I’ve spent the last several months talking to some of the smartest founders and investors in eCommerce. While they all have their own strategies, there are a few predictions that most of them agree on:
1. 2023 was all about conserving resources
Instead of adding companies to their portfolios, many VCs spent their year participating in bridge rounds and follow-ons to their existing portfolio companies. For founders, 2023 was the year for cutting costs and doing more with less. The same was true for investors – Many decided to double down on their winners instead of taking greater risks with newer companies. This is likely to continue into 2024.
2. Many of the newest eCommerce infrastructure startups are focused on one thing: supply chain
Companies like Mandrel, Factored Quality, Two Boxes, Bounty, Crstl, Mayple Global and Packsmith are building tools to help brands get better products to more customers in less time. The biggest eCommerce unlocks in the next 10 years will be in shipping, logistics and international / cross border commerce.
3. OOH is back
Digital marketing channels have become cost prohibitive for many brands looking to build a sustainable business. Data privacy policies have made it harder to reach the right customers, while increased competition has made it more costly to convert those customers. As a result, many eCommerce brands have begun flirting with more traditional advertising mediums such as truckside ads and other out-of-home (Adgile Media Group), and direct mail (PostPilot).
Expect to see more creative, real-world advertising campaigns from some of the larger eCommerce brands.
4. eCommerce is maturing quickly
It’s clear that eCommerce has been maturing at a faster pace over the past few years. Both brands and their consumers are becoming increasingly sophisticated.
This maturation is, in part, defined by the current competitive landscape:
- Competition between SaaS tools for industry market share
- Competition between brands for new customers
- Competition between customers for the best deals at the most opportune times
Moving into 2024:
- Profitability and cash flow are everything.
- There are no shortcuts or easy wins.
- This industry is full of incredibly smart, driven, talented people. The key to winning is consistency, iteration, financial discipline, and hard work.
These changes have created a different environment and a different set of priorities for investors. My strategy has evolved to prioritize investments in my existing portfolio companies. Don’t get me wrong, I’m still making new investments. In the coming year, I’ll be weighing those opportunities more heavily against the established players in my portfolio that might be a few years ahead yet priced more appropriately due to the challenging macroeconomic fundraising environment.
No matter what, I’m excited for the new friends, new partners, and the new opportunities to come in 2024.
Let’s make it happen.
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