Besides the rise of e-commerce and social media, the creation of a digital economy made of startups has shaped the 2010s. Online shopping remains one of the strongest and fastest-growing digital sectors, spawning multimillion-worth new businesses every year. In 2021, e-commerce startup companies valued at one billion U.S. dollars or more – which grants them 'unicorn' status – made up an industry of almost 114 billion U.S. dollars. In China, the e-commerce sector is responsible for the highest amount of unicorns, surpassing other cutting-edge areas like artificial intelligence and fintech. As of October 2022, China and the United States are the only markets in the world to harbor e-commerce decacorns, i.e. startups worth 10 billion dollars or more, ranking led by Chinese online fashion platform, SHEIN.
Leaders of the pack
Startups selling products or services online usually start as small businesses whose offer fills a market niche or provides an innovative solution to a problem. Fanatics and Thrasio are the leaders of the e-commerce startup pack in the United States. Mostly devoted to the sportswear segment, Jacksonville-founded Fanatics started off as a single brick-and-mortar mall store and developed into a multimillion-worth online business that markets its own brands as well as specialty platforms where sports collectibles are sold, in addition to operating exclusive e-commerce websites for major sports leagues and media brands. Thrasio, valued at around 10 billion dollars in October 2022, is a leading Amazon aggregator in the U.S. Its business consists of searching for online brands that sell on Amazon and collaborating with them to make them profitable. In some cases, Amazon aggregators also acquire these brands, acting as investment firms supporting the expansion of small retailers.
On the other side of the Pacific, Shanghai-based Xiaohongshu, also known as 'Red' or 'Little Red Book', is a content-sharing website and app that combines user-generated content and e-commerce. As of October 2022, it ranks as the third most valuable e-commerce unicorn globally, after SHEIN and Fanatics. It was founded in 2013 as a post and share platform where users, mostly women, gave product reviews and lifestyle tips. The company went from 15 to 300 million registered users in only four years. Though more popular in the health and beauty segment, Xiaohongshu also connects Chinese buyers with international retailers through its own cross-border platform, Red.
Startups: friend or foe?
Many e-commerce startups have caught the retail world by surprise. There is an ongoing debate on whether online or app-based retailers pose a threat to conventional consumer goods providers such as convenience stores, supermarkets, and other physical brands. In a 2020 survey, more than 20 percent of B2B executives in the commercial services and supply business said digital startups disrupting the industry were the main threat to their organization. To remain up-to-date with industry trends and innovation, established brands are taking part in the profitable unicorn race by acquiring promising startups that complement their business portfolio. Some examples are the acquisitions of Flipkart and Jet by Walmart, the purchase of Wolt by DoorDash, and Postmates by Uber. Most recently, in December 2022, the online delivery platform of Turkish origin, Getir, acquired its German competitor, Gorillas, for 1.2 billion U.S. dollars, a deal that is set to shape the European quick commerce market in years to come.
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