Zalando is a large and fast growing ecommerce company in Germany. Arguably, it’s Europe’s most successful pure play ecommerce operation. Co-founder Robert Gentz talks in the video below about how Zalando started as a retailer and now why it’s very much a Technology company.
Fashion or clothing has long been one of the few categories (including grocery) to have resisted ecommerce to an extent. We all bought books, electronics and so-on from very early on without hesitation but clothing was something we wanted to ‘touch’ before buying. Not any more. Many people are saying Amazon will become America’s largest clothing retailer, an astonishing thing given the number of physical outlets the likes of Walmart, Gap etc have. And it seems everyone agrees that ecommerce and fashion are finally getting together. From the FT:
“The whole thing is blurring,” says John Smith, chief operating officer of Burberry, the luxury retailer. “Electronic commerce sites are going to start having social platforms, and social networks will introduce commerce.”
From the same article, a telling interview with a young consumer:
Lara Persell, a 19-year-old student at Loughborough University, follows Victoria Beckham and British reality television stars on Instagram for fashion inspiration. But she also follows retailers such as Zara. “I like to emulate the luxury fashion brands. Seeing what new styles have come into the high street shops, via Instagram, helps me decide what I may want to buy,” she says.
Publications like magazines have traditionally influenced fashion buyers and now the Internet based social media largely replaces this. But what’s different with social media is that it’s inherently benefits Internet first retailers – those that have the best websites and best technology. As the articles notes, retailers that don’t do ecommerce will suffer and become less connected to consumers. There’s no way around it – retailers must do ecommerce and none more so than fashion where trends change faster than any other category.
Jet.com launches today, a new ecommerce startup founded by Marc Lore. Whether or not it succeeds this is a business founded on the premise of vision (like Amazon and Jeff Bezos). Below is a great interview with Lore talking about ecommerce, business, life and more. Must watch.
Lesson: Whatever you’re doing, go all in.
A surprisingly in-depth article on BuzzFeed makes an excellent point with regards to the future of ecommerce. It notes:
These initiatives are happening at a time of transition for online commerce. Though we may visit a seemingly unlimited number of websites on desktop (including lots of online shops), we spend 80% of our time on mobile apps within the top five apps, according to Forrester. On phones then, which are increasingly sucking up our time, there’s little room for the array of online shops to enter our consciousness. So these businesses are playing ball with the most popular apps to find alternate routes to reach us, and our wallets. And Facebook’s app is one we use an awful lot. According to Forrester, 13% of all time spent in mobile apps is spent within Facebook’s apps.
This is actually what I think has happened already and will happen a lot more in ecommerce going forward. Most folks call this ‘consolidation’ and once again, technology is driving it. It’s why the most promising ecommerce businesses never IPO and get bought – think Buy.com (Rakuten) or Zappos (Amazon). Essentially, it’s winner takes all in many respects.
I’ve talked about how hard pure play ecommerce is before and as the article points out, mobile is making it harder – both the technology and business model. It’s quite possible the golden era of ‘desktop’ website based ecommerce is already behind us – remember folks it’s only been two decades since ‘ecommerce’ really took off (Amazon is only 20 years old!).
If we propose that the desktop web ecommerce falls away and is replaced by mobile, what are we left with? A handful of ‘platforms’ would be my guess; Amazon, Facebook etc that act as funnels to physical retailers ie those with mall or stand-alone stores that can actually (or sometimes) make profits. It’s still going to be a boon for the technology companies – those that provide software and services to physical retailers. But from a merchants perspective, the once seemingly low barriers to entry could perhaps be a thing of the past.
One can imagine getting ‘noticed’ on the platforms could be both difficult and expensive – organic reach might disappear along with SEO as search becomes less relevant. We can speculate forever but I guess if you’re intent on starting or growing a brand, all you can do is focus on the fundamentals of product, price, promotion and service. The future of ecommerce, as commerce itself, looks to be both turbulent but full of opportunities.
I re-read “Bessemer’s Top 10 Laws of E-Commerce” as I do from time to time. It’s not a particularly well known or indeed new document (published 2010). Nevertheless, it’s still relevant and for the most part (though not entirely) right on. Particularly pay attention to #1, #5 and #9.
Do you follow any of these? Do you have any of your own? Feel free to share and discuss in the comments.
Most people equate ecommerce with selling physical things, warehouses and the sort but today ‘services’ are hot. Think about the number of companies in the space that are generating huge profits without selling a physical good; Google, Facebook, eBay, Oracle, Microsoft and more. This is usually defined as ‘software’ but it’s actually more than that.
What I mean is it’s more than software that makes services valuable both in terms of the free cash flow they generate and the huge valuations. For example, I came across a piece about Uber in the FT and the company’s plans to launch in Indonesia:
“Uber is a technology company,” the group said at the time. “We do not own, operate vehicles or employ drivers.”
This, the Airbnb style ‘sharing economy’ or whatever you want to call is perhaps the most innovative and potentially world changing thing in business today. This is the use of technology to harness physical assets – in Uber’s case cities, cars and people – to derive new value.
Think about this if you’re thinking about an ecommerce venture; how can you use the power of the Internet to use real world things?Technology is about getting more from less; how can you use the Internet to get more? What has nobody thought about yet?
Wow. The reason given is equally wow:
“India is gradually transitioning from a mobile first to a mobile only country… We are constantly experimenting with various aspects of our service to create the best shopping experience for our users on our app…,” Flipkart said in a statement.
This is a bold bet. There is the fact that most mobile users use devices to game or as the WSJ puts it “43% of our time is spent catapulting angry birds at pigs and fighting monsters”. This infographic from the same piece shows how we divide our time on these devices:
So where does shopping fit in exactly? Well, it doesn’t. Flipkart execs are correct to point out mobile represents most of ecommerce traffic these days (Shopify puts it at 50% as opposed to Flipkarts 75%). But as Tobi Lutke points out in the same article, the transition from desktop to mobile is far from complete:
We also began to work closely with major mobile operating system providers to try to address a current shortcoming of mobile: conversion rate. While the majority of online store traffic now comes from mobile, the majority of purchases still happen using computers.
So Flipkart are extremely early on this shuttering the desktop website. However who really knows, perhaps this will be a prescient move that gives them an edge over the likes of Amazon who essentially birthed the concept of desktop based ecommerce? Maybe India being a developing, mobile first country will prove this? Time wil tell but if you’re an ecommerce merchant, I wouldn’t rush in their footsteps.