jump to navigation

Ecommerce 2.0 is happening now June 7, 2007

Posted by jeremyliew in business models, Ecommerce, Entrepreneur, Internet, start-up, startups, web 2.0.
trackback

I just spent the last two days at the Internet Retailer conference, and emerged convinced more than ever that we’ve just scratching the tip of the iceberg with ecommerce opportunities. There are still many more $500m+ revenue ecommerce companies to be built, and many of the people building them were at the show.

A lot of attendees were entrepreneurs running businesses doing single to double digit millions in revenues in categories ranging from diapers to skis, from power tools to blinds. While many had built their technology in house, there really isn’t any need to do that anymore. The sheer volume of vendors who can help with everything from the ecommerce platform to the affiliate and search engine marketing, from alternative payment systems to pick, pack and ship, was just remarkable. An entrepreneur willing to do the work to pick a good category and line up vendors could launch a business with very little technological expertise.

To illustrate the depth and range of vendors to whom you can outsource just about anything, two of the more interesting companies I talked to were PAC Worldwide and Arroweye Solutions.

PAC supplies customized and branded mailing/packaging material to ecommerce vendors. For example, they produce the envelopes that your Netflix DVD’s arrive in. Its a great idea for e-tailers focusing on building a brand and an ongoing relationship with their consumers.

Arroweye allows retailers to sell customized giftcards and greeting cards. A customer can not only buy a giftcard for a friend, but can put their own picture on the card, get it inserted into a custom printed greeting card, and get the whole thing mailed, all from inside the browser. Its an incredible boon for the delinquent gifter, and an additional revenue line for retailers.

Excitingly, many of the vendors work on a SaaS/variable cost basis, so an ecommerce merchant can trial with very low risk (both technological and financial) new functionality whether it be customized gift cards, behavioural marketing (NB Lightspeed is an investor in MyBuys), collaborative filtering, or customer reviews. How very “web 2.0”.

Its definitely a good time to be an ecommerce entrepreneur! I’m interested in hearing from merchants who have passed the $10m sales mark, see real sales momentum, and are looking to raise capital to accelerate growth and address large market opportunities, as well as vendors looking to address a common pain point for etailers.

Comments»

1. Pete White - June 7, 2007

Whats E-commerce 2.0 then compared to current E-commerce. I can see how the Web 2.0 era is different but I don’t see how you have applied that to e-commece?

2. Robert John Ed - June 7, 2007

Jeremy,

I’ve read your blog some time now and enjoy it muchly. Do you have any advice for a marketer who wants to try his hand at entrepeneurship? No experience, essentially no capital. I’ve been out of school for about 2 years now and smell blood in the water with Etail but need to get started now. Full time is out…so 5-9 bootstrapping is the goal. If you have any tips or good articles to read for someone such as myself, well, I’m all ears.

Sorry this isn’t much of a comment, I agreed with your post completely. Kudos.

Thanks.

3. jeremyliew - June 7, 2007

Pete,

Web 2.0 is hard to define but i think two key elements include community participation (e.g. through user reviews) and loosely connected elements, sometimes through APIs (e.g. user facing funcationality provided on a SaaS basis)

Robert,

Thanks for your kind words. Definitely subscribe to shop.org and internetretailer for plenty of good articles on Etail. Good luck with starting something – its always the first step that is the hardest!

4. Top Posts « WordPress.com - June 8, 2007

[…] Ecommerce 2.0 is happening now I just spent the last two days at the Internet Retailer conference, and emerged convinced more than ever that […] […]

5. Dave McClure - June 8, 2007

andrew: these sound like great tools & business opportunities, but are they really venture plays? feels more like there’s potential for a lot of mom & pop shops with good ROI but not amazing scale.

and from your description above, i’d guess:
a) capx required is small (not venture-size anyway), yet
b) probably still tough to compete with big brand names

i’m thinking this space is for banks (debt) & angels (equity), who are willing to put $10-100K to work, and want to see a quick return (12-24 months), but don’t expect scale beyond $500K – $5M.

and on the other hand, if this ARE venture plays here, why isn’t eBay or Amazon doing a corp venture fund to drive growth in the space, and/or acquire some of the pick / pack / ship enablers?

(ok, so Bezos is doing some side-investing, but not quite the same thing).

ps – ok, so now looking at your post again, i think your last sentence is the real opportunity… the VENDORS in the space feel like the scale opportunity that VCs would want to invest in, rather than the MERCHANTS.

– dave mcclure
http://500hats.typepad.com/

6. P-Air - June 8, 2007

you should take a closer look at Loyalty Lab (www.loyaltylab.com) when you get a chance. they’re doing some exciting stuff in this space and were at the show. I’m hearing some interesting plays in retail many of these trying to leverage a network approach. Loomia certainly falls in this camp as do others w/orthogonal offerings. everyone is beginning to understand the value of leveraging information across merchants, and some cases the merchants are beginning to gain awareness of this too and are more willing to play than they used to be. I expect the next couple of years to bring about some interesting changes retailers’ customer acquisition and retention economics.

7. jeremyliew - June 8, 2007

Dave,

Its actually me (Jeremy) that posted this post. I agree with you that many of the more niche ecommerce plays are probably not a good fit for what I do, ie venture capital. But I admire entrepreneurs and great companies regardless of whether or not I’ll get a chance to invest in them!

As you point out, there are many venture opportunities in vendors. Additionally, there are still many ecommerce opportunities that could grow to be large and valuable, whether by having scale over multiple niches (Netshops, CSN Stores and Mercantila [a Lightspeed company]) spring to mind as examples) or by growing a single vertical to scale (zappos, buy.com etc).

Pierre/P-Air,

THanks for the tip on Loyalty Lab! I agree about Loomia (and Agg Know), I think these is real value in the SaaS approach to providing user facing functionality to etailers.

8. Dave McClure - June 8, 2007

whoops, my apologies… was reading andrew chen’s blog and then yours, got my VC bloggers confused for a sec. (you both write great stuff) my bad!

anyway, hopefully got it right on the reference on my blog.

“you can call me jay, or you can call me ray…”

9. Andy - June 12, 2007

Jeremy, glad to read this…

For this exact reason, we’re excited about Bonobos…. http://www.bonobospants.com – which is an attempt to sell men’s pants direct online and leverage UGC in the process.

We’re just incubating at Stanford GSB but we’ve got a cult of consumer passion around the product and just starting to get our blog stuff up. We’re still a ways off from a good online store (it takes time to develop with Yahoo Stores – any alternative vendors out there who you really like?) – but we smell the same opportunity that you do.

I’ve met with two of your partners over the past few weeks to talk about a venture role but for the time being, we’re selling pants like crazy and so we’ll keep at it…

Enjoy the blog very much, keep it up. andy

company | http://www.bonobospants.com
pants blog | http://www.dailycilantro.com/bonobos
my blog | http://www.dailycilantr.com

10. Andy - June 12, 2007
11. E-COMMERCE RESOURCES « Powermerchant’s Weblog - October 10, 2007
12. PuReWebDev - April 17, 2008

Great e-commerce post. I actually work with Amazon Associates setting up retail websites. Your blog is good research for my e-commerce podcast series I’m working on
http://www.youtube.com/user/PuReWebDev

thank you,
PuReWebDev


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: