Clues to E-Commerce Success

NEW YORK (TheStreet) -- In March of 1997, after getting laid-off by Netguide Magazine just before it folded, I launched a weekly newsletter called A Clue . . . to Internet Commerce, later called a-clue.com.

After the dot-bomb of 2000 realized my worst fears for the space, I moved on to other things, but after doing my Christmas shopping Wednesday I went back to the beat for what I used to call Clues.

Clues are hints on what should work, and what doesn't, patterns observed over 30 years watching businesses succeed and fail.

Just as most newspaper editors don't understand they're in the ad business, because it's so much more fun to write and report stories, so most store owners fail to see that it's infrastructure, not merchandising, that makes the difference between their success and failure.

This is especially true online. You have to get that right or the rest doesn't matter -- you're just going to tee people off.

Since Pricegrabber.com expects 56% of shoppers to be looking for clothes this holiday season and clothes are the hardest online sale; that's where I concentrated my search.

Fab.Com, launched as a flash sales site in June, 2011, has gotten the Clue. The company started as a gay social network, then became a deals site, and now portrays itself as a fashionable shopping destination, having raised over $145 million in venture capital over that time, as Business Insider reports.

What they've learned, Forbes writes is that procurement, back-end computing and fulfillment are the real ante into the e-commerce game. (Fab has also bought their Indian technology partner, writes TechCrunch.)

Not that Fab.Com doesn't do merchandising. Compare their collection of pictorial entry portals, which can lead in two clicks to something like a Brooklyn-made custom cat bed that hangs on the wall ( view it on Fab.com) to anything being done by Walmart ( WMT) or Amazon.Com ( AMZN). There's no comparison.

Still, it's blocking-and-tackling that makes it all possible. The biggest fashion story of the last decade, as The New Yorker noted in September, is Yoox, whose main business is stocking and fulfillment for other fashion brands, like Armani and Jil Sander. Handling returns is also key, because they're so high in online clothing. (Yoox went public in Italy in 2009, Bloomberg reported, trading under the symbol YOOX:MI.)

One idea I advocated in 1997 was that people need a convenient place nearby from which they can pick up online purchases. It's finally here, with Amazon Lockers inside stores like Staples ( SPLS) and Radio Shack ( RSH), Internet Retailer reports, and ShopRunner buying PickupPoints, turning 7-Elevens into quick storage for online purchases, at $79/year, the same outlet says.

So what have we learned? It's what happens before the customer walks in and long after they leave your online store that makes the biggest difference in your e-commerce success. If you're an investor, focus less on start-ups like Sift, that turn your incoming e-mail into a mall, and more on Yoox. Let that be your Clue for 2012.

And look forward to a Fab.com IPO in 2013.

At the time of publication, the author had no investments in companies mentioned in this story.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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