Exciting Commerce // Unlimited

Ponoko: New Design Challenges in the Virtual Factory

Ponoko ("The world's largest marketplace for product plans") isn’t just a paradise for Make and Craft fans, but is also one of the most exciting e-commerce startups in the area of user manufacturing and decentralized/localized production.

It's not only that the product and design selection is noticeably increasing.  Lately up to 5,000 merchants and designers can be found rummaging around the platform.  Serving as attention-grabbers are the regularly held "10 Day Design Challenges"- in March with the theme of jewelry and in May with the theme of Games and Puzzles. 

Two worthwhile interviews are with Ponoko co-founder Derek Elley at Renderosity and with Ponoko blogger Steven Kempton at Fabbaloo.

Wired Magazine recently featured Ponoko in their 2008 Business Trends under the category of “Rise of the Instrapreneur (Manufacture and Sell Anything — in Minutes)”.

More press releases to be found on Ponoko’s homepage.

Originally posted in German by Jochen Krisch, translated by Jason Soo.

Ravelry is Showered with Money and Love from Its Fans

Ravelry is the perfect site for Etsy fans and has been one of our favorite startups.  As it also happens to demonstrate one of the best examples of self propelled viral growth.  In its recent “Ravelraiser” fundraiser event, Ravelry fans showered it with both money and love.

"In 3 weeks, 3,457 Ravelers have donated a total of $71,000 to Ravelry. Not only did we receive an amazing financial boost, we also received a flood of love. About 800 people wrote up really wonderful and amazing notes in the 10 Lousy Bucks group’s 'Why I gave' thread."

"Jess and I are still reading all of the kind words - it feels so good to know that people are really happy about Ravelry. The stories are all different! We never imagined that so many people would come to our site and get so much out of it."

Although Ravelry has over 100,000 members, it still operates in Beta mode. And since the Beta version operates on a cost neutral basis, there seems to be no rush with an official launch.

"Ravelry does earn money. Advertising and affiliate programs cover our monthly costs and our paychecks but your donations have really allowed us to do more than just keep things running."

The fate of the donation money is revealed by the founders in their Unraveled blog.

See also this video report and an extensive interview with the founders

Originally posted in German by Jochen Krisch, translated by Jason Soo.

RueLaLa: $25 Million for New Shopping Club

Following last summer’s 20% purchase of French Vente Privée by US investors, this past week saw Retail Convergence Inc., founder of the new shopping club RueLaLa, receive $25 M venture capital funding (press release):

" 'Brands are looking for innovative ways to reach consumers and consumers are demanding more engaging ways to shop online', stated Dennis Baldwin, Managing Partner of Breakaway Ventures and former Chief Marketing Officer of Reebok International."

"By providing an exciting new shopping experience while vigorously protecting the integrity of our partner brands, Retail Convergence will elevate the ecommerce experience for everyone."

Shopping clubs have recently taken on steam in the US.  Within a span of just a few months, RueLaLa is the fourth start-up in this area following Ideeli, Gilt Groupe and Hautelook.

The business model is also spreading in Europe.  Vente Privée, the undisputed market leader who set a 2008 revenue target of 500 M Euro, has already launched in Germany, Spain and Italy.  A British site is in preparation and a US start is planned for sometime after end of 2008.

You can find some background information in our posts about Gilt Groupe ("More Growth With Men's Designer Fashion") and Vente-Privée ("How Vente-Privée Manages Up To 30,000 Ordes Per Day")

Recently we wrote about the Best Private Shopping Clubs in France

Originally posted in German by Jochen Krisch, translated by Jason Soo.

The Viral Numbers Game: How To Measure Viral Success?

Ultimately there’s only one way for startups to stay out of the Google trap:

"Every web entrepreneur should be a student of organic, viral growth."

Not only Facebook applications, but also many of the new shopping sites (Woot!, Threadless, Vente Privée, etc.) live from a wildly accelerated organic growth rate, nowadays referred to as “viral” growth.

There’s been a lot of talk about how to generate these viral effects.  But how can we measure success?  Can we distill viral growth into numbers which are measurable and comparable?

Exciting Commerce made its first analysis attempts last summer with shopping sites like Woot!, Etsy, and Germany's Schutzgeld.de and couldn't find anything suitable about viral growth models in the online world.

Either submerse yourself in the (sometimes very complex) epidemiological models or look for your own ways to describe the growth.  Certainly one of the most rudimentary metrics is the daily rate of growth.

Lately there is substantial material to be found on the topic.  Forbes.com published a good introduction (albeit without measurements).

"A truly viral business is "like a disease," says Botha. "It needs to be transmitted from one person to another"--and the other person has to catch it. Once the next person catches it, he or she becomes a carrier too."

Joe Suh took a close look end of 2006 at the MySpace numbers (“MySpace Viral Growth Numbers”).

Recommended also as intro is "Viral Marketing and Growth" from Rogelio Choy of RockYou, one of world’s leading Widget makers.  His credo:

“Viral products are NOVEL products”
“…almost all of the value of your product/service offering has to be FREE.”

In his Futuristic Play Blog, Andrew Chen gave attention to viral coefficients and cohort analysis (thanks to Florian Bailey for this tip!).

Andrew Chen shows you everything you need: insightful and understandable formulas and thought exercises for growth rates and saturation points.

It’s worthwhile to get familiar with these concepts because according to his (and others) opinion, it would be impossible for start-ups if they tried to achieve the same results with Google & Co.:

"It's convenient to assume that you can outsource all of your marketing out to Google, and buy lots of AdWords. Or let's say you're ambitious enough to want to buy from ad networks, or other ad sources. This is a myth."

Andrew has crunched the numbers.  Too often have entrepreneurs whined that they have a great product but no marketing budget.  Seriously:

"Design viral into your product, not into your marketing strategy."

More here on the measurability of viral growth in social networks and on short term forecasting.

Originally posted in German by Jochen Krisch, translated by Jason Soo.

How Vente-Privée Manages Up to 30,000 Orders Per Day

ShoppingActu (French/english translation) delivers an analysis of Vente Privée, France’s leading online shopping club and third largest online fashion store:

“If three orders on Vente Privée are given on three consecutive days, it can be seen that the order numbers are sequential.  For example: the order number on April 10 was 200105xx, the one on April 11 was 200334xx, and the one on April 12 was 200597xx.”

ShoppingActu then makes the following conclusion about Vente Privée:

“Vente Privée generates about 22,000 to 30,000 orders per day and could have a total of up to 20 million orders since its launch.”

Vente Privée’s official figures from 2007 show that last year during its best times they indeed managed to ship up to 900,000 orders per month (about 30,000 per day).  The French online shopping club has set a lofty 2008 revenue target of 500 M Euros (up from 350 M Euros in 2007).

Exciting Commerce has been on a recent site visit to Vente Privée’s operations in Paris for an insider look at the logistics.

According to ExCom-editor Jochen Krisch (German/english translation):

“Vente Privée is from many perspectives a fascinating company which has extremely ambitious plans. … In detailed and surprisingly open conversations General Manager Jacques-Antoine Granjon explained Vente Privée’s sales philosophy and strategy for the French and European markets.”.

Originally posted in German by Stephan Randler, translated by Jason Soo

Gilt Groupe: More Growth with Men’s Designer Fashion

Founded late last autumn, US shopping club Gilt Groupe is now making promise on its announced expansion.  Designer fashions for men are now available in their merchandise selection, which until now consisted exclusively of women’s fashions.  Fashionbreaking reports:

“All Gilt Groupe sales are 36 hours and feature hand-selected items from one designer. … Gilt Groupe launches their Men's category with John Varvatos, a designer who's universally appealing sportswear has earned him top honors including the Council of Fashion Designers of America's 2005 Men's Designer of the Year and Designer of the Year.”

The shopping club recently announced a cooperation with the CFDA, and will probably extend their product range further as indicated by a published job posting for a position as “Kids Buyer”.

The $5 Million financed shopping club has so far been convincing.  Josh Spear’s enthusiastic commentary on the shopping concept:

“…they’ll ping your inbox about 30 seconds before the start of the sale, making it crucial to turn off your spam filter and memorize your credit card pin.”

In turn, Geekigirl particularly likes the low prices for designer articles:

“When it rains it pours with online sample sales. I’ve discovered the Gilt Groupe. They have some really good deals on designer merchandise. … Some of the price discounts are very steep, I’m talking $1500 dresses for $300.”

A snapshot of the company is available at Business Week.

Originally posted in German by Stephan Randler, translated by Jason Soo

Social is not a Channel

Last week in London, the International Advertising Bureau (IAB) held the "Engage for Shopping - Half Day Conference".  Presentations are online.

After some painful experiences with their early Facebook apps, companies like ThisNext would probably agree:

The statement comes from Antony Mayfield’s presentation, Social shoppers, social brands: How social media and retail fit together (PDF).

"You can compete product by product ... or develop your own experience and ecosystems".

Unlike many others, he also points out the “live” aspects in addition to the social aspects.

"Understand your networks ... Be useful to your networks ... Be 'live' in your networks".

More on the conference in his Blog.

Clicking through the conference papers provides a good overview of the e-commerce scene in the UK.  Although perhaps not the most innovative at the international level, it is still useful for gathering tips and stimulating ideas.

You can find some of UK's most exciting e-commerce companies in an earlier post (in German)

Originally posted in German by Jochen Krisch, translated by Jason Soo.

Survey of the Best Private Shopping Clubs in France

Private shopping clubs are very popular in France. Market leader Vente Privée reported revenues of 350 million euro (more than $550 million) for the last year.

French site Top-Vente-Privée has taken a close look at dozens of French online shopping clubs and has released an overall ranking (FR/EN) of them based on price, exclusivity, as well as shipping, web design and security.

Best shopping club in the category of 'Sites Generalistes' (clubs without a specific product range) is the ubiquitous Vente-Privée.com:

“The interface is very neatly arranged, creating a pink and grey universe which envelopes the user on each visit. The main page of the site is changed regularly and the design is simple and structured.” (translated from French)

According to Top-Vente-Priveé, the only drawback for consumers is the delivery time:

“The site doesn’t hide the fact that delivery times are long.  Averaging at 30 days, you are notified at time of purchase of the estimated shipping time.” (translated from French)

Top positions for best niche supplier goes to Modz (designer fashion) and Vente du Diable (personal and home electronics).

Originally posted in German by Stephan Randler, translated by Jason Soo

How Woot! Pushes Itself to the Limit

Woot!, the world´s most popular one day one deal site, has started a seemingly optimal year. By comparing the first quarters of 2007 and 2008 it is easy to see how Woot! optimized its offerings during the one year period:

Woot! overall revenue grew 16% in the first quarter to reach $17 million. Both the regular Woot! days and the Woot-off days were highly optimized.

On the regular days of Q1 2008, Woot! reached average sales volumes of $163,000 per day, equivalent to a jump of 22%.  On the Woot-off days Woot! achieved a never before seen daily average of $914,000, tantamount to a 36% increase.  This gain was made possible as Woot! significantly reduced the number of Woot-off days from 5 to 3.

Noticeable is the significantly lower price point due to higher sales volumes in the lower price ranges. On one of its regular Woot! days, Woot! sold in February for the first time over 48,000 units of one product. On Woot-off days, Woot! can push up to 66,000 units of individual products.

Originally posted in German by Jochen Krisch, translated by Jason Soo

The Joys and Perils of Crowdsourcing

Adam Fletcher - since his university days an intensive observer of the crowdsourcing scene and last responsible for Spreadshirt’s Open Logo Project – answers some questions on the topic of crowdsourcing ("Which risks and problems will companies, that run Crowdsourcing business models, face in the future? Amongst other things"). Within there are a few pointed statements on the joys and perils of the business model:

Which aspects of a Crowdsourcing business model are crucial for its success?

Adam: Most importantly, a large active community. There have been many new crowdsourcing Community sites recently, often very similar in function to Threadless which have been unsuccessful.

In my opinion those that didn’t succeed failed to turn site visitors into Community Members. Community Members will visit most often, vote most often, get other people to visit and importantly buy most often.

They’re the lifeblood of the site and drive the whole company forward. (...)

What do you think are the major benefits of a company which runs an Online-Crowdsourcing-Community?

Adam: (...) I’m certain there is also a strong link between involvement in the crowdsourcing process and willingness to purchase. This area definitely needs more research.

I asked the community of Threadless this when I did my thesis their a few years back, only 22% thought they wouldn’t be more likely to purchase a design they had voted for, than one they had not.

How do you think, the members of an Online-Crowdsourcing-Community will react, if they perceive, that they are treated unfair?

Adam: Best case scenario they’ll kick, scream, punch, boycott, sabotage, fill up your day and inbox with insults. These people care and you can work with them on the problems.

Worst case scenario they’ll just slip away and join a new community, never to be heard from again, unless they are saying negative things about their experiences with your community externally. Then you’re in big trouble.

Which risks and problems will companies, that run Crowdsourcing business models, face in the future?

Adam: Well with more and more crowdsourcing contest opening up you’d think at some point we will run out of community members to take part. (...)

I don’t think it’s an issue for designers, as where there is a contest to be won (with the possibility of money and fame) they’ll always be people queuing up to take part.

I’m talking instead of the people who lack the design talent to submit, but instead rate, give feedback and connect with other members to keep the message boards and blogs interesting places to go while you wait for new products to buy, or designs to vote on.

These guys are the lifeblood of the company, the ambassadors without them you’re only ever going to be struggling to stay afloat.

Adam Fletcher’s complete answers can be found in his HiphipUK Blog.

(via Custom T-Shirt Talk)

Originally posted in German by Jochen Krisch, translated by Jason Soo.

ThisNext Scores with I Want Application

Where are the really social (shopping) applications for Facebook? Like so many others who failed on their first try, ThisNext, one of the Social Shopping Pioneers, seems to be on the right path now:

I want (it now) is a Wish-For-Something application whereby users give each other a helping hand (via).

From the developers' website:

"I Want is something relatively new for Facebook -- a true application with a purpose, not just another communication device or game.

For ThisNext, Facebook is about much more than games. Like many successful destination web sites, ThisNext hopes to expand its footprint on the web and its touchpoints with customers into places where those touchpoints can be more contextual, relevant and personalized.

While it's fun to tell people we "build applications on Facebook," it's serious business, too.

Facebook, and its compatriots in the OpenSocial Network, are building a parallel web that's based as much on community as content.

Even after people get tired of "super-poking" each other, there will be money to be made and businesses to grow."

More about StepChange's approach in their Changelog. The following posts are recommended amongst others:

• More than Widgets: Distributed Marketing Applications
• Facebook App Adoption: New Rules, New Expectations?

Meanwhile, ThisNext CEO Gordon Gould also maintains a personal Blog. There he wrote recently about “Connecting With APIs” (via Nicolas Leroys post on “Social Shopping Openness”).

Originally posted in German by Jochen Krisch, translated by Jason Soo.