Jeremy Liew of Lightspeed Venture Partners explains in a current Techcrunch guest article, ‘Is Direct Selling the next Driver of Start-Up Commerce Companies?’, why especially start-ups are based on the well-tried concept of direct marketing: The parties guarantee an additional income for hosts in a difficult economic employment market; Facebook&Co generate larger ranges quickly and modern tablets represent a much bigger offer array than the models and samples have allowed it before.

Liew names a whole range of new offers from the fashion industry: Thirty One Gifts, Stella and Dot, Chloe and Isabel, Gigi Hill, Miche Bags and J Hilburn. Besides that, there are offers in different other areas: Scentsy.com for scented candles, Vino Virtuoso for wine enthusiasts or Paperly for personalized printing products. Houseparty offers brand parties sponsored by brands. Party guests can test new products etc.

Pop-Up Stores in the living room: Jewelry instead of Tupperware

Sequoia Capital invested 37 million US$ in Stella&Dot at the beginning of the year

Founding wave comes to Germany

Now this wave gets to Germany as well. A series of similar concepts is being prepared or has already started. BuyVIP founder Gerald Heydenreich has just launched Pippa&Jean and according to their own statements focuses on direct marketing in e-commerce: ‘So called ‘Style Coaches’ bring the collection right to the jewelry enthusiast´s home and present it at Style Parties. In addition, every Style Coach owns their own personalized online boutique, which is available to registered users in a closed community, and reaches their network via social media channels.’

Extension of the online world to the offline world

In the medium term, 100,000 women are supposed to be won over as Style Coaches for Pippa&Jean

Another project by incubator Springwise has started a short while ago with Juvalia&You. Another one, Ada´s Avenue, is ready to be launched. Regional chains like Budnikowsky offer beauty parties as well. There is a Facebook page for shopping party fans, ShoppingParty.

Conclusion: The online world is increasingly going over to the offline universe, especially in areas such as jewelry, fashion, accessories, cosmetics and lifestyle products. The living room of the female user has an unbeatable advantage by making the impersonal e-commerce more social and emotional – without requiring bigger investments in real selling space. It is exciting to observe how especially female users in Germany react to the trend of social selling. The charm of Avon advisers and Tupperware parties has ceased in the meantime.

An infographic of My Destination gives detailed insights into the way mobile technologies have already changed our travel patterns and are increasingly going to influence it more and more in future. Admittedly only a small number of travellers have actually booked through mobile devices, but information and communication are increasingly being operated through mobile devices. In the medium term, this also includes offers like virtual walks before taking a trip, personalised information of the destination area, mobile updates of travel data, digital travel companions and guidebooks or the use of RFID chips for travellers and their luggage. Tour operators who still want to perform successfully and develop their business further will have to give the travellers all their attention. Here are some interesting facts about the mobile travel industry:

‘Mobile Technology has changed Travel forever’

Source: Infographics by My Destination

After an announcement of both companies, the US software giant invests 300 million US$ and gets 17.6% of the subsidiary, which is called Newco (working title) and which pools the digital activities of booksellers. This new subsidiary is rated with an entry of 1.7 billion US$. This is more than twice as much as the previous stock exchange value of Barnes&Noble, which amounted to 800 US$. Thus, the B&N stocks shot up right after the debut at the stock exchange – by almost two-thirds (approx. 65%). Besides e-books, B&N includes their kiosk with digital magazines and newspapers, their study portal Nook Study, an equivalent to Apple´s iTunes U, plus 641 bookstores for college students. Just in time for the launch they offer a Nook-App for Windows 8, with which Windows-users all over the world can access the online-shop.

Source screenshot: Nook Color ™

Entrance to the booming e-book market

Because of their Nook-readers, B&N is one of the strongest rivals of Apple´s iPad and Amazon´s Kindle. Now this seems to become the official Windows-platform for e-books and digital magazines. “We are now on the cusp of a revolution of reading”, Microsoft manager Andy Lees justifies this venture. Electronic books have spread much faster in the US than they have over here. The second biggest book trade chain Borders has gone bankrupt and even Barnes&Noble experiences increasing problems with printed books. In addition, this deal gives Microsoft a good basic position to enter the college market, which is worth 5.5 billion US$ and at the point of a total digital migration, because more and more students decide to buy cheaper electronic versions of textbooks instead of the printed versions.

Conclusion: Right now this is a deal that seems to satisfy each party: Barnes&Noble gets capital to be able to compete with Amazon and Apple furthermore, Microsoft fills their gap in their content-portfolio and Nook users can be assured that their platform continues to exist.

In a current online campaign the focus of one of the world´s biggest retailers is on getting as small as possible: They integrated a whole furniture store with 2,800 products on a 300 x 250 banner. Background: Living space is getting restricted by an increasing population density. But no matter how restricted the space, IKEA offers solutions and proves that the marketing idea of this banner is pretty impressive. Interested parties can browse, choose a product and will be redirected to the particular product pages. It is an innovative campaign which shows that display advertising can still be surprising and generate quite some PR.

IKEA´s smallest furniture store with only 300 x 250 pixels and more than 2800 products “Make the most of any space”

· 51.40 million German speakers over 14 years old in Germany are online

· 85% of them longer than 3 years

· 96.5% catch up on products online

· E-mail is still the No. 1 tool to be used

Especially young people virtually don´t seem to know a world without the internet: 97.2% of the fourteen- to nineteen-year olds are online. Whereas it is only 36.2% of the 60+ generation. Due to the growing distribution of smart phones, mobile internet usage is increasing rapidly as well. Thus, AGOF revises the new wave of their market-media-survey ‘Mobile Facts’ thoroughly for the mobile advertising market.  Thereby, detailed coverage data and structural data are available in the mobile sector as well.  The growth of coverage is remarkable: According to the survey,  just under 17 million users accessed the internet via mobile devices in 2011; in 2010 the number was just under 11 million. Based on approximately 60 million mobile phone users, this results in coverage of 24% (+55% YoY). Men are distinctively ahead of women when it comes to mobile internet usage. The emphasis of age structure is on 20- to 49-year-olds.

Source: AGOF, Mobile Facts 2011

The most commonly used features are making calls (90.5%), texting (79.4%) and reading the news (75.2%); followed by writing and reading e-mails, using social networks and listening to music. And: One in five mobile internet users shops via mobile devices once a week.

Source: AGOF, Mobile Facts 2011

The cloud as a hard drive for private users

Google is now entering the competition of cloud storage services with Drive as well

The cloud has been talked about as a huge topic for years now. The CEBIT 2012 was much influenced by the Cloud and Mobile. This topic is supported by the increasing spreading of smartphones and tablet PCs with private users. And ever since Apple has changed over from MobileMe to iCloud “a battle of the top dogs for private Cloud-users has been going on”, as news network n-tv strikingly phrased it. Thus, Microsoft reacted right away and restructured their service SkyDrive that has existed since 2008. Even the pioneer of all synchronization tools and cloud storages, DropBox, is going to extend their services this week and is now going to offer a new feature that allows the user to share data far easier via a link. In addition there are a lot of other service providers, who want a share of the pie: Amazon´s CloudDrive, Box.com, One.com, Rackspace or Telekom Cloud in Germany. All providers differ in a lot of points, but they have one thing in common. They offer storage space on a server on the internet. And the pie is big: According to IDC, the market for public cloud services is going to increase up to 72,9 billion US$ till 2015. (+27,6% YoY growth).

The goal of all these offers: To commit users to their services by offering free basic services and to make them paying clients by offering premium services later on. Because, if one settles for a particular service, they quickly get used to being able to have access to their data everywhere and at any time and they can´t get away from it that easily. A change of provider takes a lot of time. Everyone who has already tried to transfer all their music data from one system to another is not going to do it a second time any time soon. This business has a lot of potential due to the ever growing volume of data even in private areas: Someday almost every user gets to the charged area; and might leave the USB flash drive with all their holiday photos at home.  It remains exciting to wait and see how private users are going to react to this.

100% completion rate: They only have to pay when the user watches a commercial in full length

Apart from the monthly subscription fee of eight dollars a month, the company, whose proprietors are the media corporates like News Corp., NBC Universal and Disney, counts on advertising money. Kilar presents an interesting new concept to improve the collaboration with the advertisers: advertisers  only have to pay for their commercials when a user watches 100% of this commercial. This means: If a user leaves the commercial before it´s finished, the advertiser doesn´t have to pay. This is valid for both services, the free-of-charge service from Hulu and the subscription service from Hulu Plus. This leads to the argument that the concept might not be in the Hulu’s interest, but such doubts are quickly removed, if you consider that according to AdAge 96% of all commercials at Hulu are watched in full length at the moment. This is a pretty high figure. Though the figure for i.e. shorter videoclips is only as high as 59%, this announcement doesn´t mean there is going to be a loss of value.

An interesting concept: Advertisers only have to pay for their commercials on Hulu Plus, if these are watched in full length (100%)

According to Hulu SVP of Advertising, JP Colaco, the new concept is only one of the several initiatives: In 2007, the Hulu Ad Selector was already launched: Customers can choose between several commercials the one they like best. Hulu Ad Swap also offers a lot. Customers have been able to swap commercials with another one since October 2011. This concept seems to be successful: Hulu Ad Swap has been used for more than nine million times.
For Kilar, Hulu´s new initiative is part of the vision that TV-commercials are getting more relevant and more individual for viewers, while it also offers higher attraction for advertisers. It is indeed an exciting field, because with YouTube´s Ad Skipping and Netflix, there is now potent competition in the ring.

In comparison to other EU-countries, Germany is above the European average of 56%, but still far away from the leading nation, the Netherlands. 82% of the Dutch population informs themselves online about products and services, whereas the percentage in Southern Europe is far below 50%.

The importance of the internet as a source of information before a purchase decision is made.

Source: BITKOM/Eurostat 2012

Other consumer´s experiences are getting more and more important.

Other consumer´s experiences are getting more and more important for a purchase decision. Another survey of BITKOM says that by now every second internet user reads reviews from other customers before purchasing a product. Every third one states that other consumer´s opinions directly influence their purchase decision. Distinctly, less internet users are active themselves. Only every fifth of them publishes their own reviews of products or services.

Young adults inform themselves much more frequently than senior citizens do.

There are distinctive differences in browsing behavior between men and women, as well as individual age groups. Men (74%) inform themselves more often about products online than women (66%) do. In addition, young adults (25-34-year-olds: 89%) do so much more often than senior citizens (32% of the 65- to 74-year-olds).

Chinese netizens spend as much time on the Internet per week as US Internet users do, but Internet usage behavior is quite different. Instant messaging is the most popular tool for Chinese, even ahead of online search and online music. It is also quite interesting that Chinese seem to love to shop online: While the average US Internet user shops online 5.2 times/month, Chinese users shop online an average 8.4 times/month. This is just one of the reasons why quite a number of industry experts predict China to become the largest eCommerce market by 2015.

World’s largest Internet population

Source: Mashable_The world’s largest Online Population

Statista, China Market Data and Statistics

Shoescribe.com: Customer loyalty boost for shoe-crazy Yoox customers

Single purchase and subscribe offers increase customer loyalty

Apart from single sale purchase options, many of the established online stores now also offer subscription services. Take Amazon‘s subscription service for example: Their discount subscription offer gives a 10% discount on Pampers products, body care articles and some foodstuffs. It also includes direct delivery service for a time period of the customer’s own choosing. Customers are free to determine the delivery time of products for every month, two months or an even longer time period. Of course, the delivery time can be changed at any time. Advantages are apparent: Clearly communicated price advantages and a liberal termination of service policy help to address customer’s reservations for a long-term commitment.

Amazon’s discount subscription offer: Free direct delivery of discounted goods at time intervals of the customer’s choice

Purchasing food for pets is another routine, where subscription features greatly help to make things easier. German supermarket chain Tengelmann and founder of animal foodstuff retailer Fressnapf, Torsten Toeller, worked together to found Canimix, an online animal food shop boasting a subscription service, which provides regular delivery of pet food according to the owner’s preferences. Body care chain Douglas now also features a subscription service called Douglas-Box-of-Beauty that resembles BirchBox. For only 10 Euros per month samples of new beauty care products will be delivered to the subscriber’s home for free.

Conclusion: We can be sure that the hype surrounding subscription deals in eCommerce will continue and we will see quite a number of new start-ups in one or another niche market. It is exciting to observe how even the most basic products can be sold in revolutionary new ways. With a smart product assortment, customization features and a social media approach, some of those services will be successful in reaching out to the mainstream. However, we can also expect for the majority of these services to simply vanish. Therefore, the most interesting approaches are those by existing online retailers, which make use of subscription deals to enhance their customers’ loyalty.

Read in Part I of this story why subscription offers might hamper business growth for stand-alone businesses and learn about the breadth of services in niche markets.