The first year of any business is a time full of surprises and making adaptations when conditions go from being theoretical to becoming concrete realities.
But there are surprises, and then there’s a global pandemic that hits the reset button on consumer habits basically overnight. However, as eCommerce infrastructure company CashDrop approaches its first birthday, CEO Ruben Flores-Martinez told PYMNTS in an interview that the pandemic has ended up being a massive tailwind for his firm.
“Obviously, the harder it hits outside, the more merchants are forced to think of online solutions, which leads them to kind of fork our way,” Flores-Martinez said. “And we feel a lot of responsibility to be 100 percent merchant-focused, with economics that are extremely sustainable so that everything we’re doing empowers them to thrive in these toxic conditions. The virus has helped us diffuse our story, and it really just accelerated that adoption curve from 10 years to three months.”
He said CashDrop aims to help small- to medium-sized businesses (SMBs) in different ways from what others have done. For example, the company isn’t building a marketplace and has no desire to ever do so.
After all, there are plenty of other marketplaces out there, including those of Big Tech companies. Flores-Martinez said CashDrop’s goal isn’t to take on Amazon, Facebook, Uber Eats or Shopify with yet another marketplace whose app consumers have to download.
Instead, the goal “is to become an infrastructure company that can help merchants monetize their following and their customers where they already are,” he said.
“The precursor to a marketplace is the fact that every millennial [and] Gen Z is always on their phone scrolling through social media feeds,” he said. “We want to make it possible to monetize the customer’s attention right there, instead of having to dump [them] off to a different experience.”
Sidestepping The Big Online Marketplaces
Flores-Martinez said there are simply too many marketplaces out there these days, to an extent that eCommerce is becoming overly fragmented. That makes it hard for merchants to make a fast, digital pivot with the right offerings — and the right economics.
He said that what CashDrop hears over and over again from restaurants and retailers is that the roughly 30 percent commissions that big online marketplaces charge retailers hurt quite a lot.
So, CashDrop has done away with marketplaces and the commissions that marketplaces build their monetization strategies on. Instead, CashDrop’s merchants can download the company’s free app and set up accounts via a chat function called Cash Spot.
“They don’t need to know how to code, they don’t need to know how to design, they don’t need to be very tech savvy,” Flores-Martinez said. “They just talk to Cash Spot, which is built to know everything for them.”
The app gives merchants a custom QR code and custom links to where they want their “drops” to be located, whether on a company’s own site or on social media channels. Merchants pick the places where they encounter their customers, then decide what menu of goods or services to place within the company’s content for customers to interact with.
CashDrop’s biggest source of traffic so far is Instagram. When customers see a merchant’s postings on Instagram, they also see a Cash Drop link that they can tap to get to the company’s sales menu.
Users can then easily place orders using a credit card or Apple Pay without ever leaving Instagram. CashDrop doesn’t charge merchants for the service but makes its money by assessing consumers with a small convenience fee on their orders.
“We want to become that path of least resistance, to be able to say: ‘If you download this app, in 15 minutes, you’re off and running. You’ll have everything you need,’” Flores-Martinez said. “And [firms] will have what is needed without having to sacrifice 30 percent of their revenue to get it.”
An Expanding Landscape
CashDrop mainly works with restaurants right now, but the company designed its technology to work with all sorts of merchants, whether the product is a taco, a T-shirt, a ticket for a live event or an appointment for a consultation.
Since CashDrop’s first year was so unpredictable (to say the least), Flores-Martinez said he hesitates to make predictions for its second year in business. However, he said the company’s broad goal is growth, both in terms of verticals its serves and in terms of the company’s geographical range.
“We want CashDrop to become that platform that enables people all over the world to become entrepreneurs — to start that businesses they’ve always wanted to,” Flores-Martinez said.
He said CashDrop aims to “really facilitate people taking their business ideas from only being a side hustle into being a lifestyle.”
Selected by Fintech Tube