E-commerce start-ups facing troubling investment climate


E-Commerce Mobile Commerce Investment StrugglesE-commerce business losing traction with investors

Black Friday has passed and that has left many retailers preparing for the remainder of the holiday season. While Christmas still looms, Black Friday was the most important day for the retail industry. Now that that day has passed, retailers can enjoy some mild relief before gearing up to engage consumers again in December. Mobile commerce helped make this year’s Black Friday a major success, and the growing popularity surrounding the concept has lead to many start-up e-commerce businesses being formed. Investors have seen the potential of these start-ups and some are suggesting that they are overvalued.

Mobile commerce continues to spark new businesses

Over the past 18 months, mobile commerce has sparked the founding of several e-commerce platforms that had promised to provide innovative service to consumers and niche markets. Many of these platforms received a proverbial tidal wave of investments that helped them reach their target audience. Unfortunately, most of these platforms failed to meet the expectations of investors, thus yielding modest returns at best. The lackluster performance of some platforms has not stopped the formation of new e-commerce businesses, however. Finding investments may soon become difficult for these start-ups.

Failed e-commerce ventures create unease among investors

Though the e-commerce sector shows promising growth, investors have seen a string of failed online retail ventures from groups like Facebook, Zynga, and Groupon. Smaller companies that promised major returns were unable to deliver, thus making many investors leery of e-commerce ventures and those that revolve around mobile commerce. Former eBay executive Dana Stalder, who is now a partner at Matrix Partners, an investment firm focused on software and communications companies, suggests that there is “inflated valuations” concerning e-commerce ventures.

Capital-intensive business may find lack of support

Stalder notes that most e-commerce businesses are complex and require significant capital to operate. Inventory and shipping costs make it difficult for new businesses to reach a large audience. Even with financial backing, these businesses can easily spend more than they make, thus making them less lucrative for investors. Many of these companies have created an uneasy investment climate for the online retail industry, which could make it exceedingly difficult for new e-commerce start-ups to find the backing that they need.

QR codes lack clarity in the UK


QR Codes Mobile Commerce UKSurvey shows UK consumers want better QR codes

A new study conducted in the United Kingdom by Hitachi Consulting shows that British consumers are willing to use QR codes, if only marketers and businesses were able to use them effectively. QR codes have become favored tools throughout the advertising industry, with many agencies leveraging the capabilities of these codes to engage mobile consumers. Though advertisers and businesses have shown major favor for the codes, consumers have been less enthusiastic, with some considering the codes garish while others are entirely unfamiliar with them.

12% of consumers have scanned QR codes while shopping

According to the survey, approximately 12% of all British consumers have ever scanned a QR code while shopping. Another 36% said, however, they would be willing to use QR codes if they provided them with discounts, rewards, and more personalized services. The survey shows that younger consumers are more likely to use QR codes if they know they will be rewarded for doing so. Overall, consumers want to see QR codes used in a less ambiguous way so they know exactly what the codes are for and how they can benefit from scanning them.

Young consumers considered ideal target for QR codes

Young consumers, in particular, are an ideal target for QR codes because these people have already shown interest in the codes in the past. These consumers are steeped in mobile technology and have already established some degree of familiarity with QR codes and barcode scanning applications. As these consumers become more prominent in markets around the world, advertisers and companies have been looking for ways to engage them, using QR codes as an effective tool. Surrounding these codes in a shroud of vagueness, however, has proven unattractive for young consumers, who are demanding more straightforward and clear services.

Consumers demand more straightforward codes

Despite the relatively low use of QR codes amongst UK consumers, the codes remain one of the most widely used marketing tools in the advertising space. Marketers consider the codes to be highly effective in their ability to engage consumers, even if these consumers do not actually use the codes. The survey suggests that retailers may have to take a new approach to their use of QR codes if they want to engage a younger audience.