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Extreme Retailing: Change Is Coming to Online Shopping

jkrisch — Tue, 09 Mar 2010 22:31:32 +0000

Everything is suddenly possible again in the e-commerce world. In the US in particular, interest in extreme e-commerce models is rising steeply (“Are you ready for extreme retailing?”).

Joshua Goldman from Norwest Venture Partners gave a short introduction to Swooponomics at the Retail Innovation & Marketing Conference:

Parallel to that, several American innovators met at the First Round Capital E-commerce Summit.

The comments of the event organizer (“Change is coming to online shopping”) corroborates much of what Exciting Commerce has been heralding since 2005 which was also self-evident at this year's Live Shopping Days Conference:

"One of the things that’s surprised me the most over the last decade is how little transformative innovation has occurred in ecommerce.

eBay looks pretty much the same as it did a decade ago. Amazon looks pretty much the same as it did a decade ago. While the top 10 sites on the Internet have changed dramatically over the last decade, the top 10 online shopping sites on the Internet have not.

The traditional catalog/cart shopping model remains pretty much unchanged. I’m not sure of the reasons why so little innovation has occurred – perhaps it is because of Google.

Specifically, the fact that online retailers had a scalable, measurable, and predictable source of customer traffic (through both SEO and Adwords) might have reduced the external pressures to innovate.

However, the online shopping paradigm is finally changing. Indeed, I think we’ve seen more innovation in the last 10 months than in the last 10 years.

We’ve seen an explosion of interesting technologies and opportunities that seek to change online shopping"

The American innovators cover a wide range of methods and models from alternative payment systems down to game mechanics.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Oliver Jung’s Global Shopping Club Empire

jkrisch — Mon, 08 Mar 2010 19:08:24 +0000

Brands4Friends Goes the World: It feels almost like there aren’t any more countries where B4F founding investor Oliver Jung and his cohorts haven’t got a shopping club investment stake.

A few days ago an announcement came by email which mentions for the first time publicly the “global shopping club alliance”:

"Australia’s leading by invitation only shopping club, brandsExclusive, announced it has raised substantial Series A funding from Trayas.

Trayas is led by Klaus Hommels and Oliver Jung, who are also invested in a number of leading overseas shopping clubs including Turkish Markafoni.com, the Brasilian Brandsclub.com.br, the Swiss Fashionfriends.ch and the Indian FashionandYou.com.

“The global shopping club alliance, which has a combined membership of several million online shoppers worldwide, creates an amazing opportunity for Australian brands to reach a wider international audience, and for the Australian consumer to access more brands and even greater deals.” Says co-founder Daniel Jarosch."

Besides the known 9% of Brands4Friends that Oliver Jung holds, he also has a stake in Russian KupiVIP (which recently raised $20 million in funding), as well as the Canadian Beyond The Rack, who announced their financing round at the end of January.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Groupon Fever: How Groupon Wards Off Class Action Lawsuits

jkrisch — Mon, 08 Mar 2010 18:37:57 +0000

Overambitious lawyers are the bane of every serious startup company. At the moment, Groupon is finding it necessary to defend against a class action lawsuit in the USA - and is doing so with its customary tongue-in-cheek style (“Groupon Organizes Class Action Against Itself”):

"You may or may not have heard that a lawyer named Jay Edelson from a law firm called Edelson McGuire is attempting to organize a class action lawsuit against Groupon, claiming that our deals’ prominently displayed expiration dates somehow “systematically deceive our customers.”

We can think of two possible explanations for this lawsuit:

The law firm sees an opportunity to exploit our success and make a bunch of money.
We are indeed systematically deceiving our customers, but instead of taking advantage of our 100% open refund policy or telling us about their problems or sharing them in a public forum, our customers are secretly gossiping about them to each other and Edelson McGuire, kind of like Emily Johnson did against me in 9th grade (Emily if you are reading this I want my cabbage patch doll back)."

“Corporate Overlord” Andrew Mason reveals how Groupon would like to ward off self-inflicted lawsuits in the Groupon blog.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Private Sales, Flash Sales, Private Events, Timed Events, how to implement

mosofsky — Mon, 08 Mar 2010 13:58:07 +0000

Private Sales is one of the hottest online retail concepts with:

Rapid revenue growth (Vente-Privee - 0-$1 billion in 6 years, Gilt Groupe 0-$400 million in 3 years)
Extremely attractive financials (e.g. extremely low customer acquisition cost due to viral invitations)
Larger players buying-in (GSI Commerce acquiring Rue La La for $350 million and perpetual rumors of Amazon buying Vente-Privee for up to $3 billion)
Incumbents adding Private Sales to their sites (Neiman Marcus, Saks, Comcast(Swirl))
VCs funding new entrants (BuyVIP, Secret Sales, Private Outlet)

For those looking to develop Private Sales businesses, there is a great opportunity to learn from the leaders. Specifically:

What are the best practices that can be learned from the leaders?
What are predictions for future capabilities that the leaders will offer?

What is Private Sales?

Private Sales has different variations but is generally defined by the following:

Invite-only - requires an invitation from a friend to get in
Name brand merchandise -quality merchandise not just cheap or out of date items
Discounts - compellingly priced to drive impulse purchases and loyalty
Selling Event - timed event at which the merchandise is offered until it sells out or a time limit is reached

Who are the leaders?

Early leaders are emerging in the Private Sales space and are listed below. The space is dynamic, but these companies are early leaders that are the most likely sources of tested best practices.

Vente-Privee - originator of the concept in 2001, nearly $1 billion in revenue in 2009, in France, Germany, UK, Italy, Spain,
Gilt Groupe -$500 million in revenue after founding in 2007.
Ideeli - 1.3 million members, recent $20 million VC funding
Rue La La (GSI Commerce) - acquired by GSI for $350 million
Hautelook - $90 million in revenue

We reviewed these sites for key business model design elements that drive their success, as well as some unique elements of each to watch as trends going forward.

Key Design Elements

A successful Private Sales model requires the creation of an exclusive club, a viral invitation only machine, a highly loyal repeat customer base and a powerful demand for impulse purchases. Several key design elements have become best practices to achieve these objectives.

Viral invitations -New customer acquisition is driven primarily through people inviting their friends. This dramatically reduces the traditional customer acquisition cost of SEO, paid search and affiliates. The average incentive is $10 for each person that is invited and makes a purchase. Each site makes it easy to invite friends through either Facebook Connect or adding contacts through Plaxo.
Cart reservation - One of the biggest complaints from Private Sales shoppers is that an item will sell out in the time it takes them to move an item placed in a cart to checkout. The most common approach to address this issue is to provide a reservation time buffer once an item is placed in the cart to allow enough time to checkout. Some of the sites extend the time when another item is placed in the cart. A notable difference is whether the reservation time should be shown; which is a consideration between notifying the customer that they may continue shopping to drive up average-order-volume vs. the risk that they will horde merchandise in their cart.
No site search - Most ecommerce sites offer search or guided search to find products. Most Private Sales sights do not. The goal is to create a window-shopping experience where a shopper spends time looking at each event to create an impulse to buy. Shoppers are not coming to the site with an intent to purchase a specific item. However most of the sites do offer a variant filter such as size and color.
One page event list - A traditional ecommerce retailer may have thousands of SKUs in a hierarchical product catalog broken down by category, sub-category, and product page. Large Private Sales sites may have dozens or even a hundred simultaneous events, but are listed on a single page. The emphasis is on encouraging browsing to create the urge for an impulse purchase.
Sales events always start at the same time - It is important to train customers to come to your site at the same time for each sale to start. This maximizes the impulse purchases, the rate of product sellout and converting return visitors. It does create a huge challenge for IT to support extremely spiky traffic. IT would much prefer to spread the start time of sales events throughout the day to ease the operations - but the business benefits of training customers to come to the site everyday at the same time greatly outweigh the additional IT costs and performance challenges. Cloud-based auto-scaling platforms are ideally suited to address this spiky demand.
Order stays open for a few hours - Compared to traditional shopping, a Private Sales shopper is motivated to check-out before the inventory depletes or her reservation runs out on her cart. This creates a situation where a shopper is forced to checkout soon after adding an item to the cart. This means that buying many items may require several checkouts, inevitably leading to call-center complaints about multiple shipping charges for same-day purchases. Advertising that free shipping is available for additional items purchased within a given number of hours builds goodwill, increases order volume, and most importantly does not create disgruntled shoppers.

Likely Future Key Design Elements

Private Sales is still a young retail concept and rapid innovation in the user experience is to be expected. Listed below are some of the advances we expect to see on leading sites over the next year.

Fashion content - Private Sales sites have the opportunity to influence shoppers through richer content around the products on sale. Many of the sites provide little to no content around the items. Why are they compelling? Why is the price such a deal? Which items could be combined with others for an outfit? This type of content should increase the number of shoppers interested in a specific sales event and drive greater return traffic to the site. For example Rue La La has partnered with Bravo to sponsor Launch My Line. We predict tighter content integration into Private Sales sites as they already drive tremendous daily traffic from loyal customers, providing ‘exclusive' daily content such as fashion articles is a logical next step.
Club for top invitee networks - The most valuable shoppers are not the ones that buy the most, but the ones that have invited groups of people that buy the most. These networked influencers should be addressed separately to keep them loyal to the brand (if they switched to a competitor they could bring a lot of people with them). Private Sales sites could market to them directly with special offers, increased incentives to extend invitations or competitive leader boards to see who is the biggest influencer.
Customer idea community - Which brands are the shoppers most interested in seeing? What site improvements are most desired? Private Sales sites have many loyal customers that are deeply engaged. But none of the sites are fully leveraging the potential value of this community. Poll questions or blogs with comments would be a good start to tap into the open innovation potential of the clientele. This also allows for effective use of Social Networks to extend reach.
Crowd visualization - Part of the power of Private Sales sites is the rush of the crowd at the start of an event to generate impulse purchases. Currently, none of the sites provides a visual experience to shoppers of this crowd. This is a feature that would be turned on during the high traffic first hour of an event.
Social analytics. This is a nascent area, but as Private Event sites learn how to mine and analyze social graph information, a new level of personalization can be explored where ‘customers like you' can truly be identified and marketing effort can not only be focused on conversion, but also on influencers.

WPBook 1.5 Released – Let the Streaming begin!

jeckman — Mon, 08 Mar 2010 00:03:34 +0000

WPBook

So for a while I’ve been working on and beta testing the next version of WPBook. Tonight I’ve just tagged it for release, so it will be available for download shortly. (I’ve already been running it here for a while and testing it on a few other test blogs).

The main improvement in WPBook 1.5 is that it now knows how to use stream.publish, meaning that it will automatically post to your wall in Facebook when you publish a post in WordPress. Your friends should see that notification as well in their streams. (We’re not, however, sending application updates or tracking all users’ user id’s – instead you enter your own userid into the settings and it uses that to post to your wall). Included are attachments (first image attached to the post is used) and excerpts (if you hand craft excerpts they will be used in the wall post).

The other main improvement is that WPBook now requires PHP5, and as such can wrap Facebook calls in Try/Catch blocks. For the non-programmer, this means those awful, dramatic “fatal uncaught exception” error screens are gone. WPBook isn’t doing anything terribly meaningful with those errors yet – still working on that- but at least it traps them.

In this release:

WPBook now requires PHP 5
Enables user to post to stream, including to pages. (Must be pages for which you are the admin, to which you have added the app, and which have granted stream.publish permission – link provided in the admin to grant permissions.
Catches exceptions thrown by the Facebook client. (Doesn’t yet surface those in good error messages, but at least they are caught)
Fixed, I hope, issue with comments inside Facebook for some users
Clean up of some admin styles (resized gravatar images as well as some basic hierarchy on options)
Added Page Options as their own section
Allow user to select pages to be excluded
Added option to allow a menu of parent pages at top of the app below the title
Fixed “Facebok” typo in line line 182 of theme/index.php
Option to turn on and off page list under content (independent of menu)
Option to turn on/off recent post under content
Allow user to set the amount of recent post to show under content (default 10)
Cleaned up custom header/footer now only one function instead of two (no reason to have two functions)
Added %tag_links% and %category_links% to custom header footer as well as made archive pages work.
Set smart default for when Blog Title isn’t set

Next steps?

Better error handling code – do something with the messages Facebook returns when an exception is thrown
User selectable theme directory – for users who’ve taken the time to customize their theme
Threaded comments – likely means requiring WP 2.7, though for error handling (and just simplicity) I’m thinking of jumping right to WordPress 2.8
Cross-Posting to a commenter’s wall when they comment inside Facebook. (Because it is in response to a user action, I understand they don’t even have to grant stream.publish permission).

What else would you like to see?

Web Currencies: Facebook Imposes 30% Tax on Credits

jkrisch — Thu, 04 Mar 2010 11:27:52 +0000

Facebook is getting serious with their efforts to create a global web currency. With the start of their closed beta phase, Facebook will burden their Facebook credits with a 30% fee.

Essentially that means that in the future, whoever participates in the Facebook driven economy will need to pay a sort of sales tax for each transaction.

It is still speculation, but the indication is that Facebook is trying to establish a transnational web currency which could someday become the currency standard for the Web.

Although in the official announcement it seems all quite virtual, clearly Facebook wants to earn real money and has last summer executed some tests with purchases of real physical goods.

If Facebook makes headway, significant resistance against a parallel world currency could be expected.

Since 2007 Facebook has extended its American investor circle increasingly with investors from China and Russia, thereby ensuring that the most important global economies are represented.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Game Mechanics: The Gameification of the Web World (video)

jkrisch — Sun, 28 Feb 2010 19:28:20 +0000

At latest since Facebook, the gameification of the (web) world is continuing its steady advance:

"Carnegie Mellon University Professor, Jesse Schell, dives into a world of game development which will emerge from the popular "Facebook Games" era."

What can be learnt with this presentation, amongst others:

How to apply game mechanics outside of the web.
During conception and development of business models you can be much more creative by not neglecting the psychological factors.
That the much vaunted "convergence" doesn’t make any sense, if not from the technical nature of the problem, then at latest when it hits your wallet.

What is exciting about (social) games is that they mostly work with award systems rather than punitive systems. With awards it is often much easier to control or achieve desired behaviour.

Thanks to Florian Bailey for the video tip.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

The Polyvore Founders Give Way To Professional CEO

jkrisch — Thu, 25 Feb 2010 21:37:19 +0000

Be it Spreadshirt, Threadless, Etsy or now Polyvore, nowadays you can set your watch against the time it takes between a big round of financing and the point where investors lose their patience and get a professional CEO to take the reins.

And it isn’t as if they aren’t making enough efforts:

"A very high-profile hire for fashion site Polyvore.

The startup, which lets users mix and match products from any online store and then share their creations with others, has added Sukhinder Singh Cassidy, who formerly led Google’s operations in Asia-Pacific and Latin America, as CEO.

Singh Cassidy had left Google in April in order to become CEO-in-residence at Accel Partners, saying that she was “ready to take the next step and run or grow my own company.” "

Polyvore has recently celebrated their third anniversary and had received a financing round of $5.6 million last August from Matrix Partners and Benchmark Capital.

Almost all social shopping sites of the first generation are finding it difficult to meet investors’ high expectations and are at the moment in the process of rethinking their strategies.

And although it repeatedly seems to make sense to bring in an outside CEO to professionalize the company, there is also substantial risk that the startup can lose their spirit in the process.

At least with Etsy, one of the founders was asked to come back and plans now to make innovative changes.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Content and Commerce: Celebrity Style

jeckman — Tue, 23 Feb 2010 14:27:52 +0000

Interesting article in yesterday’s New York Times about blogs which combine “shop the look” with celebrity photos.

Specifically included are INFDaily, CelebStyle.com, and JustJared – though obviously there are many other picking up this trend, which has its origins in the celebrity stalking watching print magazine world.

The technology, from vendors like gumgum and Pixazza is fairly rudimentary, as described by the Times:

Companies like GumGum and Pixazza tag the paparazzi photos with links for buying the clothes. They hire people to look at photos and match the clothes they are wearing with the same or similar, more affordable items from retailers like Bloomingdale’s, Nordstrom and Zappos. (Image recognition technology is not yet sophisticated enough to automate the process, they say.) The companies get a small fee from retailers when a shopper clicks on or buys an article of clothing.

Essentially, the technology turns the celebrity photo into an ad for the clothing the celeb is wearing, endorsement or no:

“Publishers and readers look at it as this really informational resource,” said Ophir Tanz, chief executive of GumGum, which tagged the photo of Ms. Jolie with one of its “Shop this look” badges. “We look at it as an ad unit.”

Celebrity sites are an obvious place to start with this business, but photos all over the Web could be turned into ads or e-commerce portals, said Bob Lisbonne, chief executive of Pixazza. Pixazza plans to add sites that cover travel, sports and interior design.

I see this as further validation of the integration between content and commerce. Why have a magazine brand and a retailer as two completely separate entities, with the information about where to buy what’s featured in the spreads hidden in the small type at the back?

We’ve long said that “Every company is becoming a media company” in the age of the assembled web – and that includes learning how to take advantage of commerce opportunities around content just as much as it means learning to leverage content in the context of commerce.

Hollrr: The Perfect Look & Feel For A Twitter For Shopping

jkrisch — Mon, 22 Feb 2010 23:10:42 +0000

Hollrr is the answer to the question we raised earlier: how should a Twitter for shoppers look like?

Even their tagline “Shout about the things you love!” is pretty close to the question/slogan we put out in the German language “Was ist gerade cool und angesagt?” (what is cool and hip?)

Hollrr started up last spring and has recently introduced a whole row of innovations:

"Founder and CEO David Hegarty says that most social recommendation sites don’t really consider why people are motivated to share a product or a service with their friends.

Hollrr’s theory is that there’s a certain kind of person that really likes to recommend things to their friends.

Hollrr’s initial goal is to attract these users, allowing them to share their recommendations directly with friends through services like Facebook. And to help keep them interested, they’re focusing on building out a badge system that’s similar to Foursquare’s."

With their playful approach, their emotion filled user communication as well as their overall system, Hollrr has everything that you could wish for in such a business model.

Particularly splendid is the product site with the real time recommendations, a perfect source of inspiration outside of the livestreams on the start page.

More of these kinds of concepts would be very welcome to see! Perhaps then we would be able to move the social shopping industry further.

Hollrr comes from the Dogpatch Labs, the incubator from Polaris Venture Partners, which also recently brought the Groupon clone Scoop St. online.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.