From scale to user and experience: The new focus of electronic commerce

It is very difficult to really build an E-commerce company backed by venture capital. The good news is that the venture capitalists and the entrepreneurial world have come to a certain consensus on how to build a new generation of e-commerce companies in this world, with some lessons learned from the first revamping business and others drawing on recent success stories.

/muckerlab co-founder would Hsu

The battle for the first generation of E-commerce hegemony lasted a long time before the dust settled, and Amazon and a handful of sensible physical retailers became big winners. 15 years later, the network under the trend of convergence formed a strong wave, enough to nurture a new generation of e-commerce companies. To compare, in the same 15 years, the network photo-sharing market has almost passed the victory and defeat of 4 times: Photobucket-> Flickr-> Facebook-> Instagram.

The evolution cycle of e-commerce industry is so long, mainly for the following reasons:

1. The gap between the offline retailer, which embraced Internet technology and became more prosperous, and the companies that failed to do so, took years to emerge, when the vertical market for subversion was opened.

New billing or social user access channels are available: Facebook, Twitter, Pinterest and celebrity endorsements.

2. Monstrous's Amazon has finally matured and slowed the trend (transforming into an emphasis on inventory control, free/fast delivery as the main advantage of the mall).

3. The various skills combinations that were previously dispersed in various fields and that were necessary to win competition in the retail or E-commerce community have finally become the same set of "entrepreneurial skills", including online access to users, marketing of products, optimization of user interfaces and management of supply chains.

Over the years, we have learned about new facts in the field of E-commerce, and unfortunately many of them simply tell us that it is very difficult to really build an E-commerce company backed by venture capital. The good news is that the venture capitalists and the entrepreneurial world have come to a certain consensus on how to build a new generation of e-commerce companies in this world, with some lessons learned from the first revamping business and others drawing on recent success stories.

Retail margins are extremely meager, and e-commerce companies are sometimes more miserable, and solving the problem is the most important part of building an ever-expanding electric business.

The first strategy to solve the problem is to "refactor the supply Chain"--this is what Chris Dixon, an angel investor Chris Dickson, often does with creating new type-defined brands and setting new prices in new areas (Warby Parker and women's electric Dealer website ShoeDazzle is a typical close combination. The practice is basically as follows: bypassing the one or two intermediate links in the supply chain, involving proprietary products, produced by partners (usually Chinese manufacturers) and then sold directly online. As a result, there is the ability to simultaneously obtain higher profits, tightly controlled cash flows and lower retail prices. Suddenly, the reversal of profit margins and price levels is likely to be enough to make it possible for companies to invest in other, parallel strategies, such as promoting brand image, targeting areas of abandonment and exploring new channels.

Another strategy to address the problem is to embrace low profitability, not to assume inventory and price risk, but to expand the scale through the mall model. Of course, this is not panacea, to improve the online market "people flow" is not easy.

It is very difficult to enlarge the supply chain of the electric business and should strengthen the competitiveness in this field as soon as possible.

The supply chain is not only a cash flow or operational problem, it is also related to the user experience. Look at how much Amazon has invested in delivery, how many innovations have been made, such as Gold members (PRIME), convenience store packages (Locker), on-day delivery and free return, or a look at E-Bay (EBay) by encouraging free shipping and specifying the conversion rates that are increased by the expected delivery date. Logistics has a great effect on customer satisfaction and loyalty. As a result, few new generation of e-commerce companies directly to the third party shipments ("drop ship", unless the online mall, they are by definition by the third party shipments), but the supply chain management as a core competitiveness, around the delivery and logistics vigorously innovate (Warby Parker and clothing leasing website Rent The runway did a good job.

Away from the already commercialized inventory-managed products and "search-style" user experience, because there is little room between Amazon and Wal-Mart.

In terms of products, a new generation of e-commerce companies typically sell products in one of the following categories:

1. Highly designed, unique products (Flash site fab), either by experts or highly influential people to select such products (Fashion Dealer website JustFab and ShoeDazzle), or through the community crowdsourcing mode, of course, can also take into account the two models.

2. Proprietary brand products (because Amazon/Wal-Mart does not sell the same kind of goods).

3. A limited number of non-fashionable products (antiques, collectibles or second-hand), 1stDibs website is the route to go.

4. Local product inventories are sold online to provide a cross channel shopping experience, usually in the form of "Bazaar" (Shoptique).

In the context of the user experience, which is often closely related to the product itself, the focus is on creating a carefully selected (often personalized), "discovery", more casual shopping experience, focusing no longer on search, memory and relevance-but on satisfying the emotional experience of shopping at the store.

In the final analysis, the physical store will not disappear, the electric business is also the time to embrace retail stores.

This is easy to understand, not too dogmatic adherence to the idea of creating a "virtual" company. Can take the road of multi-channel development, to increase the profit to use, increase inventory to test offline sales channels, including traditional department stores (shoes and glasses company Toms), Mobile Store (FAB), multi-level sales team (Jewelry Direct marketing company Stella and Dot), Embedded showroom (Warby Parker) and offline service network (high-end apparel custom website J. Hillburn). Go to the place where the customer is (offline!) And trying to find a way to circumvent Google's tight grip on online shopping flows. If you successfully use the online store as a way to keep customers, the low profit margins of the offline store are acceptable, as users get the cost (and Amazon's free shipping service is actually available for that).

If you don't have a "unique" User access strategy, start over.

In the past, if you want to build an E-commerce company, first have to select a market, build a good site, and then have to consider what strategy to increase traffic. Search engine marketing? Search engine optimization? Show ads? AD league? Super Bowl ad? It's different now. Everything from the product itself, the brand, the Web site to the delivery box must be reconsidered from the point of view of promoting new user access. One of the public secrets of the E-commerce community is that social commerce works either very well or in a mess. So, if you have a brand, product, and user experience that will satisfy your customers, you'll get a lot of praise, sharing and forwarding, plus paid social media ads to make it more effective. If you sell Sony stereo systems on the Internet and expect to be able to attract users by using Facebook for viral marketing, good luck.

In addition, the success of the best batch of new-generation E-commerce companies has created the phenomenon that creators/sellers are also marketers (Retro apparel retail network ModCloth and social breakthrough trading platform Instacanvas). It is very important for creators/sellers to feel that their work and identity on the site really belong to them, which makes them emotionally naturally inclined to attract traffic (usually through social channels). Yen Yi stars or influential people in the network as creators/promoter, often can strengthen the effectiveness of the strategy (shopping site OpenSky and Myglam). But in the long run, the most sustainable strategy is to develop a shared habit of the entire user base.

The last key change in user access is the boom of the mobile internet, which takes into account the consumption and leisure of the shopping experience on mobile devices (especially the ipad), and the only way to make mobile business work successfully is to provide the type of product that fits the mobile pattern. This means not relying on commodities that emphasize inventory management, but rather on "discovery" products. Mobile users don't like typing, so they rarely search, and they are looking for a browsing-style shopping experience like Pinterest on e-commerce sites.

If you don't have a unique strategy to improve user loyalty and dimension retention (retention strategy), start over.

If done properly, 2.003 billion of users who register with e-mail can bring in more than 100 million dollars--and just 5 years ago, you needed a much larger monthly number of independent visitors to get that half of the revenue. Today only the best next-generation E-commerce companies can meet or exceed these metrics. Entertain users with exclusive products, continuous new products, excellent shopping experience and dedicated user-dimension retention activities to become repeat customers. This would increase profitability, enabling the company to take on more user-access activities and gain a much faster pace of development than its rivals. Otherwise, in-situ user access work at the beginning of the start-up will be slow down the rate of return.

Let's talk about the "subscribe" business model in this context, if this model is used to maintain a frictionless relationship with end users (diapers.com), or to strengthen the selection experience of products that must be tried or touched. If you simply "subscribe" in a way that increases the hassle of a user's transaction, thus preventing the user from losing (through a recurring charge), it does not match the other components of the business model and does not address other issues previously mentioned.

The development of a new generation of e-commerce companies has come to a tipping point. Together, these pioneers created a set of self-reinforcing strategies and tactics that solved some of the flaws in the first E-commerce companies that were born 2000 years ago, and made up for the shortcomings of the retail industry itself. More e-commerce start-ups are following their footsteps into a variety of areas and consumer categories. Retailing is a diversified industry, and this diversity is also reflected in the online world. Given that E-commerce has a penetration rate of only 8% per cent in retailing, its breadth of penetration (involving more types) and depth (increased consumption of existing e-commerce categories) will bring a new wave of opportunities for entrepreneurs and risk investors.

(via Forbes Chinese Network)