E-Commerce Mathematiks
by Fred Wilson, Partner, Flatiron PartnersThe basic economic equation for online commerce is:
RPC - CPC = Profit
RPC is revenue per click
CPC is cost per click
The Comscore data seems to indicate that this formula may no longer hold because two big things are happening this holiday season that portend big changes in ecommerce and search. Trend 1 is the emergence (finally) of the multi-channel retailer (retail, catalog, online, etc) as a major player in online commerce. Walmart, Target, BestBuy, and others are having huge holiday seasons this year. They finally got the web right! Trend 2 is the latency of online searches (the searcher often buys as long as 30-60 days after doing the search) and the fact that over 90% of searchers actually make the purchase offline. If revenue per click is recognized in the Best Buy store in the mall three weeks later, then cost per click is going to go up and may go way past immediate online revenue per click.
<< Home