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Some Thoughts On E-Commerce


Thoughts on Ecommerce

As a Digital Media Agency/Startup Incubator my hands are in many types of projects/businesses.

Currently, I am working on a unique mixed marketplace in the Home Improvement space.

Over they years, in E-commerce, I have been involved in a few different verticals such as Building Supplies, Watches, Gifts, Nutraceuticals to name a few. Each have their own nuances in order to be successful as well as rules to follow.

One interesting vertical I found was in the Lighting business. This is a tightly controlled category ruled by a handful of brands releasing distribution very carefully. Beyond being able to sell product, there is the IMAP (Internet Minimum Advertised Price) that must always be adhered to… although savvy merchants know how to circumvent that. There is the constant tension between vendor and distributor to keep certain pricing and distributor to vendor for timely shipments.

One thing, which to most is obvious, holds true regardless.. once a destination proves to have a critical mass of purchase ready shoppers, they are king and are clearly in charge.

Amazon is a great example.  The site design and user experience is arguably terrible. They were smart enough to lock in consumers with the Prime program which gives great benefits such as free shipping, video and music streaming. They also give the appearance of a marketplace where you can “shop” for the lowest price when in fact there is alot happening under the hood ensuring you usually dont (see: http://recode.net/2015/01/13/how-amazon-tricks-you-into-thinking-it-always-has-the-lowest-prices/).

One feature I am excited about seeing more widely used across the Shopping Web is the ability to make an offer. Apparently Amazon was begining to use this although I have yet to encounter it myself (see: http://techcrunch.com/2014/12/09/amazon-to-let-shoppers-bargain-for-lower-prices-with-new-make-an-offer-option/) but if this feature is more widely adopted it will have a major impact.

For one, it allows more consumers to engage a merchant whereas they may not have done so. Now they have open communication and dialog and so much can happen.. I would venture to say conversion rates would go up significantly. I find this is also better than relying on re-targetting methods and algorithms to keep fishing and testing and instead get to the point with the shopping consumer.

Second, it gives the merchant the option of managing inventory more optimally where they may be able to release a tranche of product at lower than retail levels to avoid having to send to clearance or secondary markets.

Andreesen Horowitz put out a good summary of what Marketplaces should look like (see: http://a16z.com/2015/01/22/online-marketplaces/) , which is spot on. We are implementing most of these principals in our Home Improvement business. For example they write  “Promote ever-greater economic empowerment for sellers, and create an efficient structure where marketplace fees were at levels that allow sellers to achieve this.” we are taking it a step further to bring Contractors into the fold giving them the power to run their own personalized supply stores to go along with their credentials/profile for jobs. This is obviously taking old world affiliate models and applying them to old world businesses.

Lastly, I feel its of utmost important to maintain a coherent logic throughout a shopping process for users in order to provide an excellent experience (I will elaborate in other posts).

I hope to spend the next post discussing Fab.com.

Thank you for reading and look forward to any comments.


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