Tanning creams, memory supplements and skin care devices are frequently peddled on late-night TV infomercials. But there’s no reason those products can’t find a bigger audience on the Web, and an enterprising ex-Amazon.com manager thinks he’s figured out the best way to deliver on that promise.
Seattle-based DNA Response — a 10-person company led by Ranjit Mulgaonkar — just landed $3 million in venture capital financing from Benaroya Capital, iSherpa and Seattle angel investors Geoff Entress and Mark DiSalle, GeekWire has learned. The money, which follows a $575,000 round last year, will be used to support growth.
As it turns out, there are plenty of makers of consumer-oriented products that are looking for ways to build out their e-commerce channels. Partnered with Amazon.com as a fulfillment partner, DNA Response says it can deliver products in three to five days versus the three to five weeks that many of the infomercial product companies are accustomed to. The company also has relationships with 15 e-commerce marketplaces — from Amazon.com to eBay to Bonanza — where the products can be sold.
“Because we are a real-time system, we eliminate a lot of operating costs,” said Mulgaonkar, who left his job as director of business development at Amazon Merchant Services last June to start DNA Response. “A lot of the companies we work with are not really e-commerce experts, so they are not taking advantage of what is available in terms of growth potential on e-commerce.”
Historically, the infomercial market has been highly-segmented with companies using arcane technologies from multiple vendors to sell products online. But the market is still huge, estimated at about $300 billion.
During its short lifetime, DNA Response has already met with success. Within a week of the initial funding, Mulgaonkar said that it had already signed up a paying customer. It now has eight clients, and a number of others in the pipeline.
For example, DNA Response plans to launch an e-commerce storefront next month for a memory supplement called Lucidal developed by a former neurosurgeon at a children’s hospital in Denver. In addition to managing the e-commerce sales through 15 marketplaces and on the Lucidal Web site, DNA Response also will handle incoming sales through a 1-800 number.
“It is all being fulfilled through the same fulfillment pipeline, which is another wonderful thing because they can track all of the inventory in one location,” Mulgaonkar said.
The company — which charges a set-up fee in the $15,000 range and takes a portion of e-commerce sales — is not yet profitable. But Mulgaonkar said they are targeting 2013 for that milestone, possibly sooner. DNA Response employs 10 full-time employees, with plans to grow to 25 by the end of this year.
Advisors to the company include direct response leaders such as Sean Fay and Rick Cesari.