In two decades of e-commerce in the US, we have produced only two standalone e-commerce companies of meaningful enterprise value: Amazon and eBay. One went public in 1997, the other in 1998. We haven’t had an IPO of an e-commerce company that has gotten to a two billion of market cap in fifteen years, let alone double digit billions.
Yet Marc Andreessen is predicting the death of traditional retail as e-commerce “eats the world.”
What gives?
The problem with e-commerce is that the joy of the consumer experience, extraordinary top-line growth, and market share theft are not yet met by strong business fundamentals for standalone e-commerce players.
If you’re selling other people’s brands, you are competing not via a local group of competitors but with everyone. In this type of market, you might imagine having one large national winner. You might imagine that winner is ruthless about scale and cost, and is run by a visionary leadership team who realize they can build a huge company by being extremely long-term focused. Such a company might not make real money for a long time, but when it does, though the margins will be thin, it will be incredibly powerful.