It would be extremely interesting to know what is going to happen in the future—especially when talking ecommerce, as the industry is continuously growing. In this post, you can do just that. I have had a chat with Sïmon Saneback, a Swedish entrepreneur, who offered me a rare look into the ecommerce crystal ball to find out what companies need to do to survive, what the biggest trends are, and what the tendencies will be.
Sïmon Saneback has been in the online industry for the past 15 years and has a strong connection to the e-commerce community in Europe. He started his first e-commerce company in 2007 and doubled his sales four years in a row, going from 0 to 100 million Swedish kroner. He then worked as a consultant for a year and joined Smartguy (today’s Stylepit) as the CEO of Sweden. He took over Norway and Finland and then all global sales and marketing in the group. He moved back to Sweden and made different investments in startups and became an advisor. He ended up working with Mikael Wintzell at Klarna, and they decided to join forces and establish a company called Wellstreet. Wellstreet invests in online-based businesses and infrastructure companies supporting the digital value chain.
Here are the major takeaways from the Sïmon Saneback interview:
- The importance of a great mobile version is growing tremendously. Companies need to realize this and create a unique, brilliant, mobile shopping experience different from the desktop version.
- Niche e-commerce companies are going to do well now as well as in the future. Companies doing a little bit of everything are much more likely to die.
- Stop the price war. There will always be someone offering the same product as yours a little bit cheaper, which ends up with companies selling products for less than they cost. Instead, focus on how to differ from everyone else.
Want to survive ecommerce doomsday?
If you want to be able to compete with the big players on the market, you should definitely download this ultimate guide to make your company survive – even in the future, where Sïmon predicts the big players will eliminate the small fish. Download it here.
Major ecommerce trends
- Offline is moving to online. Sïmon sees that a lot of companies that haven’t followed the digital revolution are now moving online.
- Mobile is growing tremendously. This is not a new trend, but more and more users are moving to smart devices.
- Ecommerce is going global. Many companies are trying to expand to new markets, trying to find new ways to increase their sales and profitability.
- There has been a rapid change in consumer behavior. We have never seen that before – and it’s because of mobile devices and the growing use of the Internet. According to the latest numbers from Google, the average user is using their phone 160 times a day. Hear Sïmon explain how the change of user behavior affects the ecommerce industry:
The problem with mobile
Ecommerce companies haven’t gone all the way in implementing mobile versions because they haven’t seen the same conversion rates—Sïmon knows that he’s generalizing here. The mobile version just hasn’t performed as well as the desktop version in the past. To make it work, you must try to give the best shopping experience from mobile devices. In the past, companies have taken the desktop version, cut off functionalities, and squeezed it into a mobile version. That’s why users haven’t used mobile and converted it to the same extent as on the desktop version.
The dark future of pure players
Sïmon and the people behind Wellstreet believe in companies that are specialized at something: niche companies. Google started and nailed the search engine, and then they moved onto doing other things. Sïmon is looking at companies that focus on some little thing, and do this small thing well—and not until then—they can move on. However, he doesn’t foresee a bright future for pure players, meaning companies only selling online. In the sound clip below, you’ll hear an example of this, what pure players do wrong, and one very interesting point from Sïmon:
We are going to see a lot of consolidation and companies going down on their knees. If they haven’t figured out how they can become a destination, of a sort, they will have to join forces. When Stylepit was acquired, they were purchased by a brand, so they failed because the brand then got an ecommerce platform from which to sell their products. Brands are finding new ways of selling their products from their own name and with someone else’s name. Some of those will survive, the big ones like Zalando. The mid-sized players will join forces, seek capital, or get acquired, and the small players will die. The only question is when.
How can you survive – the holy grail
This doomsday theory of small pure players sure doesn’t sound nice, but there are ways to survive, according to Sïmon. Listen to what he calls the holy grail of ecommerce survival:
Another point from Sïmon is that we need to stop the price war! The consumers are becoming less loyal and have more demands as we continually lower the prices to a level where no one is making any money. An example of this is the online shoe industry. Now, you can’t sell shoes unless you provide free shipping and free returns – how are you going to run a business like that? Impossible.
Niche yourself today
Ecommerce companies have to become niche to survive – but how? Sïmon explains that you have to position yourself by offering an extraordinary service, present the products differently or do something unique. Let people know why they should choose to buy from your website and not the others.
Is it because you know everything about that one product? Your customer service staff might consist of nerds who know every single thing about your product, which will make the service extraordinary and make your customers want to buy from you. On the other hand, you might realize that you have no way to differentiate yourself. Then, you seriously need to consider what you should do. Listen to Sïmon talk about what many mid-sized ecommerce companies in Sweden have done in order to survive:
In essence, Sïmon says that some ecommerce companies are getting bigger and bigger, and many small ones are dying out or teaming up with others – unless they niche themselves. Here are the figures to support that statement: The Ecommerce Foundation published a report last year. According to their research, in 2020, marketplaces will count for almost 50 percent of global ecommerce. This is really scary, even though it is a very aggressive statement. But if they are at least a little bit right, it is, to quote, “freakin’ scary.”
The silent killer to look out for
I asked Sïmon what company he thinks is doing the very best job right now – and the answer was Wish.com. Doesn’t sound familiar? Fear not. Sïmon asks people at conferences with thousands of listeners if they know what Wish.com is; only a few raise their hand every time.
The sad part, according to Sïmon, is that they don’t know about their biggest competitor because Wish is taking over massive market parts. Wish has built an app where they connect consumers directly with factories in China and remove the middleman.
They have changed the consumer behavior, and only a few are aware of their takeover! China is the most popular country to buy from if you live in Sweden. With Wish.com, it is not the best quality—people have gone from buying maybe five times a year to buying a lot more often, AND they are accepting longer delivery times.
The people at Wish didn’t even know what Scandinavia was in the beginning – it was the consumers who found them! Wish then discovered these customers, did some Facebook advertising, and their turnover from Scandinavia skyrocketed.
It’s not about innovation, but they have built an infrastructure where they have excluded the middleman and made shopping fun, cheap, and different.
According to Sïmon, the companies that will succeed in the future have the same success signature as the other big ones that have already succeeded – Google, YouTube, Klarna, etc. It’s the same recipe – and that will define who will win. Sïmon told me that there are four main parts in succeeding: One part is being consumer centric. It’s all about the consumer. Number two is being digitalised. It’s alpha omega. Everyone needs to be onboard. Be data-driven – understand who your customers are, and give them a personalized experience. Use the data; don’t just collect it. User experience will become vital.
To put the future of ecommerce in two words: simplicity and personalization.
And that was all from Sïmon Saneback! This post was really food for thought from my perspective. What points surprised you? And what do you think the future holds for the ecommerce industry? Share your thoughts in the comments below.