My name is Spencer Lazar. I am a venture capitalist at General Catalyst. I grew up with the internet, spend my life thinking about how it can make our lives better, and work with world-class entrepreneurs to affect that chanage. NYC is my home. This is my blog.

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Monday
Apr192010

Drop the "E" in Ecommerce

With the recent explosive growth of collective buying sites (such as Groupon), private sale clubs (see Vente-Privee & Gilt Group), and even local artisan aggregators (such as Etsy), the notion of "social commerce" has been all the rage.  Josh Koppelman provides a nice overview of the the gust of innovation in the etailing sector. In March of this year, Fred Wilson called it "Commerce 2.0."  

The fundamental observation that advocates of social commerce make is that people are more likely to buy when their shopping experience requires them to interact in some way with other people.  Whether sharing preferences, inviting others to be a member of your private club, or teaming up to secure a bulk discount through a group deal, the energy and excitement of the herd is deeply powerful.  It is what allows each of us to understand the extent to which purchases make us fit in or stand out. 

While leveraging things like gaming mechanics and the social graph will undoubtedly unlock a meaningful amount of value on the web, I believe that they will only begin to scratch the surface of what is possible.  The reason: most commercial experiences today are optimized around making an entirely asocial experience social. For all that Facebook has done to transform the world over the course of the past few years, there is very little that one could do to make sitting in front of a 15" screen at off-peak hours compare to the energy of being out in the world with your real friends in commercial environments.  Afterall, entire neighborhood communities around the world head to shopping malls just to hang out for the weekend.

The same way that we have seen marketing resources from many of the young and trusted online brands such as Kayak & HomeAway recently shift offline, I believe that we will see a trend in which established and emerging online brands extend their commercial relationship with their customers offline.  When you sign up to be a member of a online shopping club, it is not enough for that brand to simply send you a daily email with relevant content and purchasing opportunities - just as in paying for a membership at an offline private gym, I expect more from the institution than simply providing me competitively priced access to a treadmill.  Such companies are first and foremost undifferentiated and if successful, highly prone to copycat behavior.  But more importantly, they are not leveraging the most important thing that a direct to consumer brand has with its customers: trust.  

The brands that I love and choose to transact with online should leverage what they know of me to extend their influence offline.  Offer your community access to the world that you claim to represent.  In person trunk shows are a start, but think out of the box a little - invite a few of your members to actual real life fashion shows.  If you are a food site, allow members access to special drinks on the menu of a handful of restaurants. If you are music site, get me VIP access to the concerts of the bands that I love.

Product-based online commerce is a rapidly commoditizing industry. To differentiate, retailers must drop the "e" in ecommerce and extend their relationships with their customers into real offline social but transactional settings which still resonate with their online brands.

 

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