Next year, Amazon turns 25. In that time, the ecommerce giant has moved from books into movies, television, music, cloud storage, grocery and more, with potential forays into banking and healthcare. Although Amazon is just one player in a global space dominated by the likes of Alibaba, eBay, Walmart, Jingdong and Rakuten, its stunning rise highlights a single company’s potential to transform both related and unrelated industries.
If ecommerce has shown us anything, it’s that no matter what space you’re in (or how steady it seems) an emerging industry will likely disrupt it, whether that’s in five, ten or twenty years. So how can you prepare? Here, we use the rise of ecommerce as a lens to examine how and why companies should adapt to changes in the market earlier rather than later.
1. Change the conversation to change the game
Over the course of a decade, the conversation surrounding ecommerce evolved from “How can brick and mortar compete with online?” to “How can brick and mortar compete online?”
Though subtle, this shift in dialogue shows how embracing (rather than combating) external pressures can result in a better long-term growth strategy. Instead of fearing takeover from ecommerce giants, savvy brick-and-mortar retailers either built their own ecommerce platforms or successfully added online distribution channels via strategic acquisitions and partnerships—a trend reflected in the sharp uptick in ecommerce deal volume since 2010.
2. Don’t just react—prepare for major shifts
With ecommerce revenues poised to hit $4.88 trillion by 2021, any company without a digital platform risks losing business from the 1.66 billion consumers who shopped online last year. That’s why retailers continue to bet big on ecommerce, even late in the game.
Those late-in-the-game deals, however, come at a price. If Petsmart had anticipated the rise of ecommerce years ago, would it have paid $3.35 billion for Chewy last year? The deal, the largest ecommerce acquisition in history, highlights just how important it is for companies to have a plan in place to contend with the rapid rise of new industries—a plan that involves entering emerging markets before they’re out of reach.
3. Look both inside and outside your space
Perhaps more than any other industry, ecommerce has highlighted the value of staying on top of opportunities both in and outside your market. Recently, the ecommerce M&A environment has been dominated by both traditional M&A deals and somewhat surprising pairings as companies scoop up competitors (both direct and peripheral) and depart from their core offerings.
Combined with strategics’ increasing interest in early-stage investments, these unexpected consolidations and integrations have reshaped the landscape and encouraged corporate development teams to move outside their wheelhouse.
Traditional acquisitions
Qoo10
acquired by eBay for $700M
May 2018
Chewy
acquired by Petsmart for $3.35B
April 2017
Modcloth
acquired by Walmart for $62.5M
March 2017
Cross-vertical acquisitions
Whole Foods
grocery store chain acquired by Amazon for $13.7B
August 2017
Ele.me
food delivery service acquired by Alibaba for $9.5B
April 2018
Tqmall
auto accessories platform acquired by JD.com for $45.3M
November 2017
Minority-stake investments
Flipkart
sold* 15% stake to Alphabet for $3B
May 2018 (*deal in progress)
Carbon38
raised $17.1M from Footlocker
January 2018
Renrenche.com
raised $200M from Didi Chuxing
September 2017
4. Find a way to sift through the crowd
While legacy brands are facing consolidation, many new retailers are taking off, particularly as ecommerce investors exhibit renewed optimism in the wake of StichFix’s successful IPO late last year. But although more players means more opportunity, it also means more noise.
As the ecommerce landscape becomes more crowded, competitive and complex, corporations are waking up to the fact that they need data that helps them zero in on promising opportunities and make better buy, build or partner decisions.
Next to exit? Five companies to watch
Warby Parker
To see Warby Parker’s financing history and more, check out its profile preview.
Rent the Runway
To see Rent the Runway’s financing history and more, check out its profile preview.
Brooklinen
To see Brooklinen’s financing history and more, check out its profile preview.
Poshmark
To see Poshmark’s financing history and more, check out its profile preview.
Everlane
To see Everlane’s financing history and more, check out its profile preview.
In a relatively short amount of time, ecommerce has transformed not just retail but nearly every other vertical. A quick, high-level look at the industry reveals essential lessons about how important it is for corporations to prepare for disruption before they’re forced to play catch up—or, worse, before they fall permanently behind.
Does your corporation have the data it needs to adapt to major market shifts, like the rise of ecommerce? Find out with our guide.
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