The same smile appeared when I was filling out the brief quiz for True & Co., a new startup that’s trying to rethink how women buy bras. The company asks you a variety of questions that are meant to find out the best shape and size of your bras, and it has put a lot of thought into doing this in an innovative, creative, and tactful way (boobs can be a tricky subject).

For example one quiz question asks “Do your cups runneth over?”, basically asking in a playful way if the bra you’re wearing is too small. You can’t help but laugh at that, easing the tension that is natural when you’re trying to think about the shape of your chest. Email marketing company MailChimp has led the way for using this type of language in an innovative way to develop a brand and an emotion connection and deliver better results.

Everlane and True & Co are creating new online e-commerce experiences, and they’re using emotion and design to do it. Warby Parker has famously grown its online glasses business in this way, too. These are the new wave of e-commerce companies, ones that could rival not only big box retailers but also the first-generation of e-commerce companies like Amazon, or clothing companies that have moved into selling items online.

I think Fab founder and CEO Jason Goldberg put it best in an article he wrote last month on his personal blog:

The third wave of e-commerce is all about bringing emotional purchases online. Non-commodity products. More thoughtful purchase decisions.  I like to call this Emotional Commerce. This is categories like furniture, home accessories, home textiles, fashion, art, and jewelry. These are categories where people care about having something special in their lives.

It will be the Warby Parkers, the Everlanes, the Net-a-Porters, and the Birchboxes that will innovate around using design and UI to get you to part with your money online in exchange for a product that adds a little something extra to you life, your home and your wardrobe. At our RoadMap event in 2012, we highlighted a discussion between Birchbox CEO Katia Beauchamp and Warby Parker co-CEO Dave Gilboa, who discussed some of these ideas. For our next RoadMap event in San Francisco in November, we’ll continue that theme (tickets won’t go on sale until this summer, but you can sign up to get first access here).

The lesson for e-commerce startups, product developers, website designers, and anyone else building something that other people will be using — in the physical world and the digital world — is that the small details matter. A lot. Om recently gushed about well made shoes:

I don’t just love the shoes because of how they look — though that matters — but I also look at where the leather comes from, how it is stitched together and what kind of craftsmanship has gone into it. From shoe trees to little patterns on the toe to the packaging to the font on the label, all of those little things add up to the design aesthetic. And that way of thinking about the design aesthetic extends to other things, including website design. Yes, fonts matter, and the layouts matter, but so does the relative relationship to the kind of content, the speed of the web service and even the screen size and how it all correlates to me.

Design might be a buzz word in the tech world in 2013, and some high end designers might not necessarily like the bastardization of the term and its embrace by the tech industry. But in many ways, designers and design thinking is starting to be valued like never before at tech companies (and let’s face it, all companies are becoming tech companies these days).

This has led to better and higher paid positions by designers and new products that are connecting with us on an emotional level. And that’s a good thing.

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Speaking at a Q&A in New York this week, editor-in-chief Alison Feldmann explained that the main goal of the blog is not to attract new customers but instead to boost engagement with Etsy’s existing fans. It appears to be working. Feldmann said many blogs posts attract more than 100 comments, nearly all of them friendly and positive (if only it were the same for those who write in the tech trenches).

The Etsy blog posts themselves, which offer pretty pictures and tales from artisans (not to be confused with Regretsy), do indeed drive sales but it’s hard to say how many. Feldmann says Etsy has only anecdotal evidence at the moment will soon use data to quantify the relationship between the store and the blog. But even without data, it’s fair to say Etsy has created a virtuous loop between content and buying — one that will hold up on mobile devices, which Feldmann says account for one fifth of sales.

Etsy’s success with content, and that of other retail sites like Birchbox and Thrillist, may tempt more retailers to hire editors of their own. For those who do, Feldmann has some advice.

“Identify what the brand stands for and build out that tone,” she said. “No one wants to read too much about [your brand] … The goal is to take it to a more human level.”

Unfortunately, it may not be that easy. Craft sites like Etsy may be outliers because they offer myriad unique products, most of which come with a personal story that the buyer wants to hear about. Most merchants aren’t in the same position since they offer more commoditized, corporate-produced goods. Event host Erin Griffith of Pando Daily warned that using content can even backfire for some brands — leading them to end up on the Condescending Corporate Brand Page.

Feldmann spoke at Content Conversations, an ongoing series hosted by content discovery platform, Outbrain.

(Image by Karen Nicol via Etsy)

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Subscription services are nothing new, of course: there have been beer, wine and coffee of the month clubs operating for decades, as well as subscription food services like Omaha Steaks or local community-supported agriculture (CSA) programs. But this new range of startups promising subscription offerings of physical goods are a different breed — while each is more or less focused on a specific vertical, the goal is to introduce consumers to products that they may have been unaware of previously. (Wittlebee CEO Sean Percival did a good job of summarizing this space, which is already several months old, in this blog post.)

The importance of curation

Birchbox made its name for providing samples of makeup and beauty products that its subscribers may have never discovered or bought for themselves. Foodzie and Love With Food were launched with the hope of introducing specialty food brands that aren’t available on store shelves to consumers.

In each case, what’s at the center of the service is the act of curation. For the services themselves, that means creating a level of trust and loyalty with subscribers, of offering up thoughtful packages of products that they might not have known about. And for the consumer, there’s an element of discovery with each new monthly shipment.

Love With Food founder Aihui Ong said that for her subscribers, the service is sort of like getting a birthday present every month. “Our main demographic is foodies, who want to discover what’s out there. Most of our products are in the category of, ‘You don’t know what you don’t know.’ We want to increase people’s choices,” she said.

That means sourcing items that probably aren’t available in the stores that consumers shop in. Love With Food, for instance, actually turned down a major brand of snack chips because they were too mainstream, knowing that its subscribers probably already knew and had tried them.

For other subscription-based startups, curation means sourcing materials and creating a new experience around them. Mountain View-based Kiwi Crate aims to make science fun, with monthly “crates” priced at $19.99 that include experiments and crafts designed to appeal to school-age children. Those activities have been designed by parents and vetted by a group of kid testers before being arranged and shipped.

Most of the stuff found in a Kiwi Crate can be bought at the local craft store; what makes its service unique is that it has designed activities around those materials and provides everything that a parent might need, without having to hunt them down herself.

Making subscriptions personal

With more data on what consumers like, subscription commerce companies can also better target their customers and align the products they send with a consumer’s interests. Peter Pham, one of the founders of Los Angeles-based incubator Science, which now has not one, but two startups operating in the subscription commerce space, said that better data and better analytics provide a more personal experience around what they receive.

Take Wittlebee, for example. The subscription service, which was incubated by Science and launched yesterday, offers up boxes of children’s clothing for $39.99 a month. But kids can be notoriously difficult to shop for — they grow quickly and have quirky tastes in clothes. The key to keeping parents — and kids — happy is ensuring that clothes not only fit and grow with the little ones, but that they’re also the kinds of things that parents would choose themselves.

Wittlebee CEO Sean Percival says the startup accomplishes this by asking parents to create profiles of their kids, and to create boxes based on kid “personas.” That enables the company to offer up packages that its subscribers are more likely to like, and more likely to keep them on board.

Letting subscribers be evangelists

Perhaps the biggest driver of consumer interest in subscription-based commerce is how fast and easy it is for these new companies to attract customers through social and viral channels. By connecting directly with consumers, these startups are able to create stronger relationships and actually get users to build their brands for them through word-of-mouth.

“Because we live in a world with direct-to-consumer conversations, we can spend all our money on the quality of the product instead of on distribution,” Pham told me. Thanks to social channels, consumer-facing startups have a lower barrier-to-entry and lower cost of reaching new customers. That is, as long as the product is good. “When you build a quality product, you get natural virality. Because of social channels, all of a sudden, with every person you get in the door, the cost of acquisition goes down,” Pham said.

The social aspect of today’s environment also enables these startups to leverage their own customers as marketing channels for them. Kiwi Crate, for example, encourages its subscribers to share photos and videos of their children unboxing items and taking part in activities. Wittlebee is also building brand loyalty, with many of its subscribers sharing the contents of their boxes. In doing so, they can share the excitement of being part of the community.

One thing’s for certain — the subscription commerce craze is far from over, and we’re likely to see more startups announce plans to tackle new market niches as time goes on. With a mix of smart curation, personalization and social sharing, the phenomenon is likely to see more consumers interested in being surprised by monthly packages delivered to their doors.

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With its emphasis on design, Fab.com has become a go-to site for "product porn."

It’s that time of year again — time to log on to our favorite e-commerce sites, that is. They are sure to have another banner year. But it’s been an interesting last few years for a new breed of commerce sites that are gaining millions of users and boatloads of cash. These sites are distinctly different from their predecessors in that they have social, gaming and entertainment elements deeply woven into the user experience. They’re able to do so by leveraging the technologies and social graphs that were but a glimmer in the eye of the first commerce sites.

The first wave of e-commerce was built around the functional. Amazon, CDNow and others succeeded in putting the basic shopping experience online. It was hard enough for sites to translate our mouse clicks into packages that we’d receive, with all of the attendant systems, workflow and business processes that needed to be put into place. It was hard and expensive to get basic e-commerce order and fulfillment, and their attendant business processes, in place. At Live365, we spent more than a year and burnt more than a $1 million in 1999 building an online store to sell CDs. One could have the same front-end functionality today for $99 a month using Shopify. Ouch.

That’s not to say that the first generation e-commerce companies didn’t innovate. CafePress, eBay, Hotwire, Lastminute.com and Priceline, among others, innovated on the business model front, but their sites tended towards the utilitarian, rightly eschewing anything that might distract the user and impact conversion rate.

“Here we are now, entertain us!” — Kurt Cobain

Enter the second wave of e-commerce

Not so the new breed of e-commerce sites. They obviously optimize for conversion. But their core value proposition is based on entertainment, gaming or social. To channel Maslov, now that we’re able to easily buy the stuff we want and need online, we look to fulfill our “higher” needs via commerce: To express ourselves, to identify and connect with one another, to be entertained.

Companies are popping up and getting funded in several categories:

Flash sales: Vente Privee, Rue la la, Gilt, JetSetter and their kin were probably the first to go for high production values in the presentation of their product. This high-gloss veneer combined with the urgency and serendipity of a flash sale clearly struck a nerve. Fab.com is clearly on to something in this arena. As my friend put it, “It’s where people go for a little product porn during their lunch break.”

Crowd-sourced, user-created, demand-led: CafePress and Zazzle are the pioneers in this category. Threadless and its clone, Spreadshirt, have brilliantly built design-oriented communities with a game component. Made.com is taking a different approach by ensuring demand for their products before they get manufactured.

The new window shopping: Open Sky is a platform for celebrities and experts to curate things for us to buy. Others, notably Pinterest, Polyvore and Svpply, are taking the notion of curating to the logical next step by allowing us to roll our own lists of things we love, while FantasyShopper here in the UK, is introducing a game-like element to this.

Story-based commerce: As high-end brands have gone more and more mainstream, we increasingly desire other ways to express ourselves. Products with stories behind them are one way of doing this and Etsy, the platform for artisans, stands tall in this area.

S-commerce: Subscriptions, that is. ShoeDazzle, Birchbox and Trunk Club are high-profile examples of sites taking a subscription approach that gives their subscribers both cost savings and a “story” from the serendipity of what you get in your monthly shipment.

Big brands: Not to be outdone, the luxury brands are increasingly investing in entertaining their consumers online. Victoria Secret, with the annual runway show, is probably the pioneer in this area. But nearly all brands are investing heavily in rich media content including Ralph Lauren, Burberry and Hugo Boss.

This is by no means a comprehensive list of the models and activity in the space (unlike Elizabeth Knopf’s exhaustive analysis on Quora on why e-commerce is such a hot area in VC) but it hopefully gives a glimpse as to the “new new commerce.” It may well become the norm in the years to come as these new sites grow into their own, and as the incumbents respond in kind. We will simply expect our online shopping experience to be social, to be fun or to have beautifully presented products. As we’ve seen in music, there will be different curators in fashion, travel and other categories, from whom we will decide what to buy. Pinteresters, Polyvores and Svpplyers whose influence may well rival that of magazine editors and retailer buyers.

But in fact, the new new commerce isn’t so new: Artistotle is said to have noted that “Man is, by nature a social animal.” He was on to something. In fact, the fear of people and public places, agoraphobia, is literally “fear of the market.” Whether it’s the storytellers spinning yarns in the main market square in Marrakech or the flower sellers on Columbia Road hawking their wares in their Cockney accents or the auctioneer at the county fair, we have socialized and been entertained while shopping for centuries. And as long as we remain a social animal, it’s only natural that we will look for the same fix online

Rags Gupta, based in London, is currently on sabbatical from the online video company Brightcove, where he has been vice president, international. Prior to that, he was an executive at Live365 from 1999 to 2004 and is currently an investor/advisor at 8tracks. Follow him on Twitter: @ragsgupta. 

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