This is a fascinating time for e-commerce, and I’ve been watching the space closely. I believe Social and Mobile will disrupt commerce in an even bigger way than the web did a decade ago. That said, we still haven’t seen much impact. As Josh Kopelman pointed out in a 2010 blog, all but one of the top 15 e-commerce sites today were also on that list a decade ago. I expect the leaders of e-commerce will change substantially over the next 10 years, and I believe the change will revolve around two giant market opportunities I see:
1. Opening Up the Amazon Experience
Amazon has an incredible experience that gets users from shopping to consumption faster than any merchant on the planet. That experience combines three primary components: Product Discovery, One-Click to Buy, and Free 2-Day Shipping. Today this is a closed experience that’s only available inside the walls of Amazon. I think there’s a huge opportunity to open up these components so that consumers can experience them across all merchants. Let’s look at each:
- Product Discovery – No place on the web allows you to discover products as easily as Amazon does. When you stay inside of Amazon you get a deeply personalized experience and great content discovery tools, which work across their enormous catalog of products. But social media threatens Amazon’s advantage here. Facebook is centralizing your taste graph and is opening it up for all sites to utilize. Groupon has leveraged social to bring us new ways to discovery local deals. And a new wave of startups, like Open Sky, are enabling users to socially discover products from curators like Bobby Flay. This is the tip of the iceberg, and I expect lots more to come.
- One-Click to Buy – Once you’ve set up One-Click to Buy on Amazon, you find yourself buying everything from them. They store all of your purchasing information, such as your credit card number and shipping preferences; and they apply it every time you click “Buy”. I think the time is right to centralize this purchase profile and open it up to any merchant. Google tried and failed to do this with Google Checkout, mostly because they present too big of a threat to merchants. But the forces of Social will prevail. They’ve allowed Facebook to centralize your identity, and I think they’ll allow a newcomer to centralize your purchase profile.
- Free 2-Day Shipping – Amazon Prime is a subscription that offers free 2-day shipping on most products for $79/yr. It represents a smaller portion Amazon's users but a big portion of their profits. The value for shoppers isn’t about savings; it’s about convenience and certainty. Each time you shop online you avoid the hassles of shipping decisions, and you know your product will arrive in 48 hours. Once again, consumers have to stay in the Amazon world to get this experience. However, the merchant world is fighting back. Several large retailers including Dick’s, Petsmart, and ToysRus have already started supporting a third-party free shipping service called Shoprunner. I'm eager to see how they do.
2. Connecting Online and In-store Shopping
In the current era of commerce, online and in-store shopping are largely either/or propositions. I choose one or the other, then my experience is mostly online or mostly offline. However, these parallel shopping paths were born in a world without smartphones. Mobile will inextricably connect these shopping worlds and hugely disrupt both online and bricks and mortar businesses.
There are two elements of mobile that should have e-commerce entrepreneurs salivating:
- Omnipresence of Mobile – with mobile, users can shop and transact online anywhere. I envision this will this will bring online experiences deeply within in-store shopping. For example, it should allow One-Click to Buy experiences within the store – inspect a product in the store, scan it, then simply press buy on your phone to have it shipped to your home. It should allow me to find the computer accessory I need when I’m at Starbucks, then drive down the road to Target and immediately locate where it is in the store using a map on my phone.
- Embedded NFC Chips - these will connect physical store objects and mobile/online apps in the same way that the online world connects different web pages. I should be able to check into a store by waving my phone in the same way I login to a web site. Then I should be able to tap a product with my phone and pull up detailed specifications, lots of reviews, and which of my friends like it. In effect, NFC has the promise to give us the same personalization, the same rich information, and the same easy purchase experience within stores that we get online.
The industry does seem to be inching forward towards this connected online/in-store vision. Groupon makes it easy to buy coupons online, print out, and take to local merchants for redemption. Apple makes it easy to buy in their stores and have receipts sent to my email account. Just yesterday, I learned that Amazon is testing a delivery locker where customers can purchase online and pick up at local 7-Eleven stores. All of this is nice progress but the real innovation here has yet to begin.
