The ecommerce space has evolved over the years, but the coronavirus pandemic accelerated our predictions. In BigCommerce’s Day 2 of the 2020 Make it Big conference GGV Capital Managing Partner, Jeff Richards, delivered an engaging session, offering insights into what makes a successful online brand.
Jeff’s Key Takeaways
Jeff Richards, also a BigCommerce investor, has a long history of investing in ecommerce brands. In our conversation, Jeff shared a detailed approach on how to create a winning ecommerce company.
1. The concept of direct-to-consumer (DTC) reshaped the ecommerce landscape
“The concept of DTC really rose up over the last 5 to 6 years as people realized they could sell products directly over the internet, and predominantly through social commerce. If you go back 10 years ago, selling products over email wasn’t a very effective strategy, there was no real way to reach consumers other than display advertising on the internet — which wasn’t terribly effective either. As social propped up with tools like Facebook, Instagram, and other channels, you saw the rise of the DTC brand — like Warby Parker and Allbirds — that really pioneered the space. The advantage for merchants is that you really capture all the margin. The first phase happened 5 to 6 years ago, we’re now really moving into a second phase that is more focused on profitably acquiring customers, how to retain them, and how to create innovative relationships with them over time.”
2. Brands must focus on being profitable from the beginning
“With respect to funding for DTC brands and online businesses, the market as shifted a little bit. We’ve seen a lot of funding come into the space in the last 5 to 6 years. A lot of that capital was willing to fund highly unprofitable companies. It was common to see new brands and companies acquiring users with a CAC:LTV that wasn’t effective. I think the market has since matured to where investors have learned what works and what doesn’t. In turn, they are much more keen on finding merchants who have figured out how to acquire customers, build a long-term, repeat relationships with them, and actually make money with their business. It’s a shift in the market we’ve seen and the good news is that the channels in which you can reach those customers have gotten much cheaper.”
3. Building communities gains importance in the industry
“If you look at the fastest growing and most successful ecommerce companies, they have created really passionate communities around their products and services. We think there is an enormous amount of opportunity there. Pick a demographic, pick a category, build a social following, and integrate that community aspect. It’s one of the things that Poshmark has done incredibly well, and gotten to several billions of dollars of sales on, is building an incredibly passionate community of buyers and sellers. We think we’re going to see a lot more of that as people figure out how to integrate the social experience with the commerce experience.”
In our Day 2 Make it Big session we dove into the following topics:
- Managing customer acquisition costs
- Creating engaging content marketing
- Finding an authentic community
- Building a profitable online brand