Our e-commerce panelists weigh in on what it takes to succeed in e-commerce. By Jessica Stillman (Editor, Women 2.0)
What insights did our panel of successful founders in the e-commerce space share during their panel discussion on the future of e-commerce? Here are a selection of questions and answers.
What strengths do you need to start an ecommerce company?
Mauria Finley, CEO and founder of Citrus Lane, weighed in on this one. E-commerce is a two-headed thing, involving both art and science, she said. You need a point of view, to be good at merchandising and picking the products that will delight. That's the art, so is the social media and community engagement side of things. But you also need to do "a ton of math," she added. That's the science. A customer is going to have a certain lifetime value and that has to be a significant multiple of what it costs to acquire that customer. Also, you need to understand margins really well.
It's rare for one person to be good at both, Finley said, so she suggests that prospective founders analyze their strengths and weaknesses and then think about finding a match to compliment their skills.
Do you spend a lot on marketing or should you depend on organic search?
Two-month old Zady so far hasn't spent a single cent on customer acquisition, founder Soraya Darabi told the audience. Instead, they commission stories from leading writers, betting on content marketing. That's worked out well for them, she said. They also believe very strongly in social media and already have 200,000 followers.
Should you outsource your warehouse operations?
Stitchfix still does their own fulfillment, founder Lake reported. You need someone dedicated to building that portion of the business if you're going that way, she said, but it depends on your business. Do you have the time and bandwidth to focus on it and do it well? "It's an open question," she concluded and Stitchfix may rethink their approach going forward.
Do you have predictions for the future or can you point to a missing niche in the market?
"I believe a lot of startups that would traditionally bill themselves as e-commerce, will no longer bill themselves this way," Darabi answered. We're all multi-channel now, she believes. "We no longer have to bucket our businesses," as exclusively online, she believes, noting that Zady recently opened a pop up shop at LaGuardia airport to interact with customers offline.
How do you address the consumer's desire for a tactile experience of a product?
At Stitchfix, the business model allows customers to touch and feel anything they're going to buy, Lake noted, because of this very issue. Zady believes very strongly in the power of stories, Darabi added. "It's not just auxiliary text," she said. Zady also offers free shipping if you buy two or more products for those who need that tactile experience.
Jessica Stillman (@entrylevelrebel) is an editor at Women 2.0 and a freelance writer with interests in unconventional career paths, generational differences, and the future of work. She writes a daily column for Inc.com, contributes regularly to Forbes and has blogged for CBS MoneyWatch, GigaOM and Brazen Careerist, among others.