He ‘dogfooded’ a SaaS for his lean e-commerce business and sold it for 8 figures

While slick websites may convey otherwise, many e-commerce companies are operated by small teams.

With limited resources, e-commerce founders are strapped for time to not only market their business and develop products, but also to manage customer requests and order information.

That challenge is what led Michael Dash to start ChannelReply, a SaaS (software as a service) company that helps online sellers manage customer messages and order information from Amazon, eBay, Walmart, Etsy and more.

ChannelReply helps sellers manage their customer service messages and order information from a single screen, create automated messages, customize filters and provide personalized support. After six years, the company reeled in 7 figures of ARR (annual recurring revenue) before selling to e-commerce tech firm Threecolts for low-8 figures, according to Dash.

Founded in 2016 in New York City, Channelreply was born from Dash’s experience selling auto parts on Amazon, eBay and Walmart.

He soon realized that growing a business on several marketplaces came with many pain points, especially the ability to scale. With product listings, sales info, and customer data scattered across platforms, gaining a comprehensive understanding of what’s working can be challenging, Dash said.

“It’s a large problem for a niche subset of e-commerce sellers that sell in multiple marketplaces such as Amazon, eBay, Walmart, Etsy, or have multiple accounts on each marketplace,” Dash said. “Once you grow past a certain size — about $2 million a year and more in revenue — this becomes a larger and larger issue.”

He contracted outside help and subscribed to a variety of SaaS tools, but couldn’t find a customer service solution to handle Amazon and eBay messages on one screen.

“We needed a reply manager that would allow our customer service team to excel,” he wrote on a company blog. “There was only one viable solution that would allow us to keep growing sales and customer service on the marketplaces: build our own eBay marketplace CRM solution.” (CRM stands for customer relationship management.)

With no existing solution, Dash built the tool he needed

Dash leaned on his decades of sales experience to create a streamlined tool that fueled the company’s growth.

His first step into the customer service space was for internal use, which he referred to as “dogfooding.” Dogfooding is the practice of using one’s own products or services to test a product and enhance it.

He created a tool to integrate Zendesk — a popular customer service software tool — into eBay messages. After iterating the home-made tool, Dash launched it for internal use and cleverly named it “Zenbay,” which eventually became ChannelReply.

“We knew we had something special when the Zendesk team reached out to us to see what we were up to,” he wrote on the company blog. “We got a call to see if the rumors were true — ‘Did you guys really tie Zendesk into the eBay API?’ With a grin and a sense of pride, we replied with a simple, ‘Yup.’”

How ChannelReply overcame marketing challenges and attracted a buyer

Dash’s biggest hurdle was scaling while bootstrapped. To keep overhead low, he kept the team lean, and focused on creating more integrations that enabled ChannelReply to find and capture more e-commerce customers.

Integrations refer to software services that are designed to work with other platforms or applications by sharing data and/or functionality, providing customers with a more seamless or robust experience. The company employed about 10 contractors to help them grow ChannelReply’s capabilities.

Another challenge of having disparate customer information scattered across multiple marketplaces was that it made marketing difficult, Dash said. “It’s a difficult product to market because Marketplace seller information is hidden so you can’t directly market to your target audience,” he explained.

The company created integrations for Amazon, eBay, Walmart, Etsy, Shopify, Back Market, Newegg, FreshDesk and many others. That allowed it to reach new customers and earn promotion from partners.

“We leveraged integrations as our growth mechanism,” Dash said. “By integrating with the largest marketplaces and help desks in the world, they promoted our product for us. … Because we were the solution for large players like Zendesk, Freshdesk, Gorgias & Helpscout, they needed our functionality to service the sellers using their tools. This is why we continue to integrate into more marketplaces and helpdesks.”

Launching integrations as a marketing tactic is a clever, low-cost growth lever for SaaS companies; e-commerce app Fomo took a similar approach.

Over time, ChannelReply attracted customers by the thousands, including major e-commerce brands like Samsung, Dune London, emma, purple and others. By 2022, the company was raking in 7 figures in ARR and attracting about 1 million visitors to their site each year.

That success drew the attention of other companies in the e-commerce space. While Dash wasn’t looking to sell, he received an attractive offer from Threecolts, which offers a variety of tech solutions for e-commerce companies.

“The ease of the transaction was a major factor,” Dash said. “I loved how painless and seamless it was. From start to finish we closed in less than 45 days. It is nearly unheard of in the software space to close a transaction that fast, and I enjoyed working with the people who made it happen.”

In April 2022, Dash agreed to sell ChannelReply in a low-8 figure deal. He’s now vice president of M&A at Threecolts, where he gets to “give other founders like myself the same opportunity I had.”

Dash used a trusted advisor, Josh Kalish from Odell, Girton & Siegel, to navigate the sale, and recommends that all founders consider outside help — especially if it’s their first sale.

“If you’ve never been through M&A, it can be a bit overwhelming and confusing,” Dash said.” You don’t know what’s standard and what is out of the ordinary. If you can leverage someone who has been through it before, you can use them to get yourself positioned in the best possible light for a transaction. Practically speaking, you will want your business to be profitable if possible, your books to be clean, and have a good attorney and accountant assisting you.”