This Startup Used A Chatbot To Sell $1M In Vinyl Records In 8 Months, Scores $3.5M Investment

Chatbots – "a computer program designed to simulate conversation with human users, especially over the Internet" – are all the rage in tech circles. Mark Zuckerberg says they'll transform Facebook, and an 8 month old startup has used one to sell $1 million in vinyl records.

Online vinyl store, The Edit, has sold $1 million worth of records since launching eight months ago. It's parent company, ReplyYes, founded by former Amazon exec David Cotter, sells chatbots to others and started selling vinyl to fuel his passion for music and test his own software.

This week, ReplyYes closed a $3.5 million round of funding from Madrona Venture Labs, Lowercase Capital, MESA Ventures, Ore Ventures, FJ Labs, Bob Nelson, Francois Kress, and Lorne Michaels' investment arm, Broadway Video Ventures.

How It Works

After finishing a basic thumbs up or down music profile, users sign up to get a daily text message selling an album they might like. The user texts back either "yes," "like" or "dislike" which lets the chatbot know more about their musical preferences and influences what they will be offered in the future. If they answer "yes," a link appears to let them buy the album.

The Human Touch

If the user texts back with a more complex question, a live customer service person answers instantly via text. This chatbot + human combo is meant to replicate the indie record store experience – informed recommendations + personalized customer service. The result is that The Edit has sold more than 50,000 records in the last 8 months.

"It's meant to feel like an experience in a neighborhood record store," Cotter told AdWeek. "And then it's about, 'How do we take our machine learning and chatbot and build that kind of experience?' We are already selling 300 albums a day because of that… Sixty-eight percent of our (subscribers) have purchased. Twenty-eight percent have purchased six or more albums in their first 180 days."