As we move into 2013, the amount of conversations surrounding E-Commerce and its place in business as well as culture will only continue to grow. Those doubtful of its impact are diminishing as thought leaders as the industry continues to sing its praises. Industry consensus now claims the future is E-Commerce, and that offline commerce will serve only two purposes: immediacy, and experiences. But immediacy may no longer even hold promise for brick and mortor stores as both Amazon and eBay have announced same day delivery. The role of offline lies in the value of the “showroom” and “entertainment” aspects to places like Williams Sonoma or the Apple store. The future of commerce is a hybrid model with showrooms + online fullfillment, those that accept this fact and either start planning to or, even better, start implementing tools that connect these two experiences will surely see the first taste of success. Some early players include Chloe + Isabel, Warby Parker, Everlane, and Stylemint, who have begun combining online and offline experiences in disruptive ways. Mobile technology has eliminated the distinction between on- and offline shopping. There is no such a thing as e-commerce any more, there is just commerce. You can innovate in commerce with technology, but the traditional e-commerce silo is dead as mobile payments continue to disrupt the online/offline divide. The future of e-commerce is vertical integration in markets where there is significant markup in both wholesale and retail; merchants like Shoedazzle, Bonobos, J Hilburn, Warby Parker, and IndoChino have already realized this. Few successful e-commerce companies were started in the early 2000’s, although a slew of recent new entrants appear to be getting traction – flash sales, social commerce, subscription commerce and other new “content + commerce” models abound. The first wave of e-commerce was about commoditization, but now online and offline is about being a “merchant”, and having ownership over a certain point of view, authority, or experience. The key equation driving e-commerce is: profit = lifetime customer value minus customer acquisition costs, and this acquisition cost is being aided by economic social tools like social login. We now know that e-commerce is good for two things – price and exclusives. Amazon will beat you on price, so you have to beat it on exclusives. Additionally, the only way to escape commoditization and catalogue commerce dominated by Amazon is to a) sell used stuff, or b) make your own products, or c) possibly offer customization. However, time has proven customers don’t want customization, they want great brands and great design, and they want to be told what they want, looks like Steve Jobs was right all along. The e-commerce opportunity is to contribute to the e-commerce ecosystem rather than sell directly yourself. Companies have found four opportunities to do this: 1) supply chain innovation 2) marketplaces 3) e-commerce solutions for small businesses 4) mobile payments There’s room for innovation in the space as long as the ecommerce company creates value for all participants – the retailer, the supplier and the customer, and this increasingly means selling in emerging markets where there are no huge incumbents. Competing in an industry with a grey market, where consumers are willing to pay higher prices for reducing risk, for authenticity, and warranties. The opportunity for e-commerce success is sell to iPad owners, and not just any tablet owner, because iPad owners are 10 times more valuable than non iPad owners. Again, the opportunity lies in mobile commerce and in targeting customers who use social features, because they are 3 to 4 times more valuable. Domain expertise, live assistance, and overall experience are the critical success factors for success in a market where price-competitiveness and scale rule. Ultimately, we have learned that what Apple, Tiffany & Co., Coach, Lululemon do in bricks and mortar commerce, but online, will be the future of commerce, and this year stands to paint that picture a little more clearly.

 

 

By Jason Greenberg

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