I was meeting with a smart VC yesterday doing a mini post-mortem on Aprizi, our “Pandora for shopping”. When asked what I would do differently a second time, the number one thing is I would have rolled out the e-commerce model right away.
I think a special bond forms between a customer and a service when the customer parts with their money, and receives something concrete in return.* This “transactional halo” benefits not just stores, but also marketplaces like Etsy and Boticca.
* The critical caveat is that the consumer must view the purchased item as special, not a commodity.
Even better is when that customer, after waiting excitedly for their purchase, gets to open your box and experience your branding. Birchbox does this really really well. A huge part of their customer love comes not from the beauty products themselves, but rather the experience of getting a christmas present every month and unwrapping these lovely, carefully-presented, carefully-explained items.
When you sell something, customer service becomes another opportunity to build a stronger relationship with the customer. Zappos, more than any company, changed how customer service is viewed. Customer service went from “cost center” to “competitive advantage” and the bar of quality has risen for the entire e-commerce industry.
A pure software experience can generate this kind of love, but when the software is related to physical things, as Aprizi was, then I think owning the transaction can really make an impact on customer passion and loyalty.
E-commerce, of course, is not a panacea for success. It is a fiercely competitive space, challenging to scale, and the margins can be tough. But I suspect it has branding and loyalty advantages over pure product discovery and search services, not just a bigger piece of the economics.