Building a million dollar E-commerce business is getting easier, but building the next Warby Parker is getting harder for the same reason.
As I’ve written about here, Platforms: E-commerce, Financial Services and Social Media, if E-commerce becomes dominated by three partnerships (Social + Tech + Banks), merchants will struggle to differentiate themselves in a sustainable way.
Merchant success will become a function of the Ecosystem, as measured both in terms of (1) the practical efficiency (does is it work well?) and (2) equality (does it work just as well for me as it does for everyone else?).
Questions of practical efficiency create room for competition.
Questions of equality tend to lead to regulation.
Both provide an opportunity for platform innovation.
Platform innovation begins first by giving the entrepreneurs full control and analytical capabilities for their data. Enabling innovation would require more than the current “download your data” option on social media sites. Instead re-establishing entrepreneurial power requires building platforms on platforms.
By spanning across the ecosystem and integrating into every facet of the merchant’s life, such a platform would enable robust and flexible data dashboards with actionable insights.
Rather than the algorithms within the ecosystem making choices/ suggestions for the business owners, a new platform spanning across the ecosystem could do so.
For instance, Facebook may tell a business owner today that they should spend another $1,000 on promoting X product. However, a fully integrated platform may suggest the business owner should really spend $500 on this one Facebook ad that’s working really well and an additional $200 on targeted emails to their best customers, who oh by the way, are showing signs they may soon churn.
However, while full knowledge through full integration may be optimal for the merchant, the banks, social media companies and marketplaces and Platforms often own the data.
In addition, integrating into an entrepreneur’s e-commerce store, podcast account, Substack account, Uber account, Facebook and Google Ads account, personal and business bank accounts among others and leveraging the data across each to create actionable insights, both overtime and in a reliable way, is really hard.
The difficulty is compounded by the future optionality and verticality of each part of our lives, the legality of data ownership rights, and the logistical nightmare of stitching the ecosystems together for all merchants in a way that allows even simple data summarizations, let alone AI and ML driven insights to be delivered.
Innovation will prove paramount to restore power to the merchants within the platform economy; however, platform innovation will at first look like patchwork within verticals with similar datasets and problems (Data insights for X), rather than a broader, more powerful solution (Data Insights for All).
