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Flip & The Next Era of E-Commerce.

In the late 1990s, Amazon pioneered a forceful trend that changed how we shop forever. E-commerce delivered a seamless experience that took us out of the four walls of physical retail and onto a digital webpage where thousands of products were conveniently listed.

July 21, 2022
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A women in purple shit standing in front of Flip app screens
Table of Contents

20 or so years later, the e-commerce experience has remained more or less the same: web pages built around products, almost identical to the experience consumers had in the early 2000s.

Could the reason behind the stagnation be a flattening in e-commerce growth? Quite the contrary. In the last decade, we’ve seen the following:

  • E-commerce traffic: up over 500%
  • E-commerce penetration: grew from ~5% to 21% (>300% growth)

Meanwhile…

  • Time spent on e-commerce sites: down 33%
  • E-commerce conversion: down 38%

And it’s just getting started. E-commerce adoption is exploding, growing from 18% penetration just two years ago to 21% today, and expected to exceed 33% by 2030.

Discovery Moves to Social.

The timing isn’t entirely surprising. We used to spend quite a bit of time on e-commerce sites clicking through pages to discover products we wanted before deciding to purchase. But as social platforms grew, our discovery increasingly happened outside e-commerce sites, turning them into a pure utility where shoppers land to simply complete the transaction, reducing the time and engagement significantly on these destinations.

While most of us relate to that behavioral shift, it turns out that the key elements that make discovery much more impactful on social platforms relative to e-commerce can be boiled down to two: video and people.

Video, which has taken over the majority of content consumption, delivers elements that no text review can match:

  1. Easier and faster to consume
  2. Immersive and engaging
  3. Delivers richer information about the product
  4. Builds TRUST, as video reviews can’t be hacked like written reviews typically are
Source: eMarketer

People, on the other hand, deliver other elements that are critical to discovery:

  1. Context around the user of the product
  2. Credibility of the person speaking about the product, especially when they’re a part of a social network where you can verify their activity
  3. Is infinitely scalable

The Missing Piece.

We’ve established that video and people are critical to discovery. But what’s been missing on social platforms is the consistent e-commerce service. Consumer expectations have fundamentally shifted in the past ten years. A two-day delivery has gone from a premium feature to the minimum standard today. Seamless returns are expected. Yet, shopping on social platforms fails to deliver that ‘anxiety-free’ experience, making shoppable content on its own meaningless.

Without a reliable experience guaranteed by the platform, these questions will come up every time a user tries to place an order on a social network:

  • Who’s shipping me the product?
  • How fast will it ship?
  • Which country is it being shipped from?
  • Could it be a scammer?
  • Is it an authentic product or a fake?
  • How do I track my order?
  • Who do I contact if I encounter a problem with the order? The seller? The platform?
  • What’s the return policy and process?

All these questions will make shoppable content only valuable when combined with a seamless e-commerce experience: a one-click checkout, serviced by the platform, with the best-in-class post-purchase experience. Until then, shopping on social platforms simply won’t happen at scale.

The Next Era of E-Commerce.

For the next era of commerce to unfold, e-commerce has to undergo a subtle evolution, from building around products to building around people.

Instead of landing on a page with an overwhelming sea of products, you’d land on a page with videos of people talking about these products, sharing their own experiences, and adding context around each product, while the platform delivers the best post-purchase experience. That evolution will elevate the e-commerce experience again, from a utility to a discovery, research, and transaction cycle.

Flip’s ecosystem

Scaling through People.

People do deliver context and credibility. But they also provide an essential element to scale: network effects. By incentivizing each buyer to share video reviews of their own purchases, they turn into sellers of these products to other buyers on the platform, building a creator community of product experts. After all, the best sellers of a product are that product’s repeat buyers.

And with that incentive structure in place, each creator can build an audience around their expertise, as they would on other social platforms, and instantly monetize that expertise when other buyers engage or buy through their reviews. Successful creators are then naturally incentivized to continue attracting new buyers to purchase through their content, and scale the platform organically.

Flip’s network effects
The Flip Flywheel

A valid question here would be: how do you ensure authenticity? Will people start posting fake reviews to sell more products and monetize on the back of that?

That’s where technology and vertical integration come into play…

By connecting each piece of content to a transaction, the platform starts ranking creators and their content based on the value of that content. Here’s how it works: At scale, content associated with a high return rate will increasingly rank lower due to a consistent mismatch between the buyers’ satisfaction with that product relative to the video review they purchased from. That dynamic ranking would then elevate content reflecting what other buyers experienced, while delivering a transparent ecosystem for buyers to make a decision.

After a stagnation in the e-commerce model for the past two decades, we’re incredibly excited about how this evolution is unfolding and the fundamental improvement to the consumer experience it will deliver.

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