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B2C (Business to customer) news
Thrive Market, an online wholesale buying club believes that Amazon purchasing Whole Foods is a good news for the organic industry. Thrive Market in my mind is in a win-win situation as they can be seen as a "Costco for organics" and provides millennial customers with an Anti-Amazon opportunity to purchase organic foods. Food Tech Connect
TripAdvisor’s internal security and Internet fraud team usually busies itself probing sketchy user reviews from the hotel or restaurant competitor down the street or credit card abuse, but the investigators played a key role in helping the U.S. Federal Communications Commission track down an alleged travel-robocall scam that led to potentially the largest enforcement action in the regulator’s history. Skift
The Sharing Depot, Toronto’s first library of things, helps space-starved urbanites cut costs and clutter without giving up access to the stuff they love. A sort of Zipcar for the little things, the Sharing Depot, which opened earlier this year, lets members borrow items like camping gear, sports equipment, toys, and garden tools. Members pay between $50 and $100 Canadian annually; the higher the level of membership the longer you may keep an item. Make Change
Publications are looking for non-advertising means to generate revenue. Affiliate sales for products generates a small commission where as a subscription sale could potentially generate an annuity like returns. It makes commercial sense for publishers wanting to sell subscriptions as it could generate significantly better revenue. Digiday
The tale of the Amazon Buybox: its a stock exchange combined with a black box of algorithms from Amazon to leverage revenue creation and leveraging willingness to buy from customers. BuzzFeed
Google for Jobs has arrived. Another vertical search business that Google wants a part of. We’re working with a number of organizations from across the industry to bring you the most comprehensive listing of jobs—including LinkedIn, Monster, WayUp, DirectEmployers, CareerBuilder, Glassdoor and Facebook. Google
Trivago feels spammy. The trouble in the Trivago business model is “garbage in, garbage out.” Many of the listings on Trivago are actually from other aggregators like Booking.com rather than hotels themselves. IPO Candy
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D2C (Direct To Customer) news
The story of why Cotopaxi is a benefit corporation. Many direct to customer businesses have added a social responsibility element to their business but being a benefit corporation from day 1 takes that social responsibility to a whole other level. Fast Company
Direct-to-consumer sales by food manufacturers via their own online platforms remain at an experimental stage but more attention is being given to the fledgling channel and more forecasts being made on the prospects for growth. Just-food
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Marketplace news
This past week there was a narrative that Amazon was following Chinese marketplaces by purchasing and investing in physical. I dont agree with this as groceries is a huge opportunity worldwide and these giant businesses are ultimately looking for additional revenue streams and to generate additional re-use of their capital investments. DealStreet Asia
JD.com has partnered with Mitsubishi Chemical to raise vegetables in high-tech hothouses for fresh deliveries to consumers in China. The Japanese group will also provide guidance on everything from selecting the varieties of vegetables to grow to packaging them for delivery, including sanitary control and point-of-origin tracking. Nikkei Asia Review
The best explanation that I have seen on the Amazon and Whole Foods Market future. Amazon is a large service provider that uses third parties to scale and generate revenues. I said at the beginning that Mackey mis-understood Amazon’s goals, strategies, and tactics, and while that is true, the bigger error was in misunderstanding Amazon itself: unlike Whole Foods Amazon has no desire to be a grocer, and contrary to conventional wisdom the company is not even a retailer. At its core Amazon is a services provider enabled — and protected — by scale. Stratechery
Fascinating conversation at Greylock regarding marketplace liquidity, vertical vs horizontal marketplaces and the winner takes all question.. So I think they tend to be winner-take-most, at the very least, if not winner-take-all. I think the driver of that is most marketplaces have cross-side network effects whereby, if all of the demand is there, all of the supply wants to be there and if all the supply is there, all the demand wants to be there. Greylock Partners
Cainiao Network, the courier aggregator backed by Alibaba, has announced the establishment of a logistics storage fund with a leading Chinese insurer, the latest attempt to cash in on the country's lucrative express delivery market. China Daily
JD.com and TMall have been accused of putting pressure on smaller businesses to provide lower pricing during promotions. This is seen in most markets who have dominant horizontal marketplaces. Sixth Tone
Snapdeal investors seems to be squabbling over payments for early investors, founders and a significantly smaller valuation ($400 million) while their sale to Flipkart is at a loggerheads. Snapdeal for me should have looked for a sale earlier as suddenly it seems that they were hugely overvalued. The New Indian Express, Bloomberg Technology
eBay has unveiled a price match guarantee on 50,000 products. There are a few hoops like verification, and a list of competitors that is eligible for this promotion but this highlights how eBay is struggling. The mention of no membership is a thinly veiled mention of Amazon Prime but the coupon generation for the difference in price is not really a long term solution for eBays decline. Fortune
Etsy is facing tough times by cutting more of their workforce and looking at highest impact initiatives in their core marketplace. Their challenge in my mind is simple - can they create revenue without high spend on advertising? TechCrunch, Etsy
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Fashion ecommerce news
JD.com invested $397 into Farfetch. I view this as the last round of funding into Farfetch before their IPO. Farfetch gains Richard Liu on their board and a partner to drive the growth of their Chinese business.The company will gain access to JD’s marketing platform, social media channels and delivery service. Financial Times, JD.com
Prime Wardrobe, as Amazon calls it, is an attempt to bolster its fashion business as it tries to win over shoppers’ closets. Subscribers to Amazon Prime can choose three or more pieces of clothing, shoes, or accessories to fill their boxes, which arrive at their doorstep. They then have seven days to try on the items and decide what to keep. Unwanted items are shipped back to Amazon.com. Bloomberg Technology
Amazon India is using the pending GST tax changes to test physical stores in technology parks in India for fashion sales. 12 stores in 3 technology hubs in India could be a precursor physical stores in important business areas in India for Amazon. Inc42
Zalando has unveiled their fulfillment service and it is rolling it out with 4 brands. This is both a revenue generating lever but also a method to protect itself from Amazon in Europe. Drapers, Zalando
Now Tradesy, an online peer-to-peer sales company, is working with startup Happy Returns on a pilot where customers can return merchandise they don’t want in physical locations — often at the concierge kiosk at a local mall. Stores.org
The battle for luxury ecommerce in Asia is getting a additional competitor that is looking for new funding, Reebonz. The funds will be used to expand in Japan, China and South Korea who all have strong incumbents. They want to scale their marketplace offering as well. Bloomberg Technology
How Berrybenka Is Changing The Fashion Ecommerce Game In Indonesia With Private Labels & Physical Outlets. He stated that Berrybenka has grown at a CAGR of 100% or almost double every year. The average basket size stands roughly $25-$30. Again while the exact number of orders in a month was not revealed, the startup claims to overshoot more than 1 Mn orders easily in a single month. Inc42
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Mobile commerce
Mercari has added their name to the list of mobile startups that want to impact Craigslist in the US. I fear for Mercari, the market has some companies that have large funding (OfferUp, Letgo) and those mobile marketplaces which was founded in the US (Poshmark, Depop). Their struggle to partner with multiple logistics services (currently they have 2) tells me that they have 12 months to get this working otherwise they will become an also ran. TechCrunch
Purchasing products on Instagram has to be on the horizon as then it could become a huge platform for fashion ecommerce as currently it is not a friction less process. Fans of the Moda Operandi fashion label can now place orders through its Instagram account using Amazon Pay. Fans looking through Moda Operandi’s Like2Buy Instagram account can click an embedded Amazon Pay button to take them to the Moda Operandi eCommerce website, where their customer information is already populated in the order form. Mobile ID, Glossy, GeekWire
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Stats and other interesting news
Fake online stores are being used to generate payments for gambling businesses. A fascinating read. Reuters
Shopify provides their partners with a Buzzfeed channel to enable sales to 200 million customers. Shopify
Venmo has been testing its own version of a physical debit card that would allow people who use its app to make purchases in brick-and-mortar stores using money stored in their Venmo account, according to multiple sources. Recode
Specifically, Ohno uses discarded Amazon boxes to her create her collection of jaw-dropping and detailed cardboard sculptures. My Modern Met
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Stats and other interesting news
Fake online stores are being used to generate payments for gambling businesses. A fascinating read. Reuters
Shopify provides their partners with a Buzzfeed channel to enable sales to 200 million customers. Shopify
Venmo has been testing its own version of a physical debit card that would allow people who use its app to make purchases in brick-and-mortar stores using money stored in their Venmo account, according to multiple sources. Recode
Specifically, Ohno uses discarded Amazon boxes to her create her collection of jaw-dropping and detailed cardboard sculptures. My Modern Met
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Thoughts on the news from this past week
Brands are going to determine who wins the marketplace battle in any market. Most of the horizontal marketplaces around the ecommerce globe have a huge audiences and are well funded to ensure that they can market brands effectively. Amazon getting Nike to sell directly is indicative of Amazon using their brand registry as a manner to put brands at ease of counterfeits. I also view this as Amazon using their scale to protect themselves from Zalando who has done extensive work with Nike competitor, Adidas. If Nike gets a significant bump from Amazon sales, I feel that other brands that have left Amazon might reconsider their stance.
Amazon Prime Wardrobe is an experiment by Amazon to leverage their logistics prowess to gain a foothold in the apparel vertical. It is also a direct response I believe to counter the effect that Stitich Fix has had on apparel. Ultimately Amazon does care who they have to disrupt to ensure that they are seen as the place to purchase anything. Prime customers will use this as this provides a 7 day window on a purchase decision but it gives Amazon an opportunity to collect further data on Prime members and their tastes.
I want to talk a bit about the investment that JD.com made into Farfetch. Its a lot of capital that is invested into Farfetch ($397 Million) by a single investor which tells me that this is the last round of funding before going public.
- Farfetch is leveraging JD.com's ability to grow a brand for a partner. Having seen the success that JD.com has had with Yihoadian for Walmart it would be irresponsible to not view this partnership as a big deal.
- It provides Farfetch with an ability to grow in a market that has huge upside for them long term, which they have not grown at a decent rate (200 brands).
- The fact that the investment was made into Farfetch and not MATCHESFASHION, Mytheresa or 24 Sevres from LVMH is indicative of the scale that Farfetch has reached.
- It provides JD.com with access to luxury brands for their customers who are increasingly looking for upmarket brands in China.
- This is also a hedge by JD.com on their luxury business in China, if they dont succeed with Farfetch in China via their partnership with WeChat, purchase plans and marketing platforms, they are a large shareholder in a fashion business that is projected to overtake Net-A-Porter in 2 years.
- It provides evidence that JD.com is thinking about other levers to grow their own business (marketplace) than what is seen with Alibaba.
Alibaba had their Gateway 17 event in Detroit late last week. I think we need to realize that Alibaba does not have a Western marketplace that they can be compared to. Alibaba is not interested in any other market barring China and South East Asia because they can then leverage geographic closeness to grow businesses. Alibaba ultimately wants to do one thing - provide Chinese customers with products that are not seen on a competitors website and assist global small to medium enterprises grow their businesses by selling to Chinese customer.
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