E-COMMERCE 

Austin e-commerce firms finding space in sector dominated by Amazon 

Posted June 7th, 2018

In the e-commerce world, Amazon commands the attention. The company’s roughly $800 billion market cap is proof of that.

But in Austin, that’s not where the story ends.

Despite being overshadowed by Silicon Valley in the e-commerce space, the Austin metro area is home to a growing e-commerce sector that specializes in building online buying systems for merchants small to large — and helping retailers take on giants like Amazon and Etsy.

During the past 13 years, the number of local companies involved in online shopping and auctions has more than quadrupled, going from 63 companies in 2005 to 307 in 2017, according to the Greater Austin Chamber of Commerce.

“Everything is being digitized and being looked at for online retail,” said Amber Gunst, interim CEO for the Austin Techology Council. “For our tech sector, (investment in e-commerce) gives us the opportunity to grow and expand and enter a field that is rapidly transitioning from brick and mortar to online. If we weren’t doing that, then we would be behind the curve.”

While Amazon and other e-commerce platforms can offer merchants a chance to sell their products on widely trafficked websites, critics say those sites can squeeze the profit margins for businesses. That creates opportunity in the e-commerce space for other competitors, industry experts say.

“Amazon is the No. 1 concern for any seller,” said Kevin Sproles, CEO at Austin-based e-commerce company Volusion. “But there’s a lot of opportunity because, for example, Amazon is not doing a lot on social (media), or on Google.”

Volusion was established in 1999, five years after Amazon.com launched and also after Dell Technologies, headquartered in Round Rock, helped establish Austin’s e-commerce presence by beginning to sell computers online in 1996.

Ralph Barrera/Austin American-StatesmanThe Volusion office in Austin, on Thursday, May 31, 2018. 

Volusion, which builds software for merchants to create online stores, now has about 30,000 clients, Sproles said. Most of the merchants using the company’s software are small to midsized, such as Austin-based Tiny House Coffee.

Another e-commerce success story is Austin-based BigCommerce. The company raised $64 million in April, putting its combined fundraising at more than $200 million since its founding in 2009.

BigCommerce has grown into one of Austin’s premier e-commerce platforms, serving about 60,000 merchants in 120 countries, according to the company, including businesses such as Kodak, Sharp televisions and Skullcandy.

“You have to take an approach of how you’re selling online, and how to best do it,” CEO Brent Bellm said. “Some of the ways we differentiate ourselves is we have a (multipronged) approach.”

BigCommerce’s strategy, Bellm said, is to build online sales plans for its clients that can be integrated throughout various marketplaces, including Amazon.

BigCommerceBigCommerce employees at the company's downtown Austin office.

While major brands have partnered with BigCommerce, Bellm said the company’s main challenge remains competing against big names in the software building side of e-commerce, such as Canadian-based Shopify, or California-based Magento. Those e-commerce platforms can also sometimes be backed by other major corporations. Magento, for example, is in the process of being acquired by Adobe for $1.68 billion.

Sara Spivey, chief marketing officer at Austin-based Bazaarvoice, which produces software that allows businesses to analyze reviews and other content by customers on their products, said the market becomes more competitive by the day.

Companies are challenged to be innovative while navigating consumer habits and complaints, which lately, Spivey said, has concentrated on concerns over data privacy.

At Bazaarvoice, which was recently acquired by private equity firm Marlin Equity Partners for more than $500 million, Spivey said executives are focused on advancing the personalization of products in a way that doesn’t feel too invasive to consumers. Bazaarvoice has about 5,000 customers, including JBL electronics and the Container Store.

“We are constantly having to adapt,” she said.

Laura Skelding/Austin American-StatesmanBazaarvoice's global headquarters in North Austin.

Meanwhile, new Austin-based e-commerce companies are jumping into the sector. One of those is ShopSnap, an online store builder founded in 2014 by Gal Ratner, who formerly worked at Volusion.

Ratner said he created ShopSnap because he believes there’s still opportunity to find new customers that want online selling solutions. And while Austin doesn’t have the VC power found in Silicon Valley, the software talent pool here and city culture that regularly attracts more tech workers makes Austin a market “with a lot of potential,” he said.

ShopSnap is still looking for its first major funding, but Ratner said the platform has built a clientele list.

Additionally, Ratner said, there will always be businesses interested in trying to breach Amazon’s space.

“Everyone is competing with them these days,” he said. “Everyone is putting their heads together to see how people not selling on Amazon can make money.”

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