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Yahoo is coming back big on mobile – Read the full story here
Foreign fashion brands are increasingly choosing to test the Indian market via specialist online retailers rather than investing in stores and battling labyrinthine regulations.
UK-based brand Dorothy Perkins and Miss Selfridge are among those following this route, and will be soon be available through fashion retailer Jabong.com, which will import them and sell them through a micro-site.
Shares of Baidu climbed to a new all-time high on Thursday after CEO Robin Li noted that Chinese e-commerce is growing six times faster than e-commerce in the U.S. Li told reporters that annual growth of online commerce in China is at about 60%, compared to 10% in the U.S. Although Baidu, the Chinese equivalent of Google, isn’t primarily an online vendor like Alibaba — 24%-owned by Yahoo! – it stands to capitalize on the rapid growth in e-commerce.
India’s e-commerce industry is on fire. After eBay doubled down on its India play by investing $133 million in Snapdeal a week ago, the world’s biggest retailer, Walmart, is now looking to build a marketplace for tapping into the country’s e-commerce industry, which is expected to grow sevenfold to $22 billion over next five years.
While massive retailers like Best Buy, JCPenney and Wal-Mart grapple with how to build bridges to the online shopping world, all the hottest e-commerce companies, including Warby Parker, Bonobos and Betabrand, are getting into the bricks-and-mortar business. Now you can add modern design site Fab, arguably this year’s breakout e-commerce startup, to the growing list.
“We very much want a (physical) Fab store because we think we can create an amazing experience,” Fab CEO Jason Goldberg says. “The question for us is when, not if.”
Creating an offline version of an online store might not be as radical as it sounds. Amazon and eBay, while not opening big-box stores anytime soon, are tiptoeing their way toward a physical presence with lockers (Amazon) and one-hour pickup from local retailers (eBay). But a niche site like Fab might have an easier time reproducing the online experience of their store in an offline format. And thanks to Goldberg’s redesign this year of Fab from flash sales site (a la Gilt Groupe) to massively growing online store, Fab’s got the momentum to pull it off.
By nearly every metric, Fab exploded in 2012: It grew from 1.5 million members in December 2011 to 10 million in December 2012; inventory expanded from 2,000 products to 15,000; and sales topped $1 million per day on several occasions, Goldberg says.
Goldberg got Fab there by carefully setting goals to add more products to the site, and very deliberately moving Fab away from the flash sales model, where a limited number of products are sold for a few days or hours. “We found that people weren’t coming to Fab with the perception of getting a deal, so we saw an opportunity to build a long-term brand,” says Goldberg. That meant building a full-fledged digital storefront, with a mix of limited-quantity goods and products that are consistently available.
Fab also had to do what most flash sales sites like Ru La La and Gilt Groupe don’t – take on inventory. That took serious courage, and serious cash. In July 2012, Fab raised $105 million from Atomic, along with previous investors Andreessen Horowitz, Menlo Ventures, First Round Capital and others, to lease a warehouse, build its own supply chain, and purchase inventory. Now, products come into Fab’s New Jersey warehouse and remain there until the sale ends, usually between three and 30 days later. “If someone orders something that’s in our warehouse, which is 75 percent of what we sell, it starts shipping in two hours,” Goldberg says. That’s a huge change from the 16 days it typically took Fab to ship products using a patchwork of a supply chain in 2011.
Even though Fab is on its “second pivot,” as Goldberg calls it (its first pivot was from gay social network to flash sales), he has even more changes planned for next year. “In 2013, we’re heading towards becoming even more of a store, and even more of a discovery business,” he says. Given that one-third of Fab’s sales come from tablets and smartphones, you can expect the model to be “mobile-first,” says Goldberg. Flash sales will also fade into the background, and you’ll see more exclusive-to-Fab products pop up on the site.
But the biggest change in Fab’s business will happen when it starts opening stores sometime next year, according to Goldberg, who says he wants to “reinvent the entire retail experience, not just put some Fab products on a shelf.” He’s not talking pop-up stores either, but imagines a Fab flagship store initially, likely in New York City, where the startup is based.
Details are still under wraps, but Goldberg uses art – which makes up 12 percent of Fab’s sales – as an example. Since people are often intimidated to buy art from a gallery, says Goldberg, Fab wants to offer an “easier and less-scary way” to pick out a painting to hang on the wall or a sculpture to perch in an entryway. Goldberg won’t reveal more than that. And while it might end up being a more soothing experience for Fab shoppers, if you’re a bricks-and-mortar retailer in the high-design and art world, Design Within Reach for example, things just got a lot scarier.
The Commerce Department reported Thursday that retail sales rose 0.3% in November after falling 0.3% in October. Retail spending over the past 12 months has grown 3.7%, in line with modest economic growth. Even as many Americans struggle to find jobs and pay bills, one sector of the economy has been resilient in this weak economic environment. Wealthy Americans are continuing to spend their money and Web sites like Gilt — a flash sales site that offers discounts on designer apparel and jewelry as well as deals on exotic vacations, restaurants, Broadway shows and gym memberships — has experienced a surge in sales as high-end consumers chose online shopping over brick-and-mortar stores.
Even the prospect of higher taxes next year has had little effect on the shopping habits of these individuals. Kevin Ryan, CEO and founder of Gilt, estimates that sales for the current quarter will increase 30% from the same period a year ago. The site saw a 60% year-over-year gain during the Thanksgiving holiday weekend. According to Ryan, online shoppers tend to be wealthy consumers and he expects all online players will “do very well” this holiday season.
Online commerce has exploded largely due to the shift in consumer preferences for mobile devices. According to Sucharita Mulpuru, an analyst at Forrester Research, eCommerce sales touched $200 billion in 2011. Online sales are projected to grow to 9% of total retail sales by 2016 from the current 7%. Nearly 167 million consumers, or 53% of the U.S. population, shopped online last year.
Ryan says Gilt customers are consciously reducing their time spent shopping the racks in physical stores, and he refers to mobile as the “dominant player” in the online world. Mobile devices accounted for 60% of the site’s traffic last week alone, Ryan notes, with Apple’s iPhones and iPads as the main source of page views. Sales via mobile devices could even comprise 50% of Gilt’s revenue by next year. The expensive items for sale on Gilt are more likely to be sold on tablets than smartphones, Ryan says, a trend Forrester confirms.
“Given the smartphone’s considerable screen size limitations and consumers’ preponderance to use smartphones for research and social shopping activities, it is hardly surprising that just 2% of all U.S. eCommerce is actually transacted on smartphones. By contrast, the mobile sales growth opportunity appears to lie squarely with tablets,” writes Mulpuru in a recent report.
Ryan sees a future for daily deals sites but believes there will be considerable consolidation in the industry. Groupon, despite its recent trouble, will likely hold onto its top spot but competitor LivingSocial may ultimately fold, Ryan predicts. Overall, mobile has been changing how consumers shop and traditional retailers are going to have to adapt to stay in the game.
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