How A New “E-Commerce” Will Reach You

In 2013, I penned an essay called “E-Commerce 3.0” for the WSJ. That worked for then, it wouldn’t work now. It’s already outdated, so what’s next?

@web
@web
Nov 9, 2015 · 4 min read

If I see another Jet.com ad, I will break my Macbook. Spring App, there’s less synergy in your Snapchat investment than you think. Curatum is missing an element or ten — no one’s buying a $20,000 bike (without context) on a mobile app. And if one more brand starts Cyber Monday a week early, I may boycott e-comm altogether.

The new wave of superior e-commerce companies will be the earnest ones, non-gimmicky, and they’ll have a longterm vision of connecting the in-store with the offline. Traditional metrics for success will have to be thrown out. E-commerce can’t be their only play. We’re talking a cultivated, organic community, with little to no-purchased traffic, quality visitors. And with no VC / board governance, out with those limiting e-comm metrics. It’ll have a significantly smaller market cap of course, the anti-Amazon. The playbook is counter to Jet.com’s, who’s currently burning through the GDP of Sri Lanka each month (they are raising $550M just to get through Valentine’s Day).

The best new e-commerce companies will have a blue-collar approach to execution, customer service, and relationship building. A select few e-comm upstarts are well-suited to benefit from a future where recapture ads will make customers hate your brand, follow-on VC rounds are due to dry up, and ‘discounts’ are no longer enough for sustained loyalty. The most well-hedged and sustainable e-commerce model hasn’t launched.

Presented below are three overlapping e-commerce projects that I’ve had the pleasure of working on. Each had their own unique lessons. Few would have the same trajectory if they started today — that’s how quickly the optimal system changes.

2010: The process was an intimidating one. For one, I had a $5–6,000/day search engine marketing budget and an SEM contractor that just wasn’t doing his job. This meant that I had to learn that job, fast. A 3x ROI meant that my soul was about to be crushed in a daily conference meeting. A 5x ROI ($30k+ gross) on that spend meant that I lived to see another day. The ramp-up was mechanic and mathematical. It was more akin to trading than selling. Just three years prior, the company was operating out of a Toledo garage with one employee. The e-comm Stack: Magento Enterprise, Rackspace, Apache.

Most important takeaway: via L. Gevelber, Google VP of Marketing.

2012: The process was pained, slow, and imperfect. Early on, every day was an adjustment. The lessons were too many to count. The first six months of the young, niche e-commerce vendor saw top line revenue of $35,400. In that 180 days, we moved just ~ 354 units at a 20–25%, when factoring all associated costs. The next two quarters saw that number surpass $130k. The next year saw 10x growth. And two years later, the company is on an eight figure, annualized run rate. The beginning was all brute effort, over-delivery, and great customer service. Now, the company is at the above stage — mechanics and math. E-comm Stack: Shopify, Stitch labs, Shipstation, Xero.

Most important takeaway: optimize for mobile.

2014: The process was taxing. One year cost, um, $221,000 in development and execution. Yeah, I lost that. I’m still sort of screwed. Anyway, the aim was to prove that ease of purchase, community, and design could gain traction faster than traditional e-commerce service. The hypothesis was that one click purchasing and quick shipping may lead to increased conversions. With Columbus and 4,976 active monthly users, we grossed $271k within the first year. We went from negative gross margins to 17% gross margins within that time. I shut down the growth opportunity before expanding to Cincinnati and Cleveland. E-comm Stack: xCode 7.1, Swift 2.0, Stripe, Parse, Optimizely.

Most important takeaway: optimize for return revenue.

All of these lessons center around two things— fluidity and timing. None of these early approaches would work in 2016 but there are new and brilliant ways to launch an effective, scalable plan.

It’s not just about a website’s shopping cart and its ad spend anymore. Customers need a reason to arrive — even when they’re not buying. They need a reason to say — even when they’re not looking. And brands need avenues in addition to hard goods and traditional sales to move forward in this fast-evolving world of segmentation, shifting allegiances, and ad-shorting.

Most existing e-commerce brands had to buy consumer loyalty and traffic to convert. The best e-commerce brands to come will have loyalty and traffic before the first box is shipped.

I was short on detail by design, but I’d like to hear your thoughts on the future of commerce. Thanks for reading.

@web

Written by

@web

Grateful husband & proud dad to two awesome little girls. Founder of 2PM. Head of Partnerships at Cotton Bureau. Owner of a few cool startups. Commerce analyst.

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