Today ecommerce saves customers money and time tomorrow it will accelerate discovery

By May 15, 2014Ecommerce

I’ve just re-read Jeff Bezos 1997 letter to shareholders. It’s a great example of clear story telling and bold strategy, but most importantly Bezos’ judgement is amazing, and much of it stands the test of time. The title of this post is a bastardisation of this quote from the letter:

Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery

We are ecommerce investors and 17 years after this letter was written personalisation is one of our investment themes. Our portfolio companies Thread, Stylect, and Top10 all aim to win on the basis of larger range, and better personalisation and discovery. I think this theme has some way to go. Buying high value items online, especially ones with emotional drivers, is still painful, largely because it’s hard to know if the purchase is right for me. Free and streamlined returns processes have helped a lot, but the real prize comes from gathering more information about the purchase and purchaser and being smart with matching. Artificial intelligence has a large role to play, as do social signals and other new sources of data, including wearables.

  • Nathan Schor

    Nick,
    Interesting connection about how the personalization problem persists. In your observation ‘the real prize comes from gathering more information about the purchase and purchaser’, you left out the key source of the most authentic data – the users themselves. As a business model the customer-centered approach is referred to as demand-side commerce, intentcasting, or VRM, topics you’ve covered in the past.

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  • http://localoids.com/ Prashant Lagisetti

    Hi Nic,
    Interesting quote and it has stood the test of time for a decade and a half, but as you quite rightly pointed out, there is a definite shift towards personalisation. In my humble opinion, I think the big opportunity here is niche social networks. These networks have a highly engaged member base with similar interests, and (hopefully) well formed profiles which can be used to target advertising.
    For example, Localoids, my business, is primarily a travel and learning social network, thus we are able to promote travel services and products to users, based on their travel preferences. Taking it a step further, we can suggest the best places to surf, rock out, hike or anything else, while adding travel services, events etc as part of our offer. This is real, personalised discovery. Niche social networks are where you can find passionate people, with particular interests. Just what you want in ecommerce.

  • http://www.theequitykicker.com brisbourne

    Hi Prashant – niche social networks are very important for their constituents, but in my experience have been tough to monetise. In the sites I know there isn’t much intent to buy and users don’t want to see too many ads, hence you need massive volume if the business is to get to VC scale.

    best,
    N

  • http://localoids.com/ Prashant Lagisetti

    Hi Nic – Thanks for your response. I don’t doubt your experience that niche social networks are tough to monetize, but I am slightly surprised. It’s something we will be testing shortly. Our approach will be different to the likes of FB for example. We will run a freemium model for subscriptions, but will also have an ecomm section.
    Our focus will be on the community and any suggestions we make for services, products or events will be to help out our members. We know what they like and can provide highly personalised deals for them at a discount to what they can access them for, using our shared affiliate commission model. Personalisation is a massive topic in travel right now, so we feel we are well situated. We’ll make these offers by email and onsite messaging, not ads on the site. It’s an assumption, that we will test with our MVP shortly, but we are confident the model will work.