How long is a period of just a few years? If you’d asked us that before computers ruled the world, we would have told you that a few years wasn’t a long time at all. Now that the algorithm is king… a few years in the information age is a lifetime. Keep that in mind when you read the following figures abut e-commerce and how it has changed our society so profoundly in recent years.
By 2025, e-commerce will account for 24.5% of global retail sales. That’s big… what’s more telling, though, is how quickly it’s evolving. In 2020, that figure sat at 17.8%, and that was already up from only 7.4% in 2015. That’s just in the last few years… accelerants of our current global predicaments, along with continued rapid advancements in technology, means that the space will run, not walk with these figures.
The Sales Mix Keeps Changing
Technology means barriers that were previously holding back online business are being shattered. For instance, let’s say that some years ago you decided to open a t-shirt business. You would need to acquire a location, equipment, staff, figure out logistics, legal issues, security… the list goes on. Now, you want to start one… no problem. The entire business can be set up in one day from a laptop.
You pick a design (which open-source AI can create for you), leverage already existing technology for the other pieces (like printing and drop shipping) and then, most of the rest of the process can be automated. Not only that, with current advances in AI, listing on a platform that allows for smooth global sales is pretty easy because region-specific rules can be applied to shops with the click of a button… then, even that is handled.
If you think scaling or applying this to other businesses won’t work… we’d beg to differ. With our computing power and resources, almost anything can be automated, outsourced, reconfigured… this world, with all this technology, means we can reconfigure our business models in infinite ways to serve infinite customers online, we just need to put on our thinking caps and figure it out.
Beyond Black Friday
I’d say we saw evidence of the rapid rise in e-commerce over the past holiday season… both Black Friday and Cyber Monday shattered previous records. This past holiday season, we weren’t just hungry for full-bodied beer and maple sugar ham… we wanted stuff, and we got it. According to Adobe, Black Friday online sales reached for the stars and hit a record $9.12 billion. This has never happened.
Adobe tracks online retailers’ websites and what they found is telling… these numbers represented a 221% surge over an average day in October. But that’s not the whole story, it’s that coupled with what we’re seeing from consumers. Customers posted video after video of empty stores, which are normally packed on Black Friday to the point that it’s a running joke on popular television shows such as SNL. This year… the people spoke, and they don’t want to go to brick-and-mortar stores.
Cyber Monday did not disappoint, either, with U.S. consumers shelling out $35.27 billion, an increase of 4% compared with the same period in 2021. We think it’s fair to say, e-commerce is it… businesses that want to keep pace and stay relevant, need to practice active listening here. Not only do people want to shop online, they want to do it on their phones. This year was record breaking in that regard too, with mobile orders accounting for 48% of online sales, up from 44% last year.
Deals To Watch
Today, we’ll be looking at Gorgias and Rokt. Gorgias has built multi-channel helpdesk software for e-commerce companies to help them deliver top-notch customer experiences. Founded in 2015, the company now serves customers around the world, but started their journey by serving a few small businesses on Shopify. The team is now 250 strong, working from all over, and Gorgias serves over 10,000 online stores including Marine Layer, Steve Madden, Princess Polly, and Olipop on platforms such as Adobe Commerce and BigCommerce.
In August, the company secured $30 million in new Series C funding, boosting their valuation to $710 million. They believe survival in our current environment takes strategy, which they provide via a DTC growth playbook that can result in 44% more revenue. Funds from this recent round of funding will go toward building out an automation add-on feature designed to deflect up to a third of incoming repetitive support tickets, as well as a new feature capable of identifying customers that may good candidates for further revenue generation.
Rokt is an e-commerce technology provider giant gearing up for a 2023 IPO, according to CEO Bruce Buchanan. This powerhouse is nesting in the meantime, positioning notable new hires like Nathaniel Katz, previously SVP of finance at cybersecurity software firm Datto, as its CFO. Mr. Katz oversaw Datto’s IPO a few years back, so Rokt is in good hands. This information as the company announced a secondary transaction recently, valuing the business at $2.4 billion. This time last year, that figure sat at $1.95 billion.
Founded in 2012 in Australia, and headquartered in New York City, Rokt has since cast a wider net, expanding to countries across Europe, the Asia-Pacific region, and America. The company uses machine learning technology to help firms drive incremental value, and their technology has powered over 5 billion transactions globally for companies like AMC Theatres, Hulu, GoDaddy, Staples, PayPal, Uber, and HelloFresh… and the company just landed on the 2022 list of fastest-growing private companies in the US for a second year.
The future of shopping, and probably doing a lot of other things, is online… but this will be the e-commerce of the future. Memorize the words “dynamic content technology” because you’ll be experiencing a lot more of it. Shopping online won’t just be picking a cookie-cutter product, rather it will be web pages with customizable items, and these web pages will adapt to in-session behavior to bring us what we love… kind of like we bring you what you love from the IPO space every week. Come back next week for more, see you then!