Will Racksandstands.com Disrupt the World of Ecommerce?

Way back in 2002, amidst the fallout of the dot-com bust, two college buddies turned serial entrepreneurs had a simple idea: utilize the internet to meet hyper-focused consumer demand for niche products. Amazon.com had a long ago established dominance in books and more recently moved into electronics, but what about everything else? Leveraging search engine optimization and a few ad words, these two founders connected suppliers to burgeoning ecommerce demand by creating an individual product oriented website. Thus was born racksandstands.com, an online store for the diehard sound enthusiast who could not hope to find similar variety for speaker system stands in her local brick-and-mortar retailer. About 270 stores tailored to oddly specific interests followed—allbarstools.com, everymirror.com, strollers.com, luggage.com to name a few. The umbrella business became CNS Stores LLC; a purposefully lame name intended to disguise the ecommerce nature of their business from would-be suppliers. CNS was hopefully not sexy enough to be another hapless ecommerce platform. Shah noted that back “…in 2002, manufacturers didn’t want to hear the word internet.”

Without external capital, co-founders Niraj Shah and Steve Conine quietly grew CNS to over $500M annual sales by 2011. About that time the founders decided to take some investor capital—$200M Series A to be exact—rebrand CNS to Wayfair.com and apply their learnings to the home furnishings market. Four years of rapid growth and an IPO later, Wayfair.com is well-positioned to capture a large chunk of the $233B home goods market—only 7% of which currently transacts online. Recent revenue data demonstrates their rapid growth: year-over-year sales for the first six months of 2015 grew at 56% to over $900M. But unlike a website for bar stools, home decor is a crowded space. How sustainable is this growth and how has Wayfair remained differentiated?

With a network of over 7,000 suppliers and something like 7,000,000 products, the two-sided platform should be a logistics nightmare. According to an interview with Alex Finkelstein from Spark Capital, Wayfair solves this complicated puzzle by “teaching of small, mid, and large manufacturers to do drop-ship…”—fulfilling orders by shipping directly to the customer. Greg Bettinelli from UpFront Venture gives credit in his blog to the traits that made racksandstands.com  the original success back in 2002—old-fashioned online marketing capabilities in the form of paid search advertising and search engine optimization coupled with dedication to providing unmatched product depth. Bettinelli apparently counted 17,000 accent pillows and 5,000 barstools on the site.

Will Wayfair.com become for home décor what Barstools.com was for… barstools? In a recent interview Co-founder and CEO Niraj Shah seems to have his sights a little higher this time aiming to become the “Amazon for the home.”







http://gregbettinelli.com/my-wayfair-ipo-breakdown-when-an-s-1-doesnt-tell-you-everything/ http://www.xconomy.com/boston/2015/08/17/wayfair-learning-e-commerce-lessons-from-amazon-zulily/

By: Ben Seipel

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As the popularity of flash sales models grow, it is intriguing to see the evolution from general, broad Groupon daily deals to the emergence of niche commerce sites.  An example of an up and coming niche site is One Kings Lane, is a flash sales site for the home market.  They sell home décor, furnishings, and accessories at up to 70% off retail.  With the competitive environment heating up in home retail, One Kings Lane has clearly pursued a full-fledged strategy of editorial content and partnerships to maintain their branding edge above the competition.

About One Kings Lane

One Kings Lane was founded in 2008 by Alison Pincus and Susan Feldman.  As style-conscious women, they noticed the lack of high quality and affordable home décor options online. Three years later, One Kings Lane is on its way in becoming a household name for purveyors of home décor.  The company has a very simple business model: buy at lower prices than they sell to consumers.  Also, One Kings Lane doesn’t carry inventory risk that a traditional retailer would, because all transactions with the manufacturers happen after the sale ends (usually lasts for 3 days). Even as a niche e-commerce site, One Kings Lane has garnered a large user base of over 2 million members to date.  And these members are certainly buying; the company experience revenue growth of 500% between 2009 and 2010.  They expect to generate $100M of sales in 2011, and was recently valued at $440M, backed by numerous investors including Kleiner Perkins, First Round Capital, and Greylock Partners.

When Price is Not Enough

Given the recent trends in flash sales sites, many competitors to One Kings Lane have emerged including Gilt Groupe’s GiltHome, Joss & Main (Wayfair/CSN), fab.com, and Amazon’s MyHabit Home. Competing on price is just the bare minimum and One Kings Lane has found impressive ways to stand out among the crowd of home retail sites.  One of the ways they’ve done this is by focusing on creating amazing editorial content.  In fact, this is so important to One Kings Lane that they actually bought a publishing design firm called Helicopter.  Examples of well-branded content include how-to videos (i.e. how to make a bed – 9,500 views), which resonate with a Martha Stewart-esque audience of aspirational home décor enthusiasts.

Additionally, One Kings Lane has identified strategic partnerships with celebrities and media outlets that are aligned with their brand identity.  This provides the company with channels to market their products in a refreshing way, without getting lost in a potential customer’s email inbox.  Specifically, One Kings Lane partnered with Gwyneth Paltrow last April to promote her first cookbook.  This relationship enabled the company to reach Platrow’s existing fan base (roughly 500k Twitter followers) and strengthen the One Kings Lane brand in the mind of consumers.  Most recently, One Kings Lane snagged a huge endorsement from Bravo, which put the brand front and center in episodes of the Bravo TV show “Million Dollar Decorators”. 

In a business that is fundamentally about getting the best value, One Kings Lane has made it clear that competing on value is not only about price, but also about the brand.

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