Google Store Confirms Value of the Store

As we discussed previously regarding Google’s increasing ecommerce efforts, the company has gone one step further now by not only opening it’s first physical store in London, but more interestingly, it’s own Google Store.

Google Store

Source: Google

As the company says in a blog post:

“You can shop Nexus phones and tablets, Chromecast and Chromebooks, learn more about newer technology like Android Wear, Nexus Player and Nest, and stock up on accessories like cases, keyboards and chargers,”

Undoubtedly, as we saw with the Microsoft Store, this is a case of seeing those thousands of folks at Apple Stores and thinking, we need to do this too. Now, we can’t fully attribute Apple’s rise from struggling bankruptcy threatened pc maker to the world’s most valuable company to stores. But undoubtedly, the stores – both Apple Store Online and their 450+ physical counterparts – have greatly contributed.

The human experience is something we can’t live without, despite the rise of the Internet as a way of doing commerce. Sure, we are more and more liking the convenience and pricing of Internet retail but nothing beats the theatre of a great store such as Apple. The question for those like Google following their lead; can they also be great at Retail?

This is a competency that requires mastery of the physical store environment, Apple developed this between Jobs and Ron Johnson over the best part of a decade. Other great retail experiences such as those at leaders like Costco and Whole Foods with food or Macy’s and John Lewis department stores, Zara and Forever 21 in apparel or IKEA in home furnishings have been refined over multiple decades. Interbrand released a great report summizing what it takes to join this club.

But getting the physical store right isn’t enough, Walmart have long been a leader in mass merchandising yet have until recently, struggled online, particularly against Amazon. The reason they’ve struggled? Unlike Apple and others, they haven’t been able to offer that truly integrated online-offline experience. In today’s world, the relationship between an ecommerce store and it’s physical counterpart is vital; if you don’t meet the consumer’s needs by offering a seamless experience, you will struggle to compete.

No doubt Google’s Store is a work in progress, what remains to be seen is how serious they are about Retail. What is for sure is that the role of the Store for those businesses selling to consumers is more valuable than ever.

Etsy IPO and What We Can All Learn

Etsy’s long awaited IPO is finally happening with the release of their S1 filing today. Surprisingly, unlike many of the classic ‘marketplace’ ecommerce companies like Ebay, the company is loss making:

The company registered a $4.9 million net loss on $108.7 million in revenue in 2014. The prior year, Etsy was actually closer to profitability, with a $796,000 loss

That aside, there are a couple of pieces of information related to marketing and loyalty that I’d like to point out and may be useful to you running an ecommerce business. First up, marketing:

We believe that the rapid growth of our marketplace is a testament to our compelling value proposition for Etsy sellers and Etsy buyers. Etsy sellers and Etsy buyers have been our best marketers, and the majority of our visits have come from direct and organic channels. Historically, we have invested relatively small amounts in marketing. We spent only $10.9 million on marketing in 2012 and only $17.9 million in 2013. In 2014, we began increasing our brand and digital marketing efforts and spent $39.7 million in marketing, up 122% from 2013.

In essence, let our customers market our company and our products. Easier said than done right? But it’s absolutely the right strategy to compete in today’s world where everyone is fighting for attention, just look at Apple. Yes, the iPhone maker spends a ton on marketing – especially traditional advertising like TV and print – and yet, look at their social media strategy or lack of it. The whole focus of successful companies like Apple and in alignment with Etsy’s marketing strategy is the notion that you both let (and encourage) customers to do marketing on your behalf.

Some call this word of mouth and more formally, ‘organic’ but whatever, it’s where you want to be. And on loyalty:

Our members’ repeat sales and purchases drive GMS growth. In 2014, 78.5% of our GMS resulted from repeat purchases made by Etsy buyers, and 99.3% of our GMS was generated by repeat sales made by Etsy sellers.

Over three quarters of sales from repeat customers; some would say this is a sign of a small customer base but remember what happened during the .com boom with all of those ecommerce companies who bought customers and lusted after those sales; they burned off course. You are far better off with a smaller, more engaged group of loyal customers. Amazon started with book buyers, Ebay with coin collectors, Netflix with DVD by mail and so-on – you want to start small and then grow horizontally into other categories or customers over-time.

Finally, if you’re wondering what the typical Etsy customer (aka ecommerce business) does, check out this graphic form the S1. You won’t be surprised to learn that the vast majority of time is dedicated to inventory – circa 70% in the Etsy seller’s case. The rest? Broadly split between marketing and administrative tasks. Running a company can be very exciting but much of time, it’s a case of getting your head down and working through the stuff that just needs to get done.