In the wake of this year’s Black Friday/Cyber Monday stats, I want to talk about mobile commerce: the truths, the questions, and the abundant opportunities. I’ll be honest, the importance of mobile commerce isn’t escaping anyone playing the eCommerce game. In fact, it may be the most agreed upon movement out there — consumers spend a lot of time on their phones so eCommerce apps need to be available to them. And there are tons of stats to support the growth of mobile, particularly after the past four days.
According to IBM, Black Friday mobile traffic increased 34% over 2012 to make up 39.7% of all online traffic and mobile sales constituted 21.8% of online sales. Cyber Monday was also strong in mobile, showing 31.7% of all online traffic and 17% of sales. The breakdown of smartphones to tablets was interesting too:
“Smartphones drove 24.9 percent of all online traffic on Black Friday compared to tablets at 14.2 percent, making it the browsing device of choice. Tablets drove 14.4 percent of all online sales, double that of smartphones, which accounted for 7.2 percent of all online sales. Tablet users also averaged 15 percent more per order than smartphone users, spending on average $132.75 versus $115.63 for smartphone users.”
Compared to Cyber Monday:
“Smartphones drove 19.7 percent of all online traffic compared to tablets at 11.5 percent, making it the browsing device of choice. When it comes to making the sale, tablets drove 11.7 percent of all online sales, more than double that of smartphones, which accounted for 5.5 percent. On average, tablet users spent $126.30 per order compared to smartphone users who spent $106.49.” (Read the full Black Friday and Cyber Monday reports).
So what does this all mean? We know phones and tablets are important in the future of eCommerce, but what should companies actually be doing about it?
Despite universal acknowledgement that mobile apps are increasingly important for eCommerce companies, those apps continue to be viewed as just paired-down versions of web apps. They’re not. Thinking about tablets and smartphones as smaller versions of desktops is a dangerous game: Best Buy and Sony Style both failed to adapt their sites to tablet users and lost out on Cyber Monday (Mobile Commerce Daily has a good article about this). On the other hand, dating site Tinder is crushing it in the mobile sphere by creating an app that is NATIVELY mobile. Users swipe though potential matches instead of clicking or scrolling.
But what about eCommerce sites? Some retailers are certainly catching on. Both REI and Nine West have created mobile apps that are meant for use in store. They recognize that shoppers want to be able to compare products in real time. The REI app has a product scan option where shoppers can scan the bar code of any product in store to see details and customer reviews. Nine West now provides in-store ipads with an app from which shoppers can browse, see details and reviews, and then order online, all while still being able to try on the item in-store.
Mobile apps offer incredible opportunities for marketing and personalization. Cache is doing this right. They’ve adapted their push notification system to respond to shoppers habits. If a shopper generally browses certain parts of the site, they get notifications about specific items that they may have viewed. And, like REI, the Cache app also offers in-store bar code scanning.
There is so much opportunity inherent to mobile shopping; retailers need to remember that having a mobile app does not mean having a responsive web page.
Brick and Mortar isn’t disappearing anytime soon. But the growth of mobile shopping means that eCommerce and B&M don’t need to be in constant competition. If showrooming and webrooming are growing trends, mobile apps and in-store tablet implementations could help companies create harmony between the two. eCommerce companies should be looking to build better cross-channel experiences as Nine West is doing. Moreover, companies should think about offering incentives to customers browsing online — if the customer webrooms on his phone, why not offer him a promo when he walks into the store? Promotions could work across channels, providing incentives for shoppers to be interacting with retailers on multiple channels, thereby increasing exposure.
Mobile Behaviors and a few questions to turn things on their head.
To begin, I’d like to say, “I’m back!” I’m committed to being a better, more frequent, blogger. Instead of simply stating publicly that I’m going to try harder (which I’ve done before…and failed), I intend to simply prove it. Stay tuned and see if I’m telling the truth.
My newest company is focused on scaling global technology teams for high-growth companies. Many of our earliest customers are eCommerce companies. (This is not purely coincidence: I was a Founder at ModCloth, an investor in Touch of Modern, and an advisor to Blank Label.) So I’ve done a lot of thinking lately about the future of eCommerce. My goal is to share the fruits of my research and analysis with you. With that thought in mind, this post is intended to get you up-to-speed. This is the stuff I already know, and much of it may not be new to you. Moving forward, I intend to dive deeper into the nitty gritty.
Before I jump into things, if you are totally new to eCommerce (or just want to have a little more background) I suggest that you check out this report from the National Retail Federation. It provides a brief history of eCommerce as well as an overview of the eCommerce landscape in 2012 and 2013.
This post is about the big picture. eCommerce has evolved a lot over the past seven years. Online retailers are reaching more people around the world (see the recent Wall Street Journal article on Russia’s emerging eCommerce market) through more channels. With more points of access to retailers, more retailers, and more product choice, consumers are gaining power at an unprecedented rate. And with more consumers with more personal choice, retailers have to compete more than ever to win that consumer’s custom. In order to compete, retailers have to up their game, and they’ve been doing so in a myriad of ways.
Trend #1: Flash Sales and Deep Discounts It’s not the newest trick in the book, but sites offering flash sales and deep discounts are still making headway in the eCommerce world. One point of success for these companies is that they require the consumer to sign up before he or she can see any of the offers. This allows sites like Groupon, TouchofModern, and Zulily to better track and identify their users. Whether you’ve visited once, twice, or fifteen times, they can customize their marketing to your apparent interest level.
Other sites like One Kings Lane and Wayfair (see here an interesting article on Wayfair’s approach to indecisive consumers) may not require you to sign in, but they publish their discounts on the page (see image) and on sites like One Kings Lane, sales only last for a certain amount of time, encouraging consumers to buy quickly or lose out on the deal.
Trend #2: ReCommerce Deals don’t only come in the form of sales. Companies like thredUP and Threadflip are bringing second-hand retail to the internet. Nor does it only apply to clothing. Gazelle is a site where consumers can selltheir used electronics. Offering verification services for used items brings the whole second-hand marketplace online. It also allows shoppers and sellers to directly communicate with each other about things like size and availability.
Trend #3: Social Shopping Although the social shopping trend hasn’t seen too much implementation amongst individual retailers, it may not be far off in the future. If friends share what they buy with each other through channels like Pinterest, Facebook, and Wanelo how long will it take before major online retailers implement their own social shopping platforms? A slightly different form of social shopping, Yardsale incorporates both secondhand and social elements. A mobile-only app, it makes your local garage sale available right on your phone.
Trend #4: Subscription Commerce In contrast, a trend that has taken off amongst online retailers and consumers is the subscription model. Companies like Birchbox, ShoeDazzle, BlueApron, and Fancy are all using it, to lesser and greater success. The appeal of the model for the retailer is that it solves the problem of CLV (customer lifetime value). For the consumer, boxes provide a sense of personalization, and for boxes like those from Fancy (who predetermines the content of each box along some basic themes), they also provide a solution to the paradox of choice. For a lot more insight andsome interesting reviews of the many subscription box options out there, check out My Subscription Addiction. You can get an even better of idea of who’s doing it well and who’s just making it work.
Trend #5: Digital to Brick In a world of pure-play vs. multi-channel, many eCommerce companies have opted for the online (and mobile) route in order to keep down the costs behind traditional brick and mortar retail. But one company has found a way to do both – and to both the company and the customer’s benefit. Bonobos, originally an internet-only retailer has begun opening “guideshops.” Recognizing a desire in their customers to try before they buy, customers can nowgoto designated guideshops to try out clothes and then place an order online and in-store. The orderis delivered to their home. Glasses brand Warby Parker has also begun opening stores that offer in-store optometrist appointments and a carefully curated selection of books with which to test your newfound eyeware. Fashion jewelry site BaubleBar offers in-store visits by appointment only with perks including styling sessions, a free tote bag and other small delights.
Trend #6: The convergence of content and commerce An interesting partnership is emerging between Flipboard and online retailers. Flipboard now offers clickable catalogs for retailers like eBay, Banana Republic, Modcloth and more. And they’re creating a platform not only for retailers, but for users too. For more information, check out this article.
Trend #7: Vertical Integration Finally, one of the most interesting trends emerging-and it’s significant to note that this is the only non-user-facing trend I’ll discuss here-is the movement towards vertical integration. This is a trend focused on creating a sustainable competitive advantage, not simply generating sales. For this reason, although I’ve mentioned it here, I want to come back to this trend in more depth. So keep your eyes open for a post on vertical integration and how it fits into the future of eCommerce.
Alright, so now you’ve got an idea of some of the developments and innovations I’ve taken note of in the world of eCommerce. It’s a tough world out there, but the little guys are finding some pretty good ways to fight back. (For other interesting trends, check out this article) But what does all this mean for the future of eCommerce? First, and perhaps most significantly, consumers are winning. They get more choice overall: products, costs, brands. But having this as our number one takeaway raises questions about loyalty, marketing technique, and sustainability. In particular, the following questions come to mind:
1. If the consumer has so much power of choice, what does the future of CLV and loyalty look like?
2. If loyalty is becoming ever more unattainable, how important is CPA? Is it possible to attract consumers and drive purchase behavior without some kind of gimmick?
3. This gives rise to my next question: should retailers really try to differentiate based on existing customer loyalty vs. new customer acquisition?
4. And if gimmicks are the best way to attract consumers, what’s the half-life of user-facing innovations on the web? How long is the window for gimmicks open and what are the benefits of being a fast follower?
To be honest, I don’t have the answers for these questions just yet. But I promise I’ll get back to you soon with some more insight.
As you may have noticed, I have recently found myself consumed by the problems facing technology entrepreneurship today. In particular, it’s the amount of sheer waste that gets to me. As I’ve mentioned before, the real tragedy here is all of the time that is wasted by really talented entrepreneurs and early employees. Unlike money, time is non-renewable. You don’t know how much you actually have, and you can’t make any more of it when you run out.
As an entrepreneur about to embark on my next journey, this is something I think a lot about. I want to avoid premature commitment bias like its a plague (which, by the way, it is.) And I want to find myself on the right side of the disequilibrium of success! I don’t want to bust my ass for 2-5 years just to chase a mediocre dream. Not worth it.
I’ve decided that it’s time to take a new approach to building companies. That approach involves assembling a team of the most talented people in the world. Then we’re going to unearth really hard problems and solve them.
Companies will be formed.
Fun will be had.
I don’t know them yet. It makes sense to figure out the details of how this thing works after the right people are on the team. Here’s what I do know, though: we’ll be calling ourselves the Kemists.
And we’ll have a website that looks like this, and a logo that looks like this:
If you know remarkably talented people who like building companies, or are one yourself, send them to (or go to) the site and apply.
I was fortunate enough to be invited to sit on a panel at the Rise of Social Commerce conference here in the bay area this week. I’ve been so busy lately that I haven’t actually had the opportunity to check out the conference agenda until recently, and I have to say that it really looks like it is shaping up.
There seem to be some great panels and talks throughout the two days. Also, the size of the event seems to be ‘just right’ to me. It seems like it is going to be small enough for really meaningful conversations and networking to take place but large enough for there to be a diverse group of folks in attendance.
True to the social flavor of the conference, everything seems to have a hash tag. The conference can be followed with #RSC10. Each session can be followed via #RSCS1..11 or #RSCP1..6. Also, everything is going to be on a live stream that you can tune into here!
Our panel will be on October 7th at 1pm PST. You can tune in via the feed and ask questions via #RSCP4 on twitter!