Lately I’ve been working through the next incarnation of my online shopping style-hunt. I’m probably similar to most guys in that we never feel like we can find exactly what we want when we’re shopping – even for those of us that actually enjoy looking for clothes – so we end up buying seven pairs of the thing we don’t really want, but which at least puts our dysfunctional shopping experience out of its misery: all in shades of blue, grey, heather, chocolate, pink and manly yellow.
If e-commerce is about a about optimising the USP mix of price, convenience and availability, then my 1.0 online shopping experience back in the early 00′s was weighted heavily toward availability. By and large I was ordering from the US to Canada, waiting for mediocre shipping timelines and paying associated tax and custom duties all in the aim of buying niche styles and new brands that I couldn’t find locally, or which were stocked in 5’11″ guy sizes only. I sacrificed price, pushed on convenience and was sold on availability. Karmaloop.com was my go-to back then. I still rock the Triple Five Soul blazers on occasion.
I was pushed further down the price path of the 3-way cross of USPs when I moved to the Middle East in 2003. With nothing available online then, and a notch or two above nothing available when I left 2012, price wasn’t really a USP on a head-to-head basis, and convenience was irrelevant because local/regional availability online was non-existent. If you wanted access to goods not available in the region, or custom/new/unique/niche brands and products then you had to travel virtually to the other side of the planet to shop online. The bottom fell out of convenience since you waited weeks and faced uncertain customs practices and timelines, and any price benefits gained by shopping from the US were typically trumped by shipping fees. Therefore, you were left considering the third rail of availability was enough to trump the other two.
When the Gilt‘s of the world emerged toward the end of the 00′s, the lure of availability only increased coupled now with a major uptick in price competitiveness presented by the steep discounts of the flash sales model. Clearly the sellers were seeing this demand globally and enlisted businesses like FiftyOne (now BorderFree) to facilitate more transparent international shipping, and Amazon sites like MyHabit were able to provide flat rate international shipping.
Basically, that meant that Middle Eastern – and other non-US e-commerce businesses were competing with international operating as domestic. With shipping rates and times roughly equal to what local sites could provide, this created a major threat that was and still is best repelled by locally-relevant and adept customer service and returns.
Phew! All of that said, my online shopping life 2.0 (or maybe 3.0 or 4.0 by now) has changed now that I’m back in Canada, and now that entrepreneurs aren’t necessarily trying to go head-to-head with the Amazon death star, but trying to disrupt (men’s) fashion through driving up style, opening bespoke to the masses as facilitated through technology, and driving down price as a function of quality by owning more of the value chain.
I am going to muse more deeply on many of the below, but here’s who I’m loving lately, why I’m loving them, and if the rubber hits the road and I’m actually a customer or not:
Indochino: I love that these guys are from Canada, weren’t fashion or retail insiders, but saw an opportunity to create “the world’s first online service for hand-tailored men’s suits and other custom apparel” and by creating stuff people wanted, at a price they were willing to pay, and from a new brand that they could associate with and feel good about – or at least feel neutral about without cutting out labels (who hasn’t done that, at least when you were 11). I love the look and style, I don’t love that they source from China because I think there is latent demand for all the attributes above but with a made in Canada/USA core that people will pay a premium for… especially given that this premium will be applied to the discount gained through this sewing-machine-to-closet value chain. This could net out and provide a competitive advantage over price on same quality – there’s a tweaked model for someone to pursue. I haven’t bought from them yet – I’ve been in my jeans and running shoes entrepreneur mode for the last few years.
Everlane: I’m a big customer. This is one of the few companies that has actually materially impacted my look. I wear Everlane t-shirts most days and I love the fit, feel and price. John Fluevog is the only brand that can claim a more entrenched place in my closet right now. Everlane is definitely competing on price by trying to really optimise the sewing-machine-to-closet value chain while spreading a sweet layer of simple, compelling style on top. It works for me, and with expansion into Canada they are obviously seeing some traction. It’s not so much that people will copy what they do – which will happen for sure – but I do hope that they get a steady stream of followers down the road of optimising price by solving supply and using the nimble showroom of the internet to tweak their styles and collections in a manner that remains responsive to demand.
Betabrand: What company do I want to go hangout with, like the whole company, everyone, and know it’ll be awesome? Easy one. Betabrand. They crush it for me on the mix of product, personality, media, content, style and substance. It’s probably the only e-commerce site I visit and feel bad that I haven’t bought anything yet, simply because I know that I’m missing out on being a member of their crowd. FOMO: I am missing out, and I do fear it. It’s also the only e-comm site I visit regularly for the style and the content. I want to see product pages, read copy, and check their new ideas. I’m a Betabrand stalker. For me, Betabrand is the clothing version of the appeal Fluevog has for me: great style that’s not in your face, but by adding creative and smart style elements to great products, all with a personality that is unmistakable. It’s noteworthy that they’ve invested into their Think Tank as a way to leverage audience and crowd in product design. It would be difficult to imagine someone massively trumping their ability to imagine/solicit, vet and produce.
Convenience is still not a big pain point for me. Get me great style with a great mix of utility, uniqueness and personality, and if you can optimise your supply chain and the full value chain of sewing-machine-to-closet to get a price that’s in the ballpark of what I’m willing to spend on clothes, then I’m all in.
Dan Stuart, co-founder of GoNabit (now LivingSocial), offers insights into the daily deal business, discussing GoNabit’s values, how the culture at GoNabit was maintained after its acquisition by LivingSocial, what it takes to start a daily deals site, the challenges of cash-on-delivery, and what trends we’ll see in the coming year.
The key factor in success for daily deal site is scaling, he says. “If you’re not operating at scale, it’s hard to be profitable. And it’s hard to get to scale and try to be profitable. So if you’re a new entrant, it can be really hard.”
This post originally appeared on Wamda
A former English literature teacher and a telecoms guy walk into a coffee shop… The punch line is that a year later they sell their e-commerce start-up in the first M&A deal in this space in the short history of Middle Eastern e-business.
GoNabit was born out of recognizing both opportunities and hurdles. In December 2009, I was tracking a number of businesses both successful and fledgling in other regions, looking for inspiration to start my first business. My recent experience was in the online recruitment space so I was focused on doing something online. I looked deeply into the business models of many different e-businesses, but seeing the model of Groupon and later LivingSocial gaining major traction in North America, I took to the seeming simplicity of implementation, clear business model and short timeline to launch. I also recognized that since the product that we would be delivering was via email, I could avoid the issues around poor regional address systems and the expense of courier companies.
After a week or so of business modeling and some discussions with friends and potential investors, I came home and told my pregnant wife that I was quitting my job, liquidating our savings, and starting a company. That talk went surprisingly well. After some great advice and some serious discussion, she handed me a virtual pair of running shoes and told me to start running, and that I’d better make it work.
While the market in 2009 was still struggling to get back on track, I managed to attract investors, which was a great validation of my ability and the potential in the business, and this gave me the impetus to move forward. What I learned is that committed investment – even from good friends – is still someone else’s money and getting to signed documents probably requires a few hard meetings. And maybe even a difficult conversation or two… or three.
Before the money came in, what I needed more was a committed partner to share the load. The most important decision any start-up entrepreneur makes is finding a partner with as much commitment to the business and passion for entrepreneurship as you have. Sohrab Jahanbani came into my life and after only four hours together we were partners. He had been involved in several start-ups before, and he was ready to commit 100% to the business. We didn’t share the same skill and experience set, but we made equal claims to being the hardest working and most passionate members of the partnership.
The main areas that we focused on were how we did what we were doing, and racing to quality and scale. Before we ever hired a single person, we had laid out our vision for how we wanted to operate. We created a set of six values that drove our actions and decision-making. These values ended up being very similar to those of LivingSocial, and this was one of the key decision-making criteria for us to favor their offer over others’. We walked away from business opportunities that didn’t mesh with these values, we hired based on these values, we made them a part of the everyday dialog in the office, and we competed on the premise of these values. We wanted to be successful, we wanted to become the leading e-commerce company in the Middle East, but we also wanted to be able to come home at night and feel good about how we were growing GoNabit. Our values helped us find ourselves – eight months after running our first deal – with three term sheets for full or majority acquisition of GoNabit.
The acquisition process by LivingSocial, and likely the acquisition of any company by another, was strongly dictated by our path on the way in. Our capital raise felt like a one-way ticket, but the fact that we had bought the return-trip ticket from the start made all the difference. We had outlined how we would get back – how we would exit the business as shareholders, and what would happen when shareholders differed on which offer was best for the company. These shareholding documents were invaluable for providing the structure that got us to where we landed. We had a few more difficult conversations, but we all benefited from the sound shareholder rights and protections that we had collectively laid out from the outset. There is no replacement for doing it right on the way in.
You spend so much time head down and racing forward that the operations and the acquisition consume your time completely and without break. Throughout the entire process you are lucky to get a few brief moments to take in what you’ve achieved, to stand back, look around your office at the jobs you’ve created and the company you’ve built, and remember when it was only you and a spreadsheet.
It’s a mistake to think that setting up an e-commerce business in the Middle East is (only) a sprint. It’s a marathon, and you have to outlast as much as you need to continually out-compete. You race, you cherish any small chance for rest, but ultimately what brought us success was knowing where the finish line was, and focusing on landing each new step.
This article originally appeared on zawya.com
Ok, riddle me this: I’m working at Facebook as the evangelist of the Facebook Platform, looking at how Connect is adding a social layer to other websites while at the same time probably more commonly exploited as an easy online credential rather than really providing much social context. I clue-in to the fact – like most of us at Facebook – that people’s friends on FB aren’t truly and purely their friends…they’re a mix of high school and elementary school classmates from way back, some current friends, family members if you’ve coaxed them onto the site so they can see pics of your kid, or they’re your young cousins, maybe some co-workers, and whole bunch of random people that have added you but who you really don’t know or care to know. You look at Connect as something that extends a login credential – and the take-up is huge – but it’s more of a way to get data back into the FB homeworld than a way to add social context to these non-FB sites – since the social context is really weak there anyway because of the nature of most friend lists. You hear the internal conversations about creating lists…maybe even Groups…but think maybe there’s a backlash a comin’….and maybe you even pro-cog Dave McClure’s post about FB’s lack of intimacy and the integral relationship between intimacy and context, connection and continuity (a post that happens to come out only a couple weeks before you launch your un-thought-of new startup) as the way to disrupt the (new) Big Blue, and you think: its time for me to call my friends and start a co.
Do you take the leap? If you’re Dave Morin and crew, you already did. And I’ll tell you why (I think).
People are seriously bashing the new “photo-sharing app” Path that launched the other day. Check all the hate in the comments on TechCrunch. The reason all these dudes just comment on blog posts rather than start companies is because they don’t get it. Path will be much more.
Morin didn’t assemble the 1927 Yankees equivalent of investors for a photo-shairng app. He hooked them in because he pitched the concept of creating meaningful networks of close friends – the people who you would actual share baby photos, traval pics and tips, invite to dinner, buy xmas presents, miss when you don’t see for a while, get advice from, take shopping, and general have in your life. “Path allows you to capture your life’s most personal moments and share them with the 50 close friends and family in your life who matter most.”
Facebook is not that right now. I am testament to this. I logged in two days ago and ripped through my ‘friend’ list. It was easy for me to un-friend over 100 people because frankly I didn’t even know who they were. Add to that, a lot of my friends and family aren’t on Facebook, and I get a social network that is more like a place to broadcast data to acquantances while I continue to email my actual friends and family the things that are meanignful…like pics of my young son.
So is there room to take a different tack? There is, but it won’t be won in a “size matters” contest. Facebook is on its way to 1 billion and there’s no stopping that train.
The answer: start small and keep the circles small and real. Try to end up with a group of close friends and family who pass the bikini test, and force people to triage that group so it continually reflects there current inner circle. To use the name of this new startup, we don’t stand in a ‘path’, we move along it, paths diverge and converge, and so it makes sense that this innner circle changes. My inner circle and my wife’s inner cirlce will be similar but not the same. There will be connection points, as there will be between our innner circles and the close friends and family of those in our group…and so on. But this graph isn’t really so much a ‘social graph’ since I’m more than simply ‘social’ with this group. It’s more of an ‘intimacy graph’.
Path is potentially so much more than a photo-sharing app, but the early reaction is seriously short-sighted.
So, I’m Path and I want people to end up with a small group of connections that bears a strong sense of intimacy…but again, isn’t the value in the size of these groups? Nope.
The most valuable connections for me are those that I’d share info with, travel with, dine with, party with, laugh with, shop with, etc. These are my inner circle, or my 50 as the Path team has decided. Lots of people are bitching about Path limiting connections to 50, but I’d think that in many cases, 50 may even be too many. Take a picture of your new son, or your family at a brithday party, or your girlfriend at the beach. Now think about who you’d want to send this to. Doubt you got more than 50 people on your list.
This intimate group of connections will have far more relevance in a FB Connect-style implementation since its the people are care to see what I’ve bought or where I’m going. Anything above that group size means sharing is simply vanity and voyeurism.
Imagine the social dynamics of limiting a contact list to 50. List triage would be ongoing. Your list is full, but your mom wants in…so someone has to go. You are forced to decide who is most meanignful in your life at that moment, and who you want to keep a close connection with. Think of high school kids jockeying to be on people’s 50-list. I’ve had best friends through various stages in my life who wouldn’t be in my current 50…and its because our paths have diverged and we don’t keep in touch…and don’t really want to. My inner circle has changed, so why shouldn’t it be natural that this list changes, too? This inner cirlce as reflected in a “personal network” changes.
So let’s make a lot of assumptions about the value of a small intimate group of connections on a platform where I can comfortably share content without simply watching and waiting for one of the big boys like google or facebook to figure out how to do it like some kind of online benefactors, and let’s assume that people actually want an alternative to joining a beheamoth of a social network, and really just want to stay in touch and connected on a meaningful level in a way that is best accomplished by email right now. How do you bring people onto this netowrk? How do you sell them on the value?
I know. Create a network, ask people to join and build a profile, and then fgure out some things for them to do…maybe update their status. Share a link. Uhhh…..fail.
Creating a profile for the sake of creating a profile is the idiots guide to social networking…or any kind of applicaiton that wants to build a userbase. A job site doesn’t ask you to build a CV and then look for jobs. It presents you with interesting opportunities that you can only apply to if you have a CV on their site. Facebook doesn’t say build a profile and that’s it. They ask you to add more info about schools attended or jobs held, for example as a way to find people you may know. There is utlity in the action and a proper carrot motivating you to do it.
Path started with a carrot: Think about the most intimate thing you could share with you closest 50. Its not a link or status or events or questions or game results…its images. Giving me an app to take and then share those images only with the 50 most important people in my life provides a utlity (obviously one not currently exclusive to Path) while also making the explicit statement that these images will only be available to a small group. Therefore, group size informs content, and conversely the content will influence who is in this group. If I want to use the app, and I’ll only be able to share the images to 50 people, then I might as well add the most important people in my life, and since they’re the most important people, I’ll likely use the app to take more intimate photos of my family, experiences, friends, vacations, special moments, etc.
Boom! I now have a ‘personal network’ that holds a snapshot of the most important people currently in my life. I add them to this network since the level of intimacy of my content will be higher, and as an accessible (less clutter, smaller, not kitchen sink-ish) place to join, they are more likely to join.
Great. An photo-sharing with some exclusivity…then what?
Path (probably) laughs at all the people who thought they were another photo sharing app. Now they turn on the smart. Give me more to share with my 50 like travel plans, content, links, video, purchases, wish lists etc. Remember, early access to path showed it as a list aggregator. That’s still probably coming, since who better to add context to lists of wants, favorites, dislikes, etc then your inner circle. Similarities across these lists are very meaningful ie. 7 of my friends all want to travel to a certain place some day, 4 of my cousins all want the same gift, 2 of us love the same recipe, none of my friends share the same taste in food as me but they all think a certain place is a top 5-er…so worth checking out. And so on…
Think of the power of Path Connect. If I’m logged in to Amazon this way, I may not so much see what people like me tend to like, but I’ll see what’s on my 50′s wish lists, and imagine the co-shopping possibilities. There won’t always be someone online with you, but when they are, it’ll be meaningful and interesting, since you likely value their advice. At GoNabit we use Facebook Connect, but Path Connect would be far more meaningful since people less likely to share to the Facebook crowds that they bought a massage voucher, but much more likely to co-plan events through buying vouchers on GoNabit and share these purchases to their 50. The relevance, intimacy and value are much higher with Path.
Look for Path to get some adoption, less from the early-adopter app crowd, and more from the people who actually want to find a way to send baby pics without always sending out group emails, and aren’t interested in creating some FB group. That said, as with any new business, getting scale is the challenge that makes or breaks. Over time, I’m sure they’ll add meaningful features to the photo app, but also flesh-out the utility of connecting with your 50. The photo app will become a part of the overall mix, but the only element by any means.
…or, it could just be another photo-sharing app.
When was the last time you bought something online from the Middle East? For many of us who are comfortable shopping online in general – and have also experience e-commerce in this region – the answers will range from rarely to occasionally. For many others the answer is never, or even more likely that there’s not really that much to buy online from/in the Middle East…what are my options?
The honest answer revolves around some variation of the fact that there really isn’t much to buy online in the region. I contend that the reason is not because those of us here don’t have credit cards, or don’t feel comfortable buying online, but that there is dearth of opportunities to buy online here and this is fueled by the challenge is setting-up an e-commerce platform rather than the resistance from the consumer.
Why do I say that? Let’s look at some numbers in no particular order:
I’ll use an example that I know well: Bayt.com is one of the most-visited websites in the region with roughly 1.5+ million monthly unique visitors. One of the greatest sources of that traffic is the UAE. While Bayt does have an e-commerce element (job seekers and employers can purchase either CV services or recruitment services online respectively) it is not an e-commerce webstie per se. One would argue that it gets this much traffic because it is not an e-commerce website, since no one here uses ecomm and the site would get less traffic if it did. However, looking at Google trends shows us that Amazon.com gets more traffic from the UAE that Bayt.com. People are shopping online from here to the other side of the planet in greater numbers than they are looking for new opportunities here. The Shop & Ship guys can attest to this. Similar-ish numbers hold true when comparing souq.com to ebay.com. The apples-to-apples comparison is that clearly there is a strong interest in online shopping from this region – even to the extent that people are willing to cross the hurdle of shipping fees and currency conversion to make that buy.
Recently I conducted some research on credit card usage in this region.
- 80% of respondents have a credit card
- 70% of respondents use their credit card for online purchases
- 40% of respondents buy online once per month or more
- 56% of respondents are somewhat to very comfortable buying online from Europe, 59% from North America, but with the largest group of respondents from the GCC and Levant saying that buying from this region just hasn’t even been an option
- 49% of respondents site the chief reason for hesitation or lack of online shopping from this region is the lack of options
- and when asked what would increase their confidence in buying online from the region 55% said trust that the site would run error-free, 53% said clear signs of audit and verification, and 50% said clear transparent customer care
When a similar question to the last was asked on Bayt.com that limited respondents to one answer:
- 26% of respondants will always remain sceptics
- but that means 74% of people are open to measures to increase that confidence – primarily to the tune of 27.5% agree with the need for clear signs of audit and verification (in other words, that the gateway looks and operates as it should and because someone else says it does)
So let’s round this out with what I can buy online here with a credit card:
- airline tickets
- hotel bookings
- event tickets
- CV services
- recruitment services
- auction items
- anything else…?
Some preliminary conclusions are that:
- people have credit cards – google the recent MasterCard info on credit card penetration in the region
- people are shopping online – but primarily from outside the region
- people are open to shopping online in the region given trust that the gateway will work, its safe, and that they can contact someone if there’s an issue
- that there must be a huge opportunity for new e-commerce plays that are limited only by our imagination, initiative and implementation….
Go start an e-commerce site today based in the region and you’ll quickly find that the main issue is not your will, building a site, incorporating (could be easier and cheaper), or the consumer. The biggest challenge is the difficulty in securing an inexpensive – globally-leading – payment gateway.
Let’s compare regions:
- link-out only gateways – no API usage to integrate payment into a seamless experience for the user
- choice of 2 gateway providers
- serve all Middle Eastern markets including Egypt and Lebanon
- ~$85,000 of collateral on account as a deposit with the merchant account provider (subtract from your operating capital)
- $1,000 setup fee
- $5,000 yearly maintenance fee
- 3% and 2aed on every transaction
North American provider:
- link-out or API gateways plus e-wallet services (can carry a balance on account to use later)
- choice of many gateway providers
- serve most all Middle Eastern markets, often not including Egypt and Lebanon
- $0 of collateral on account as a deposit with the merchant account provider
- $199 setup fee
- $420 yearly maintenance fee
- 2.6% and $0.25 on every transaction
You tell me which is easier for an entrepreneur to swallow at start-up? I understand that its difficult to setup internationally given the issues around residency and tax requirements, but this is an opportunity for making the local ecosystem more attractive for local and international entrepreneurs…
Oh can you imagine…..with a tax-free business climate, great central geography, access to existing and emerging markets, great weather, multicultural workforce, a fairly liquid environment…and combine that with a real interest in making it both easier to setup a start-up PLUS working with global payment gateways providers to maximize options for e-commerce start-ups and you end with even more reason to launch a tech start-up here.
What’s your experience as an online consumer or trying to enter the ecommerce space in the region?
I’m not sure it sits right with me calling it “Burj Khalifa” since it is a bit of a kick in the teeth to the people in Dubai – from here and abroad – who built this incredible structure in Dubai. Whatever you call it, the light and fireworks show was epic. My question: who was the dude that had to hang out up there and attached the fireworks?!
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