Exciting Commerce // Unlimited

Crowdfunding: Why Seedmatch makes us so euphoric

At the moment, Seedmatch is Germany's most important online startup - a startup the founders in Germany had to wait for for a long time.

Essentially, what we have expected from Smava and other social lending platforms four or five years ago, is now something that Seedmatch makes possible these days: Widely spread financing of exciting companies/projects with small amounts of money.

 

What the German startup scene lacks the most for really getting on with it is fertile soil to grow fresh ideas of inventors and entrepreneurs.

Those who do a lot of work with founders know that currently not enough ideas get the chance to prove themselves and could then lead to a sufficient number of promising projects.

Institutional investors and - regrettably - also most business angels expect that the initial funding during the experimental phase comes from the famous three F's - Family, Friends and Fools.

But who has enough wealthy friends, relatives and maniacs that one could get the seed capital from in this early phase?

The social web has increased the circle of friends and aquaintances considerably. And precisely these are the groups which Seedmatch allows to support exciting ideas and motivated teams in their early phases with manageable amounts from 250 EUR.

At the moment, Seedmatch is busy building trust. And the way in which the Seedmatch team around Jens-Uwe Sauer proceeds is extremely clever - both regarding the very selective choice of startups and the unweary work behind and in front of the curtain.

The lightning-fast funding of Sugarshape last week is more than an succès d'estime for all parties involved. Because if all of a sudden a team of female founders gets the chance to push their idea forward, and maybe even in the future projects and ideas such as Ravelry, which would normally fall through every grid, then we can guess the potential of a company such as Seedmatch, which focuses on the democratisation of the funding process.

Over the weekend, launch organiser Jason Calacanis has also advocated more widely spread funding models ("The two most important startups in the world").

At any rate we are looking forward to the Exceed session with Seedmatch founder Jens-Uwer Sauer and his experiences with crowdfunding.

Earlier posts on the subject:

• SugarShape holt sich 100.000 Crowd-Euro in 4 Stunden (German)
• Exceed 2012: Neue Finanzierungsmodelle für E-Commerce (German)
• Kickstarter: What's the story? [Erfolgreiches Crowdfunding]
• Seedmatch: Emma-Mobil sucht Crowdfunding für Supermarkt (German)
• Seedmatch: Cosmopol-Shop holt Crowdfunding-Finanzierung (German)

On the Google drip

Yesterday I have talked about how installing and maintaining isolated online shops creates an enormous amount of complexity that, in the long term, smaller merchants won’t be able to handle. The other part of the story is that most of these shops almost exclusively rely on Google as the traffic bringer. Be it organic search results or effective SEM, these shops are on the drip of the world’s biggest search engine.

Read the full feature on ecomPunk.com!

Facebook Insights: Strong Credits, weak shops and more

by Marcel Weiß

With Facebook's planned IPO, for the first time one gets a deeper look into the social network with its 850 million users thanks to the S-1 Registration Statement.

What's especially interesting is the fact that apart from the naturally strong advertising business, the web currency Facebook Credits already accounts for 15% of the Facebook revenue, as we have already reported in our Extras:

"Facebook Credits are almost exclusively used for the retail of virtual goods. As long as Facebook maintains its 30% service fee on every transaction, this is not likely to change soon.

However, the market potential is too big for Facebook to ignore. For instance, fraud could be strongly minimised if Facebook used the social graph data for reputation management." (our translation)

While advertising on Facebook can be more efficient than on Google due to more personalised targeting, the classic Facebook shops already lose their attractiveness because of lack of user interest.

For Exciting Commerce readers, this should not come as a big surprise: We keep saying that it does not make a lot of sense to integrate an online shop into a Facebook app 1:1 (also read "Wie banal kann E-Commerce in Facebook werden").

It's not about uninspired shop apps but rather about the clever usage of the new interconnections and the data that are generated via the Open Graph (see also "Soziale Filter: Wie Facebook den Webshop befruchten kann")

E-Commerce and Facebook can work together by all means, however, apparently it will take a while until we will see the first breakthroughs in this segment.

Not surprisingly, Facebook is very dependant on the social gaming star Zynga (Farmville, etc.). Those games accounted for 12 percent of the Facebook revenue. AllThingsD:

"Facebook said [in its SEC filing] that Zynga accounted for approximately 12 percent of the company’s revenue last year when Facebook’s revenues totaled $3.7 billion.

The revenue came from both its 30 percent payments processing fee related to the sale of virtual goods from games, such as FarmVille and Words With Friends, but also from advertising purchased by Zynga.

Additionally, Facebook said Zynga’s apps generate a large number of pages on which it displays ads from other advertisers."

This is interesting for a number of reasons. Often, with regard to (web) platforms, it is stressed how app providers can become too dependant on platforms. In rare cases it is mentioned that also the platforms themselves become more or less dependant on the app providers. But: Zynga makes about 93% of its revenue with Facebook.

What's also interesting for everybody who at least partly builds his business on the Facebook platform: founder Mark Zuckerberg will keep control of the company after its IPO. Thus, continuity regarding strategic decisons will be maintained. For those who have read "The Facebook Effect", Zuckerberg's persistent control is not surprising.

Regarding the general assessment of Facebook's business figures, we recommend the Business Insider Analysis by Henry Blodget.

Earlier posts on this subject:

• Facebook-Neuerungen werden völlig neue Wege in der Personalisierung ermöglichen (German)
• F8 Highlights: Facebook aktiviert sein Langzeitgedächtnis (German)
• Wie  banal kann E-Commerce in Facebook werden? (German)
• Getestet: Wie nun auch Amazon Facebook integriert (German)
• Warum auch Facebooks "Groupon Killer" zum Scheitern verurteilt war (German)

Do we need shop software?

For a while now I have been thinking a lot about the general theme of possessing things, which already manifested itself in my recent musings on ownership. That article dealt with the difference between access and ownership and how this motif can be found in new business models. Here, I would like to try and apply this question to software, or shop software, to be more specific.

Read the full feature on ecomPunk.com!

Ravelry Tells Its 2 Million Members How It Earns Its Keep

Social shopping may often be declared as dead, but there are still good examples of user driven e-commerce models that work. The key is a wholehearted and consistent strategy – be it Etsy, who is continuing to grow dramatically (“Etsy Raises Merchant Revenues to $538 Million in 2011 (+71%)”) or Ravelry, a not so atypical project aimed at the female market. Ravelry is flourishing and prospering, despite (or perhaps due to) the lack of focus on profit optimization.

Ravelry settled on their crowdfunding model early on and has stuck to it since then. The Ravelry team is still just four people who take care of almost 2 million members.

A few days ago, Ravelry explained in detail to its users how it pays their bills:

"Ravelry gets ~180,000,000 page views a month and we could probably cash in on that in a big way but we’re very committed to keeping the ads pretty, relevant, and accessible to very small businesses.

Our system and our rates were designed with the goal of having many small advertisers instead of a few larger advertisers. Today we have about 1,500 active advertisers – most are active Ravelry members and many are very small businesses. 25% are Etsy shops and 50% spend less than $15 with us each month."

More on this and Ravelry’s other revenue streams are described in their blog post.

Anissa Stettner wrote a post recently (in German) on the history of the company.

Related posts:

• Etsy Raises Merchant Revenues to $538 Million in 2011 (+71%)
• Ravelry is Showered with Money and Love from Its Fans
• Etsy Tech Talk: Moving Fast At Scale

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo. 

QVC takes over SendTheTrend for online product subscriptions

QCV has not only published its business figures for 2011 (+7% in Germany), but has also announced the acquisition of Send The Trend (via):

"This week QVC acquired Send The Trend, a startup eCommerce company based in New York City that provides customers with an innovative way to shop for personalized fashion accessories and beauty.

We believe QVC’s strong record in eCommerce paired with Send The Trend’s cutting edge use of customization and technology will make for a winning combination. As a subsidiary of QVC Send The Trend will continue to operate as a separate eCommerce site."

Send The Trend sells product subscriptions for $29.95 per month, like Shoedazzle and Beachmint.

Also, QVC's parent company Liberty Interactive has announced today to split off the investment business (eg. shares of Expedia, TripAdvisor, Tree.com) and to concentrate entirely on the teleshopping as well as ecommerce business.

"With Liberty Interactive you're going to able to get a pure play video and eCommerce company better aligned with our retail eCommerce peers."

Apart from QVC, since 2008/2009 the Liberty Interactive portfolio comprises online retailers such as Backcountry.com, Bodybuilding.com, BuyCostumes, ProFlowers.com, Red Envelope, Gifts.com and The Right Start as well as shares in Lockerz and HSN.

A couple of years ago, QVC had realistic chances to get closer to Amazon in terms of revenue, until Amazon in 2009/2010 has wandered off by taking over ("Amazon Attacks") Zappos, Diapers, Woot!, BuyVIP and others.

Apparently, one would like to attack once more via QVC by means of disentagling Liberty Media.

During the Exceed Conference, which will take place in Berlin in March, QVC as well as HSE24 will be present.

Earlier posts on this subject:

• QVC holt sich langjährigen HOT/HSE24- und 1-2-3.tv-Chef (German)
• Wie QVC HSE24 das Wasser abgräbt (und umgekehrt) (German)
• Der boomende Beauty-Markt im elektronischen Versandhandel (German)

This week on Freaky Friday: Are you freigthended?

Some of you may think that I’m nuts - asking such a question on an ecommerce blog. What on earth has fear to do with online shopping??? More than you think...

Fear is an interesting mechanism. For ages now it saved us from being eaten by the sable tooth tiger. OK, the tigers are gone, but the mechanism still works fantastic. But in old times the fear worked in other ways.

Read the full feature on ecomPunk.com!

Fab.com Picks up Casacanda from the Springstar Incubator

More than ever, cloning is paying off for German entrepreneurs and their investors. But what would the German clone culture be without the US startups who have the cash and the willingness to shop around in Germany?

Fab.com took over Casacanda a few days ago and renamed the site to Fab.de:

"We did a study of the German market in October and November and went through a decision process of whether to build or acquire.

In early December we took a trip to Berlin and met with a few potential partners to explore launching Fab in Germany.  Of all the teams and people we met with in Berlin, we were far and away most impressed with the founders and team at Casacanda.

The more Bradford and I met with them the more we became convinced that the best way to launch Fab in Germany was with them."

More information to be found in the Fab.com blog ("Fab Acquires Casacanda").

Casacanda comes from Springstar, a German clone factory started by Klaus Hommels, Oliver Jung and Harish Bahl. The incubator has already started up and sold numerous private shopping clubs and Groupon-like clones. Apparently Fast Lane Ventures, the Russian arm of the Otto Group’s eVenture Capital Partners also has a stake in Casacanda (German link).

The competition for “German Clone Champion 2012” has been kicked off. Clone champions of 2010 were the Samwer brothers who sold Citydeal to Groupon for shares worth $126 million. Champions for 2011 were the Heilemann brothers who were able to sell DailyDeal to Google Offers for $114 million.

Venture Village reported that the acquisition has valued Casacanda, with their 250,000 members, at $10 million. Fab.com was speculated to be valued at $200 million as of their last $40 million financing round.

EU-Startups makes a good point in their blog ("Fab acquires Casacanda to beat the Samwers").

Related posts:

• Fab.com and the Latest Out of Germany’s Clone Factories
• The Oryx Project: Has Otto been recruiting the Samwer-Crew?
• Extras: Fab.com, Plum District, Groupon, Zappos, Marka VIP
• Springstar: Jung/Hommels bündeln ihre Beteiligungen in Berlin (German)
• Google Offers: DailyDeal Goes to Google Instead of LivingSocial
• Groupon Takes Over Germany’s CityDeal

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo. 

Fortune about cronyism in Silicon Valley

You scratch my back and I'll scratch yours. Taking "Superangel" Ron Conway as an example, Fortune provides interesting insights into the cronyism in Silicon Valley ("Ron Conway is a Silicon Valley startup's best friend"):

"Conway may not be a brand name outside of tech circles, but in the startup-fueled economy of the Bay Area, he's a ubiquitous character with an outsize personality who is often called the godfather of Silicon Valley.

It's a moniker he's earned, in part, by investing relatively small sums in more than 600 Internet companies since the mid-1990s. Hundreds went bust, but there are a few you might have heard of. In the first Internet boom, he bet on PayPal and Google."

For everybody who always wanted to know what makes the industry in Silicon Valley tick and why, even in Berlin, we have to deal with the Ashton Kutchers of this world. 

What you an also see in this chart is how much importance ecommerce has gained in Silicon Valley. There is hardly a month without Conway's SV Angel Investments investing at least in one ecommerce startup.

However, with regard to online retail, where lately innovations in trade have bet those in technology ("More Than Nerd Commerce"), Silicon Valley is not yet again the centre of the world. If the formative ecommerce startups come from the US at all, they tend to be founded on the East coast.

Earlier posts on this subject

• Kickstarter: What's the story? [Erfolgreiches Crowdfunding] (German)
• E-Commerce für 2012: "More Than Nerd Commerce!" (German)
• Gender Innovation: Wer knackt den Online-Code der Frauen? (German)

Some thoughts on books

Some of you might have wondered when a guy having studied literature embarks on a journalistic journey about books on ecomPunk. The answer is: now. So sit back and relax while I try to come to terms with the recent discussions about this industry.

Brick-and-mortar bookstores

What immediately comes to mind when talking about buying books in the real world, ie. in brick-and-mortar stores, is the case of the Borders bankruptcy last year. The Borders bookstore, which was founded in 1971 grew into one of the world’s most prominent sellers of books and media, with more than 500 so-called superstores, 19,000 employees during its peak times (Find more about the details about the company’s decline in the Wikipedia article about the Borders Group.) Ousting and buying traditional mom-and-pop bookstores, they managed to completely changing the character of physical book retail. Instead of small to medium sized businesses, they established gigantic retail stores, one the biggest being one in Kuala Lumpur, Malaysia featuring a  sales area of 700,000 square metres.

Read the full feature on ecomPunk.com!