What trends are changing Online retail?

Rob has addressed mainstream trends taking place in online retail thoroughly, however, I would like to shed some light on the new business models and user behaviours that emerged recently in e-commerce and are revolutionizing this space.


1)     Platform verticals
Ebay and Amazon were for years the king and queen of all platforms. However, recently with the overwhelming amount of data and products on both platforms consumers start to shift to smaller, more specialised and targeted platforms such as Etsy (http://www.etsy.com/). I believe, it is quite natural for most of the platforms to degenerate in that way. Think Myspace. Once two or in some cases even three generations of one family started to occupy the platform, a small group of users, namely students, decided to shift to a platform that targeted their needs better- Facebook.) Thinking in analogical terms, a subset of Ebay sellers decided to shift to a platform which fulfilled their needs better with regard to selling handmade goods- Etsy. This can go on indefinitely, given than the subset of users is big enough to build a compelling market place. In the coming years with more products being available on-line and greater Internet penetration worldwide I would expect users to be more demanding and hence further verticals expansion: e.g. Linkedin for athletes, Facebook for elderly etc.

2)     Impulse purchases
With the new culture of scrolling addiction (recently well covered in Techcrunch http://techcrunch.com/2012/08/18...) we are more prone to carry out impulse purchases. Especially, that e-commerce website browsing is becoming a legitimate free time activity. Therefore, websites which nurture those new habits, such as flash sales and group buying have become increasingly popular. Not only do they pleasantly stimulate our dopamine levels by discovering each time something new, but also due to their time-limited offering they cause a sense of urgency to buy. Subscription services also satisfy our urge to discover and be surprised, but the time pressing mechanism is not present in that case.

Recently, just as with platform verticals we also observe specialization among flash sales sites, subscriptions and group buying. Think of verticals such as European Westwing being Ideeli for furniture or Umbabox which is a bit like Etsy and Birchbox after getting married. Similar trend is appearing among the group buying websites- underneath I present couple of examples of such verticals:

• Order With Me (wholesale group buying for  small businesses) https://www.orderwithme.com/
• CollegeBudget (daily deals and group buying for campuses) http://collegebudget.com/
• Plum Disctrict (daily deals for moms) http://www.plumdistrict.com/signup

Additionally, we can observe platforms and aggregators bringing all deals in one place e.g. http://www.dealcollector.com/, which is usually the last step in the cycle of business model innovation.

3)     Mass-personalization
I call it mass-personalization because in most e-commerce website there is no true personalization. Instead all the job of personalizing is being shifted to the user himself e.g. by asking the user to provide demographics, style preferences etc. After the user has done all the job websites such as Bombfell, Shoedazzle or Birchbox can then adjust their product offering to the user’s characteristics, so that the product is more appealing. In fact, for major e-commerce website full customization would be a nightmare in terms of scalability, so for that reason they apply half-way solution which is just a trade-off between the speed and quality. Nonetheless, users enjoy the goods suited to their preferences and hence are more likely to make a purchase.

4)     Discovery services
As humans we have the constant urge to discover new things and be surprised again and again. Therefore, we love to scroll down Pinterest, Fashionlista, Facebook etc. I presume that website such as Pinterest and its subsets (Fashionlista is a sort of Pinterest but for fashion) will become increasingly integrated with e-commerce shops. Especially, that nowadays users do not always seek for a specic item - they often prefer to be inspired first. Services such as Fashiolista, Lyst, Polyvore meet the discovery need plus they provide value added in terms of search & community mechanisms enabling quicker selection of relevant goods. I believe those services will outperform in the future Google as well as single shop search - since the first one is too generic (e.g. try typing in Google "blue collar" and it will think it has something to do with the working class) - of course Google is trying hard to make its search result "context relevant" where context is the users and his search / browsing history, however there is still a long way to go - while single shop search will always be limited to one brand / multihop selection of brands.

However, only few brands truly understand that and hence, strive to be as integrated as possible with discovery/browsing services such as Pinterest or Fashionlista. From my experience with Fashionlista it is usually smaller brands which are more eager to integrate since, their own traffic is much smaller than this of established brands and they have to seek other lead sources. In the future therefore, I would expect two things: more Pinterest verticals and increasing integration of discovery services with e-commerce shops. I am already waiting for "Fashionlista for furniture". Anyone?