Roger Kirkness was running the Canadian e-commerce business of a health and nutrition retailer, when he realized there was a problem with the way the company was connecting with its suppliers, he says.
The company, GNC Holdings Inc., wanted to carry products online that it carried in its physical stores and it wanted its vendors to handle delivery.
But the software the company was using wasn’t up to the task.
“Getting those vendors set up was painful,” Mr. Kirkness says. “Only 1 per cent of our vendors were able to get on-boarded."
Several years later, while working at e-commerce software company Shopify Inc., he says he noticed other online retailers struggling with the same problem.
That led Mr. Kirkness and one of his Shopify colleagues, Chris Grouchy, to set out on their own. In 2017, the pair co-founded Convictional Inc., a Toronto- and Waterloo-based startup that aims to make it easier for online retailers and their suppliers to integrate their systems.
“Vendor integration is the last thing that hasn’t really been impacted by the internet,” says Mr. Kirkness, who is Convictional’s chief executive.
Behind the scenes, many retailers and their suppliers are using legacy systems that don’t work well with newer platforms such as Shopify, he says.
As a result, online retailers that are sourcing products from multiple vendors often have to send order information to their suppliers manually. While that might not be a problem for a retailer with five or 10 suppliers, at a certain point that becomes impossible.
A retailer carrying the products of 1,000 different brands, for example, “couldn’t have an e-mail relationship with a sales rep at each one,” Mr. Kirkness says.
“You need a centralized way to do all these things and a centralized way to figure out which vendors are meeting expectations and which ones are falling behind,” he says.
Convictional’s software allows retailers to import product information from their suppliers’ system so they can list products for sale. When a consumer makes an order with the retailer, the software shares that information with the supplier, so they can fulfill the order, and then it ensures the supplier gets paid, Mr. Kirkness says.
Because suppliers handle shipping, the online retailer doesn’t need to carry any inventory, an approach known as drop-shipping.
Lindsey Taylor Wood, the co-founder and CEO of The Helm, an enterprise that supports female-founded companies through a venture capital fund and, more recently, through an online store, says she wouldn’t have been able to expand into online retail without the ability to drop-ship.
Three months after launching, The Helm’s online store carries more than 8,000 products from more than 90 female-founded brands, Ms. Wood says.
“For a young company, having to have the upfront capital to participate in a wholesale model is really hard to do," says Ms. Wood, whose company uses Convictional’s software to link its back end systems with those of their suppliers.
“Drop-shipping isn’t perfect, but it’s certainly a better alternative for many, as long as you can guarantee the quality and the dependability of the shipping,” says John-Kurt Pliniussen, who teaches digital marketing, creativity and sales at Queen’s University’s Smith School of Business.
Prof. Pliniussen says he’s impressed with Convictional’s approach. It appears to have figured out that “managing inventory with the current tech, the old technology that hasn’t kept up with the platforms and applications that are available now” is a pain point for many businesses, he says. “In this market space, there’s so few competitors, they’ve got a niche. The potential right now, globally, is huge.”
The company charges retailers a flat monthly fee, says Mr. Grouchy, Convictional’s president and chief operating officer. That fee is based, in part, on what kind of systems need to be integrated, he says. “We tend to scale our pricing according to both what’s involved for us and the value to customers.”
Online retailers can use Convictional’s software with their existing suppliers or find new suppliers through Convictional’s B2B marketplace.
When Convictional connects retailers to new suppliers it can take a small percentage of those sales, between 1 per cent and 10 per cent, in addition to, or in place of the annual fee, Mr. Grouchy says.
The company won’t disclose revenue or customer numbers. Mr. Grouchy says gross merchandise volume, the total value of all sales through the platform and the main metric the company looks at, is rising by 45 per cent month over month.
This fall, Convictional attended Y Combinator, a high-profile Silicon Valley startup accelerator program. While in the program, Convictional raised a seed investment round worth US$2.2-million.
The company, which currently employs eight people, including its co-founders, plans to use the money to hire more engineers “to really continue to make the product better,” Mr. Grouchy says.