Top 3 Reasons Why VCs Should Be Investing in eCommerce
What do some of the largest eCommerce brands and online retailers have in common? They’ve all been backed by venture capitalists. Recently, more and more VCs have been investing in eCommerce, putting their dollars behind retailers who offer a variety of products to global markets.
Investing in eCommerce might seem like a departure from more traditional investments, like technology startups. But the eCommerce industry is booming. As small, private retailers grow, so do their sales numbers. Eventually, these private companies move to become publicly traded or are acquired by larger companies, making your investment worthwhile in the long run.
Here’s Why You Should Be Investing in eCommerce
Venture capital firms invested over $1 billion dollars in the retail and distribution sector last year. That’s five times greater than investments made in 2013*. Small to mid-size eCommerce brands are constantly looking for VC-backed funding to get their businesses off the ground. If you’re on the fence about investing in eCommerce, here are a few things to reconsider:
- Consumer demand for online goods continues to grow. Online shopping is extremely popular among today’s consumers. Customers are more likely to research and buy products from eCommerce sites than they are to visit physical store locations to look for them. Constantly increasing product demand opens the door for more online retailers to emerge and capture their share of a growing market.
- Online retail costs are low compared to investing in brick-and-mortar stores. The upfront overhead costs associated with opening physical store locations are lofty. There’s the retail space, lighting, fixtures, signage and more. If you’re looking for a safe, low-cost and profitable investment, eCommerce is the right option. Since there is no need for a brick-and-mortar location, the most expensive elements are quickly eliminated.
- Investing in eCommerce results in more expansion opportunities. As an investor, you’re looking for companies that are positioned for growth and expansion. While it can take years before retailers are able to open a second physical store location, eCommerce brands successful in their initial years have more opportunities to grow and expand into international and multichannel markets faster than traditional retail stores.
At Dotcom Distribution, we believe that VCs and eCommerce brands have strong, mutual interests. We also believe that eCommerce brands should be ready for growth when VCs step in to provide funding. That’s why we have dedicated ourselves to helping online retailers strategically manage fulfillment and logistics strategies.
When you choose a Dotcom Distribution client, you know you’re investing in an eCommerce brand that has the tools and procedures in place to succeed.
Still have questions about investing in eCommerce? Contact Dotcom Distribution today to learn more.
*David Pierson, “Why Silicon Valley venture capital firms are funding online retailers like Dollar Shave Club.” Los Angeles Times, 2016