Because, shockingly, it turns out that e-commerce is hard to run, many investors are losing interest in these types of ventures. The threat of both the existence, and subsequent bursting, of a tech bubble has been hanging around for a while. A preemptive slow-down in the money, however, could preclude that from happening — but it also means the onslaught of fashion start-ups might evaporate.
While private, or angel, investors haven’t lost as much steam, venture capital (for the most part, where the serious money comes in) is turning its back on retail-focused tech start-ups. And, interestingly, despite glowing reports regarding its growth, mobile commerce has been caught up in an unappealing light, too. The trouble here, it seems, is that monetization on mobile is simply slower and more difficult than via standard e-commerce.
A while back, we noted that certain kinds of fashion start-ups were already being forced to change their game plans, particularly in the areas of subscription models (a few were already abandoning the format), style advice sites (they needed to add e-commerce to make money), and flash sales (some were forced to close altogether). Now, it seems, investors have caught on to the fact that online retail ventures aren’t easy money — Gilt Groupe is still unprofitable, Groupon is still a mess, and smaller businesses predicated on social media have had to adjust as Facebook and Twitter change their own games in order to profit more.
So, with funding harder to get, who’ll be around on the other side? There are already too many start-ups overlapping with one another and providing minutely different offerings of the same services. Integral to survival, we think, is daily engagement combined with extensive user personalization (like Shop It To Me’s Threads) or a substantive consumer-to-brand connection, again, combined with total personalization (like Poshly). What start-ups do you use online regularly and expect to last? Tell us your thoughts in the comments.