e(verywhere)-Commerce

A couple of weeks ago, nextNY had a great round table discussion about the explosion of new models and companies in eCommerce—from group buying to flash sales to local discounts.  A lot of ideas came out of it—many were ones that we’ve been thinking about at First Round for a while, given our investments in One King’s Lane, Homerun, Bigdeal, Modcloth, Monetate and Packlate, among others.  There’s also been some great blog chatter from Sarah Tavel (here) and Josh Kopelman (here and here) on the topic.

One thing that Chris Fralic and I have been tossing around is the lack of a retailer centric play—where individual retailers can run their own group buys, manage discounts across various sites, run local campaigns across Foursquare, Facebook fan pages, etc.  All of the current sites revolve around a centralized curation and sales function.   To get that spa or sandwich shop onto your system, you still need a person getting on the phone, calling them up, running through the economics and particulars of the deal, scheduling, etc. That leaves a lot of open space in the market.  Even if you have 5 major competitors in a city and they do a different place every weekday, you’re still only covering about 1,000 retailers and merchants per year, assuming no overlap and no repeats.  On top of that, the economics of having that salesforce requires you to raise boatloads of money. 

On the other hand, how many places would love to run their own little group sales—sales that might not be big enough to be the Homerun deal of the day, but might make sense to do economically if they can get two dozen people in that day?  Many would run those deals everyday if they could.

Enter Closely.  Closely just launched at DEMO this week and is the natural evolution of group buying and discount sites—allowing retailers to run these deals on their own in front of their own audiences.  I’m sure at some point, the best of these deals will be syndicated to Homerun, Groupon, Buywithme, etc., and maybe those sites will eventually compete, paying for the right to run the best deals at the most highly sought after venues.  They might even do it at a loss on a per deal basis if it means acquiring a customer. 

I’d also want to see the ability to manage deals across existing local platforms—as there’s been an explosion in local inventory that needs to get monetized.  Will Foursquare start running Closely ads?  It should… and retailers should be able to see how their campaigns are doing across sites and platforms.

Another early effort to watch in this space is BeeMe, which is a project run by some ITP students.  BeeMe is taking those little coffee shop loyalty cards (the ones you punch for your 10th and finally free coffee) and moving them online.  Retailer centric, self serve models are where it’s at—*IF* they can figure out how to acquire customers cheaply.  These plays still have the “last mile” problem of getting new venues onto the platform when the average retailer barely knows how to use the web and generally sucks at online marketing. 

Community is one solution I had in mind.  What if you weren’t just a platform for distribution of deals, but a kind of local virtual chamber of commerce or small business organization—with some social networking features so that retailers could get together to share best practices, work with each other, cross-sell, etc.  In fact, the failure of the local chamber of commerce and economic development organizations is largely the reason why it’s so expensive for local plays to acquire customers.  If you get a permit to do business in the city, you should automatically get signed up to take an online marketing course and be presented accounts in all of these local plays.  Same with banks—they’re equally incentivized to have you figure out how to bring customers in the door after they loan you money.  Chase should be a reseller of Homerun, Foursquare, Square, and all of the different ways that retailers can innovate, save money or grow revenues.

A good example is the Etsy seller community which does a lot for new sellers to help them get up and running—sharing best practices about taking photos, copy, pricing, etc.  This kind of selling optimization takes the pressure (and cost) off of Etsy to solve this problem of getting and onboarding new sellers on their own.

Not only is deal origination likely to disaggregate, but so will the end purchases.  After Facebook integrates payments, how long before you start making purchases right in your newsfeed without ever leaving the page.  Your friend will say that they bought a dress from Modcloth, publish it to their newsfeed and you’ll be able to buy the same dress right there in the newsfeed with your Facebook Payment account without leaving the site.