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Summary:

We’ve seen a rise of e-commerce companies recently that have tackled the dual problems of discovery and boredom: They’ve made shopping a fun, emotional experience. But can they translate that to sales?

Fab fun e-commerce design

Last night I found myself on Fab, browsing the company’s latest items for sale, and the experience didn’t disappoint. Among items of interest, I found a NYC Metro bracelet cuff, a cardboard rhino sculpture, a life-size inflatable reindeer, typographical neon light signs, and a Frank Lloyd Wright-styled card case.

Did scrolling through these items on Fab keep me deeply engaged and looking for more? Absolutely. But would I ever put a $50 cardboard animal in a shopping cart and actually pull the trigger? I would not.

And therein lies the question with the rise of design-centric e-commerce companies: There is no doubt that Pinterest has inspired a population of people to look for beautiful images on the web, and these companies like Fab and The Fancy have risen to the challenge of producing beautiful items to browse. But in working to solve the problems of discovery and boredom in online shopping, can these companies translate consumer interest and engagement into actually making a purchase?

I sat down with Shop It To Me CEO Charlie Graham this week, who’s been in e-commerce since 2005, and he had some interesting ideas on how these older companies have succeeded, and how to think about the new wave of companies. He pointed out that just a few years ago, the big e-commerce companies were ones that focused on getting consumers to pull the trigger: From half off a restaurant at Groupon, to rock-bottom prices and Prime shipping on Amazon items, to bidding on something through eBay, to getting designer deals at Gilt, you were either shopping with a specific intent to purchase, or you found deals that were too good to pass up.

But recently we’ve seen an explosion of these design-focused e-commerce companies that are drawing consumers through a totally different approach. From Warby Parker mailing you a box of glasses to try on and model in your own home, to True & Co charming customers with a Q&A about how your bra fits, to Fab giving you endless entertainment with wacky and clever home items, there’s no doubt that these companies want to make your shopping experience fun. They create pleasurable, cool experiences. But the question remains: does this consumer experience get people to buy?

Fab reindeer

The biggest of these companies have grabbed the attention of investors, inspiring whopping valuations — reportedly $1 billion for Fab, and $600 million for The Fancy – but whether or not they’re still on an upward trajectory when it comes to revenue is questionable. Bloomberg recently reported that Fab missed its revenue targets and still isn’t profitable, and The Fancy is bringing in revenue of $3 million a month.

These numbers still pale in comparison sales at Amazon or eBay, the far less exciting e-commerce companies that came out of the last era that are now dominating the arena. On Thursday, Amazon’s earnings noted the company hit $6.48 billion in sales of electronics and other merchandise, up 31 percent over last year.  And as Om wrote this week, the company is absolutely killing the competition when it comes to retail and in-store comparison shopping (and certainly besting Google’s shopping efforts.)

The difference is about intent — Warby Parker and Fab have made browsing a fun experience, but when you’re going to Amazon, it’s much more likely that you’re going there to buy something. So could the former capture the behavior so common on the latter? Fab has planned a major expansion to move beyond flash sales to carrying more regular merchandise, so this could be a successful tactic.

But as long as it’s selling $200 full-size inflatable reindeers, it’s hard to imagine how Fab will become a core staple in anyone’s shopping.

We’ll be talking more in depth about design at GigaOM’s RoadMap 2013 in November in San Francisco (to be the first to access tickets, which will go on sale this Summer, go here).

  1. Great point about valuation but besides that this article is a waste. You are comparing search based shopping pattern to discovery based shopping pattern. Totally different. Search based shopping has cover more SKUs, better supply chain (including easy shipping) and better search personalization algos. For discovery sites, it is always about presentation and aesthetics. They are never going to staples for everyday shopping but are going to be ultra high disposable income class destination. That said, their profit per item is always going to be higher because it is not cost of mfg that determines the price but discovery that does.

    If you need to compare something, compare it with high end shopping site with low mfg cost (e.g. ethen allen in furniture etc).

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  2. I agree with the first comment – You’re trying to compare apples to oranges – a boutique shop in a fancy mall to Walmart.

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  3. ddd

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