There is eCommerce and there is fashion. They may have a very clear overlap, but with a crucial differentiator that could determine the future prospects of your business. If you are an entrepreneur building an eCommerce or fashion company, or you're an investor thinking the company you just invested in is in both, some clarity can be gained by asking the question: is this company competing with Amazon?
Don't Compete with AmazonIn the short two-minute clip (below) from his PandoMonthly, Bessemer Venture Partners' Jeremy Levine (who's currently on the board at Pinterest) said that he was investing in eCommerce companies back in 2007-2008, but stopped, in large part when he realized how powerful Amazon is and how incredibly difficult it is to take them on.
That however, didn't stop entrepreneurs from pitching Jeremy on their eCommerce business - assuming he must have an interest - and wanting him to take a look at what they have. When he did, something became apparent:
I noticed that a lot of these companies were making their own products, whereas the eCommerce businesses that I've invested in were selling products made by third parties. That’s what Amazon is the king of. The nice thing about making your own products is that Amazon can’t screw you because they can’t get your product to sell unless you give it to them, so you actually have a way of differentiating versus Amazon.If your core business is selling products online that are made my third parties - you're in eCommerce - which is hard because it means you're competing with Amazon. It also sends you're company in a predictable path, where breakout success, may lead to an inevitable acquisition by Amazon.
What does it mean to be a startup in fashion?You make your own products.
There is very much an overlap between eCommerce and fashion, in the sense that a product is sold and distribution is online. The key differentiator though is that the online 'fashion' retailer is more in control of it's own destiny:
When you make your own products you have complete control over how your product is sold and at what price point - which means you can charge a premium. Capturing the value from a premium product is something that Amazon is inherently against...and is something Apple has mastered. So, Watch could be considered Apple's first foray into a traditional fashion model - high margins, pre-existing perceived value for product, and the potential for the characteristics of non-tech/telecom/2-year product cycle upgrades (consumers will purchase and accessorize depending on what's in-fashion).
The Watch is at the intersection of fashion and tech.