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Why Did Wix Just Acquire Rise.ai?

By Ryan Henderson - May 20, 2021 at 7:09AM

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Following a flurry of announcements in the first quarter, here's why Wix just made another acquisition.

Two weeks ago, Wix.com (WIX 1.56%), the online website building and hosting platform, acquired a small customer re-engagement platform called Rise.ai for an undisclosed price. This acquisition follows a series of recent announcements for Wix, including acquiring the online ordering specialist SpeedETab and announcing a comprehensive mobile app. 

But despite the recent flurry of announcements from Wix, this acquisition, even more so than others, should add plenty of value for both users and ultimately shareholders -- let's see why. 

What is Rise.ai?

Rise.ai helps retailers reengage their target customers with digital gift cards, easy-to-install loyalty programs, and intuitive store credit/refund systems. While it might not sound like a huge deal, several customers have enthusiastically advocated for the product, crediting Rise.ai for helping bring back old customers.

Credit card being passed between two hands

Image source: Getty Images.

But Rise.ai not only helps boost order frequency, it also helps merchants boost the average order value thanks to its customizable discounts. Notable retailers, including PepsiCo subsidiary Gatorade, Kroger, and the Miami Heat, can all attest to the product as they each use at least one of Rise.ai's various solutions. Since retailers already have access to previous customer data and acquiring new customers can be costly, the name of the game is really customer retention -- and Rise.ai helps them drive that.

How does this help Wix?

Though Wix is known for its core function, which is allowing users to easily build the websites they want, it is trying to become more than that. By building deeper functionality and additional features, Wix is attempting to become a complete digital operating system for businesses of all types, and Rise.ai should help with that. 

Prior to this deal being made, Rise.ai already served more than 10,000 different brands around the globe. However, now as a part of Wix, Rise.ai's various customer retention solutions can easily be applied to Wix's existing business customers. In the company's press release announcing the deal, Rise.ai CEO Yair Miron stated: "We are now thrilled to join Wix and bring Rise.ai to hundreds of thousands of online stores."

It's not just retail, either. During the first-quarter conference call, Wix's COO Nir Zohar expressed the company's long-term vision for the acquisition by mentioning that the gift cards and loyalty solutions could apply to all of Wix's verticals. With this acquisition, Wix has taken the next step in building out its full suite of e-commerce tools, including payments, search engine optimization (SEO), delivery services, and plenty more. 

What does this mean for shareholders?

It's no secret that Wix is trying to become a prominent player in the world of e-commerce. In 2020, Wix's gross payment volume (GPV) grew by 126% to $5.4 billion, and the company stated that it's currently on track to grow that number to $10 billion this year. 

With the Rise.ai acquisition, not only can Wix boost its business solutions revenue by offering it to its existing customers, but if the product truly works it will also increase spending across Wix's platform. With more spending on the platform, Wix can drive additional revenue through its payments offering, where it charges a roughly 1.3% take rate.

At the end of last year, CEO Avishai Abrahami optimistically announced that he thinks Wix can power 50% of anything new built on the internet within five to seven years. If the company is going to achieve that, it'll need to build out a holistic suite of tools, and this is a step in the right direction.

As for shareholders, not knowing the purchase price can be frustrating, as it's difficult to determine a return on the company's investment. But the deal looks like a win-win for both Wix and its customers. This is yet another clear example of management's ambitions to build out the best-in-class solution for any type of business.

 

Ryan Henderson owns shares of Wix.com. The Motley Fool owns shares of and recommends Wix.com. The Motley Fool has a disclosure policy.

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