Aneesh Varma

Changing scene of Ecommerce in the UK — December 2009

Note

As you know we are quite eagerly focused on Ecommerce especially in this market environment, since it’s essentially equivalent to adding a sales team online without the real estate and personnel costs.

I recently attended a very good summit on Ecommerce (hosted by Bryan Garnier) at the Dorchester Hotel in Mayfair, London (with a Bugatti Veyron out front — see my Flickr). The conference was attended by some of the leading ecommerce companies in Europe as part of the panel:

  • SeatWave (CEO, Joe Cohen): a fan-to-fan ticket exchange (secondary market for tickets for events, concerts, sports)
  • Wonga (CEO, Errol Damelin): allows consumers to get short-term cash loans
  • Zooplus (CEO, Cornelius Patt): German ecommerce dedicated to pet accessories and supplies
  • Google was also there to talk about Analytics and the ecommerce side of things from their perspective (Head of ecommerce partnerships, Adrian Blair)

The audience had many of the leading VCs. Here are some of our notes.

  • For Ecommerce, Search Marketing is ABSOLUTELY crucial.
    • It is something you HAVE to get right — there is no margin for SEO or PPC not working for ecommerce companies.
    • The most common business model in ecommerce is that you bring in the user from PPC for the right word, and ensure that you can convert that “lead” into a sale — and the PPC then becomes Cost of Customer Acquisition.
  • An interesting metric to measure your success as a brand is the Net Promoter score: basically a measure of how many people would recommend / promote your service to their friends.
    • For companies that are selling online, this becomes a big metric.
  • When buying PPC ads — do consider the Long Tail effect, that cheaper words at the end of the tail might be more fruitful. The Google speaker suggested that up to 20% of searches on Google daily have never been done before (strange stat?).
  • The web is becoming real-time. Marketing on the web has to become real-time too.
    • A company that is dependent on social trends has to adapt its marketing rather fast to these changes.
    • eg: Seatwave saw that a documentary on Rod Stewart on ITV sent internet searches related to his concerts soaring. They quickly started buying more keywords (PPC) in that area and brought in additional revenue on the back of that ITV documentary. Real-time, flexible, nimble.
  • The CEO of Wonga (Errol Damelin) made a statement: You can pretty much buy everything online now. So the real challenge for ecommerce companies is now differentiation and price comparison.
  • Google commented that Google Analytics has really helped observe user behaviour on the site and how to improve the conversion of visitors to buyers (the others all agreed that Google Analytics has been a game changer).
  • User experience and adaptation to international markets were also discussed as a great example of how to maximize revenues. What works in the US does not work in Europe (and we know that by looking at the designs of US sites vs European sites).
  • Fulfillment used to be the biggest struggle — but now isn’t even an issue for all ecommerce companies. Some of them are selling digital products, so there is instant online fulfillment like e-tickets, vouchers or even cash (eg: Wonga).

So in a nutshell, I think there is a lot of scope for Ecommerce to grow. One of the comments in the summit that really stuck with me was that the internet industry is still very young (at most 15 years old) — and if you compare that to the automotive or aircraft industry, you realise… that the web is just about becoming a teenager… with skin acne, some hormonal rushes… and a lot more growing and maturing to do!