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B2C (Business to customer) news
Perfect Price Discrimination - one of the most fascinating things I have read in a while. If pricing algorithms achieve perfect price discrimination we may no longer need pricing regulations - Amazon and Uber would love that as then they can personalize pricing even more. Rahul Matthan
How a Supreme Court ruling on printer cartridges changes what it means to buy almost anything. It is the battle over ownership and how that impacts the right to tinker with a product. This is a big deal for the future as digital ownership of e-books is seen as a loan agreement by Amazon. The Washington Post
Blue Apron has filed to go public and it has proved my own thesis on food recipe startups to be spot on. These startups have struggled to be profitable, are reliant on customer acquisition based on heavy marketing costs and average customer spend to be stable. On all 3 counts does Blue Apron fulfill this and I am still not convinced that this is a sustainable business model. Recode
Walmart continues to be innovative and are testing using staff as delivery / logistics staff to get purchases to end customers. Is this hedging of the investment into collecting in store when buying online. Also there is a fine line that Walmart has to walk regarding what they pay these individuals to deliver items otherwise it will fail and become a PR disaster for them. I view this as Walmart not being able to convince the market that they are winning against Amazon (speed, convenience) and a contrarian move that is a worrying sign for me. Fortune, Walmart
Google / Alphabet seemingly is going to be fined heavily in Europe over their distorting of search results with their shopping service. The problem with this ruling is that is too late and Google / Alphabet will settle it by paying as Europe seems to be unwilling to settle. Google Shopping is ultimately Adwords for shopping on top of organic search results for customers looking to purchase products. Fortune
Grocery businesses worldwide are increasingly looking at partners to provide shoppers with more options in receiving their purchases. Marks & Spencer has collaborated with the British store-to-door delivery platform Dropit, which provides a courier service for shoppers in London’s West End. Now, customers from Marks & Spencer who don’t want to carry their bags home, instead can have them delivered at their place whenever they want. Ecommerce News Europe
Trivago is hotel-only and is focused on growing its own brand without the headaches of trying to figure out what to do with an additional brand. Trivago isn’t talking about it, but would gladly leave it to Kayak to try to determine what to do with multiple brands such as Momondo and Cheapflights. Skift
Amazon Japan notified publishers earlier this month that it would be partially ending its relationship with a major distributor. The distributor, Nippon Shuppan Hanbai, had been supplying the company with large orders of bestsellers–a strategy that has worked in the industry for decades, before online retailers dominated the market and bookstore logistics dictated distribution strategy. The announcement comes with a request that publishers make deals directly with Amazon, allowing the company to quickly sell a variety of quantities of books across the long tail to online customers. Forbes
Chewy is now a part of PetSmart and it will be an independent subsidiary of PetSmart. The specialty pet supplies retailer announced on Wednesday, May 31, that it completed the acquisition of Chewy, a leading online retailer for merchandise for pets, ranging from cats and dogs to horses. PetSmart financed the transaction through the offering of $1.350 million of 5.875% senior first lien notes, $650 million of 8.875% senior notes, and proceeds of an approximately $1,000 million equity contribution by PetSmart’s existing investor group and cash on hand, according to the company. Chain Store Age
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D2C (Direct To Customer) news
A fascinating look at Mon Purse and how they are growing at scale through partnerships and a quality product. For those who aren’t familiar, Mon Purse enables women to design their own handbags via its e-commerce platform… yes, you read correctly. Its online platform allows for over six billion design combinations, according to the company’s founder and CEO Lana Hopkins. Power Retail
Mickey Drexler and the death of a supply-driven world. Fashion retailers like Gap and Old Navy are currently either closing stores or looking at new models for survival. The change is that these retailers are no longer in a supply ecosystem with customers looking to purchase uniform products from soullless shops. Retail and especially direct to customer ecommerce business is demand orientated based on communities of customers who would like these unique products for themselves in arenas that experiential and not focused on a sale. Loose Threads
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Marketplace news
Fascinating insights into how Avito used the culture of their founders to create a dominant classifieds service in Russia. Timing and domain knowledge led to one of the largest and most successful classifieds business in the world not called Craigslist. Tech.eu
Anatomy of a managed marketplace - a must read. Managed marketplaces are a quintessential venture investment, allowing entrepreneurs to recast consumer experiences while leveraging venture capital subsidies to hold much of the risk inherent in these managed models.
From a unit economic perspective, the potential automation of much of the service labor that goes into these platforms could be significant. Investors and operators need to remain sensitive that it is ultimately the technology, not heavy services, that will long-term cultivate highly desired business models and margins. TechCrunch
Alibaba buys 201.5 million shares in Lianhua Supermarket to become second-largest shareholder. The stake purchase is the latest in a long line of Alibaba investment in brick and mortar shopping malls, part of a strategy adopted by the e-commerce giant since 2015 to broaden its exposure to markets where online and offline retailers are converging. South China Morning Post
Tmall and Taobao users, the nation's largest e-commerce platforms under Alibaba, found they cannot track their parcels delivered by SF Express, the nation’s biggest parcel delivery firm, from last night after SF and Cainiao Network, the logistics arm of Alibaba Group, suspended data sharing with each other yesterday. ShanghaiDaily, Bloomberg
Snapdeal founders and one of the early investors have invested some capital to provide runway for Snapdeal while Flipkart does it due diligence. What a fall from grace for everyone involved. Snapdeal’s founders, Kunal Bahl and Rohit Bansal, and early investor Nexus Venture Partners have pumped US$17.5 million into the struggling ecommerce site. Tech In Asia
One of the most succinct and insightful pieces I have seen on the bet Wal-Mart has made on Marc Lore. I will continue following this storyline as I believe that it impacts global ecommerce in a very large way IF Wal-Mart turns the corner on Amazon. For those interested - I have decided to reserve judgement until 1 year has passed since the Jet.com acquisition. Marc Lore was in the crowd last June when Wal-Mart Chief Executive Officer Doug Mc-Millon told shareholders and employees gathered in Northwest Arkansas that the company was embarking on a journey to “re-imagine retail.” Northwest Arkansas Democrat Gazette
Rakuten has finally provided insights on its investment thesis. Needless to say I believe that they will be disrupted in Japan and are already losing marketshare in Japanese ecommerce. The investment thesis for Rakuten Ventures – which late last year had doubled its Global Investment Fund to US$200 million – is not based on synergies with the group’s Japan-based ecommerce parent. DealStreet Asia
It looks like Amazon’s attempts to attract Chinese shoppers to items being sold by merchants in the US, Japan and UK are paying off. Apparently, since inception in 2014, Amazon China’s overseas shopping service has seen 17 million items being bought by Chinese shoppers from overseas. Tamebay
Online marketplaces in China are busy preparing for the mid-year online shopping event as they must work harder to woo affluent and sophisticated consumers. Initiated by leading e-commerce platform JD.com, "6/18" was first launched in 2010 to celebrate the company's anniversary on June 18. It joins the Singles' Day sale on Nov. 11 and has become one of China's largest online shopping sprees. Xinhua
The seven sins of Snapdeal: how and where they lost their way. Lack of innovation, culture of inclusion in leadership lacking and business model changes. E-commerce is yet to make money in India. But the consolidation season has already begun. For Snapdeal, was it long coming? Yourstory
How one online marketplace helps product ideas become reality - the story of Fitzroy Toys. NRF
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Fashion ecommerce news
Amazon is cancelling their QVC-like programme, "Style Code Live". The 15 month experiment I believe will be used to power commerce on Twitch (their video game watching service) and will no doubt be used as a way to connect with influencers directly as seen in their current social media influencer programme. TechCrunch, GeekWire
Reebonz, the Singapore-headquartered ecommerce site for luxury fashion hasn’t been idle – just this week it announced the official opening of its Ecommerce Hub, a 200,000-square foot building that will house its entire business in Singapore. Interesting to note the services they offer - a secondary market and a service to move fashion products digitally. Singapore will be a good selection - affluent market and easy access to other parts of South East Asia. Tech In Asia
How vintage e-commerce sites like Vestiaire Collective are disrupting the luxury market. Secondary fashion markets are going to change the fashion ecosystem in Asia. South China Morning Post
Naspers is closing its flagship fashion business in Turkey. After 9 years of operating the business in Turkey, it is being closed due to economic challenges and a model that could not scale to profitability. Reuters, Naspers
The battle between Flipkart siblings, Myntra and Jabong seems to be escalating. Myntra has been positioned by Flipkart as the dominant fashion ecommerce business in India with exclusive brands etc but Jabong also has exclusivity on brands and thus it seems Myntra is getting all of the exclusive brands and Jabong is being turned into a private label platform. Online fashion retailer Myntra is turning its sister company Jabong into a platform for its private labels, said sellers that use the two portals, marking a significant departure from Jabong’s original proposition of establishing itself as a marketplace for exclusive international brands. The Economic Times
Zalando is ready to conquer the Nordic region. The online fashion platform successfully completed its location search and will open its first Nordic fulfillment center in Sweden later this year. The fulfillment center will be built in Brunna, near Stockholm, and is meant to meet the demand of its customers in Sweden, Denmark, Finland and Norway. Ecommerce News Europe
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Mobile commerce
Tencent Courts Luxury Brands Via WeChat - this could significantly impact TMall and Alibaba's influence on luxury in China. According to a report in The Wall Street Journal, Longchamp of France and Burberry Group of the U.K. have started selling their high end designer handbags and clothes via WeChat, which is the most popular messaging app in China. LVMH Moët Hennessy Louis Vuitton SE’s Givenchy and Dior brands are also testing demand for their goods through flash sales on the messaging platform, reported the paper. Pymnts
I continue to believe that Amazon's mobile apps are not given the proper respect by the ecommerce industry as they are a closed book for competitors and a huge revenue driver for Amazon. Amazon seems to want its smartphone app to span more than just traditional online shopping. Customers have spilled into the mobile space, the e-commerce giant has turned its flagship app into something of a testing ground for the small-screen shopping experience of the future. It now boasts a slew of experimental features beyond Amazon's standard store listings—some of which are impressive and potentially game-changing. Mashable
Page load speed matters when it comes to mobile shopping, with 53% of mobile site visitors abandoning a page that takes over three seconds to load. Fascinating data.. Business of Apps
The fascinating story on how Ibotta was started. Denver’s most popular mobile app and it is not a traditional story but importantly they have been at the forefront of driving customers back into stores and providing folk who use coupons with a digital solution. The Denver Post
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Stats and other interesting news
In Russia, it is e-commerce that drives the market for cloud technology. New legislation incentivizes cloud applications in retail as it requires online cash registers. According to the Russian Association of Internet Trade Companies (AITC), in 2016 the Russian e-commerce market was up 21% to RUB 920 billion. This year, it is projected to reach RUB 1.1 trillion. By 2020, experts expect the figure to double (Higher School of Economics). TASS
China remains the world's largest ecommerce trading market, where transactions through unconventional e-platforms reached 26.1 trillion yuan last year, up 19.8 percent from the previous year, according to a Sina news report citing data from the Ministry of Commerce. The value of China's ecommerce market accounted for 39.2 percent of the global market as of the end of 2016, making it the largest globally for consecutive years, according to the report. ZDNet
Amazon has received a patent for a shipping label that includes a built-in parachute, “to enable the delivery of packages by [unpiloted] aerial vehicles (UAVs) or other aerial vehicles.” The patent, as reported by GeekWire, was filed in August 2015 and granted by the US Patent and Trademark Office (USPTO) on Monday. The Verge, GeekWire
Some Amazon orders are more Prime than others - fascinating that there are different delivery for Amazon deliveries when the customers are in other Seattle counties. The News Herald
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Thoughts on the news from this past week
This past week, Mary Meeker from KPCB provided the entire Internet industry with her Internet Trends report. I want to focus on a few things that need to be said:
1. Amazon got a few slides and it showed the ecommerce industry that we are battling a company that is growing at scale. Ecommerce grew at 15% in the last year and logistics is going to determine a whole lot in terms of winners in ecommerce. In Asia we are seeing the merge of offline and online being done by Alibaba and JD.com via mobile yet it seems to me that Amazon is using physical stores to leverage their online advantage.
2. Direct to customer brands are here to stay and are going to make investors a lot of ROI. Why? They have been able to generate customer feedback loops via user generated content (slide 38, 39) and use their communities to solve inefficiencies (slide 54) via the mix of offline and online exchanges.
3. I believe strongly that Amazon is going to use Alexa to drive the commoditization of brands. We are already seeing the impact that Amazon private labels have had via AmazonBasics - batteries and nappies( slide 75). Amazon never invests in anything unless it removes friction for a retail transaction to occur. (Thanks to subscriber Dino Becirovic and the team at KPCB who assisted in creation of this industry roadmap)
Over in China we have the start of a battle for dominance in logistics. In the one corner we have SF Express and in the other corner we have the Cainao Network that is essentially Alibaba building Chinese logistics with partners. The cutting off of data this past week between the parties will effect customers who bought on Alibaba platforms. I believe this move was made due to Cainao Network needing to become the exclusive partner for Alibaba and thus moving SF Express out of the way. When Chinese Internet billionaires battle it normally changes a market ecosystem in ways we in the West dont understand.
Lastly, I wanted to talk about the Naspers news in Turkey. I understand that Turkey's political climate has changed but I believe very strongly that Naspers is looking to exit their holdings in their B2C segment as they fear that Alibaba, Amazon and Google could significantly impact their investments. Over the last 18 months Naspers has either exited or closed a majority of the price comparison businesses, sold dominant marketplaces to Amazon or Private Equity / Investment Management businesses. it is clear that they have changed their investment strategy and have moved away from what created them huge holdings all over the globe.
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