How to Break Into E-commerce in the Age of Amazon
FEBRUARY 14, 2018: Amazon is an e-commerce powerhouse. But it’s not the place to go if you want Hershey bars emblazoned with your daughter’s name for her birthday party, a product Just Candy can provide, or a Burrow sofa that comes in sections for easy hauling up the steps of an apartment building.
Even as Amazon.com Inc. grew its market share and such rivals as Walmart Inc. and Target Corp. poured money into e-commerce in recent years, companies new to online selling have entered the market, and prospered. A new Internet Retailer study of 72 brands and retailers that entered e-commerce since 2015 or later shows they collectively increased their web sales by 112.2% in 2017 over 2016. Those that began selling online in 2015 posted a two-year compound growth rate of 117.3%.
That’s far above the e-commerce market growth of about 15% in recent years.
How have they done it? “It’s not by trying to compete with the likes of Amazon or Walmart on commodity items,” says Internet Retailer editor at large Don Davis, editor of the 56-page report, “The E-Commerce Startups.” “Each of these newcomers is offering a unique product or service, such as customization, or marketing in unique ways, often using social media aggressively to reach millennial shoppers.”
A prime example is Ivory Ella, which was launched in 2015 by a group of social media geeks, several of them students at Temple University. They used their combined 60 million social media followers as a mailing list, and quickly established Ivory Ella as the cool brand for “Save the Elephants” T-shirts.
Like Ivory Ella, many of the newcomers—38 out of 72—sell products of their own design, which means they can keep their merchandise off Amazon and other big shopping sites if they choose. But some of them, like Eosera, which developed a new product for removing earwax, have used Amazon as a way to quickly make a name for themselves. In the case of Eosera that led to drugstore chain CVS selling its EarWaxMD product.
A handful of the newcomers are backed by sizable venture capital investments. “But that’s the exception, not the rule,” Davis says. “Only 10 of the 72 companies in this report have raised as much as $10 million. The rest are finding low-cost ways to reach their target audience, whether that’s advertising on podcasts, gaining the goodwill of influential social media stars or attracting free media coverage.”
While most of these companies focus on the web, they also seek to reach consumers in the physical world. Examples include Burrow placing its furniture in high-end shopping malls so consumers can try them out (and video chat with customer service agents) or Rad Power Bikes partnering with Velofix, which operates mobile bike-repair vans, to assemble motorized Rad bikes for online shoppers.
“Researching this report was great fun, because I interviewed so many creative entrepreneurs who built businesses on ideas that probably never would have made it past a whiteboard at a big company,” Davis says. “With a good idea and lots of drive, it’s still possible for startups to use the reach of the internet to build successful businesses, and to do it quickly.”
For more commentary on e-commerce startups, or for a copy of the full 56-page PDF report, reporters can reach Don Davis at firstname.lastname@example.org.
Purchase this report, “The E-Commerce Startups.”
ABOUT INTERNET RETAILER RESEARCH
At Internet Retailer Research our goal is to provide data and information about e-commerce that helps retailers, investors and technology companies prosper. The team tracks hundreds of metrics on roughly 6,000 online retail companies around the world, including such sought-after data points as web sales and traffic, conversion rates, average order value and key technology partners used to power their e-commerce businesses. We sell this data in its raw format in our multiple online databases. We also dig deeply into these numbers in our custom research division, and to help inform our 30+ exclusive analysis reports we publish each year on key e-commerce topics like selling on online marketplaces, cross-border e-commerce and omnichannel retailing.