Customization defines next generation ecommerce

Hot new online retailers that feature product customization are currently in the spotlight.  Recently, Indochino, FashionPlaytes and Gemvara all recently announced investment rounds to fuel their efforts to disrupt shopping categories like men’s suits, apparel for tweens, and jewelry.   What do these vendors have in common?  Customization.

How big is the emerging user-generated product market?   “We were inspired by (Gemvara CEO) Matt Lauzon’s far-reaching vision of future e-commerce, and his team’s deliberate execution to date,” said Mark Evans, Partner at Balderton Capital. “We believe that Gemvara can become the world’s first billion-dollar user-generated product company.”

Also part of the next-generation of online retailers are Bonobos with an $18.5 million dollar round, and BetaBrand with a $1.3 million dollar round.   These new brands are focusing on changing the online shopping landscape by reinventing how consumers interact with their brand online.

From the TechCrunch write-up on BetaBrand: “So what’s Chris Lindland’s take on a VC firm investing in what is essentially a clothing company?  ‘E-Commerce is such an exploding area, and there aren’t really companies failing at it. There will be a ton of online clothing brands that pop up over the next year. The next Quicksilver or the next Patagonia is going to start on the Internet.’”

So why is there so much opportunity in the new wave of online shopping?

Ecommerce is mature

First-generation ecommerce has matured to the point where the majority of Internet users are comfortable submitting their credit card to online vendors.  Additionally, Paypal boosts trust by adding another layer of confidence.

The past 10 years have seen ecommerce giants like Amazon, eBay, Zappos, and Walmart.com establish themselves as trusted ecommerce leaders.  According to Comscore, Ecommerce is growing at about 12% and generates over $100B in sales in the US annually.

Ecommerce 1.0’s biggest challenge was trust-building.  Consumers needed to believe that they were getting what they saw on their screen, to know that their payment was secure, and that their shipment would arrive on time.   Next-generation ecommerce vendors are building on that trust and reaching new customers.   Matt Lauzon of Gemvara tweeted that 45% of Gemvara’s customers “trusted us with their first online jewelry purchase they ever made.”

Demand for digital customization

We can all learn from the successes of these ecommerce 1.0 juggernauts: Customer service, free shipping both ways, and a seamless discovery are paramount to the shopping experience.   Now that the ecommerce framework is mature, users are demanding interactive, social, shopping experiences that tap into their creativity.

Due to increasing adoption of customizable digital experiences like Pandora, Netflix, and Facebook, users expect equally personalized, visual experiences when they shop online.   Forrester cited customer demand as a primary catalyst in their market report on the topic; “Mass Customization is (Finally) the future of products.”

Customers expect a “curated” presentation of products based on their product selections on the site.   Retailers need to integrate targeted suggestions as users navigate their product line.  The goal is to present personalized, curated product suggestions by guiding the user to a sales conversion.

Evolving social marketing strategies

According to a post by Internet Retailing “(Customization) is as much about a way of social marketing as it is about what is being sold.”  Brands often implement a visual product configurator to encourage design contests, brand engagement, and social sharing of creative product designs.    The configurator is not just a sales tool, but also an engagement tool that is critical component in a broader community engagement strategy.

To this end, customization has grown beyond just a niche market focused on delivering highly specialized products to a small group of customers.    Customization fuels mainstream social commerce and defines next-generation shopping experiences.

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  1. […] Customization defines next generation ecommerce […]

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