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B2C (Business to customer) news
Houzz continues to grow and receive investment from investors. I keep thinking that vertical specific search businesses like Houzz is going to overshadow Pinterests long term viability. Having a commerce angle as part of your business like Houzz inherently drives revenue creation unlike advertising which is unsustainable long term. Recode
Can Retailers Escape the Scourge of Free Shipping? A fascinating look at a topic that has huge capital implications for ecommerce businesses. “I do think there will be some kind of shake out,” she says, “and then it’s maybe you get free shipping, but you are paying a subscription price, or the price is built in somewhere else. It’s like the way you are lured into a store to get some incredible discount on something for sale, and then there is a higher premium on the other things you bought along with the sale item. You get free shipping, but the margins come from somewhere else.” Knowledge @ Wharton
The Potential of Petsmart’s Acquisition of Chewy. 1010data provides great insights on why Petsmart bought Chewy and what it stands to gain from spending $3.3 billion. To summarise - Petsmart is now the . biggest pet retailer online and in-store. 1010data
Amazon clearly is trying to fix the discovery problem that is touted by competitors as a weak point. Discovery of new products that are relevant to customers is a tough problem to solve. However Amazon has the most data to fix it.. TechCrunch
Cross-border commerce platform WaystoCap has raised new funding to expand its reach in Africa by opening new offices and moving into new geographies. More selection could potentially make them a power in the B2B space. TechCrunch
Snap bought Placed, A Seattle startup to ensure that they can show the value to retailers on using their adverts. Having followed Placed for years this is a very big deal for Snap. Who ever can prove that ads leads to foot traffic to stores will make lots of money. Business Insider, TechCrunch
Kinnevik has sold their remaining Rocket Internet shares and generated $244 million from the The parties were partners once but now are rivals due to Rocket Internet becoming an investor and less of an incubator. Kinnevik invested 155 million euros into Rocket from 2009 to 2013. During the five years prior to Rocket’s 2014 IPO, Kinnevik received 510 million euros in cash and stock dividends. It has now sold the entire shareholding for gross proceeds of 426 million euros, the Swedish company said. Reuters, Bloomberg
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D2C (Direct To Customer) news
I am increasingly thinking that direct to customer businesses are an answer for both fast fashion and a horizontal marketplace like Amazon. Why? Customer service and usage of transparent pricing as certain industries like fashion has a problem with warehouse staff abuses etc. I am still working on my thesis here.. The New York Times
Dollar Shave Club was not lucky nor were they only based on viral videos. They created a business that had great customer service and amazing retention which lead to momentum and huge growth. Medium
Selling Stuff Is No Longer the Point of Retail Stores - Erin Griffith provides a brief look at the future of retail. That’s the future of retail, according to a new breed of startups that have embraced physical stores as places for “brand experiences” rather than mere sales. Consider Outdoor Voices, an athletic apparel brand that has gained a cult like following among young, primarily female fitness enthusiasts. Fortune
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Marketplace news
Alibaba aims to become fifth largest ‘economy’ by 2036 and laid down the gauntlet for competitors. “If a company can serve 2 billion consumers, that is one third of the total population of the world. If a company can create 100 million jobs, that is probably bigger than most governments can do. If a company can support 10 million profitable businesses on its platform, this is called an economy,” Ma told the audience. South China Morning Post, Bloomberg Technology
Amazon already owns the high-income shopper segment in the U.S. Now it’s making a bid to court those who have less income at their disposal. On Tuesday, Amazon announced that it is offering a 45 percent discount on Prime memberships — $5.99 a month instead of $10.99 month — to U.S. residents receiving government assistance. Recode
Amazon continues to invest in their Indian operations and is looking at adding more capital to its logistics arm. Amazon Transportation Services (ATS), the logistics arm of online marketplace Amazon India, has received an infusion of Rs 207 crore from Amazon Corporate Holdings Singapore and Amazon Malaysia The Economic Times
JD.com is looking for growth markets outside of China, Thailand does not have a market leader and thus could be a huge market for JD.com. Expanding its footprint beyond Indonesia which currently accounts for almost all of its overseas business is becoming important as Indonesia gets more competitive. Reuters
Frontier Digital Ventures, an operator of online classified businesses announced it invested in sites Autodeal in the Philippines and Propzy in Vietnam, with the aim of helping the startups generate more money. These are classifieds markets that do not have market leaders and are reaching stages on monetization. Tech In Asia, Property Portal Watch
The race to stock international brands on Chinese marketplaces have been escalated as the CEO of JD.com is in the UK to look for luxury brands. Richard Liu, the head of JD.com, is on a shopping expedition to the UK. The founder and CEO of China's online mega-store, JD.com, is in the UK, looking for British brands to stock in China. ECNS
Amazon is using its balance sheet to grow marketplace business by providing loans with lower interest rates than banks but ensuring that their flywheel continues to drive revenue creation. Amazon Lending was launched six years ago, and offered 12-month loans that charged an annual interest rate of between 6% and 17% to Amazon sellers. Since then, Amazon has completed over $3bn worth of loans, with $1bn in the last year alone. Now, Amazon wants to extend its loan services to more of the 2 million businesses that are registered on its marketplace platform. The Market Mogul
Amazon Becomes a Destination for Practical Skin Care and growth its influence on beauty products. Given that 2% of beauty products sold on Amazon are luxury products, it’s interesting to look at what composes the rest. L2 research finds that a large part of Amazon’s growth in the Beauty space can be attributed to Skincare. L2 Inc
Ekart, the captive logistics arm of India's biggest online retailer Flipkart, is now reaping the benefits of its efforts to lower cost of delivery and improve efficiency through tie-ups with external clients.
JD Shuts Down Used Goods Platform After Only Four Months. Kumai.jd.com, the second-hand trading platform of JD.com will partially close its e-commerce platform services starting from June 22, 2017. China Tech News
There is a new marketplace in Australia and its not called Amazon. The Catch Group is now a business that offers 30,000 products for sale at any one time and has annual revenue of more than $300 million. Along with CatchoftheDay, the group also operates Scoopon and GroceryRun. Leibovich says the growth of the site means now is the perfect time for CatchoftheDay to transition into a “marketplace” that includes deals for third party sellers. Smartcompany Australia, Australian Financial Review
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Fashion ecommerce news
Fashion media businesses are steadily moving their businesses towards ecommerce apps. SHOP/Who What Wear for me is a sign that businesses based on advertising alone is in trouble. SHOP/Who What Wear also provides yet another platform for Who What Wear to sell their private label items to their audience. Recode
TheRealReal raised a round of funding from a PE investor, Great Hill Partners, who invests in middle market companies. They have a pretty strong ecommerce portfolio and seemingly will assist TheRealReal in growing via physical locations. Brand awareness is critical for a secondary market creator and leads to organic user growth. TechCrunch
Boohoo continues to grow aggressively and sold equity to service a new warehouse which will create large revenue returns. Fast fashion etailer Boohoo has reported a 106% rise in quarterly group revenue to £120.1m and has increased its full-year guidance (for the financial year ending February 2018) for revenue growth from 50% to 60%. To support its growth the business has also revealed plans for a new “super-site” warehouse that will take its capacity to more than £2bn of sales. The Industry London, Bloomberg
The fascinating story about how Stitch Fix founder Katrina Lake built one of the few successful e-commerce subscription services. Carrying inventory remained risky, but as the company gathered more data on customers’ preferences it was able to mitigate some of the risk and predict how much and what kind of stock to carry. Los Angeles Times
Is Farfetch at the beginning stages of going public? I tend to believe so - why? They have reached a valuation that makes an acquisition difficult barring it being from Amazon or a Chinese ecommerce business. By going public they will be able to be sustainable and be an independent fashion business that has no direct ties to LVMH or Richemont but has huge opportunities to grow. Sky News
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Mobile commerce
Surprise - WeChat has a thriving grey market for counterfeit products which are very difficult to take down. A ubiquitous ecosystem such as WeChat has the possibility to foster a grey market that is impossible to manage due to its scale and lack of clear ways for it to be contained. Tech In Asia
Why did Target think having 2 apps would be better than having all the features in one for customers? Target’s mobile app strategy will undergo a significant change, starting this summer. The retailer announced this week it will soon combine the functionality of its Cartwheel savings app with its main shopping app, in preparation for an eventual Cartwheel shutdown. TechCrunch, Target
Unboxing videos and reviews as a new channel for product sales makes a lot of sense and also obfuscates the growth indicators of these products away from the dominant businesses. Could we be seeing a end point for KickStarter companies in which they can drive additional value? A team incubated out of venture firm Kleiner Perkins has created Packagd, which is building a series of mobile apps that combine unboxing and review videos with the ability to instantly purchase the products they talk about. TechCrunch
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Stats and other interesting news
Cortana can now do price comparisons when you’re shopping online. When digital assistants can start doing this - my question is -> how is this done in a way to ensure that it cannot be influenced? How long before Amazon blocks this feature from cross town rival Microsoft? TechCrunch
Your eyes aren’t deceiving you: Amazon just quietly redesigned the Prime logo. GeekWire
Japan's shipbuilders and maritime shippers are teaming up to make self-navigating ships a reality by 2025, hoping to lead global development on a project that should dramatically reduce accidents at sea. Nikkei Asia Review
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Thoughts on the news from this past week
I had a realization this past week that came after reading the Alibaba Markets Day presentation (PDF). Alibaba is thinking big and really long term. Being able to indicate to the market that they expect 49% sales growth in the coming quarter. “If a company can serve 2 billion consumers, that is one third of the total population of the world. If a company can create 100 million jobs, that is probably bigger than most governments can do. If a company can support 10 million profitable businesses on its platform, this is called an economy,” Ma told the audience. I have long said that Alibaba is a long term business and they can even cope with a failing mobile product. If they ensure that they dominate in Asia then they dont need to move into Europe and other markets.
LVMH launched their luxury website, Severe 24 without too much fanfare. They have their hands full in competing with Yoox-Net-A-Porter, Matchesfashion and increasingly Farfetch. Severe 24 for me is interesting as it focuses on a physical store in Paris and provides a loyalty programme that it quite unique. Is this too little to late from LVMH?
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