Where does Rocket and other pure-play’s go after saturation?

One could look at Rocket Internet – the maligned German startup incubator – and be impressed that it’s only second to Alibaba in Asia’s fast growing ecommerce market. In Asia, Rocket Internet’s data shows strong growth including such as Zalora and Foodpanda – aimed at emerging nations where ecommerce is nascent.

Rocket’s Lazada which runs in seven Asian nations, saw its shoppers spend EUR 71 million (US$91.4 million) in the six months that make up H1 2014. That’s a modest average of US$500,000 per day according to their IPO document.

Regardless of which ecommerce operations last the course, Rocket’s expertise gained from these plus their more established investments like Zalando positions them right up there with the best operators in all ecommerce.

But the question for rocket is and the question many pure play ecommerce outfits must consider is; what happens when you saturate market? Where does the growth from? That’s where physical bricks and mortar have the edge and it’s perhaps why we will see more than just perhaps Amazon following up with their physical stores.

Social Network Marketing Reality

Finally Forrester analyst Nate Elliot’s post and paper on social network marketing has brought attention to the fact that relying on social networks alone to market your business is a mistake. The sad fact is that many believe in today’s world – especially ecommerce only retailers – think they can grow on the back of a Facebook Ad or a Tweet alone.

As Elliot puts it:

It’s not as if marketers could count on much organic reach or engagement anyway. Ogilvy reported that in February 2014 large brands’ Facebook posts reached just 2% of their fans (a number that was falling by .5% per month). And earlier this year a Forrester study showed that on average, only .07% of top brands’ Facebook fans interact with each of their posts. But Facebook’s latest announcement will certainly make matters worse.

Many folks have known for some-time this is the case; maybe some will explore other ways of marketing your website or business online like paid ads, seo, email marketing etc.

Are Affiliates Still Relevant? You Bet

I recall an outcry to the story of how Amazon embedded ‘buy it now’ buttons in articles on the Washington Post and it got me thinking about affiliates and their relevancy in what’s becoming a mobile first Internet. As this WSJ article mentions:

“Amazon could use the data it has about buying behavior to help make these ads much more effective,” said Karsten Weide, an analyst at researcher IDC. “Marketers would love to have another viable option beyond Google and Facebook FB -0.85% for their advertising.”

Forget just Amazon using affiliates however, should all retailers regardless of size be pro-active in affiliate marketing? How big an opportunity is it still? I would argue it’s often overlooked.

For example, you can now ‘roll your own’ affiliate program rather easily using software as a service solutions like Tapfiliate. If you don’t want to manager your own program, services such as CJ are still very useful for driving traffic.

The point is with affiliates, in an age where social is often the be all and end all to folks, taps into a very old but successful principle of retailing: loyalty. This is particularly important in ecommerce, you want loyal customers. The value of repeat customer is many orders of magnitude more important than single transactions. It’s no secret that Amazon is number one in the ecommerce world (at least in the west) as their customers are rabidly loyal.

And this is in no small part due to affiliate marketing. Do you use affiliates? If not, why not?