Why when how what we buy

Where the heck is ecommerce going?

First, you have to look at where it has been.

Some ecommerce CEOs recently sat around and agreed on growth phases for ecommerce. Here's a recap of those phases and some thoughts on what might come next.


Ecommerce 1.0, Demand fulfillment

In the early ecommerce days, Zappos and Amazon led a pack of companies in translating the retail experience from physical to digital. Logistics were the primary technological concern (how do we accept credit cards and stock inventory and deliver shipments?).

This time in ecommerce was all about fulfilling existing consumer demand by engineering digital metaphors for physical retail businesses. And so search was the dominant navigational model across these experiences.

In the same way that Google was serving up answers to the world's informational problems, Amazon and its niche corollaries learned how to serve up answers to the world's consumer problems. If you knew what you wanted, some company had arisen on the Internet that could retrieve and deliver it for you while you sat on the couch and waited for it to arrive. That was magic enough. For awhile.


Ecommerce 2.0, Demand Generation

Then innovators (and consumers) started realizing that inspiring purchase requires merchandising.


The physical retailing giants didn't become successful by relying on consumers to come in armed with a list of exactly what they wanted. No, they merchandised. And this meant developing blasts, coupons, bundling, endorsements, aisle caps, and all kinds of other strategies that helped consumers discover products.

The second phase of ecommerce has been all retailer or consumer driven merchandising. But without physical constraints, online merchandising has looked really interesting and different! Vente-Privee and Gilt Groupe (inspired by w00t, let's not forget that) pioneered the idea of serial, time-merchandised assortments — flash sales. Numerous other companies began to proliferate around flash sales and scarcity, visual bookmarking and sharing (Pinterest, etc), group buying and aggregating demand (Groupon, etc). Each of these companies (for better or worse) grew up around a specific new type of merchandising.


Ecommerce 2.0 was about inspiring the consumer to purchase rather than fulfilling an existing purchase need.

Ecommerce 3.0, So where do we go from here?

Some folks would say mobile! Phablets! Personalization! Or something like that. But really what I think we're going to see, is a blend of technology, logistics, and marketing innovations that bring more of the purchase funnel online for each consumer.


Ecommerce 1.0 saw the establishment of lower funnel fulfilmment logistics, 2.0 saw experimentation with (and fallout of some) mid-funnel purchase persuasion tools, and 3.0 will aim to complete the funnel.

Something like 10% of transactions are online now in the US. That makes it sound like not that much online shopping is going on. But actually, something like 90% of US web visitors research, browse, or otherwise 'window shop' online. So what we have here is actually a massive conversion riddle. How do you get all of these folks who are spending massive amounts of time online but still buying offline to move to digital? Everyone buys things eventually. How do you get them to buy them online? The completion of the purchase funnel is where we're headed in Ecommerce 3.0.


To get there, you'll see things like an explosion of technology to support remarketing and personalization, continued proliferation of digital wallets to reduce transaction friction, the merging of upper funnel media with lower funnel commerce, same day shipping to disrupt offline convenience purchasing, traditional and B2B industries being disrupted by technology (witness Uber and Square app-ifying taxi cabs), and diversification of 1.0 and 2.0 companies up through the entire purchase funnel (witness Amazon moving up the funnel into media production and brand advertising). 

The next step in ecommerce may not be a single trend, but it's clear that when next we evaluate where we are — online commerce will feel a lot more effortless, interconnected, and instant. And that's because much more of the funnel will be happening to you online. 


Photo of an Amazon UK warehouse by Bruno Vincent / Getty via evadedave.

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