A blog on eCommerce, Social Commerce, Comparative Shopping Engines & Business

By Hendrik Laubscher

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The Marketplace model is not for every ecommerce business

Earlier this week Crate and Barrel announced that they have added a marketplace to their business.

Home furnishings retailer Crate and Barrel today announced the launch of its new “Crate and Barrel Exclusive Marketplace”, a highly curated marketplace offering consumers a broader selection of products based on Crate and Barrel’s merchandising expertise. Available via the company’s e-commerce site, crateandbarrel.com, the marketplace now offers customers an extended aisle of unique product. Source

I understand the reasoning for adding a marketplace to any ecommerce business. It provides greater selection to customers. The sourcing of select brands can be done at a lower cost in comparison sourcing it directly from brands / manufacturers. Opportunities to create more revenue are created as your selection is increased.

This makes me think back to what Brian Walker mentioned about Amazon’s decision to add the marketplace:

When Jeff Bezos announced to his Amazon staff his concept for the Amazon Marketplace in November 2000, many people — inside and outside Amazon — thought he was crazy. Amazon was inviting in other sellers — individuals and merchants — to compete against Amazon’s owned inventory on Amazon.com.  As full price merchants were added in categories such as consumer electronics, apparel, and baby products in the early 2000s, the head shaking continued. To paraphrase, Jeff Bezos claimed this was about “the world of perfect information.” Customers are going to find the lowest price online if they really want to, and they should be trained to find it on Amazon. Maybe Amazon could grab a piece of the pie along the way. Forrester

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A few thoughts on the GGV Capital Evolving E Summit

A few weeks ago I had the privilege to attend GGV Capital’s Evolving E 16 Summit in San Francisco. I suspect that in the years ahead this event will become a must attend for anyone in commerce on the West Coast or for that matter the US.

Background

I came across GGV Capital 3 years ago when Amir Erfati from the information mentioned them to me in a conversation. There are plenty of commerce investors out there, but what makes GGV Capital special to me is that  they have a deeper understanding on global commerce than most investors I have researched. Their unique outlook if formed by having 2 offices (US and China) in their 2 markets of interest. They are on the ground and have deeper relationships with their markets and ecosystems than most investors I have come across.

GGV Capital has investments in Wish, Operator, Boxed, OfferUp, AirBNB. They are investors in marketplaces that connect their areas of operation.

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The Evolving E Summit was conceived to solve a weakness which they identified. There is not a good consumer commerce event in San Francisco that allows for startups, investors to mingle and share knowledge. It also supplements GGV’s other Summit that is in New York.

I found the one comment from the Summit to be quite refreshing and honest. “Startups that work in Atherton and San Francisco might not scale well in large global markets”. I have paraphrased that but that exemplifies what GGV Capital think and what their investment thesis is.  I should mention that the Evolving E Summit was done in partnership with Silicon Valley Bank which seems to be a longstanding partner of GGV Capital and their portfolio companies.

GGV Capital has been in operation for 16 years, has a team of 55 people across their 2 offices. GGV Capital has invested $300M into businesses that is generating between $10 – $15 Billion in GMV.

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Button – a Contextual Commerce business

As 2016 moves into full speed I wanted to recap on a trend I have been seeing. No – it is not mobile commerce (as that is now a requirement) but rather contextual commerce. 2015 is the year in which mobile assisted ecommerce drove a significant amount of sales away from brick and mortar retail. Button – a New York startup has fascinated me with integration’s that make mobile commerce an contextual event.

The fundamental shift
In developed markets such as the US and Europe – apps play a huge part of mobile users lives. The usage of apps have become the norm for most smart phone owners. It also has created a situation in which customers are being forced to make decisions on their home screens. What apps are users keeping on their homescreens and why is a question I hear often.

I also believe that mobile has fundamentally changed the process of shopping as the shopping process is no longer a once off event. I see daily that at after 9pm how many customers start browsing on their mobile devices and then either browse items they are interested in which leads to a purchase or the purchase ends on notebook or tablet. Omnichannel commerce is readily becoming seen across the globe.

I also believe that on-demand apps have changed our expectations. When you use a ride hailing app such as Uber – the moment that you request your ride you know it is on the way. All on-demand apps are used based on need or luxury when customers are time starved. However there is a magnitude of on-demand apps that require opening to achieve a simple action. These apps have become a bridge between us and our surroundings. As I mentioned earlier this is becoming a challenge for customers as we have many apps on our phones.

However with mobile commerce there is a challenge so big that only 2 tech behemoths can fix it. Discovery of apps is nothing short of a nightmare and at the moment at the mercy of Google and Apple. These businesses have been interfering with app store placements to ensure that larger budgeted app businesses are seen as being popular and top performing apps.

With great power comes great responsibility

In the past 12 months – 2 companies have fascinated me in the mobile space. Button and Wish, as they are advancing the uptake of mobile commerce. Button is also one of a handful of companies that have leveraged the deep link. Button has a mixture of company backgrounds that reads like a who’s who of global tech. Rocket Internet, Rakuten, Venmo, Google, PayPal etc have all played their parts in forming the Button team.

Deep linking is a smartphone cousin of the web link which we use daily to drive connections between search, content and commerce. The deeplink on mobile is after desktop search the most important development in the last 20 years in consumer technology. A deeplink provides a bridge between a user and an action. The user is not redirected to a desktop website, touch optomised (LinkedIn I am looking at you) but rather to an app that is already open on the functionality that the user requires.

In the most simple interpretation, a deep link is any link that directs a user past the home page of a website or app to content inside of it. e.g. linking directly to a product instead of the home page. In the context of 2015, we’re particularly interested in mobile deep links; links that can be used to open an app to a specific piece of content or action. For example the URL fb:// may open the Facebook app, but fb://profile/33138223345 opens Wikipedia’s profile in the Facebook app.

Button I believe has also capitalised on a larger trend that as a software product manager I can relate to. They have gone all in on API’s to ensure that in the background, independent sets of software can operate in a focused manner. Button was by my research the first startup to capitalise on Uber’s open API and have provided other startups the opportunity to leverage a mobile first on demand behemoth in a manner that will bring joy to their customers.

As I mentioned earlier Button has ensured that developers can plug in functionality from Uber, Delivery Hero, Drizly, Foursquare etc to ensure that their customers can leverage context to ensure that multiple tasks can be completed inside their app.

Watch how they demonstrate the interaction of Uber ride hailing inside another app.

So how does Button make revenue?
Button works on the affiliate model in which a percentage of the revenue generated by one of their API’s is then paid to them. Button gets app install revenue in addition to transaction revenue. It is basically an affiliate transaction for mobile that benefits everyone – publisher gets additional revenue, while the commerce service gets a loyal app customer with a transaction.

So who is Buttons competition?
In the same geography – there are a few competitors for this New York based startup. URX, Branch are all playing in this space but from the outside it looks like Button has leveraged the on demand ecosystem the best from everyone.

Currently Button has focused only on the US and European markets through partnerships and I believe that they will look to become a global business in the coming 5 years as mobile commerce is seen across the globe. I suspect that Button will most probably look to Asia in 2016.

Button provides context to mobile commerce in a manner that is beautiful, simple and elegant. As a commerce executive Button makes me look into the future and believe that our devices will provide context to us unlike any algorithm or AI will provide.

15 thoughts about ecommerce from 2015

It is the time of year when summaries are written about what happened during the year past. 2015 was a fascinating year full of intrigue. I cant remember any year in which fluctuations occurred in a specific market. To summarise ecommerce in a few thoughts is very difficult as the industry is large but through observations, conversations I have come to the following 15 points:

tldr; Amazon was dominant, Alibaba wrote a lot of checques and ecommerce made a dent in global percentage of retail.

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Is ecommerce a social event?

Social
noun: social; plural noun: socials

The last few months has provided me with a question that I have been thinking about – “Is ecommerce a social event?”.  As an ecommerce executive when planning is done for new features, the social aspect of shopping will get a mention. However – I feel that referral marketing is being seen as social commerce. Share a product via a facebook post, a tweet or an Instagram post. In some cases it will lead to a discussion on the respective product but it will not lead to a discussion over a possible sale..

Social commerce is a subset of electronic commerce that involves social media, online media that supports social interaction, and user contributions to assist online buying and selling of products and services. More succinctly, social commerce is the use of social network(s) in the context of e-commerce transactions. (Wikipedia)

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