What Does the Next Wave of Digital Commerce Look Like?

In my previous analysis on digital/social commerce founders two interesting insights stood out. Digital commerce startups are more likely to be founded by non-technical founders and sole founders compared to other VC-backed tech startups.

This has made sense as the successful digital commerce companies of today boast superior digital branding as their main competitive advantage, but as time passes the question is how sustainable this will be in the long run.

So what’s next? In light of recent acquisition sprees, such as Wal-Mart’s four deals in seven months (Jet.com, ModCloth, MooseJaw, ShoeBuy and now a rumored $300m bid on Bonobos) it is evident that traditional retailers are taking the threat seriously. Not only are they acquiring but also investing in digital marketing and tech in the form of artificial intelligence and machine learning (AI/ML), virtual and augmented reality (VR/AR), automated fulfillment centers etc. Some examples include Wal-Mart’s new investment arm which is specifically tasked to partner with startups in robotics, VR/AR and AI/ML, Levi’s partnership with Google on Project Jacquard, LVMH’s corporate ventures arm LVMH Luxury Ventures and H&M’s corporate venture and business development arm CO:LAB. But we also see more product-driven developments as Sunglass Hut partners with Sentient Technologies to improve its online visual product discovery by using AI while Pinterest launches Lens to win physical visual product discovery. While these are all anecdotal examples, it is a telling tale that this is on the radar of new entrants and incumbents alike.

While there are still plenty of incumbents that desperately need to get up to speed in digital marketing, the companies on the forefront are looking to leverage tech more broadly. In light of this, look for the next wave of commerce M&A to be more centered around tech as an enabler. Digital commerce startups that have tech leaders in management who can combine a clear vision of their role in the company combined with an ability to turn data into actionable, business-critical products have a clear edge here.

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