Ecommerce 2.0 is happening now June 7, 2007Posted by jeremyliew in business models, Ecommerce, Entrepreneur, Internet, start-up, startups, web 2.0.
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.
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.
Not following Google; following AOL May 22, 2007Posted by jeremyliew in advertising, Consumer internet, Internet, media.
Well it was a busy week last week, what with WPP agreeing to buy 24/7 and Microsoft agreeing to buy Aquantive. I was on vacation overseas, so didn’t get a chance to post my thoughts on it as it happened, but there was a lot of thoughtful coverage.
Since these deals came hard on the heels of Yahoo’s acquisition of Right Media and Google’s acquisition of Doubleclick last month, most of the coverage was in the vein of “watch everyone play catchup to Google”.
I have a slightly different take on this spate on transactions. I think that in the case of Yahoo and Microsoft, they are actually playing catchup to AOL’s acquisition of Advertising.com in 2004. This happened under Jon Miller’s watch (I was his chief of staff at the time). It has since proved to be a prescient deal.
It is no accident that AOL was the first big portal to move to acquire an ad network as they were the first to experience the trend of deportalization. The big three portals (Yahoo, MSN, AOL) are losing share (of total US pageviews), as the chart below shows.
They will likely never regain their lost share – their tried and true techniques of recycling traffic into their own sites don’t work anymore. Users want best of breed content and, thanks to search, they can get it – within or without the portals. Its been well documented that both Yahoo and MSN have seen flat/negative advertising revenue growth in the last few years. See the below chart from Valleywag for a comparison of Google vs Yahoo gross revenues for the last few quarters.
AOL has fared better because it opened up its proprietary content, so its year on year comps look better, but it took its traffic hit earlier and will likely start to see similar trends once the growth spurt generated by opening up AOL’s content to the web slows down.
Public companies must show growth.
If you can’t grow by selling your own inventory, then you’re forced to sell other people’s inventory. That was the driver of AOL’s acquisition of Advertising.com, and it’s the driver of Microsoft and Yahoo’s recent acquisitions as well. It also explains the prices that they paid, which some fear to be too high. Fear of loss is always a greater motivator than the prospect of gain. The big portals are looking down the barrel of a loss of their share of total pageviews, and are willing to fight hard (i.e. pay up) to avert that loss.