Gilt Groupe CEO Kevin Ryan on the evolution of commerce

From a search paradigm to discovery; from gadgets and books to gourmet food and men's suits

The other day, my five-year-old-iPad-loving son tried to swipe the computer screen in front of his seat on the plane flight home from New York. By the time he's in his 20's, ordering made-to-wear clothing online may be as quick and easy as ordering a pizza. 

How times have changed. While online commerce started off with electronics and books, today consumers are more than comfortable ordering gourmet food, suits and shoes. How has commerce evolved in the past 10 to 15 years? For that, I spoke with Kevin Ryan, founder and CEO of Gilt Groupe, a full-blown online retailer with its roots in daily deals.

Here's some highlights of Ryan's thoughts on commerce:

- There's been steady growth in commerce since 1995. The travel sector got big, but books was the leader. Every couple of years, people are getting more and more comfortable buying other things.

- The reason why people are more comfortable buying products online is that the products are well marketed and beautifully-photographed. There's also a lot more emphasis on consumer service.

- Only 4% to 5% of retail is online. "You'll see a tripling of e-commerce" over the next few years.

- The 90's were boom years. Between 2000 and 2005, there was a dry period in e-commerce. No one was innovating. Then there was a flowering in 2006 and 2007, with companies like Gilt Groupe and Diapers.com. A lot of the interest was driven by the daily deal models.

- Capital is also more readily available. E-commerce companies need a lot of capital for warehouses to house the inventory. Additionally, the cost of business has come down a lot. Since e-commerce is a low-margin business, these two factors had to coincide for there to be a boom in e-commerce innovation. A savings of 5% in e-commerce expenses is enormous.

- We used to be a search paragidm. Today, it's more about discovery. There's a curation phase on the part of retailers. They curate and then put the products in front of the consumer. "Discovery is what the flast sales and new businesses are about." Amazon isn't about discovery. It's about search. Today's e-tailers are more discovery based.

- Personalization and targeting is helping retailers present new products for consumers to discover. For instance, Gilt Groupe sends out 2,000 versions of an email to its customers in order to tailor the right product to the right person.

- E-commerce in the future will become more personalized. Products will be built for you as the supply chain improves.