses. A system like Brightpearl, that you rely on for decision making and financial insight, has to have full visibility of everything you do. If a retailer is selling online and offline, Brightpearl needs to connect into all of those channels. That’s an area where we are very strong compared to some of the other systems out there, who are more focused on either online or offline – but not both.
Brightpearl has an online and offline selection of sales channels. With online, it includes marketplaces and web stores, and for offline it connects with point of sale systems in bricks and mortar stores. A business may have a trade counter at a warehouse where they sell wholesale to trade customers. Or there may be a field sales team that’s on the road, doing business-to-business deals on iPads. It could even be a popup-shop at a trade show or a festival. You need to integrate all those sales channels into one place. That’s one part that I think makes Brightpearl different.
The other part is that we help our customers manage everything, from when they first purchase a product that they’re going to sell, through to the point where that product is sold and the interaction with the customer. The supply chain management part is incredibly important. They say your money is made when you buy the product, not when you sell it. Making smart buying decisions and having an efficient supply chain is an area where you can make a real difference to the profitability of your business, if you focus and put energy into it.
So we have great functionality around vendor and supply management, purchase orders and accounting for all the costs of getting products into your warehouse. That is not just the cost of buying the product, but all the “landed costs” in retail terms, including customs fees, shipping costs, insurance, and so on. We’ve got this full visibility from supply to sale, online to offline. Once you have that, it will generate a lot of insight and data.
I always describe the Brightpearl value proposition in two parts. The first is getting the sort of operational stability and efficiency of having all these processes and data in one place. So you never need to copy and paste and run the risk of inputting errors. The second is that then you have an enormous treasure trove of data, that you can use to make decisions about how you grow your business. That is not just how you grow the top line but how you grow the bottom line.
We can help businesses grow profitably, because we have a full accounting suite built in. We can give our customers near real-time profitability on every aspect of what they’re doing. That really enables decisions and strategies to be made quickly, so you can do more of the stuff that’s making you money and change strategy on the things that aren’t.
Do your customers use separate accounting tools or is that completely unnecessary? Why do you have such a strong focus on accounting?
We don’t expect our customers to have another accounting tool. Customers often come to us using QuickBooks or Sage and they move their whole business into Brightpearl, so they don’t have to pay for a separate accounting package and then another piece of software to connect the two together.
What determines success for a small business is profitability and cash flow – that’s why we do accounting. You can look at any other numbers you want, and feel good about growing your top line or about the number of sales you had today, or the number of SKUs you have in your inventory. But at the end of the day what determines whether you’ll be around next month and the month after is cash flow and profitability. You can’t have one of those without the other. Even if you’re profitable you can still go out of business because you get your cash flow wrong. We think it’s absolutely fundamental to business success to have a very tight understanding of the finances.
Because Brightpearl handles everything from supply chain to sale, and from online to offline, you don’t need to do accounting. It just happens as a by-product of running your business. For example, if you need to order some new products and use Brightpearl to generate a purchase order for your supplier, the system automatically makes all the accounting entries to account for that order. When the product is received, it makes all the entries to account for the assets in your warehouse. When the invoice comes it automatically accounts for the liability, and when it’s paid it accounts for that too.
If you think about what our customers should be spending time on, you should not be spending time doing accounting, but you should absolutely be spending time looking at the numbers. Brightpearl can generally do the accounting in the background, and I don’t think that can be said for a separate system which has to be synchronized and makes errors that need to be fixed. That’s the problem when you start plugging two systems together, especially if you’ve got a third piece of software in the middle acting as a translator. It’s never perfect, and you need your accounting to be solid.
You have a well-developed partner program and your own app store. Where do you draw the boundaries of what you’ll build into Brightpearl, and what you look for partners to provide?
If you just focus on the technology piece, we are very aware that all the things we do make for a broad feature set. But there are some things that we’re not going to do. For example, we do not do listing to marketplaces. We made a decision around twelve months ago not to invest in that any further, because people have built whole companies just around listing. We don’t think we can add a ton more value than what’s already out there in the marketplace.
For a lot of companies, listing is their biggest pain point because they may have new products coming in every week. But the more mature a company gets, the fewer SKUs they have. We looked at our companies by revenue and number of SKUs, and there was a very clear correlation which showed that as revenue grows, the number of SKUs decreases. The larger companies tend to get smarter about their business and realise that growth isn’t about pumping out millions of SKUs, it’s actually about finding the ones that make you money and focusing your energy on those. So we decided that while listing was a pain point, there are other solutions out there and we should help our customers find those.
We’ve managed to give small and medium sized businesses access to the same technology that national and global retail brands have had for many years, levelling the playing field and giving them the ability to compete more effectively. To do that cost effectively we have to think about the functionality that these businesses really need, and that’s what we’re going to build for them. We give them the majority of what they need within the core platform. But every business is different, and everyone has slightly differing needs. That’s where our network of partners come in, allowing them to customise the Brightpearl platform to meet 100% of their business needs.
We have a really vibrant ecosystem around Brightpearl, and last year we invested a lot in our API to enable other companies to connect into us. We’re seeing the results of that now, and you’ll see more this year. Technology partners add functionality to the platform, but we also have a growing army of service partners, people who can provide knowledge and expertise to help with the more strategic business questions like, “What is the right strategy for me to expand into this new country? How can I improve my stock supply chain? What is this data telling me, what are my options?”
Do you synchronize stock levels across marketplaces?
The only thing we don’t do is create the new listings. We do connect with marketplace accounts and ecommerce platforms. In some cases, we download the listing data and create SKUs within Brightpearl, so if you list ten new products to a marketplace we can synchronise and create those products in Brightpearl automatically.
Once that connection is made there’s a SKU in Brightpearl which corresponds to the SKU that’s listed on eBay or Amazon, for example, and Brightpearl knows that it’s the same product. Then we synchronise price and quantities. That happens close to real-time depending on the channel. Inventory management and price mastering is absolutely part of what we do.
What kind of businesses are your customers, typically?
We are equally happy to work with customers that are pure-play online as we are pure-play offline. If you look across all our customers and where their sales come from, the split between online and offline is pretty much identical to the overall numbers for businesses in the UK and the US. Our customers are not skewed towards online-only or offline-only.
We have some customers who sell purely wholesale and have no online component at all, and other customers who are 100% pure-play online. The majority are a mixture with some online marketplace sales and website sales, and also a retail store or call centre to take offline orders.
In terms of size our sweet spot is between $500,000 and $30 million of online sales a year. But we often have people signing up in the $250,000 range, and we also have businesses in the $70-$80 million dollar revenue range. Businesses at $250,000 who can see a path to $500,000 in the next six months are a good fit, but if they’re happy at that level and it’s more of a lifestyle business then we’re probably not the right solution. It’s a powerful platform, and takes an investment of time and money to implement. It’s not for people running a business out of their bedroom, but more for companies with four or five employees who are planning to grow further.
When we design the software, we do it for people doing a million dollars upwards. We have a lot of companies who are smaller than that but they are growing. Because they’re growing they’re starting to experience the pain. There is a classic cycle that is repeated time and time again where somebody finds a great product, delights their customers, grows their business, and then becomes a victim of their own success. Suddenly they’re spending all their time fire-fighting, fixing things that are going wrong, and they start to plateau. When customers implement Brightpearl they return to their previous levels of growth, then because they have all this data that they didn’t have before, they start to accelerate.
Our customers include some really interesting companies. Oaklandish in California is a great example. They’re a t-shirt company with a mission, which is to help the local community in Oakland, the area where they were founded. They’ve developed an amazing following and a very loyal customer base, and have had a great impact in the local community. They do a lot of events in their stores and local parks, and are one of the fastest-growing private companies in the US as a result.
Another example is Spikeball, which is a game that you play on the beach or in the back garden. The founders knew the game was played 30 years ago, but nobody was selling it any more. So they brought it back to life. They didn’t just create a plastic frame and a net that sits on the floor – they built a whole community of competitions and leagues around the world that play this game. They’ve developed a whole movement. Now they’re number 139 on the Inc. 5000 fastest growing companies. These are not huge companies but they are young, doing amazing things and growing fast. That’s really inspiring to other retailers.
What are the latest new features in Brightpearl, and what have you got coming next?
We roll out new features every four weeks or so, and released a number of them in late October, just in time for the holiday season, to help with drop shipping and returns. We beefed up some of our functionality around drop shipping because that’s a popular business model for many of our customers.
We have been working really hard over the last 12 months on a number of big new features that are going to start being announced in February. The first is multicurrency accounting. We’ve always supported the ability to trade cross-border, because even smaller sellers are selling internationally. But multicurrency accounting enables customers who are buying and selling in different currencies, and may have bank accounts in multiple currencies, to properly manage their accounts payable and receivable.
Let’s say you’re buying stock from China and you’re located in the UK. You might be buying in dollars and selling in pounds. Or you might have a Euro bank account because you have a large volume of sales in France and Spain, which you convert to dollars or pounds at the time that’s best for your business. As businesses get more mature and they’re processing larger sums of money in different currencies, the ability to manage that becomes really important. Multicurrency accounting will do that, and it’s a very complex piece of work that we’re just nearing the end of now.
We are also working on a next-generation point of sales system for release in the spring. Our current point of sale is functional but basic, and not pretty when you compare it to some of the systems that you can buy cheaply online nowadays. It’s still massively popular with our customers and with people who come to us. The reason it’s popular is because it’s so deeply integrated with the core platform, and gives the person in the shop information that none of these other systems can give them.
They can say, “Well, I haven’t got that product in stock but I can see it’s in stock in our warehouse,” or, “I can see we’ve got some on order and it’s going to be delivered in five days’ time.” All that sort of information that sits in the back office, we make available at the point of sale. Our customers love that, so we’re investing in the point of sale and bringing some of the more modern technologies, like new payment methods, into a new version. That’s a big move forward for us.
How do you make sure your software and customer support are a good fit for US businesses?
Success in the US is key to our company’s success. We started in the UK, and have a really strong product in the UK, but we found that US customers were starting to buy it even though we weren’t marketing to the US. What you find is that the needs of small and medium-sized businesses in the UK, in the US, Australia, South Africa, and so on are very similar – a 90% overlap. There are some localisation needs of course, around accounting and different sales channels for example.
We decided a couple of years ago that US success was a priority for the business. To be successful in the US you need to have a product that fits the local market. You need to have a team that understands the customers and their needs, and participates in the community. And then you need to work hard to raise the profile of your brand, tell the story to your customers, and show what great results we’ve had in other parts of the world. So we decided that we were going to function as though we’re a US company.
We spent most of 2015 improving the US functionality in our product, to make our market fit really strong. Towards the end of last year, we scaled up our US teams to support some massive growth in 2016. We’re at the point now where more new customers every month are coming to us from the US market than the UK. Over the course of this coming year, two-thirds of our new business will be US and one-third UK.
We’re not in any way reducing our focus on the UK. We have our whole engineering and product development team based in the UK. We have a lot of our executive team in the UK. But we’re putting a lot of our 2016 investment into the US market.
How do new customers get set up on Brightpearl?
All of our customers are different, and one of the things that we love about this business is that every customer has a unique story and unique goals for their business. So we talk to every prospective customer, and we make sure we understand their business and their goals. Then we package the right combination of technology and services to make sure that they have what they need to be successful, not just initially but also in the long term. Once we understand that we then pass them to our onboarding team. They get the customer set up for success on the platform.
We survey every customer after they go live and ask them to rate the experience. Time and time again, they say the most valuable part of the onboarding was not the help with data, or the training, or the support – it was the business consultancy that took place. At the beginning of the project we dive into all their different workflows and processes, and help improve those or change them to the best practice we’ve seen with other customers. They get a ton of value out of that, and feel like they’ve made a change for the better right from the beginning.
When the customer goes live we pass them to our customer success team. They monitor the customer in a number of different ways, and provide guidance and support both reactively and proactively, to help ensure the customer is continuing to move their business forward in the way they plan to.
Sometimes the business needs change so we’ll have a discussion about that and set new goals. Then we’ll decide what actions are going to help them get to those goals. Some of those actions may be things that we do, others may be things where we involve partners.
We are very involved with our customers, with a hands-on customer success function and a strong community in the forums. We have lots of opportunities to interact, and that’s something we’re really proud of. I think it enables us to stay really in tune with what our customers like about the software, but also what they need us to do that we’re not doing yet. That customer contact is very important.
How do you support customers in so many different countries?
Our customers’ businesses run 24 hours a day, so it’s really important to them to get help whenever they need it. They can do that via email or if they wish to pay for phone support that’s an option we give them. There are also customer forums which can be a really valuable source of information.
We’re really proud of having a 24/7/365 support team. We’ve had that for two years now, with round-the clock-coverage every day of the year, 24 hours a day. We do that with a combination of teams in Europe, North America and Asia.
It’s a follow-the-sun approach. If you’re a UK customer, and it’s nine o’clock in the evening, our UK support team won’t be there but our system will push you over to the San Francisco team and you’ll get somebody on the phone there. All retailers and wholesalers, not just our customers, are busy people. When you get a little time to work on something, there’s nothing more frustrating than getting 10 minutes in and suddenly hitting some sort of roadblock. So we respond to every ticket within an hour regardless of the time of day, and 60% of the time that initial response solves the question. If needs be it’s escalated to different teams, but we have a first level of response that can answer the most common questions.
We also have an advanced support team that specialises in eBay, Shopify and Amazon. Then we have an escalations team, which is our third level for things that require much more complex investigation. It’s a really effective structure. We survey every customer after every ticket, and our support average is around 98% minimum every month.
What’s it like to work at Brightpearl? What drives you as a company?
It’s a fun place to work and if you talk to any one of our employees they’d say the same thing. The type of customers that we get to interact with and spend our day talking with make it interesting. We try and level the playing field for independent retailers. We think a world without independent retailers would be a very sad place, so we are champions for them. We love shopping from them, and we love seeing them be successful. We want to find them on every street corner. That’s what binds us as a company.
We’re trying to give independent retailers the technology and the knowledge that large retailers have had for a long time. That allows them to compete more effectively on their USPs – product knowledge for example, or their unique customer service. If they can do that, they don’t have to compete on price to be successful, and they’ll be around for a long time. Every day we’re thinking about how can we give them that next piece of technology or next feature that’s just going to help them be more successful.
James, thank you for taking the time to tell Web Retailer readers all about Brightpearl. I hope your success continues through 2016 and beyond.