We’ve now had 40 years of e-commerce since the Boston Computer Exchange first launched in 1982, rising to $4.2T spent last year.
This means that we’ve built an amazing system to get goods to consumers as efficiently as possible. But if you look at it by total volume, the types of goods sold online have been dominated by those that are easily explorable or searchable, for relatively simple purchases.
This is changing, and more and more we’re seeing purchases that have traditionally been offline, move online. It started with examples here and there, then exploded during the pandemic as people locked indoors bypassed their historical discomfort with online in many categories, and merchants had to figure out how to sell things to them.
This has been such a dramatic change in the types of purchases that it’s messing with our core data, since it’s quietly breaking our traditional definitions of what e-commerce is and isn’t:
And it’s happening all over.
An example: your new pickup truck
Take cars. It makes sense to buy cars the way we always have — in person. A new car is something you want to try first, and want to customize. Maybe your spouse wants to try it too. All reasons to wander down to a dealership.
While Tesla first started selling cars online in 2013, they were pioneers. By some estimates, by 2020 only 2% of new cars were bought online. That has dramatically changed, and similar estimates pegged the percentage by the end of the pandemic to be 30%. A whole set of consumers decided not only that it was acceptable to buy a new car online, but often preferable. Partly because more and more companies had figured out how to do it right.
Take Rivian’s experience. It starts with the deposit, continues through an elegant configuration, is supported by concierges, and offers schedulable test drives. Internet-native all the way.
But this is still getting off the ground. You can clearly see a sector that is transitioning online purchasing, wrestling with industry structures that pit dealerships against online, and requiring new organizational strengths to do it well. So it’s been easier for the upstarts to get this right quicker than the incumbents.
Take Ford, which has done an awesome job of building some modern cars recently, but hasn’t quite mastered the experience in selling them over the internet.
It’s clunky, busy, and complex — I counted 79 choices to configure an F150. At the end of the flow I can either purchase or search inventory, the latter of which lands at this beautiful page:
I don’t want to rag on Ford. Transitioning business models is hard, and you can see that in the e-commerce experience (Looking at you, Ikea…). But even the fact that they’re pushing here tells you all you need to know about consumers’ interest in making this once in-person purchase online.
Where there’s demand, the tools will follow. And where there are tools, demand will be unlocked.
Why is it hard to sell a car online?
What is it about cars as a type of good that that has prevented them from being bought online?
Recall:
It makes sense to buy cars the way we always have — in person. A new car is something you want to try first, and want to customize. Maybe your spouse wants to try it too.
Put another way, cars are an experiential (i.e. test), configured, and collaborative purchase. All three of these purchase types have been traditionally tough to do online, since we didn’t have the habits, trust, or tools.
What’s moving online?
There’s a whole set of previously offline purchase that are making their way online. I call these ‘non-optimized purchases’ since it’s a set that doesn’t always fit into the traditional search and optimize purchase flows.
In this messy bucket:
- Considered purchases: Those requiring detailed knowledge or discovery as you go
- Clientelling: long term relationship with a salesperson or broker
- Sales-assisted: you need guidance as you choose.
- Influenced: by a famous person, a peer, or a review. More marketing than purchase process, but the lines blur.
- Experiential: you want to try it live.
- High configuration: as it sounds — a lot of decision-making to get to your desired good.
- Subscription: somewhat established, but we’re early in the complex repurchase evolution.
- Luxury/unique/rare goods: where trust is paramount — in provenance, condition, accuracy, and ultimately delivery,
- Combined service: combination of service with the sale, like installation, repair, ongoing servicing, or a combination with adjacent services.
- Rental and resale: you may not be the end state for the good.
- International: cross-border is a surprisingly small, but growing part of e-commerce.
- B2B and wholesale: a massive portion of commerce that hasn’t made its way online
Some of these are new, and we need entirely new experiences. Others we’ve been doing them for awhile now, but still need tools to bring the experience up to par. And in all cases, we’re going to need some new tools to create great buying experiences, all while working some existing tools as well.
Given that we’ve been doing this for 40 years, it may seem like we’ve figured out a lot in e-commerce.
We’ve figured out a lot of the easy stuff. The harder stuff is yet to come, but it’s arriving quickly.
