The Next Big E-Commerce Wave
techcrunch.com
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You must be able to answer the "Amazon question" if you're starting an online commerce company. If your product category makes sense on Amazon, they'll obliterate your margins the second you're successful by using revenues from high-margin categories (think: AWS, e-books, etc.) to subsidize low prices for products in your category.
That's when the acquisition offer comes. Just ask Zappos or Quidsi. Who has the leverage in that situation?
It's harder, but if you sell something nobody else does† and successfully brand it, Amazon won't ever be able to compete. If J.Crew, GAP, LVMH, Hermès, etc. ever go out of business it won't be because of Amazon.
†: Vertical integration, i.e., "making your own stuff," is just one way to satisfy this condition.
So far it's the only to really work, but companies like Shoptiques are trying to satisfy it other ways.
I've been thinking about how to bring the content of these stores together. Sites like svpply or Pinterest get close, but they don't tell the story of the brands (which is what people are really buying into).
Funny story: Everlane started off doing something similar to Svpply and Pinterest and quickly realized the only way to win would be to catch lightning in a bottle. Congrats on Pinterest for pulling that one off. :)
Exposure is always a major challenge and nobody's going to begrudge a new source of traffic. Assuming a company is aiming to "go big," though, they fall into one of two categories:
1. They have momentum
2. They don't yet have momentum
For people in (2), focus is the priority. You're small. You don't have much cash. Every second counts. Opportunity cost is everything.
The "tl;dr" of everything below is this: merchants aren't interested in a third-party aggregation or discovery service until it can delivers thousands of customers to their (virtual) door.
Read on. If you dare.
Those people are going to focus on 1-2 highly-leveraged opportunities. It's a classic chicken-and-egg: they won't want to devote energy to playing with a new "product discovery platform" until that platform can return 10-100-1000x the opportunity cost.
This is entirely ignoring the branding implications of embracing a neutral, product-centric, third-party platform as a main customer acquisition channel, FWIW.
Svpply tried to get around this by side-stepping the content creators and letting their users find and post content. Pinterest got around this by having less-strict editorial guidelines so that users could post super-viral but less-commercial content, e.g., "Check out Lindsay Lohan's new haircut! (photo) (photo) (photo)."
Those are thin wedges to base a whole company on, IMO, but maybe I'm just risk-averse†. It obviously worked for Pinterest.
If I were advising someone in group (2) I'd tell them to find what networks their current or potential customers are spending time on and focus exclusively on those. If there's one network, all the better -- focus exclusively on that one. Odds are "that one" isn't whatever you're building.
For Everlane, we got a lot of benefit out of focusing entirely on Tumblr (http://tumblr.everlane.com).
Through a combination of well-crafted editorial (Michael) and "stupid viral tricks" (me), Everlane's tumblr was, in late 2010/early 2011, the largest in the men's fashion category and one of the largest in the fashion category.
Today I'd consider Pinterest a viable platform to experiment with, too, but in 2010-2011 Pinterest had no traffic at all.
†: I'm kidding. Early on at Everlane everyone and their uncle was pushing us to be a "discovery platform blah blah blah" and when we said we thought the opportunity was vertically integrated commerce they told us we were insane.
Well, except our seed investors and early employees. God bless them. :)
I've noticed there are three aspects in building a successful content/aggregation sites.
1. Provide value to businesses by giving exposure to their products. This is the best way to make money from the service. The aspect I like about these sites is you don't need to rely on traditional advertising.
2. Provide a motivation for users to contribute content (mainly ego and recognition). This is hard because you need lots of users for this to work. Good examples are lookbook.nu, wikipedia etc.
3. Provide a good one player experience - even if you don't have an account, it's still worth visiting. I visit sites like fffffound, designspiration, or dribbble every day - even though I don't have an account or know anyone else using the site.
Instead of browsing hundreds of products, I'd like to see 10 products and get the back story. Why was it made, what's the story behind the product, how was it made etc.
The best description for what I would like is an IMDb/Wikipedia for brands, products, and artists.
I get a list of all the stores that sign up with us and go through to check out their products and make sure they are setup and happy. During this process, I'm always amazed at how creative people are at creating unique products and brands, as well as differentiating on support.
A "Bank Simple" wrapper-as-product strategy might work, but you're operating in a smaller and more fragmented market than personal banking.