7 Tips and Confessions of CoE E-Commerce

on Tuesday, June 26, 2012

CoE E-Commerce, our CoE event focused on the E-Commerce sector, concluded yesterday after a second day jam-packed with "Wamdat" talks and panels addressing the biggest issues facing e-commerce today. 
At your e-commerce startups, you might now want to: 
1) Negotiate for lower payment gateway fees.
In the first panel, "Show me the Money, Part 1: Is Online Payment a Solved Issue?" panelists addressed the region's struggles with payment gateways.
The GCC is a $5 billion industry for online transactions, said Stephen Leeds of Visa. According to a survey by Souq, 90% of customers in the UAE according to survey feel comfortable buying online, said Ronaldo, CEO of Souq.com. But most of them prefer cash on delivery to credit cards or prepaid credit card solutions like those that CashU offers. 

2) Target the Jordanian market.
Before announcing Iyad Kamal handed out some great statistics on e-commerce that build upon data:
  • E-Commerce in the region grew 300% in 2011.
  • The #1 country that pays online is Jordan. 
  • The average weight of a shipment in the MENA region is 1.25 kg.
  • The average value of an order is $115. 
  • Cash-on-delivery accounts for 70% of transactions in the region, but customers are slowly coming over to credit card payments. 
  • 50% of the e-commerce business in Saudi Arabia is outside of the main cities.
  • Returns are around 10% in Bahrain, Kuwait, up to 25% in Saudi Arabia (compared to a return rate between 17-25% on apparel in the U.S.). 
  • COD returns are 7 times the amount of returns by credit cards (COD is 15%; credit cards are 2%) 
  • 24% of registered Shop & Ship accounts are women, but they tend to make the shopping decisions. 
3) Sell your company for half a billion (that's a b) dollars… using an orange website.
Ok, maybe your startup won't sell for US $525 million like online shopping comparision site Shopzilla did in 2005. Yet, its founder Henri Asseily revealed in a short "Wamdat" talk that testing of U.S. sites concluded that the best color for enticing users to shop was an "ugly" orange. "I hated it," said Asseily. "But it worked," he pointed out, extolling the virtues of A/B testing. "Don't be afraid to take steps to see what hasn't been done before."
4) Show investors the product… before chatting about the financials.
In the second "Show Me the Money" panel, titled "Investing in E-Commerce," it was refreshing to hear Pamir Gelenbe of Hummingbird Ventures talk about the increase in intensity and pace of work that he experiences upon leaving London and touching down in Istanbul. Hopefully that vibe will infect the MENA region a bit more.
James Chan, co-founder (along with Joi Ito) at Neoteny Labs, and Elie Habib of Riyada Enterprise Development, disagreed over the kind of pitches they like to see from startups. 
Chan gets depressed by pitches that focus on the financials; he wants to see the product that will engage customers at the end of the day. 
5) Take on funding early. 
The panel that I moderated, "The Hot Top Models of E-Commerce," came down to a faceoff between MENA's wildly successful site MarkaVIP (founded by Ahmad Khatib) against Turkey's flash sales giant, Trendyol (founded by Demet Mutlu).  
Trendyol is out for world domination, having taken on $50 million in funding in three rounds of funding led by Tiger Global since its launch in March 2010. But MarkaVIP is on Trendyol's heels, having built up to 1.5 million users and taken on $30 million in funding since its launch in November 2010. 
6) Don't be afraid to go online. 
If it wasn't obvious enough already, in the last panel, moderated by Arabnet founder Omar Christidis, panelists discussed how going online is key to retail success.  
This was especially apparent when looking at the example of home shopping network station CitrussTV. 90% of his business is offline, said founder Michael Trueschler, but his growth rate offline is only 50%-60% per year, while online is growing at a rate of 15% per month, which, when compounded, would exceed 500% a year. "To be successful, you have to be online," he concluded.
The panel agreed that issues along the way that typically prevent business from going online include: 1) not understanding digital, 2) being afraid of the technical aspects, 3) the challenges of integrating online with your current business. Don't succumb to these fears.
7) In the digital content space, monetize with mobile apps.
In the final panel, on "The World of E-Commerce Beyond Physical Goods," moderated by Abed Agha of Vinelab, panelists discussed a shift into new monetization models for digital content. 
While TV channels have been the dominant players when its comes to monetizing digital content space, by distributing through telcom channels, here panelists pointed to mobile apps and direct-to-consumer platforms as new routes.
Your Thoughts.
For those who went, share your insights and take-homes with us. What surprised you? What did you disagree with or want to see more numbers on? What would you consider when starting an e-commerce business?
Source :wamda
Edited by author