BOULDER – With Boulder Startup Week on the horizon, Boomtown Accelerator companies are preparing for their Demo Day, May 19.
One of its companies, ShadowBid, is starting to see success. The Los Angeles-based startup has a tool for helping consumers find the best prices for products on Amazon, by using an algorithm to find when a product someone is eyeing will be at its lowest price and automatically ordering it from them.
The company’s chief executive and co-founder, Wes Hansen, got the idea from his past life as a stockbroker.
“I started to get frustrated because I noticed the fact that these amazing tools I used for buying or selling stock were not available in any other aspect of my life,” Hansen told BizWest.
Specifically, Hansen was looking at buying airline tickets when he wanted to do an equivalent of what he knows at work as a “limit order.” Essentially, limit orders are bids where a price is set, and if a stock drops to that price, an order is automatically placed.
Rather than try to tackle the airline industry though, Hansen and his co-founder, Kevin Futch, decided to build a platform for Amazon, which had a lot of price volatility.
ShadowBid, which can be used as an app or Chrome extension, can take a product a person is viewing on Amazon and show them the price history. Users can set a price, and if the item falls below that bar, the item is automatically purchased.
The platform also has a chart that can show the expected trajectory of prices. ShadowBid makes a suggestion if the product’s price is expected to drop or if now is the best time to buy.
The program works by pinging Amazon multiple times per day. When an item hits the bid price or lower, it triggers an order. A person’s Amazon settings, such as their Prime account for free shipping, still applies.
ShadowBid places some limits on whom it will allow to make orders — specifically, no third-party sellers and no one who doesn’t offer free shipping. Hansen said that’s ShadowBid’s way of preventing customers from accidentally ordering an item from an unreputable seller.
The company makes its revenue several ways. Part of it comes from Amazon, which pays a 4 percent to 6 percent finder’s fee to companies such as ShadowBid for helping the retail giant save on marketing by bringing it customers. Another part of revenue comes from a service fee on certain transactions: If ShadowBid finds your item at a price that’s significantly lower than the bid price you set, a portion of those savings goes to ShadowBid. Finally, the company is also looking at a premium subscription, where Futch said people who are really into the financial part of ShadowBid’s features can pay to have a more in-depth look at the history of their item.
Beyond the Boomtown Demo Day, ShadowBid is looking ahead to raise funding, between $750,000 to $1 million.
“We primarily want to get 150,000 users,” Hansen said. “We’re looking at our next version, and we plan to get to that number of users in the next 12 months.”