Nasty Gal Bankruptcy Ecommerce Takeaways

A shocking story to outsiders but perhaps less shocking to people in the know, Nasty Gal, the poster child of Fashion Ecommerce to many has filed for bankruptcy protection. The full story is here and it’s worth reading to consider what this – and the many other ecommerce failures – teach us today.

1) Firstly, it’s a rocketship. Nasty Gal like most Ecommerce success stories had grown like crazy from a small Ebay store to ‘International’ retailer. This growth is not typically experienced with other businesses. It means they hired aggresively, built structures and systems as well as financed the venture all at extreme speed. Ultimately, this contributed to their downfall.

2) Fast growing revenues don’t equal fast growing profits. In fact, the opposite is usually true and losses are deep for a long-time..even perpetually. The model of ecommerce as pioneered by B2C giants like Amazon, JD.com etc is all based on two things; scale, and secondly, ways to make money other than shipping merchandise i.e marketplaces, payments, digital goods and so-on.

3) You need all the channels. Ecommerce, at least stand-alone, is not viable. We’ve seen time and time again pure play ecommerce companies go out of business. Who is winning in ecommerce? It’s multi-channel. That means you have to integrate stores and other channels to maximise your customer retention (stickyness) and sales. That’s hard.

4) Really consider your goals. Nasty Gal was a founder led business that was quote ‘successful’ ie they had real revenue, real customers and a real brand. But that still wasn’t enough to save it. Perhaps if the company didn’t take venture funding or had grown at a more realistic speed then it would still be on track. When you’re starting, you should consider your goals. Not everyone can be lucky but you can be good.

Have you learned any Ecommerce lessons you’d like to share? Let us know in the comments.

Alibaba’s 11.11: E-commerce on a huge scale!

The E-commerce giant Alibaba’s 11.11 online sale or ‘singles day’ has become the biggest day in the Chinese shoppers’ calendar reflecting the giant Chinese e-commerce market and its growth on an unprecedented scale. This is indicative of the largest e-commerce market in the world with 800 million Chinese now connected online, they are embracing western style consumerism in a way they never could before throughout China’s tempestuous history.

What does Alibaba’s 11.11 represent? It is the biggest online shopping day in the world where on November 11 Alibaba slashes prices on all their online platforms but most notably Tmall and Taobao. In 2015 the Chinese spent $9.3 billion dollars in a 12 hour period on November 11th. This figure is only set to increase this year with a growing internet penetration rate, up from 45% to 55%.

The Alibaba Nov 11 sale is a tradition that started in 2009, when 27 merchants on the company’s Tmall site offered discounts to increase sales during a usually slower period for e-commerce. It has since been promoted year on year to become a huge shopping phenomenon in the world of e-commerce.

The Chinese e-commerce giant cleverly utilized the existing (but less established) Chinese tradition of ‘singles day’. This tradition started in Universities where students would celebrate their single status on this day because the figures ‘11.11’ were thought to be aesthetically representative of single life.

With the growth of consumerism in China it was a logical step to link this expression of single identity with the purchasing habits of Chinese citizens. This e-shopping festival is ultimately enabled by Alibaba’s established e-commerce infrastructure across China and it’s strong digital marketing strategy which established 11.11 as an ‘anti-valentines day’ whereby consumers are encouraged to assert their independence through purchases.

The event has received strong support from the government at a time when China’s economic expansion is slowing and Beijing is trying to transform the Chinese growth model into a more sustainable one driven by consumption and technological developments rather than manufacturing. Alibaba as an innovative Chinese e-commerce platform are arguably the greatest domestic success story for the state.

How has Alibaba, which developed a host of platforms linking buyers and sellers, achieved this? Crucially, it has been able to tap into China’s changing market demographics, marketing to the emerging middle class and its increasingly affluent younger population. It also positioned itself as a wholly digital company at the cusp of China’s internet revolution. This is a time where traditional brick and mortar retail no longer dominates in the aptly named ‘mysterious orient’, everything has moved online, especially with the wide-scale adoption of smartphones.

These developments and savy business practices have allowed the company to go from being a small start-up to the largest retail giant on the planet in the space of 15 years. It’s platforms now carry some 80% of Chinese online commerce. Forbes has named Jack Ma, its charismatic founder, as the richest person in China, with an estimated fortune of over $20 bn.

What we care about is what is behind the numbers,” Alibaba Chairman Jack Ma told reporters at the company’s headquarters. “Behind the numbers we can see the power of the market.” He said more competition and diversity in e-commerce would help strengthen this burgeoning industry in China.

Alibaba when speaking about singles day the previous year said its logistical division and its partners would utilize more than 1.7 million personnel, 400,000 vehicles, 5,000 warehouses and 200 planes to handle deliveries on this epic scale. China can be thought of more as a continent than a single country and this scale of infrastructure is necessary for the delivery to Chinese tier 1,2 and 3 cities as well as more rural areas.

With so many Chinese buyers looking for products online this is a key time to develop your business in the Middle Kingdom. Tmall the platform which kick-started this online shopping occasion boasts a whole division of its business ‘Tmall Global’ dedicated to providing online stores for western brands and companies. In these major sales the Chinese are often looking for western products, which have become a byword for quality in a market flooded with counterfeits and fakes.

Alibaba has strong global aspirations that are in line with this trend. 200 overseas merchants from more than 20 countries have confirmed participation in its Singles’ Day sales this year, with many multinational brands taking part in the “11.11 shopping festival” for the first time.

Looking to develop your e-reputation and online visibility in China is absolutely vital for you to succeed in E-commerce and tap into this lucrative market. The most powerful thing about selling your products on Tmall or Taobao is that suddenly you are exposed to the largest consumer market in the world where you can benefit from Alibaba’s existing infrastructure for sales and delivery. The scale of online shopping and deliveries for singles day represents this.

Benji specializes in Chinese e-commerce and tailoring digital campaigns to this market enabling companies and brands to make that first step into China. See here.

Ecommerce Platform Update

Engadget of all things has a nice update on the current status of Ecommerce Platform marketshare:

1

I think it’s surprisingly vibrant in an era when so much of technology is in the hands of so few. This is especially true with infrastructure and middleware (looking at you AWS) controlled by just a handful of companies such as IBM, Google, Amazon, Oracle, Microsoft etc.

Application developers are embracing both open source and creating closed source ecommerce solutions and this is good news for merchants going forward. The perennial question for merchants is however, which one do I choose? There’s no easy answer but at least there’s lots of options.

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