Beanstalk Ventures is a New York-based seed-stage venture fund exclusively focused on investments in “impactful and innovative technology” in the retail sector.
The company was founded as a partnership between Ken Seiff and Novel TMT, which is the global technology investment firm of Silas Chou and his family. Seiff serves as managing director. Prior to this role, Seiff was founder of Bluefly and cofounder of Poppin as well as Simply Gum. Here, Seiff discusses e-commerce, online consumer behavior and new technologies.
Conversion rates are declining for online traffic. What does this mean for online sales and how should brands and retailers respond?
Let me start by pointing out that today’s consumers are increasingly looking to shop on their mobile phones, but the experience is falling short of what they have come to expect. For every 1,000 visitors to a retailer’s mobile site, it is not uncommon for 997 to leave without making a purchase. So, as a meaningful share of online traffic shifts from higher-converting desktop Web sites to this far lower-converting alternative, the blended conversion rates inevitably decline. For several years now, retailers have been advised that their responsive-design Web sites effectively serve their mobile visitors, but they have been copying their e-commerce strategies to mobile. This doesn’t work because mobile site pages load in 6 to 8 seconds and filling out the checkout fields is painful.
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We are leading the way with a solution that integrates Apple Pay and Google Wallet into a native app experience. In this solution, site pages load in 1/20th of the time and no forms are required at checkout. We expect this powerful combination to drive mobile checkouts up [significantly] and stem the industry’s recent decline in conversion rates. More importantly, it will enable retailers and brands to satisfy today’s consumer mobile shopping needs.
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What is the lowest-hanging fruit for physical stores when it comes to new technologies?
It surprises many people to learn that retailers often get more annual visitors to their Web sites than to their stores — in some cases, four times as many. Unfortunately, less than 3 percent of these online visitors typically convert into customers.
Many retailers spend lots of time and resources to get an extra fraction of a percent to convert online, while very few try to also drive the 97 percent who have not converted on the Web into their physical stores. In fact, when it comes to promoting their physical stores online, most Web sites simply list stores’ addresses, hours of operation and phone numbers. And, as a result, they miss a big opportunity to build out the presence of the store section of their Web site.
Offering their online audiences the services and features designed for store customers, such as booking in-store personal shopping appointments or RSVP-ing to in-store events, will drive meaningful results. Customers who use the Web site to book personal shopper appointments spend 300-plus percent more than the average store customer. By taking these two relatively simple actions on their sites, retailers can easily expand the audience of potential in-store guests and add new-to-file customers that otherwise would have been lost in the nameless hoard of that 97 percent who disappear back into the Internet ether.
What is the next big thing in online commerce?
Google, Facebook, Instagram, Pinterest and Twitter are in the early stages of reinventing the way consumers will shop online. They are redesigning their experiences so consumers will be able to “buy” products from retailers without ever having to leave the Web sites and apps of these social media giants. This is a big win for consumers. See a pin or tweet of a product you like? Simply press the buy button and the order goes directly to the retailer or brand. Anytime billions of customers can shop more easily and impulsively, it is a big win for the retailers and brands. But to receive these order transmissions, retailers and brands will need to allocate more technology resources to clean up and standardize their own data as they integrate into each of these sites. And if history is any guide, the algorithms of these giants will begin to favor the “buyable” products. I believe this transition will take hold within two to three years because retailers that chose not to participate will likely see their traffic wane.
What is the last frontier of the retail landscape to get technology?
Retail and brand back offices will be the last frontier to acquire the necessary technology and systems innovation. Historically, with the exception of the finance department, retailers have underinvested in the back office. This is a bit backward since these teams often oversee critical functions. One area in which we have taken a keen investing interest is in the buying and selling of excess inventory.
It is not uncommon for a large off-price retailer to be a brand’s single largest customer. These multimillion-dollar transactions, which can impact a brand’s annual profits, are still happening on excel spread-sheets, without photos. That is crazy. For a thousand-dollar full-price transaction, the same brands can easily justify deploying sophisticated, visual solutions. It is not just the brands that are losing out, it hurts the off-price buyers as well, since each brand’s spreadsheet is different. So smart retailers like TJ Maxx, Ross and Gilt have to cut and paste these offers manually into formats they can then analyze. This complicated problem, along with many other back-office functions, will be overcome by the next generation of software companies.