E-Commerce 3.0: Europe’s Fab Future

European start-ups know only too well that being first does not necessarily mean winning. Several pioneered e-commerce models such as flash sales and selling eyeglasses on-line but did not become global giants, while U.S. copycats  raised gobs of money and gained considerable  traction, thanks to the deep pockets of Silicon Valley venture funds and the luxury of a large and lucrative homogenous market.

The tables may be turning.

E-commerce 3.0 is about super-targeted personalized curation and social sharing. The most successful play to date is New York’s Fab.com, which pivoted from a social site for the gay community to a fast-growing flash sale site for design, selling everything from pieces of furniture  to smaller accessories for the home.

But it turns out that Europeans spend significantly more on interior design than Americans. So this time the U.S. does not necessary have the upper hand.

Three European companies are already gearing up to conquer the Continent – and maybe even the world – with sales sites for design: Germany’s Casacanda, backed by Klaus Hommels, one of Europe’s most seasoned angel investors; Germany’s West Wing, funded by Oliver, Marc and AlexanderSamwer, often called Germany’s most successful serial entrepreneurs; and London-based Llustre, financed by former Google executive Rob Kniaz, design firm IDEO’s Tom Hulme, angel investors Hussein Kanji andOleg Tscheltzoff,  and John Earner, an ex-managing director of social gaming company Playfish.

Like Fab.com, all three European companies will try to make smart use of social media. Social sharing tools are key because they allow users to communicate to their friends that they have joined the site and share the products they buy on Facebook and Twitter.

“Social is all about taking things out of the wide world and bringing them back into your own circle, to make it human and personal,” says Vivienne Bearmann, who worked at social gaming company Playfish before co-founding Llustre. The company, which will go live in March, is focusing uniquely on “beautifully designed products for the home.”

Llustre says it is attempting to recreate an experience similar to the one offered by Pinterest, a U.S. social photo-sharing site. Its social photo-sharing will allow users to upload photos of their own homes and to specify items that are important to them. “What we are trying to create is a community of designers and brands and people who are passionate about homeware and interiors,” she says.  “It’s design porn in a very vertical sense; we want to offer a keyhole into other peoples’ homes and let you know where they bought the things that give it such a beautiful look.”

The hope is to get the kind of traction enjoyed by the likes of One Kings Lane, a well-established site that sells home décor, gifts and kitchenware handpicked by tastemakers and brands.

“The European homeware market is much larger than the U.S.’s and it has a broader base of designer talent so this is a really exciting market to target for a European company,” says Llustre co-founder Tracey Doree.

There are other advantages: the Fab.com model overcomes some of the challenges faced by online fashion shops because sales are not as brand dependent, says angel investor Hommels, a speaker at the DLD conference in Munich January 22-24. What’s more, “with design products for the home there are no issues about whether something fits, so returns are not a big issue – it is 2% versus 8% to 9% and the overall metrics look better than flash sales,” he says.

So far Casacanda, the Fab clone being backed by Hommels, is focused just on Germany but there are plans to expand internationally.

The U.K.’s Fantasy Shopper, one of Europe’s hottest 3.0 e-commerce companies, is already doing just that. The company, which recently won out over 1,500 start-ups  to gain the global grand prize at the annual Amazon Web services competition, is in the process of raising a new round of funding from Accel, the venture firm behind Facebook, and New Enterprise Associates, the venture firm behind Groupon, to expand into the U.S., says CEO Chris Prescott. (Prescott, who is attending DLD says he would like to connect with big corporates at the event who are interested in social shopping).

Fantasy Shopper, which uses elements of social gaming to drive engagement and allow people to explore items sold in brick and mortar stores, connecting the online and offline worlds, neatly exhibits several other of Europe’s emerging ecommerce 3.0 areas of strength: fashion, collaborative consumption and gamification.

“People want entertainment, they want to feel social when they are shopping online,” says Prescott. “What we are doing is to make social gaming relevant to the shopping process. Our mission is to centralize, socialize and gamify online shopping.”

Right now the service is available only to UK consumers but thanks to its new funding round, Fantasy Shopper will soon be launching in New York, San Francisco, Paris, Milan, Tokyo and Shanghai.

If the young company’s success to date is mirrored by the new design sites, Europe’s 3.0 ecommerce future could be more fabulous than Fab.com’s.

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