Part 1 of the 30 experts revealing the biggest opportunities in eCommerce right now. Part one contains answers from those in the commerce ecosystem – investors, analysts, and SASS founders.
When I ran my retailer, January was always a great time of the year for planning. The holiday blitz was over, and a bit of a lull would set in before sales would start ramping up again.
With that in mind, I looked at the year ahead and asked myself: “Drew, what would you do if you were to start from scratch today?” I always like it when founders share that insight because it has inevitably been informed by months and years of hard on-the-job challenges and learnings.
Why learn for yourself if you can take someone else’s word for it and accelerate things?
To make things more valuable, I went out to all the smart ecommerce people I know and asked them some variation on the same question: it’s a new year, what is the biggest opportunity in ecommerce right now?
This post contains their answers. I received so many great responses that I divided them into two digestible parts:
- Part 1 (this post) contains insights from the Ecommerce Ecosystem: investors, analysts, and SAAS founders. These people don’t run retailers: they observe them. Lots of them. And as a result they see what is working and what isn’t.
- Part 2 (next week) contains insights from Ecommerce Operators: CEOs and CMOs at large and small retailers. These individuals speak more to what they are seeing work internal to their own companies.
To me, this series is probably the most important strategic post I’ll compile this year. I hope it gives you some ideas on how to capitalize on more opportunities in 2014.
Investors & Analysts
Jeremy Liew is one of the most knowledgeable ecommerce VCs I know; he’s also the most fashionable. A Partner at Lightspeed Venture Partners, Jeremy’s ecommerce investments include LivingSocial, Bonobos, PetFlow, Slice, and The Honest Company.
Opportunity: Inefficient New Marketing Channels
In any new channel, it takes a few years for customer acquisition to become hyper efficient. Look at SEM or Facebook right rail ads as an example. Nimble startups who can repeatedly and at scale build customer acquisition expertise in unsaturated channels can really differentiate from their competitors. Petflow, Country Outfitters and a few others have built that expertise in organic social and are reaping the rewards. I think that other startups that can master organic social customer acquisition will realize significant gains.
Eric Roth – Lazard Freres
Eric Roth is a managing director at Lazard Freres who eats and breathes ecommerce (I’ve seen him do both at a midtown steakhouse — I ordered a steak, he ordered conversion rates). As a member of the firm’s Consumer/Retail Group he has advised companies on all phases of mergers and acquisitions, most notably Oriental Trading on its sale to Berkshire Hathaway and Buy.com on its sale to Rakuten.
Opportunity: Pricing and Bundling
The ability to dynamically price items is an enormous margin opportunity for online retailers willing to make the investment to determine and monitor price elasticity, particularly for secondary items in the basket that typically are not price-shopped by consumers as closely as the primary item.
Carson Biederman – Mustang Group
Carson Biederman is taking an innovative approach to private equity: running a fund that buys and scales middle market ecommerce companies. His Mustang Group is a Boston-based private equity firm that invests in companies with revenue between $5 million and $100 million. Investments include Vermont Teddy Bear and Cascade Lacrosse.
Opportunity: Customer Segmentation
The biggest opportunity in online retail is in consumer segmentation – whether it is remarketing lists for search ads, tailoring your site experience based upon personas or distinct buying behaviors or customization of emails to consumer preferences, using customer segmentation to increase your marketing efficiency and become more relevant to your customers and prospects is the largest area of opportunity for online retailers that have covered the basics in traffic generation, conversion, and repeat purchasing.
Jason Pressman runs the enterprise ecommerce practice at Shasta Ventures and invests across a range of sectors including software, SaaS, cloud and consumer services. Prior to joining Shasta in 2005, Jason was Vice President, Strategy and Operations at Walmart.com, where he took the online retailer from zero to large-scale revenue in five years.
Opportunity: Vertically Integrated Brands
I see the biggest opportunity in online commerce as design-oriented and/or custom products in specialty verticals. Examples include Warby Parker for glasses, J. Hilburn for shirts, and Poppin for office supplies. These categories have had very little product innovation and lend themselves to special customer experiences in ways that many other categories don’t.
Charlie O’Donnell has been an active member of the NYC venture capital and startup community for ten years, in roles ranging from institutional fund investor to venture capitalist to entrepreneur. While at First Round Capital his ecommerce investments included Refinery29 and Cloe + Isabel.
Opportunity: Personalization and gifting
Gifting is broken. With all the data on my friends (their birthdays, anniversaries, etc.) and their interests, it should be easier for the web to curate a very limited set of choices for me that is unique to the receiver, within a given price range.
Mark Macdonald runs content marketing at Shopify. As blog editor, he turns out consistently epic — and cart agnostic– content on the subject of ecommerce. And with his vantage point he can see what is succeeding among new Shopify stores.
Opportunity: Vertically Integrated Brands
We’re seeing more and more ‘Warby Parker-style’ vertically integrated businesses being created that bring products directly to consumers at really competitive prices. A good example of this is Greats Brand, a new online shoe company that recently launched on Shopify. The tools, apps and resources that are now available to entrepreneurs have made it easier than ever to bootstrap a business with minimal overhead and initial investment.
Opportunity: Customer Lifecycle Management
The big opportunities are in customer relationships — solving for customer lifetime value — both before and after the sale. Pre-transactional conversions (consumers who download educational or persona-relevant content prior to purchasing something) can feed the marketer’s creation of a highly contextually relevant experience that reaches buyers in higher phases of the buying cycle (before they know exactly what they want and price comparison is the only remaining factor) and nurtures them to a purchase. Post-transaction, leveraging content to increase product usage (something B2C marketers have traditionally ignored) and creating an experience that grows more valuable over time (through content, community, and progressive profiling) can help take up-sell, cross-sell, and re-sell activities to the next level by positioning our ongoing relationships with consumers from a perspective beyond pure price competition.
Corey Pierson is the co-founder of Custora. Custora analytics software works behind the scenes at retailers like Etsy and Fab to help them identify and cater to their highest lifetime value customers.
Opportunity: Customer Lifecycle Management
One of biggest changes we’ve seen with the fastest growing retailers is a shift from tracking single events, such as conversions, to measuring the value of customers over their entire lifetime. For example, we’re seeing more and more firms think about customer lifetime value. When retailers are spending to acquire customers via Search Engine Marketing, the fastest growing companies are comparing the cost per acquired customer to the lifetime value of customers, rather than just looking at the immediate return from the customer’s initial purchase. This focus on customer lifetime value also impacts retention marketers, as we’re seeing firms track the long-term, lifetime value impact of various retention marketing tactics.
Janus Jagd is the founder and CEO of Cylindo, a profitable and growing provider of visualization software to home design retailers and ecommerce sites. A former game designer, he is working to bring game mechanics to the buying process.
Opportunity: Complex and Big Purchase Decisions
Big ticket items are moving online. For instance, in US and Europe combined only 4% of all furniture sales are online — this will change substantially over the next decade. Technology can help qualify these complex purchase decisions. Ten years from now I can imagine buying my car online after having customized and test-driven it virtually.
Sina Djafari is the founder and CEO of Duoplane.com, the drop-shipping SAAS solutions company. At Duoplane, his team has built operations automation software that allows any ecommerce front-end to manage the drop-shipping process.
Opportunity: Aggregation of Niche Products
A big opportunity is in aggregating large numbers of independent manufacturers under a single ecommerce brand. Independent apparel designers would be an example. Craft food is another. With those, you aren’t competing with Amazon, and new product discovery is a compelling reason for your customers to return to check out your merchandise.
Deena Varshavskaya is the founder and CEO of Wanelo, a social shopping platform that today features hundreds of thousands of stores with millions of users.
Opportunity: Mobile Commerce
Mobile commerce is the big opportunity.
For most businesses, the PPC and SEO dials have been turned to the max, so the biggest opportunities are with conversion rate optimization (CRO) and the entire customer experience.
Most retailers are focusing on traffic generation strategies such as paid advertising, SEO, or even shopping feeds. What they aren’t focusing much energy on is conversion rate optimization, which is where most of the potential lies.
Ecom Gurus & Social Media
Dr. Dave Chaffey is CEO and co-founder of Smart Insights, a digital marketing portal and consultancy that provides advice and software to help businesses succeed online. He is the author of five bestselling books on ecommerce and has been recognized as one of 50 marketing ‘gurus’ worldwide who have shaped the future of Marketing.
Smarter Merchandising is a big opportunity, but it is rare for anyone to write about it because it’s not new!
Ezra Firestone runs one of the world’s most popular ecommerce blogs, SmartMarketer.com, and ecommerce podcasts. He has also “been there done that” having run hundreds of stores, ranging from niche to large scale.
Opportunity: The Facebook Channel
The biggest opportunity in online retail right now is Facebook. It’s never been easier to drive mass volumes of sales quickly and test markets. Get good ad FB ads.
Chris Brogan is the original social media guru. He is CEO & President of Human Business Works, a publishing and media company, and has consulted for companies like Disney, Microsoft, Coke, Titleist, Pepsico, Google, and Motorola.
Opportunity: Customer Loyalty
Build loyalty into the process. That’s the big thing most ecommerce folks miss. Know me and love me, if I’m your buyer.
Linda Bustos is the Director of Ecommerce Research at Elastic Path — a leading ecommerce blog with a daily readership of over 20,000.
Opportunity: Mobile Commerce
The biggest opportunity is optimizing for mobile.
Practical Ecommerce publishes independent articles and advice to help ecommerce businesses succeed.
Opportunity: Niches + Small Manufacturers
The biggest opportunity right now is combining niche retailers and small manufacturers. The web is changing traditional distribution channels.
Now I’ll turn this over to you: what are these people missing? What do you see as the biggest opportunity you’d go after if you were starting over this year?