The last couple of weeks have been big in the e-commerce world. First Unilever bought Dollar Shave Club for more than $1 billion. Now it looks like Walmart will snap up Jet.com for more than $3 billion. But these big deals only highlight something we’ve long known about the internet — it completely overturned the laws of economics a couple of decades ago, allowing for niche and ridiculous economies of scale, choice and inventory.
But what the success of these companies — together with a few more recent success stories — also reveal, is that the internet and other technologies have completely revolutionised the entire e-commerce stack. From manufacturing right through to marketing. The old gatekeepers are long gone.
Dollar Shave Club
When Unilever announced it was acquiring the Dollar Shave Club to Unilever a fair few eyebrows were raised. DSC’s business model is the complete inverse of a regular CPG company — it doesn’t spend big on R&D or packaging to create differentiation, it hasn’t developed a huge distribution network or deals with retailers, and it’s not a big brand advertiser. Boiled down to its essence, DSC is a supplier of a commoditised product (razor blades), with a huge subscriber list that pays monthly dues.
But how it got to that stage — over $200 million in revenue in less than five years, is a perfect encapsulation of the opportunities available to budding e-commerce entrepreneurs everywhere. Dollar Shave Club had an insane social media campaign. The founders really understood how the internet had changed the way you reach customers — go find them where they already are, with content that speaks to them.
When we first wrote about it back in 2012 the company had only just launched its first viral marketing campaign. It resulted in 12,000 sign ups in just the first week. The company spent less than $4,500 on a video that has been seen more than 26 million times to date. And it was part of a larger vision, according to CEO Michael Dubin, who explained:
…if you can create content that goes viral it’s going to be cheaper for you to build your business. I’m not going to call ourselves a content company. That would be arrogant. But I do think there’s going to be a commitment here to developing content here whether its video or Facebook content, we’ve got a lot of stuff in the pipeline. But whether its video, or Facebook content, or other kinds of content, we are going to make a strong commitment to telling strong stories in creative ways and just giving our audience and our customers fun stuff to play with. That’s part of the fun of being an Internet brand.
Shoes of Prey
Shoes of Prey, an Australian startup that sells custom shoes, was another company that understood the new rules of getting yourself found on the internet. When it launched in 2010, the company leapfrogged traditional retail and traditional media. It went right to YouTube, knocking on the door of an influential beauty blogger. One 10-minute video later, and half a million people were on the Shoes of Prey site.
And the company has continued to go to Youtube, posting regular explainers, sneak peeks and behind the scenes stories, racking up hundreds of thousands of views, targeting the audience they want, and building a community.
But it’s not just videos that have seen the company sell into more than 90 countries, and take in more than $22 million in funding to date. As a purveyor of custom shoes, the startup is at the forefront of the wave of personalisation that is hitting the fashion industry. It’s a sign of several intersecting technological and social trends — as the internet allows companies to go niche, on-demand manufacturing becomes more viable, and consumers demand more individual service. And it’s an e-commerce trend with a long way to run.
Disrupt Sports is another pioneer in the field of customised, on-demand e-commerce. The company makes custom surfboards, skateboards, snowboards and yoga mats. A couple of years ago, founder Gary Elphick told us that the technology was almost there. The technology — 3D printers, online marketplaces and the like, was there, but the materials were just short:
“The main thing holding us back at the moment is the commercial availability of the right material. The machinery is there, the files are there, it’s just the materials that are not quite at the level where we could do it commercially and still make a profit out of it,” he said.
“But the end goal we want is to cut down on the global shipping that is going on. We want people to download a file and be able to get it made locally… I think that is going to be the future of most of the things that get made in the world.”
But in the 18 months since launch, the company is claiming more than $620,000 in revenue from selling custom gear. That’s a lot of skateboards at only a couple of hundred bucks a pop, showing the size of the demand for customised niche gear.
What all this shows is that technology, and especially the internet, has disrupted traditional commerce in a bunch of ways, opening up opportunities left and right. Drop-shipping eliminated the need for big warehouses, content management systems and payment networks negated the need for storefronts, and now technology is even tackling the physical aspect of e-commerce — manufacturing.
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