E-Commerce Is Seeing More Success Than Any Other VC-Backed Tech Sector
Welcome to our new E-Commerce Insider newsletter, a morning email with the top news and analysis on the e-commerce industry, produced by BI Intelligence.
E-COMMERCE LEADS VC-BACKED EXITS: Among the more than 450 venture-backed exits in the technology sector last year, 16% were e-commerce companies (more than any other industry). Advertising, sales and marketing companies accounted for the second-most VC-backed deals (14%), followed by database management, storage and document management (10%), and social media (8%).
The fact that there has been so much deal activity in the e-commerce industry demonstrates the maturity of the online retail market. In other words, some e-commerce companies have grown so large that they are now publicly traded, while others are being acquired by larger companies or investors who think they can make a profit from e-commerce. Both exit scenarios are an indicator of how bullish investors and market participants are on the fast-growing e-commerce industry.
One of the largest exits last year was when Zulily, a daily deals site that caters to mothers, went public at a $2.6 billion valuation. Some analysts called the exit a "watershed moment" for e-commerce. Zulily's market cap as of yesterday was $7.4 billion. We expect the flurry of deal activity occurring in e-commerce to continue in 2014. For example, China-based e-commerce giant Alibaba plans to go public this year in the U.S. (CB Insights)
MOBILE 'CLIENTELING': When talking about mobile commerce, many retailers focus on showrooming - when consumers browse in-store but shop online - or vice-versa. However, a new report from PricewaterhouseCoopers explores how mobile is revolutionizing "clienteling," an industry buzz word for personalized in-store shopping. The idea is that if retailers are storing customer data - such as past purchases - in the cloud, then sales associates could tap those insights on a smartphone and/or tablet while assisting a person in-store. In practice, mobile clienteling could transform sales associates from acting as information providers to trusted advisors. (PricewaterhouseCoopers)
QUOTE OF THE DAY: "Today's shopper is looking for a richer, more personalized retail experience, and one that brings intelligence from their past interaction history, comprehensive information about products, and inventory availability." - PwC's Director of Retail Consulting, Ian Kahn.
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E-COMMERCE DISRUPTS CHINESE SUPERMARKETS: Multinational supermarkets slowed their bricks-and-mortar expansion into China's mainland, and say a greater number of Chinese consumers are going online to purchase groceries. Benefitting from this trend are China's e-commerce players, such as Alibaba, which increased fresh produce sales by 195% last year.
We know that in the U.S., food and groceries are among the least purchased items online, but in China, a rash of livestock- and produce-contamination scares have stoked health fears. Some online grocers in China are selling organic produce shipped straight from the farm.
"I think people [in China] are willing to pay a higher premium [for online groceries] than in the West. In other markets, like the UK, food e-commerce is about convenience. Here [in China], there's going to be a higher quality and safety premium," said McKinsey Consultant Chen Yougang in an interview with Reuters last year. (Want China Times)
MAJORITY OF CANADIANS SHOP INTERNATIONALLY: Approximately 68% of Canadians shop on websites operated by international retailers, according to a new report from L2 Think Tank. This means a significant portion of online retail dollars are flowing across Canada's border. L2 theorizes that subpar shopping experiences, limited product selection, and weak shipping infrastructure in Canada is driving consumers to shop online internationally. This trend signals that Canada's retail market is ripe for disruption, and more locally-based players could benefit. Amazon already operates a Canadian site. (L2 Think Tank)
ZAPPOS PILOTS SOCIAL COMMERCE PROGRAM: Online clothing and shoes retailer Zappos is piloting a program on Instagram called "Next OOTD," which stands for "Next Outfit Of The Day." The program is a play on the popular hashtag #OOTD, which has been tagged on more than 23 million images on Instagram. When people upload a self-portrait (or, selfie) to Instagram appended with the hashtag #nextootd, Zappos will send them a "personalized shopping recommendation." Zappos, a company that prides itself on its customer focus, clearly sees social media as one avenue for personalized service. "It could be the future of our business," said Director of Zappos Labs Will Young. At launch, one Zappos employee will be recommending personalized outfits, but Young said it could grow to a "50-person team" eventually. (Fashionista)
BELGIUM E-COMMERCE: Online retail sales in Belgium increased 26% last year to $2.6 billion. What's more, 90% of business owners in the country said they expect online sales to grow further in 2014. Although the size of Belgium's retail sector pales in comparison to other markets around the globe, it is another positive indicator of e-commerce growth in Europe. (Euro E-Commerce News)
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