Jeff Jordan on: eCommerce, Marketplaces, & Amazon posted by: Richie Serna

Jeff Jordan on: eCommerce, Marketplaces, & Amazon

Many thanks to Jeff Jordan for sharing his great insight on marketplaces and the trajectory of eCommerce with the Balanced Community. For those of you who were unable to attend the event we’ve highlighted some of the key takeaways from the talk below:

Bullish Outlook on eCommerce

Highlighting online stores’ considerable cost advantages (as much as 5x) over their brick and mortar counterparts, Jeff maintains an extremely bullish outlook on the future of eCommerce. One key indicator of this continuing trend is the striking decline in popularity of American malls, where vacancies have reached 30% in roughly 20% of U.S. malls. Furthermore, Jeff expects this trend to accelerate and spread across more product verticals as physical retailers continue to struggle to sufficiently differentiate their value proposition.

Expansion of Marketplaces

Marketplaces are being increasingly established across every vertical, as evidenced by the fact that nearly every section of Craigslist is being systematically disrupted by a particular marketplace. Jeff estimates this trend will increase exponentially as marketplaces are able to offer unique regulatory and product differentiations.

Demand-Side vs Supply-Side Constraints

While at eBay and OpenTable, Jeff learned that the greatest source of value came from the buyers. If there was a critical mass of buyers in a marketplace then over time suppliers would flock to where the customers were. However, he suggested that this trend might be reversed when it comes to “sharing economy” marketplaces like AirBnB. In this case, there has been a limit to the amount of people who are willing to rent their houses out to strangers and as such the supply-side can be seen as the limiting factor.

Cultivating End-to-End User Experience

On the subject of AirBnB, Jeff emphasized the importance of “sharing economy” companies capturing the entire end-to-end user experience. With such marketplaces, it is not sufficient to merely act as a facilitator of the connection between two parties over the web. The company and its reputation is judged upon the experience as a whole. As such the need to own and moderate the customer experience from discovery through fulfillment is critical.

Amazon the Behemoth

The dominance of Amazon in certain verticals can be seen as a limiting factor to the growth of eCommerce because it is such a punishing competitor. The notable exception is in apparel where the notion of searching for clothes is a less natural fit than the curated, browsing experience put forward by companies like Fab and Pinterest. He also suggested that Amazon is perhaps the biggest competitor to Google at the moment. This is because it can offer a superior end-to-end user experience when it comes to product search, discovery, and fulfillment when compared to Google.

Power of Product

What makes a marketplace or any tech company succeed is first and foremost product. Focus on building an amazing product then continue to iterate and make it even better. The first step that Jeff took at both eBay and OpenTable was to double the number of engineers in order to accelerate product innovation. Each time the payoff was big! Eventually the rate of product innovation will slow and at that stage the priority starts to shift to user experience, but at an early stage the focus really is product, product, product!

If you would like to view the full-length video of the discussion you can view it here.