Images-1 I have been not only thinking a lot abut the e-commerce space these days, I am seeing a lot of new businesses in this area crop-up.  I like to look at this space in terms of history.  Lets go back to the 70's.  In the 70's the big department stores were built and it was definitely the shopping location of choice.  The chains of singular stores had not really exploded yet and the Gap took that to another level.  Although the first Gap store opened up in 1969 it was sometime around the mid-70s that they began to grow.  The rest is history with other verticals such as Banana Republic, Old Navy, etc. 

The 80's come and the market share for department stores starts to drop.  More companies are starting up stores devoted to one type of look from jewelry to clothing to shoe stores.  These companies start grabbing some market share in the retail space.  Many of these stores, including department stores, begin to produce their products overseas where they can buy items for less, sell at a lower price point with the thoughts of turning through more merchandise or making better margins.  The amount of merchandise on the shelves of stores is staggering. 

With the Internet, say mid-90's, people began to explore a variety of ways to create e-commerce from terrible ideas such as Ties.com to brilliant ideas like Amazon or Zappos (launching 1999).  Now the market share is split among even more companies in the retail space.  There is also the explosion of Borders and Barnes and Noble that is not only a bookstore but had figured out how to create communities with their local coffee shop and in-house events.  Local book stores are dying.  We also began to watch department stores consolidate such as Federated starting in the late 80's through the 90's trying to become leaner smarter organizations.

Perhaps it is the advent of the Internet, the world of social media, whatever it is the world has changed at lightening speed.  We consume information differently, we shop differently, we live our lives differently.  Not only that but the Internet has allowed us to find sites and communities across the globe that appeal to our only personal senses.  People have also begun to have a desire to return to their roots.  They want to support local businesses and buy their basics online.  Do you really need to go and see certain items?  It is becoming apparent through e-commerce that you don't. 

There are now businesses that are crowd sourcing cool lists of items that you can link through and buy such as Svpply.  Gilt group has captured people shopping for top bargains but has grown the company with other options for their customers such as Jet Setter.  I think of Gilt as the Loehmanns of the 21st Century although they have become much more than that. 

People don't necessarily want to spend their time shopping and wandering through department stores these days.  Live are frenetic and more complicated than the past.  People are looking for ways to go back to their roots and simplify their lives.  Buying on the net to make life easier and spending time doing something else on the weekend seems to be the direction that we are taking.  If department stores don't completely retool their business model they will find themselves way behind the times as Borders did by recently going into bankruptcy. 

There will be a slew of new e-commerce sites in the next year that will change the way we shop and communicate about our purchases as the communities we navigate towards become an extension of our own personal brands. 

Netflix is one of the genius moves over the past few years.  Launching to provide an easier approach to watching movies at home by getting your dvd sent to you in the mail as they saw the demise of local video shops.  They saw the writing on the wall when they began to see opportunities with companies such as Boxee and realized that people were going to watch their movies with a click of a mouse and they needed to have access to the Netflix data base on line.  They moved into that pretty quickly as a company and now they own that space.  More companies in the large brick and mortar models of old should spend a little time getting out in the world and thinking out of the box about the future of e-commerce or they too will find themselves out of a job.

How do people want to consume, how do people want to live their lives, how can data provide better information so we can become leaner higher margin businesses and what value can my retail operation provide for the community I want to reach.   The next couple of years in the e-commerce space will be very interesting. 


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Comments (Archived):

  1. rachel

    so interesting – i think about it alot. the articles about companies getting totally screwed over by groupon makes me think as well. don’t know where that is headed but definitely feel more comfortable w/ a gilt model than a groupon one. i always have a struggle to click on amazon and seamlessly order vs. paying more at our local toy store, kids clothing store, book store, etc. feel like we must find a balance b/c living in an area full of banks is just plain shitty.

    1. Gotham Gal

      a bank on every corner certainly does not scream “community”

      1. suesol

        Hence the social shopping tech companies popping up… Shopping has always been inherently social in ways, i.e. malls. Although addicted now to our digital devices, people still clearly want social connections for shopping & otherwise – twitter, FB, etc. I believe mobile is the real change agent for retailers. Ecommerce is clearly important, but Mcommerce even more so. Creating a seamless user centric experience (customized, personalized, localized) tying in-store experience to mobile, web & social is the real challenge now for retailers. (And is tying backend infrastructure with consumer facing technology i.e. mobile wallets, POS, loyalty cards/preferences, etc.) Those that succeed at that will be the clear winners.

        1. Gotham Gal

          For sure. Mobile apps will be life changing

          1. johndodds

            Successful mobile apps will reflect changed lives.

          2. Gotham Gal

            Perfect description. Good tagline

        2. Erin Newkirk

          Totally agree! Mobile devices are the new PC {personal computer}.

          1. suesol

            If a retailer can get a consumer to carry the store in their pocket, they have a much greater chance of engaging them, and customizing the consumer’s experience, wherever they are… via apps or mobile web.

  2. Rebecca Healy

    Today’s generation use digital devices as a means for self expression. That has made possible an economy focused on knowledge and experiences, not consumer goods.We prefer to live by our screens, not among objects, and so the knowledge economy is just that – in our minds (and on our iPads) and not in the revenue-generating sector of the economy (like chains/retail).At the same time, the Internet dislocated us so we’re seeing a resurgence of hyper-local with a reurbanization into cities. I think for retail stores to survive, they have to go online, okay, but also allow their bricks and mortar locations to be localized and customized to whatever community they’re in. Duane Reade did this with their Williamsburg story adding a beer bar (an experience) to avoid chain disdain from young NY hipsters.On the internet, everything can be copied. So e-commerce is just continually abstracted because few companies small or large can successfully replicate the experience of going to a local store. E-commerce is not all that interesting if it continues to be a retail model. What will be more interesting is the new models that the Internet and these trends allow – access over consumption, services over products, direct to consumer, peer to peer transactions and so on and so forth. That which cannot be easily copied.

    1. Gotham Gal

      Great comment. What will be next should be interesting. I agree that thereneeds to be the balance of a brick and mortar store in the community andalso online.What duane reade did is super smart. Connect with the neighborhood andconnect online too

    2. Lisa O

      Joanne + Rebecca great conversation regarding dept. store businessBrands + Department Stores are losing market share to Niche Brands sold in specialty + On-line retailers. Skincare is the dept. store’s most stable + growth potential dept. however, Estee Lauder alone has lost 7% U.S. dept. store rev. in the last 4 yrs (Source: E.L.com) E.Lauder CEO, President, Fabrizio Freda, speaking to colleagues last year pinpoints one of the issues; ‘We have pushed the push-model too far.’ ‘…the traditional push model in department stores, especially in the U.S., must evolve into one that pulls and adds value [to] make the emotional connection on which [consumer] loyalty and trust depend.’ As veterans from the medical/spa skincare industry, our concentration is the dept. store skincare counter: Transformation of this brick + mortar economy via technology into a consumer-centric experiential, informational, relationship culture will ensure future economic stability + sustainability. There are huge opportunities in rescue-via-technology + innovation, of this global method of distribution! As a bootstrapped to our chinny-chin-chins start-up, we have yet to find VC’s or Angels in the OC/LA area that think like richest man in the world, Carlos Slim Helu,’ I think one of the big errors people are making right now is thinking that old-style businesses will be obsolete, when actually they will be an important part of this new civilization. Some retail groups are introducing e-commerce and think that the “bricks” are no longer useful. But they will continue to be important.’

      1. Gotham Gal

        really interesting. brick and mortar is far from obsolete. the question iswhat is brick and mortar going to look like in 5 years.btw, in my prior life and first job out of the macy’s training program, iran the cosmetics department in king plaza, brooklyn. at that point, it wasthe largest volume cosmetic department outside herald square. reallyinteresting business.we have watched many stores, barneys and bergdoffs, move their cosmeticdepartments downstairs vs leaving them to the first floor as i have alwaysthought that there is a bit of an impulse purchase to cosmetics on somelevel. i’d always wondered how the turn of the goods as well as the dollarsper square foot has changed at both of those two stores. has it gone up ordown?

  3. awaldstein

    ecommerce used to be the alternative to brick and mortar. Books, cars, things that we can buy online rather than on the street.Not so anymore it seems. The connection of on and offline is complete. What brick and mortar doesn’t have something online to enhance the experience or to make the shopper smarter or more connected or more social while shopping?Even online only now has connections through real life through social nets to connect the dots between the experiences. It’s all a tight string that approximates a complete experience with us in the middle.I wrote this post the other day “Choosing context over friendship to filter the social web” @ http://bt.io/Gwtj that addressed cutting through the noise on the friend graph with context. Reading your post made me realize that the offline/online connection is also a context provider to focus intent and mitigate noise.Interesting stuff.

    1. Gotham Gal

      there is no doubt that the online experience must be focused…and obv userfriendly. companies are just beginning to break the iceberg. two yearsfrom now it will be very interesting to see where we are with ecommercelinked back to brick and mortar.every day i see another e-commerce biz plan roll into my box

  4. Germainsteven

    I think your observation about people really wanting to simplify is right on but paradoxically technology and e commerce may be having the opposite effect… Too much searching for the best, deal, price, item, friend, thing to do, place to eat… I was talking to my 21 year old back to nature, green, sustainable, keep it small and keepmit real daughter the other day and I used the verb “tweet” and she said “what is tweeting?” She had never heard of twitter and while part of me wondered how that is possible (what planet is she living on?) another part of me was glad for her and proud of her.

  5. markslater

    Hi Joanne – i am a sometimes commenter on your Hubbys blog – Arnold W recommended i read your post today…he was correct…..very interesting!We are building what we believe is the next wave of consumer purchasing services. But unlike the GILTS, or the groupons we are focused on lightweight (mobile) and instant (push notifications or text). We call it “tiny commercial conversations”My wife gestures an intent to the service (i am out looking for some spring wears) to our service. We then contact her audience of merchants who are notified and can respond directly to her. (for her she has selected her favorites to follow – but random merchants can also be selected) – these merchants respond with “incentives” (they dont have to be coupons – we don’t believe that everyone seeks a coupon – we believe that people react to being made to feel special) with – “glass of champers for you – come by and see the spring line”.her friends can see this activity and follow her in to a deal, or incentive situation. these friends are not your FB audience or your Tweet jetstream – they are tighter concentric circles of friends who you are happy to share your purchasing habits with.Its one way to describe a commerce model for your interest graph.We believe that everything starts with a gesture of intent. (not a check in – that does not tell some one anything about your purchasing intent) – so its pull based marketing – not contextual push (unless you permission a merchant to do so).we are piloting in boston – i’ll be sure to ping you when we get to the big apple.thanks for the great post.

    1. Gotham Gal

      creating community through local consumer purchasing and sharing that withyour personal friends. i have seen a few of these starting up. what i likeis the engagement of the local vendors where as they might have never hadthe opportunity to engage their customer in this way before. this goesdirectly back to the thread of many of these comments: brick and mortarmust be tied into the online world too in order to succeed.

      1. markslater

        the absolute key – is for the merchant to be involved IN the conversation – not for it to be canned or proxy’d.its all about conversation – alot of things come from that.

        1. Guest

          Hi Mark- What is your URL?

      2. markslater

        “brick and mortar must be tied in to the online world too in order to succeed”that is absolutely spot on.we use status to do this. Merchant changes status to “ON” followers know merchant is getabl. “OFF” busy periods.

  6. MikePmalai

    Terrific post.The growth of social media and online communities has definitely changed things. A retailer’s best sales associate is no longer in store. They are online and not employed by the retailer. The next couple of years should be interesting.

    1. Gotham Gal

      very very interesting.

  7. William Mougayar

    E-commerce is one of my favorite topics, and will always be. As someone who wrote a best-selling business book on Internet commerce in 1997 (Opening Digital Markets, McGraw-Hill http://www.google.com/#q=%2…, I go back and pick it up now and again, and it’s interesting that certain trends that were described then are happening now, while others weren’t even on the radar. What’s fueling e-commerce now is social networks, group buying mechanics, and the wide availability of easy-to-use tools for engaging clients and selling anything over the Internet + social media as an engagement and loyalty platform.That said, I’m very optimistic like you are. E-commerce is getting its second wind now and it will get bigger and more pervasive. We said back then that it might kill bricks and mortars, but that didn’t happen too much. Now, it’s a different story. It will kill the retailers that don’t fully embrace it as a serious undertaking.

  8. ellen

    I use online sites for comparison shopping but I am old and so old school. I still have to touch and feel it to want to buy it. I could never buy a washing machine just from a picture or even an article of clothing. Can you buy a car without a test drive? I can’t and I have bought the same model car for the last 10 years. Each year there is a new feature or an engine change or even a new shock absorber option.I love to look at the gilt group but most of the bargains are not so great and I find the same things for less in bricks and mortar. I cannot buy a diamond from a picture. I need to see it to see how it sparkles.

  9. James

    I agree with the internet changing the retail experience for some stores, but not for everything. Amazon and Netflix are great examples of this.Gilt is a good example, but not a great one. When it comes to fashion – clothes, shoes, etc. – selling needs to involve more of an experience than showing products online. It’s about the look and feel of the store, the people whom are selling to you, the music playing in the background, these things cannot be captured online. Gilt and a few other clothing retailers have done a good job of it, but ultimately have been successful because of the economic bust. They are not going to be able to access inventory as readily when the economy improves, because it’s going to get back to the point where people are going to want to see and try on their clothes and will be willing to spend a little more to do that, and manufacturers are going to hold back stock lots for these people when they return.

    1. Gotham Gal

      hate to break it to you but manufacturers actually make clothes fordiscounters. originally, at places like Loehmanns, the concept was to sellexcess inventory. Now, labels actually take their best sellers and knockthem off with other fabrications to get to the price points that they needto be at. Perhaps a dirty little secret. Leslie Fay for instance used tohave Loehmanns as one of their largest accounts in the 90’s.People might go back to shopping more in stores as they economy gets betterbut lifestyles have got accustom to the ease of shopping and even returningonline. Shopping in person will have to be a different community experiencethat is connected to an online presence.

  10. artyowza

    Does anyone have other examples of online company challenges / community groups ?I want to do something like this for my biz and I’m looking for good ideas…….Muji in your life Contesthttp://www.muji.us/contest/Ikea Hackershttp://www.ikeahackers.net/

  11. Tereza

    I just got caught up on a week of Gotham Gal and I have to say you’re on a freaking ROLL. Have to pick which to comment on on small iPhone screen and 5-min left of train. Very tough choice…Emily, Passover, Bloomberg…tons here…Re: Ecommerce. I am not of the retail industry but have always loved ‘the find’ — it’s kinda emotional for me. It’s a bridge between who you are right now and who you want to be.Ecommerce 1.0 was in my view very guy oriented. What I mean is, helping the guy get in and out of the store as fast as himanly possible. Right choice, right price, DONE. Nuthin’ wrong with that but left big openings.Then i’d say 2.0 has been curation. Like Etsy. An experience that’s a pleasure to meander, to press your nose against the e-glass.We’ve gotten much more social, that’s what I call 3.0. Lots of current examples on that. More like a jewelry or lingerie party at your girlfriend’s house.I think there is still a lot more opportunity embedded in the emotional piece — it should spring off the social. But I think it has to be more than a buying frenzy — but instead an emotional — ‘we know you, we care about you’. A big chunk can be datamining sourced. But there’s a human X factor, a warm 1-to-1 “I’m thinking about you’ that when inserted into the right moments creates customers for life…who are willing to pay full price.Our lives get more complicated as our wallets get fatter. That human touch becomes essential.

    1. Gotham Gal

      ha! our lives get more complicated as our wallets get fatter. nice onetereza.

  12. ecommerce merchandising

    Great share…!!!E-commerce has surely changed the trends among the maketers. Online stores sell much well than the local franchise. The comig years are going to be a revolution in the shopping trends with an e-commerce era.

    1. Gotham Gal

      revolutionary, for sure.