THE BLOG
07/14/2010 03:01 pm ET Updated May 25, 2011

Venture Capital's Excitement for E-Commerce

Mark Suster of Both Sides of the Table and This Week in VC gave us an interesting update on what was new in e-commerce and venture financing.

To reiterate his summary:

ThredUp received a $1.4 million round of financing to further expand their online clothing exchange for a more eco-friendly environment and a more affordable way to get clothes for your continually growing kids. As your kids outgrow their clothes, since they just grow so quickly, you can send them over to ThredUp and exchange them for clothes from other families who have children who outgrew their clothes, clothes which can now fit your child.

My-Wardrobe raised a $9 million Series A to provide consumers with an outlet to purchase affordable designer clothing. This business clearly has legs with how much it's proven the concept so far. While the business model isn't too differentiated from what normal retailers do, it seems like there are some (modest) discounts for the products sold on this site, and there is just the ease of having all those brands in the same place and online which might be enough to keep this business growing.

Side note: Mark was not too impressed with the hyphen in the business' URL, but to be honest, small businesses can't always afford an un-hyphenated URL. My company, Blank Label, an e-commerce business focusing on custom dress shirts, has a hyphen in the URL because the squatter on blanklabel.com wants us to fork up $15,000. Should a lean start-up really pay $15,000 for a special URL when they capture 8 out of 10 of the search results for their branded term? Any research on how useful a proper URL is? What's the worth of an un-hyphenated URL vs a hyphenated URL? We have thought about just sucking it up and buying the domain, but we can't justify the cost right now.

ModCloth just closed a Series B with $19.8 million raised. The business is an outlet for vintage and retro clothing for that indie individual that's not quite interested in trying to look like everyone else, but wants to express their independent and unique style.

There's definitely proof that e-commerce is booming, there is no doubt about that, and clearly investors want a piece of the action and want to support it's growth.

Why is e-commerce exciting? It's improving the customer shopping experience by making it easier for people to find a product they want, filter what they don't want, and not have to rummage through racks and racks of clothing or shelves of product to find the one size that fits them best. People also like it because it's a heck of a lot easier than running between Store A and Store B with fingers crossed that one of the stores might have what you're looking for in-stock.

E-commerce companies have also spent a lot of time and resources on improving the usability of their service so that visitors are having a really amazing shopping experience. It's a lot easier for web businesses to be agile and re-vamp the visitor experience for smoother, and more fun interactions with the service, than to try to change the user experience for shoppers in physical retail stores. Brick-and-mortar is going to be outdated within the next few decades, especially if e-commerce continues to innovate the way people shop to provide more benefit in shopping online rather than going to a physical retail outlet. While there is a loss in the general experience of actually touching, feeling, trying on or testing out product before you purchase it, e-commerce businesses are figuring out ways to make their shopping experiences far more compelling, such that consumers find more benefit in shopping online.