I have written this blog after being inspired by an infographic sent me by a reader. The subject is the growth of eCommerce. Retail and marketplace models dominate this space right now. But there is a big opportunity for SaaS innovation. Rent v Buy models are already emerging. Advertising style subscription models are also possible. Yet another source of value will lie with data and analytics. Time for SaaS to disrupt another industry.
eCommerce - A SaaS Opportunity
This blog is a little different. It was inspired by an infographic sent to me by a regular reader - Max from Tracking Courier. Part of his work is in the header and you can download the full version below. I loved it and took the challenge to look into the subject matter and write about it.
eCommerce is the theme of Max’s infographic. We all know the general story of explosive growth. The 5 minute guide highlights the statistics and trends which every startup should understand. Despite the expansion, a huge opportunity remains. But there is a lot of competition out there. Plenty of smart people and large amounts of investment are focused on eCommerce. Yet almost everything goes into two business models. Standard retail eCommerce and Marketplaces.
Some of these businesses will achieve wild success. This will be a hard and expensive road. Why not try a more innovative approach? I think eCommerce is a great opportunity for SaaS which is not being exploited today. With some creative thought, SaaS could also open up many new opportunities.
Rent v Buy
One SaaS route for eCommerce is to apply the rent v buy model from software to other goods and services. This is the essence of SaaS. eCommerce today is a sales business. Turning it into rental can offer better value for consumers. And a better business model for startups.
This model would work well for digital goods. There are already companies experimenting. The most prominent example is Amazon’s Kindle Unlimited service. Subscribers (note the SaaS term!) to the service or to Amazon Prime can rent 5 books for a month. At no extra cost.
Subscription Based Advertising
Another option is to adopt a B2C2B model. Great eCommerce sites are not just a platform for the retailer. They provide a massive audience for brands and channels. This lies at the heart of the marketplace model. But it also works for traditional sales models. The eCommerce business can build a SaaS revenue stream. By offering subscription based advertising services. Brand owners pay to place their goods or services in the shop window provided by the eCommerce site.
SaaS Data And Analytics
Not every eCommerce site is a channel for other brands. Many are the shopfront for a product or service. Even here a SaaS revenue stream is possible. Customers who visit your site will be attracted by many different things. Some will be buyers, some browsers others just visitors. Data about who comes and how they behave could have real value to many others. Imagine you run a travel site which specialises in trips to golf destinations in Scotland. Your visitors are also a possible audience for golf equipment and clothing brands. A regular feed of that data could provide a nice SaaS business.
Time For Disruption
So have a look at the infographic. And use it to inspire some creative thinking. eCommerce may be stuck in a bit of a rut. SaaS can be a vehicle to disrupt new industries as well as old. Let’s open up that opportunity. Thanks Max!
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Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.