Building the next Amazon: The race to democratise digital commerce

- November 20, 2014 3 MIN READ

Today we’re living in the age of digital commerce, a market which will exceed $1.5 trillion by the end of this year. That’s a massive number – in fact, if ecommerce was its own country, its GDP would surpass that of Argentina, Thailand and the Netherlands combined. This shift is apparent everywhere you look, from the meteoric rise of the mobile web, to the showrooming phenomenon, to new payment technologies like Apple Pay, Stripe and Square that have fundamentally changed how we purchase goods and services.

Here’s a fun fact you may have missed: last month marked the 20th anniversary of the first recorded online transaction, a $12.48 compact disc of Sting’s Ten Summoners’ Tales. Of course, the fate of CDs and ecommerce couldn’t be more different.


Image Credit: WSJ.com


Image Credit: eMarketer.com

The first 20 years of digital commerce gave birth to some of the most influential brands in the world — Amazon, eBay, One Kings Lane, Groupon, Zappos — companies which defined their categories, challenged conventions and shaped the online customer experience. While these companies have rightfully garnered worldwide press attention and accolades, as a result the market missed an equally important movement — the advent of SMB ecommerce.

Cloud Power to the People

Around the time Amazon was founded, the average cost to build a fully functional online store was $100,000. Additionally, merchants needed to consider upfront operating expenses such as bulk inventory, warehouse space and staff for order fulfilment, marketing and more.

Today the picture is much different. Instead of purchasing expensive equipment and hiring developers, entrepreneurs can choose from several SaaS ecommerce platforms — including our company, Bigcommerce — which include built-in tools for site management, marketing/SEO, inventory, shipping and sales tax calculations. As an alternative to purchasing inventory up front, businesses can use drop-shipping providers to fulfil directly from the manufacturer, eliminating the need for warehouse space.

As President Obama said, “small businesses are the backbone of our nation’s economy and the cornerstones of our nation’s promise.” It’s clear that starting a business has never been easier, and the barriers to entry in the world of digital commerce are now virtually gone.

The question is, can that cornerstone be the foundation of a new empire?

Many Davids vs. a Few Goliaths

The shift from traditional retail to ecommerce is well documented. According to eMarketer, ecommerce sales will grow almost 18 percent next year; Bigcommerce research shows even more bullish growth at closer to 30 percent. These numbers well outpace the projections for brick-and-mortar retail. However, this success hasn’t been universal. Several large ecommerce businesses like Dell, Coldwater Creek and US Auto Parts have struggled to innovate, allowing smaller competitors to out-execute them in the race to capture both mindshare and a larger portion of consumer spending. This is happening for several reasons.

Unlike traditional retail where location is king, the digital era has leveled the playing field, allowing online businesses to reach customers more effectively through marketing techniques like PPC, SEO, rewards/loyalty programs and retargeting campaigns. Why is this significant? These methods were once only available to large brands with massive marketing teams — now they’re being used by small businesses with a fraction of the resources.

And it’s not just limited to a small handful of businesses. A 2013 industry survey polling small business owners selling online revealed that 53 percent used cloud applications, a trend growing more than 100 percent annually. Meanwhile, among enterprise e-retailers (those with more than $15 million in annual sales), 58 percent reported using in-house commerce platforms built prior to 2000. Fourteen years is a long time in any industry. On the web, it’s a lifetime. Technology enthusiasts have debated the merits of best-of-breed vs. home-grown systems since the dawn of computing, yet as more and more commerce moves online, there appears to be a clear winner.

Large retailers that once competed with only a small handful of companies now must compete against literally hundreds of thousands of merchants, big and small, all equipped with the means to effectively sell online.

What to Expect from the Next 20 Years

The rise of digital commerce is one of the most disruptive and important movements of our generation. Much has changed as SMBs have grown market share and established themselves as viable competitors to category leaders.

But what will the next two decades hold? First off, I’m hoping we’ll all have hover cars. And I think we’ll continue to see technologies and techniques once only viable for the Amazons of the world to become more accessible, affordable and easy to use for smaller merchants. More and more startups and tech companies, like Bigcommerce, will begin to build tools specifically for SMBs as they realise the potential of the market.

One thing that won’t change is that the most successful businesses will be those that identify a great niche and focus on providing top-notch service to customers. Online, as on Main Street, the same values apply: great service and quality products are timeless.


Steven R. Power is the President of Bigcommerce, a global ecommerce provider helping entrepreneurs and growing businesses sell more online.