Category Archives: Ecommerce

Volume of global ecommerce exits growing nicely

By | Ecommerce, Startup general interest, Uncategorized | No Comments

CB Insights posted this chart on Twitter today. As you know at Forward Partners we’re ecommerce and marketplace investors, so we like to keep tabs on all aspects of the ecommerce market.

Historically there haven’t been many exits in ecommerce, so it’s good to see the number rising. I think this trend has some way to go because ecommerce penetration is still only in the low teens in the UK and US and is lower still in many other countries.

To really kickstart the exit market we need a few more huge ecommerce businesses to compete with Amazon. That would unlock the sort of strategic exits we’ve seen in software and consumer internet over the years.

Until then it’s important to make sure the fundamentals of a company add up so that they will be able to make substantial profits once they hit scale.

The UK is still hot for ecommerce

By | Ecommerce | No Comments

Us Brits are famously a nation of shoppers, and that’s translated into being a nation of online shoppers. For a while we’ve spent more online per head than other developed economies and created more than our fair share of ecommerce winners as a result.

New data out from eCommerce Europe shows the picture hasn’t changed and that there’s still a lot of growth to come:

  • in 2013 the UK spent $142bn on eCommerce, third in the world on a gross spend basis behind the USA and China which have much larger populations. Germany, the next European country on the list, was two places behind the UK with $84bn spend. Germany has a population of 81m and the UK has 64m people.
  • Global eCommerce is forecast to grow at 23% 2013-2014 and 18% 2014-2015. Within that the UK eCommerce is forecast to grow at 17% 2013-2014.
  • There are 7.4bn people in the world of which 4.2bn are online and only 1.0bn are e-shoppers. The equivalent figures for Europe are population: 881m, online: 564m, e-shoppers: 331m.

Lots of eCommerce markets have now been ‘done’ from a venture perspective, but there’s still lots of opportunity ahead of us.

Solutions for closing the gap between browsing and buying on mobile

By | Ecommerce | 18 Comments

Yesterday I wrote about the yawning gap between the 60% of retail browsing and the 15% of purchases that occur on mobile. Michael Haynes commented:

one of the biggest pain points in mcommerce currently is how difficult it is to fill out all the forms – especially if checking out on a new website and factoring in that many sites require registration. It becomes a nightmare that most people will just leave and checkout on a desktop

That makes sense to me. The pain in filling out forms is the biggest reason I sometimes move to my laptop to complete purchases, and bear in mind I’m more patient than many other users because I’m professionally curious about mCommerce. When I do abandon a purchase on mobile it’s either because filling out the form takes too long or because it’s buggy on mobile.

Conversely the beauty of apps like Uber and Amazon is that they have my data already and I can check out with one click.

The key to getting people to purchase on their phones, then, is to take care of the site registration and form filling. There are two broad types of solution getting talked about at the moment:

  • AI based assistants based in the mobile OS – Google Now and Siri lead the pack
  • Messaging clients – Facebook and WeChat are out front here, but services like Telegram and Snapchat are also interesting

I think these all have stated ambitions to enable commerce from a chat style interface, but aren’t doing it yet in volume. Ultimately they will store your personal information and credit card data for you and supply it to ecommerce companies when you want to buy something.

The big question is how discovery will work. If I want to buy flowers on Whatsapp what options will I get? Best case for me is I search and get a full list of providers who have integrated with an open API, appropriately ranked. Worst case is I get to choose between a small number of companies that Facebook has chosen to partner with.

Search currently happens in the browser of course. An alternative solution would be for my data to be stored in the browser and made available to automatically fill out forms. That would keep the open-ness of the web, which would be great for discovering new services. Nobody’s talking about this idea though, at least not that I’ve heard.

Mobile has 60% of retail browsing and 15% of purchases

By | Ecommerce | 6 Comments

I swore out loud earlier today when I read this statistic.

60 percent of retail browsing happens on mobile devices, those devices only account for 15 percent of dollars spent

That’s a massive opportunity, right there.

And what’s interesting is that it’s still with us. Mobile first has been here for years now.

We have good mCommerce models now for regular purchases – Uber and Amazon are two great examples – but for more occasional purchases apps don’t make sense and mobile browsing in its current form clearly isn’t working.

One approach, as taken by our portfolio company Stylect, is to combine entertainment/content with commerce to build an app that people visit daily and purchase from occasionally, but I don’t think this will work for every vertical and what this headline statistic tells us is that there’s a big opportunity to innovate and a large prize for the company that gets it right.


The ecommerce and marketplace opportunity is growing like crazy

By | Ecommerce | No Comments

Screen Shot 2015-06-04 at 11.01.24

In the last five years we have seen three new ecommerce and marketplace companies worth $10bn+, whereas in the last twenty years there were six US public companies in those sectors worth the same amount.

At Forward Partners we focus on ecommerce, marketplaces and related SaaS.

There are two takeaways:

  • The ecommerce and marketplaces opportunity has been yielding huge companies for two decades now
  • The rate at which $10bn+ companies are created has accelerated significantly

The inspiration for this post was Bessemer’s recent presentation about current valuations.

The future of mobile ecommerce

By | Amazon, Ecommerce, Facebook | 3 Comments

We’ve been doing a good deal of thinking about the future of ecommerce as the world goes mobile. As we all know people are increasingly accessing the internet and shopping from their smartphones (one of our more recent investments has 81% of it’s traffic from mobile), and within mobile people are spending a larger and larger share of their time in apps at the expense of browsers. That presents a challenge for retailers of occasional purchases whose customers don’t use them often enough to download an app. On the web these retailers found their customers via search, but that doesn’t work as well on mobile.

So how will discovery work on mobile?

In a couple of different ways, I think.

Firstly some apps will aggregate goods from lots of retailers and discovery will happen in app. Amazon is the best example here, but different types of discovery are appropriate for different types of purchase and whilst Amazon works well for commodity goods it doesn’t work so well for higher value goods where the purchase is emotionally driven. That creates space for startups to build discovery experiences focused on specific verticals. Good examples include Houzz in interior design, and Stylect in fashion, and Top10 in travel. We have invested a lot on this theme and the last three examples are partner companies (note Thread is working on their mobile app).

Key to success for these companies is building a loyal customer base with high life time values. The aggregation needs to be broad enough that transactions occur frequently but narrow enough that product discovery is truly engaging. Strong brands will be built on the back of great product ranges and strong discovery experiences.

Secondly, some companies will focus on a small range of their own products. They will be primarily web based (including mobile web) and may not need an app. Strong brands will be built on the back of amazing products and first class marketing. Facebook is the best channel for many of these companies, for now at least. Bonobos in the US is a good example, and amongst our partners I would point to Lost My Name, Big Health, and Spoke.

An interesting question for the first group is whether the aggregation moves from apps into the OS layer, or something similar. There are lots of hints we are headed in this direction:

  • Baidu surfaces recommendations from maps
  • Facebook’s Instant Articles pulls news discovery into Facebook
  • Amazon’s Echo device enables re-ordering via voice command

If aggregation does move to the OS layer then in the short term partnerships will become critical drivers of traffic and custom, and in the long run I hope we will see a meritocratic discovery process emerge.

Update: Benedict Evans argues here that the trend within mobile towards apps is concentrated in a small number of apps (mostly Facebook and YouTube) and hence less significant for ecommerce companies than one would think

UK mCommerce penetration higher than the rest of the west

By | Ecommerce | No Comments

Screen Shot 2015-01-22 at 20.10.27

The chart above is from the ever useful Criteo State of Mobile Commerce report.

It’s good to see UK shoppers turning to their phones to shop more than the rest of the western world because UK companies will innovate faster on mobile as a result. We already produce more than our fair share of ecommerce giants and so long as the UK shopper keeps adopting new technology faster than Europeans and Americans we will most likely keep doing so.


eCommerce inflection point coming in 2018: invest now

By | Ecommerce, Exits | No Comments

Screen Shot 2015-01-21 at 11.59.21

I just saw this chart in a Morgan Stanley investor note with the subtitle eCommerce Hits it’s Stride. Firstly it’s good to see that top investment banks continue to see a lot of growth ahead in eCommerce, but more exciting is the notion that an inflection point is coming towards the end of this decade. If that’s true then growth for ecommerce businesses will peak around 2020. Company valuations are highly geared to growth, so we can expect them to peak around the same time. That makes 2015 a great time to be investing in eCommerce startups.

Product discovery is not solved online

By | Ecommerce, Startup general interest | 5 Comments

Reflecting on his Christmas Shopping Benedict Evans posted this tweet yesterday:

If “retail-as-discovery” is a problem for consumers it is an opportunity for entrepreneurs, and it’s one that we’ve invested in heavily over the last twelve months. The best examples are, perhaps, Thread and Stylect which help men discover new clothes and women discover new shoes respectively, but many of our partner companies are in the business of helping consumers discover and buy new products and services.

One of the big differences between retail-as-logistics and retail-as-discovery is that with discovery there’s a much higher trust hurdle. The consumer doesn’t know what they want in advance and so has to trust that the product is good, that the price is right, and maybe that the retailer will deliver on time and handle returns well. The trust hurdle is pushed higher by the fact that many discovery items are high value – like shoes and mens fashion.

When designing to deliver trust rather than designing to deliver logistics the user experience is more about reassurance and less about efficiency. That needs to be reflected in site design, brand values, returns policies and just about every aspect of the business. The need for efficiency in logistics doesn’t go away, at least not very often, but it moves from being prominent in the value proposition to somewhere in the background.

Getting all this right is tough. But then if it were easy, everyone would be doing it. Successful tactics include elements of human curation, striking visual design, and most importantly, a big focus on building great product.

$1bn sales in 17mins 58s – Alibaba

By | Ecommerce | No Comments

Singles Day has just started in China. It’s a day where single people celebrate, and was selected because of the number of ‘1s’ in the date – it’s 11/11. It’s also the largest online shopping day in China and the news this morning is that Alibaba racked up $1bn of sales in the first 17mins 58s, and $2bn in the first hour.

In comparison, sales for the whole of Cyber Monday in the US last year were $2.3bn.

Back to Alibaba – $1bn of sales in 18mins is just phenomenal. Very few companies ever get to do that in a year. For further comparison, Amazon did $20bn in the three months to September 3o.

And, investors love Alibaba. The company went public in September in the largest ever tech company IPO and the share price has risen 28% since then giving the company a market cap of $296bn. That compares with Amazon’s market cap of $141bn and Google’s of $375bn. The business was founded in 1999.

At heart this is mostly a story about the size of China, but it also talks to the power of the internet as a platform for building large scale enterprises.

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