The Daily Grommet Leads Wave of “Anti-Amazon” E-Commerce in Boston

5/16/13Follow @gthuang

First of all, the company is no longer called the Daily Grommet. Now it’s just The Grommet.

“We still execute daily,” says CEO Jules Pieri, “but we dropped the word because it seemed to be superfluous.” She adds, “We love what ‘grommet’ represents, a humble piece of hardware that makes things better.”

The company’s mission? To feature interesting, undiscovered products on its website, tell the stories behind their makers, and help get them out into the world.

The news this week is that Lexington, MA-based Grommet has a new majority owner—Japanese e-commerce giant Rakuten—thanks to an unspecified new investment. Rakuten led the startup’s Series B round last September, and Grommet also has raised about $6 million in angel investment ($4.4 million paid in capital).

And next month, the startup—which has grown from 10 to 43 employees in the past year or so—will move into new digs right on the Cambridge-Somerville border, near Davis Square. Its new mailing address will be in Somerville to reflect “more of a hacker/maker community,” Pieri says.

All of which is to say, this is a good time to step back and think about Grommet’s greater journey—and, in particular, its significance to a world of online commerce traditionally dominated by big players.

Pieri co-founded the startup, her third, in 2008 along with Joanne Domeniconi. An industrial designer by training, Pieri wanted to build a business around helping small products and companies compete for distribution in a world of big-box retailers and Amazon.com (hold that thought). She calls the approach “citizen commerce,” and it’s a mix of online marketing, curating, storytelling, and video, all centered around changing the culture of how and why people buy stuff.

“We reveal the people behind the company and what they care about,” she says. “On our site, you can search by values. You’re not necessarily shopping by price or requirements, you’re shopping by what kind of world you want to live in.”

That might sound idealistic, but Grommet has built up some scale now. In addition to the typical hot-startup growth chart—roughly 400 percent growth in revenues and customers in the past year—Pieri (pictured) says the firm has “more vendor relationships than Walmart and more suppliers than Ford Motor,” to use the parlance of the big guys. (Grommet calls its suppliers “partners.”)

On the new ownership front, what Rakuten brings is a large, established online marketplace, logistical expertise, international product sourcing, and key relationships with companies like Pinterest (in which Rakuten is an investor).

The Japanese firm also shares an important bit of culture with Grommet. “They’ve been working away at the same mission for 15 years,” Pieri says. “The humanizing experience of commerce, connecting you to merchants.” She relays an experience in Tokyo a few weeks ago: she was shopping at an open market and met a stand owner peddling nuts; she found out that the owner does more than $300,000 a month in sales on Rakuten.

And while Grommet’s mission hasn’t changed, it does need to serve its new master. “Our role in life is to discover and curate the best ideas and products out there, and help them scale,” Pieri says. “We de-risk them to help them move forward to Rakuten’s store” and other large retailers.

Rakuten is sometimes referred to as the “Amazon of Japan.” But it sells itself culturally as the opposite of Amazon. “Rakuten doesn’t undermine its partners,” Pieri says. “A lot of our vendors have a problem with Amazon.”

She’s talking about the Seattle e-commerce giant’s tendency to “watch what sells on their platform and then undercut them.” There’s nothing wrong with competing on price, of course, but Amazon does seem to rub a lot of smaller retailers the wrong way.

For Grommet and others, it boils down to a philosophical difference in what online shopping should be. “On Amazon, it’s a transactional experience. You just interact with the product,” Pieri says. “Most of shopping isn’t transactional, it’s about discovery or connecting with the creator of a product. It’s about walking down that cool street in a town, it’s all about story and personal experience. Amazon can’t retrofit around that, that’s not its business.”

There’s a lot more to this thread, but off the top of my head I can think of at least a handful of Boston-area companies that are chipping away, directly or indirectly, at Amazon’s retail approach.

Salsify is a young company helping small retailers and big brands manage their online content around products in a better way, thereby helping the products compete more effectively. Price Intelligently is working on a scientific pricing approach to help brands and retailers figure out the best prices for their products. CustomMade is pushing its marketplace of buyers and makers of hand-made goods such as furniture and jewelry. And Zmags is trying to reinvent digital product catalogs and commerce for tablet computers.

Those are just a few, but the common themes are around helping the little guy and making the shopping experience more interactive. The bottom line, according to Pieri: “We will change how companies will be able to compete.” And, in doing so, “change the shape of the economy in a community-driven way.” She goes on to say, “It’s really important that businesses take responsibility for the world we create. And the only way consumers can interact with that is to understand the companies.”

Meantime, in e-commerce, Pieri says, “you either have to be Amazon or the anti-Amazon. We don’t intend to own every sale—we want to help people succeed.”

Yet skeptics would say that’s why such approaches will ultimately fail. Because if Amazon has figured out one thing, it is the cold, calculating behavior of a huge mass of consumers. That is where Grommet (and a lot of other companies in Boston and elsewhere) is still relatively weak. As Pieri admits, “The next frontier is expansion of awareness and trust with consumers. We’re not a household name.”

On the other hand, she says, “We have built a community whose reaction to newsworthy and innovative products is totally predictive of mainstream response” across “20 categories of product.” So, together with Rakuten, Grommet hopes eventually to approach Amazon’s consumer numbers and influence—albeit from a very different mindset.

Then again, one other Boston e-commerce company, Wayfair, seems a lot closer to Amazon right off the bat, in terms of its scale, reach, supply-chain efficiency, and basic consumer experience. It even describes itself as “Amazon for the home.” And it’s on pretty solid footing as an independent company after a big venture round and rebranding in 2011.

So, if you can’t beat them, join them? We’ll see about that.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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    I found Grommet to be a tad bit overpriced. I understand there is innovation and inventors involved but I bought the wine glass shades and they left out that the way they chose to close the shades was inefficient and a bit unsightly. I did love the state towels. But a lot of it seems to be from China. Am I right?