E-commerce – is the next wave about to break?

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How can e-commerce continue to grow? This guest post by Jamie Murray Wells, founder and Executive Chairman of Glasses Direct, looks at the next wave coming round the corner.

Latest figures show UK ecommerce sales continue to buck the financial doom-and-gloom. There was an overall 14% increase in the year to April 2009. E-commerce certainly looks like the Noah’s Ark of retail during the recession: those companies that have a strong online consumer proposition get a ticket to ride out the storm, and those that don’t, may drown.

There is a lot of he growth in the clothing, footwear and accessories category in particular. According to Forrester, in those categories online sales represented 2-4% in 2003, and now represent over 10% and in some cases, over 15% of the total category.

Where the sale of more ‘generic’ products such as books, DVDs and travel can be seen as something of a first wave of ecommerce, understanding how consumers want to buy high-touch, cosmetic products online such as expensive jewellery, fitted garments and for us, eyewear, could represent something of a second wave of e-commerce.

For companies involved in this second wave of ecommerce, it is not as simple as relying on the old cornerstones of price, range, convenience to attract customers. Our peer group face significant consumer purchase barriers to do with try-on, fit, and product education, that one-by-one, need to be identified and addressed, through continued technological innovation and great customer service, in order to pursued customers to make purchase decisions in our favour over the high street.

A number of interesting businesses ride this new wave of e-commerce innovation shotgun with us:

Blue Nile, is an online jeweller that offers a completely new level of service online, changing diamond shoppers’ habits. They offer enormous amounts of information on the diamonds that they sell, specialist experts on-call, and a massive focus on education to teach you about what you should think about when buying a diamond – far more than you could get in a high street store. The technology on their site allows you to see what different carat diamonds would look like on your finger. This matched with the traditional advantages of shopping online – a massive selection, reasonable pricing and convenience, has meant their business has been a runaway success.

Everyone knows ASOS, which has developed some really strong online celebrity and brand engagement. Suggestions for product ranges and tips from other consumers’ purchases, beautifully shot imagery and the ability to zoom in to inspect every detail complete the picture for the ASOS shopper of high-touch products.

At Glasses Direct [interest declared] we help our customers find their ideal glasses with our Virtual Mirror, which allows people to virtually try on glasses while they’re browsing. We want people to use the resulting images to get other people’s opinions on their looks. ‘Do I look good in this’ becomes a question you can ask your community, not just one shopping companion or the store assistant. Retailers like us are looking at ground-breaking ways to visualise products online, especially when the products face higher than average barriers to sale.

And then there’s Zappos, who use customer service to create a ‘personal emotional connection’ with their customers – something that helps it overcome barriers to buying shoes online, drives loyalty and therefore repeat purchase, and helps them sell over a $1b of shoes every year online.

The second wave of ecommerce isn’t about necessarily unique or high technologies, but how we, as retailers of the fitted or fashion product, can fashion practical online solutions to each of our own consumer bases’ needs. I believe that in years to come it is likely that every retailer will be able to offer price, range and convenience like Amazon, and so the real competition will be around the customer experience and the customer service. We’re just ahead of the curve by prioritising these now. This is why, as I said in a blog post after a visit to the company, Zappos, who calls itself ‘a service company that happens to sell shoes’, it will probably in time, replace Amazon as the e-commerce ‘gold standard’.

Now that the first group of second wave companies has proved that the public, investors and the city all buy in to the prospects of companies dealing thin the high-touch, entrepreneurs should be scrutinising the high street for possibilities. Most of the obvious e-commerce first wave opportunities may well have been seized, but there are many second wave opportunities still out there. Look around and anything that says ‘tailor made’ on, is not sacred to the high street anymore.

  • http://www.twitter.com/djbarker dan barker

    The other factor that joins all the companies you’ve mentioned is ‘fun’. It’s fun to find stuff at ASOS, Zappos, Blue Nile.

    ‘Fun’ is the exception in online retail to the extent that it’s remarkable.

    Blue Nile & Zappos are both great examples of companies using bog-standard e-commerce principles in a really interesting way. Blue Nile with their ‘attribute-based’ search tool. Zappos with their visual ‘explore’ tool.

  • http://www.adelph.us william

    I think that the next phase of e-commerce will be the inclusion and empowerment of users in the entire e-commerce cycle.

    I think that the days of large stand alone and niche e-commerce sites are nearing and end.

    We are coming to a time where conversations between members and communities will be the trigger for e-commerce activity

  • http://www.glassesdirect.co.uk Jamie Murray Wells

    @William understanding how and when shoppers like to validate each others purchases is crucial in the next stage of empowerment and inclusion of users in the entire e-commerce cycle

  • http://www.thecoffeeshopsofmayfair.com Paul Fisher

    Nice Post Jamie. I think you’re missing personalisation though. Companies like TailorStore.com and Graze.com are the first step towards a completely new experience in ecommerce differentiation coming from personalisation.

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    Whilst we are not an e-commerce provider, edocr.com will evolve to create a meeting place for buyers and suppliers through documents. In this respect, we are interested in discussing with e-commerce solution providers where we provide the hosting and interactivity platform for data sheets, specifications, user manuals, etc (where applicable).

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  • http://www.estatecreate.com Henry Yates

    Good point Paul – mass personalisation enabled by near zero/very low marginal costs is why I find it an exciting space.

  • http://www.glassesdirect.co.uk Jamie Murray Wells

    @Paul Fisher @Henry Yates – couldn’t agree more. We are headed towards a retail world where there will need to be an obvious justification for a product to be standardised. Those that master the difficult job of mass personalisation of a product also rightly benefit from margin improvements that come hand in hand with the premium customers will bear to ‘make it their own’.

  • http://sdj-pragmatist.blogspot.com/2009/03/what-does-sustainable-capitalism-mean.html Pragmatist

    I agree that high-touch items are the subject of a lot of focus now, but the idea of “mass personalisation” is an oxymoron. There isn’t and never was a “mass”. It’s just a marketing trick that e-commerce has exposed, and more and more consumers stop falling for each year. Maybe you mean something else by the term?

    Not sure we’re seeing a “new wave”. It’s still Web 2.0 which has been all about user empowerment – enabling personalisation through user participation. We’re just seeing that model applied successfully in more and more challenging scenarios, though the ones you mention are yet to scale internationally as far as I can tell.

    The semantic web is the next big wave. Let the machines do most of the work.

  • http://www.facebook.com/people/George_Bevis/36913823 George Bevis

    Mass personalisation has some interesting implications for staffing. Historically, distance retailers shifted high volumes of identical units with cheap (and typically bored) staff providing little value-add to the customer experience. Now, we must either pay more for value-adding staff (I doubt Zappos staff are minimum wage, and there is certainly a lot of effort/spend dedicated to motivating them), or open up our platforms for micro-entrepreneurs (as Etsy does) to achieve the same level of product and service for highly differentiated customers.

    The good news is that even 5 minutes per customer of high quality human attention isn’t actually so expensive to deliver (still much cheaper than customer acquisition costs), and may lead to fantastic customer advocacy.

  • http://charonqc.wordpress.com/2009/05/31/blawg-review-214/ Blawg Review #214 « Charon QC

    […] with his blogging and blog reading… I rather liked this wry comment: debunking the notion of “mass personalisation”, which is about as oxymoronic as you can […]

  • http://www.hoodiepeople.com Hasan Luongo

    i think a discussion of the next wave of e-commerce is incomplete without talking about the role of social. amazon stands firm against in the rise of zappos because it is more social, more reviews deliver more relevant/engaging content that lead to sales.

    one the other side you have threadless, offering a highly social and interactive buying experience that no other retailer can match.

    additionally add in winelibrary.tv for a diff kind of social, where a daily interactive show and lots of personal brand set the tone for a fun buying experience.

    e-commerce is in fact experiencing many new waves, partly due to the massive efforts by small software firms building free or cheap social apps, and smart e-commerce sites that are leveraging these platforms to connect with customers. while web 2.0 has monitization issues and an unhealthy reliance on boring Ads, e-commerce has a lot to gain from web 2.0 and a direct way to turn all that social activity in cash. exciting times indeed.

  • http://www.theinternetmarketingshow.com Mark Bowden

    Hi Jamie

    Great article Jamie, you are doing a fantastic job, and I wish you every success.

    I have now backed off the running of my company so you won’t experience the same drop in sales as you will have experienced in the past.

    I would love to have had 10% of the funding you have managed to secure, but hey every credit.

    Okay the branding I created was built with a £5,000 credit card and did pretty good as you well you know.

    Thanks for the inspiration to move me in a different direction I owe it to you.


  • http://www.glassesdirect.co.uk Jamie Murray Wells

    Thanks Mark, and the best of luck with your new venture.

  • http://pjb.co.uk/Perrec.htm Peter Bates

    Second generation Personalisation and Recommendation Tools must also be part of the next wave. It’s all about making the customer experience relevant to them – particularly when we are in a recession. Very few sites have utilised these tools to the level that Amazon have done. But, the second generation tools are now getting even more sophisticated.

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  • http://www.facebook.com/people/Jack-Kingsley/100001730842241 Jack Kingsley

    I guess everything is becoming about becoming more emotional, more personal with the customer. I personally support this, as I believe in the mantra that “the customer is always king”, but this doesn’t always work. For example, at Blue Nile I saw someone giving an employee a hard time about a princess cut diamond pendant when they shouldn’t have. Too bad I couldn’t speak up.

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  • jabez armada

    I’ve had a similar experience when I bought a pair of small loose diamonds for my handcuffs at Brilliance.com. Their Diamond Search Tool made everything very easy for me and I was able to choose a nice pair from literally hundreds of different diamonds within their inventory, had it shipped to me without any problems. Didn’t even have to contact their support line! I doubt that I would have had the same liberty if I’d have gone to a regular jewelry shop in my area. This is one specific instance where online shopping has the upper hand. 

  • jabez armada

    I’ve had a similar experience when I bought a pair of small loose diamonds for my handcuffs at Brilliance.com. Their Diamond Search Tool made everything very easy for me and I was able to choose a nice pair from literally hundreds of different diamonds within their inventory, had it shipped to me without any problems. Didn’t even have to contact their support line! I doubt that I would have had the same liberty if I’d have gone to a regular jewelry shop in my area. This is one specific instance where online shopping has the upper hand. 

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