Michele Romanow, Clearbanc Co-Founder and President, joined Yahoo Finance Live to discuss how COVID-19 has impacted the ecommerce sector and trends she’s seeing.
ADAM SHAPIRO: We’re going to talk about the F word when it comes to business– funding, f-u-n-d-i-n-g, that F word. And getting a level playing field for a startup is not always easy, but there is a platform out there that I think it’s over 1.5, 1.6 billion already invested in more than 4,000 companies. Let’s talk to the co-founder and president once again of Clearbanc. That’s Michele Romanow. She’s joining us from Toronto. Good to have you here.
When we talk about where we are headed, if I’m an e-commerce startup, and I use your platform to find funding, so much of the last year has been about pandemic, pandemic, pandemic. We’re going to come out of this pandemic. But what’s the next discussion going to be for these startups, and where do they go?
MICHELE ROMANOW: You know, I think that there is– where it’s such a good place to start this. We’ve seen so much growth in the last year from some of these companies that have created these incredibly creative brands at home. We’ve seen the companies– you know, compared to last year, e-commerce brands on the Clearbanc platform grew 55% more. And it’s largely because, you know, we’ve democratized access to so much of this capital. You can come to us. We can give you a term sheet in 20 minutes and show you then how to use that capital to grow, whether it’s to buy more ads or more inventory.
But, you know, I would say we’re still barely scratching the surface. I mean, if you take a look at macro, what’s happened is, you know, as a percentage of retail sales, e-commerce has gone from 14% to 22% in retails. My prediction is that in the next decade, we’re going to see the first countries– probably China will be first– that gets to 50% of e-commerce retail sales.
So there’s a lot to do. I certainly think as people come back and, you know, we are vaccinated, people will be excited to go in stores. But I think now, people have gotten used to buying things without testing them or trying them on. And that’s a trend that’s certainly here to stay.
SEANA SMITH: Well, Michele, going off of that, I think people initially before the pandemic were a little bit hesitant to buy some things online because they couldn’t test them out. They couldn’t see exactly how they fit or how they would feel on. We’ve seen the introduction that some brands have used when it comes to augmented reality. I’m curious just to get your perspective on that and how you think this can help branches better connect with some of their customers.
MICHELE ROMANOW: Yeah, it’s a great question because I– you know, the thought of the idea of going into a Sephora and trying on a lipstick tester that could have been used with another human being is, like, crazy to think that we would have done that at all. Certainly clothing did not have that hygienic experience, but certainly this year was that push for brands to really understand. I mean, you can see what Dior did with Snapchat and the ability to try on shoes. I think there’s way more about to come.
The first generation of this stuff was generally pretty crummy. Like, it didn’t work that well. The glasses didn’t really fit your face. It didn’t quite look like it was you. But now, as we spent a year making this happen, brands have been able to do that. And brands are highly incentives to do this because, you know, every time they have a return, that really hurts their top line revenue at the end of the day. And so we’ve just become better and better at sizing, at augmented reality, and a lot of the innovations that we’ve been building this year we’re just starting to see take flight.
ADAM SHAPIRO: But– I never did the lipstick, but let’s talk about, like, jeans, all right? I won’t say fat jeans– my COVID jeans. When I want to get my next pair of Levi’s, I want to try them on because definitely the COVID 10 has found me. And I don’t want to take the chance of having to go through the hassle of returning. So what’s the natural– what’s the balance going to be for old folk, young folk? I think a lot of people, it’s the hassle of returning that keeps us making the full commitment to go totally commerce.
MICHELE ROMANOW: I think that’s been some of it. I mean, returns have certainly gotten a lot easier. There has been plenty of technology companies that have invested in the space to make this easier, and the customer experience easier to do that as well. I think we’ll see also a lot more showrooming behavior. We’ll see people that want to go in store. They want to touch and feel things. And then they’re perfectly comfortable, truly in that store being like, ship this to my house, which is true.
And look, there has been a lot of other categories besides apparel that really exploded this year. I mean, one of the ones that we have talked a lot about is food, right? We used to have– buying your groceries on the internet used to be a pretty small percentage of the population, even with the popularity of Instacart.
You know, this year, I think everyone figured that out. And now most people are on some form of getting Amazon Basics or some level of fruit and vegetables or a prepped meal kit. And it’s some of those categories, which is such a large percentage of discretionary spend, have really turn the dial on these e-commerce trends.
SEANA SMITH: Michele, you’re very optimistic. And a number of our guests that we talk to here on Yahoo Finance are very bullish just on e-commerce and the fact that we’re just scratching the surface, like you said. But what about the adoption of the vaccine? Now that we’re getting more and more people vaccinated at least in the shorter term, when you look at the near term, maybe over the next couple of quarters, the next couple of years even, does that mean that we will see this initial pullback in e-commerce sales?
MICHELE ROMANOW: You know, it’s a good question, and I think people should actually think to, in many ways, their own behavior. I think there is going to be– there’s a bit of a roaring 20s movement when we all get out and go to restaurants and we get to see each other and get to vacation. But I think people underestimate how low discretionary spend was this year. You know, there wasn’t people going on vacations and buying bathing suits. There wasn’t people thinking about that.
And so although I think we’ll see a lot of, you know, the offline stuff start to continue, many of those things that go into buying your next trip or the things you want to bring on your next trip, you’re going to be buying those online. And so, I’m actually pretty optimistic that we’re not going to see a huge dip, that the patterns we’ve created around our household goods, around food, around consumables that we have will stay that way.
And then, you know, where it’s really going to see the variability is actually how much time we’re going to be spending on the internet and how good the targeting is going to remain on Facebook and Google. I think those are probably the two largest variables that people are not paying attention to. One of the reasons that e-commerce sales have exploded is because we all spent more time on the internet because we had less things to do.
And now that Facebook is losing some of their targeting capacities with iOS 14 And Google has said they’re removing their cookie, that might change the way we can target buyers. And so I think that might have a bigger impact than actually consumer spending, which I think is going to go up largely as we get into a more vaccinated state.
ADAM SHAPIRO: Michele, there is a $1.3, $1.4 trillion savings tidal wave about to get unleashed. So I think your call on consumer spending is accurate. Michele Romanow is Clearbanc’s co-founder and president. Thanks for coming to join us again. We look forward to your return–