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B2C (Business to customer) news
I had a very interesting call with the team from Happy Returns. One of the remaining parts of ecommerce that has not had its moment nor investment. This LA based startup I think is one to follow. My blog
Amazon continues to roll out service based initiatives similar to "Geeksquad" that BestBuy has. This is hardly surprising but it should concern retailers and Google. Amazon leverages their great brand recognition and generates business for merchants that are service related. Google is clearly the loser here as well, as finding people to set up Alexa's or other bought goods stays off their index.Recode
Shopify continues to show that they are the ecommerce infrastructure business that has significant upside. They continue to become the one place that merchants can interact with marketplaces. marketing etc. eBay gains access to more potential merchants yet Shopify becomes more entrenched with their customers. TechCrunch
Meituan-Dianping report: Only 4% of dining revenue comes from delivery. This should raise flags with investors as Meituan-Dianping is the food delivery market leader in China. e27
A new online grocer has launched, Brandless and it is selling everything for $3. Unit economics make little sense to me and their investors are all venture based. Quality products at less 40% than at Whole Foods Market for me is not defensible. Brandless is about more than any individual product we sell. It is about the true democratization of goodness. Meaning everyone deserves better stuff at affordable prices. Medium, Grubstreet
A former Amazon team member (supply chain, logistics and delivery) says that Amazon could become the top grocer in the US by 2030. Yes it is a long time away but this is the best argument I have read on what Walmart can do to counteract the impact that effect of the Whole Foods acquisition. GeekWire
South African eCommerce players accused of breaking payment rules. Numerous South African eCommerce players have been accused of “sorting at source”, which is prohibited by the Payments Association of South Africa (PASA). Sorting at source is the practice of an eCommerce company having multiple bank accounts with a number of different banks. Mybroadband
PayPal has partnered with global ecommerce platform Webinterpret to offer services which significantly reduces time when selling offshore. Through a partnership with international commerce provider WebInterpret, PayPal will help merchants get set up with localized versions of their online stores, and enable them to take orders and receive payments from international customers. The partnership also facilitates shipping and fulfillment to customers around the world. TechCrunch, PayPal, WebInterpret
Canada's far North is terrified of losing Amazon Prime — and residents say it would be like 'pandemonium'. A fascinating read on the impact that Amazon has in remote Canada. Business insider, CBC Canada
Hire a realtor from Amazon? Another experiment that could drive a new service and lead generation for realtors. A new placeholder web page on Amazon that says “Hire a Realtor” with an option to enter your zip code and “Coming Soon” below is prompting speculation that the company may be expanding into the real estate referral business — Zillow’s bread and butter. GeekWire
Wayfair 125% Rally Defies Amazon Effect as Shorts Take Lumps. Yes, they are valued at $7 billion yet I am concerned over how Wayfair becomes profitable. I still believe that their end game is an acquisition. Bloomberg
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D2C (Direct To Customer) news
L Catterton (one of the LVMH investment vehicles) has taken a minority shareholding in Equinox. Equinox is fast becoming the gym for millennials and also the a valuable partner for direct to customer businesses. PE Hub
Why AESOP is not your typical grooming brand. Direct to customer brands such as AESOP is about providing the customer with the best product and not instant gratification. StyleZeitgeist
Care/of, a year-old, New York-based company that makes subscription-only vitamin supplements that it says are tailored specifically to user’s needs, has convinced investors to give it $12 million in Series A funding to get more of its pill packs on users’ welcome mats. TechCrunch
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Marketplace news
Goldman Sachs believe Walmart can sidestep the Amazon effect. Walmart is "as well positioned as any retailer to simultaneously sidestep the (Amazon) juggernaut based on market/category exposure,". The main reason for this is their stores in rural areas and improved inventory management and in-store operations. Goldman clearly wants more Walmart business as after this boost, Walmart stock price increased. Let me say this clear - Walmart is fighting on 3 fronts. On the retail front they have Aldi and Lidl who are going to add significant price challenges to their stores. In rural markets - customers are buying from marketplaces that are under the radar and also from Walmart competitors. In ecommerce Walmart has Amazon looking at it front on. Fortune, CNBC
Alibaba launches US network to give small manufacturers easier access to 500 million customers. Capping off a series of US events, China’s e-commerce giant established its Taobao Global US Merchants Network with more than 300 merchant members. Providing sellers with tools and access to Chinese customers could generate huge upside for Alibaba. South China Morning Post
JD.com is investing and partnering with logistics companies as they try and create further moats in their battle with Alibaba. They are also adding more products from locations that resonates with their customer base. Parcel and Post, JD.com
The story of how Wikimart ( the eBay of Russia) went bankrupt. A fascinating read and a reminder that geopolitics can effect startups and that bad acquisitions can harm marketplaces. East-West Digital News
Flipkart needs to spend at least $900 million to acquire Snapdeal. As Snapdeal is being sold off by parts (logistics, payments) dont be surprised to see Alibaba (Alipay) and Amazon looking to acquire assets for cheap. I continue to believe that Flipkart should be spending this funding in a better manner and that Snapdeal adds little value to the Flipkart ecosystem. DealStreet Asia
Jet, has struck a deal with smart access provider Latch in an effort to make deliveries easier for its customers in urban areas. Jet is clearly looking at a solution to counter Amazon lockers in New York with the marketing partnership. TechCrunch, Retail Dive
Coupang plans to raise US$500m funds before NASDAQ listing. The conversion price will be based on the IPO price, and if the company fails to go public, it is required to pay back all the money it attracts. The deal is expected to carry 5-6 percent in payment-in-kind rate, which means the interest would be paid through additional shares rather than cash. The rate is not fixed and can be increased by 1-2 percentage points within the five-year contract. The Investor
eBay UK offers credit from PayPal so shoppers can pay in installments. This is new in the UK but has been operating stateside for some time so it’s good to see it cross the pond. You’ll see it on the normal mobile and web versions of eBay but it’s not yet ready for the apps. Tamebay
The Indian government has asked Amazon to keep its food-only retailing business at an arm’s length from its existing flagship marketplace business, where foreign firms are not allowed to sell products to consumers directly. The government, while clearing Amazon’s $500 million (Rs 3,225 crore) food retailing proposal on Monday, asked the US giant to maintain a separate management and offices for the food retailing venture. The Economic Times
Argentine online marketplace Mercadolibre is diving into areas like lending and logistics management, which once belonged exclusively to large financial and retail groups, to increase market share in Brazil, a top executive said. US News
In China, Shoppers Buy Bad Loans Online With Their Groceries. For 4.15 million yuan ($610,000), customers on the site owned by e-retailing giant Alibaba Group Holding Ltd. can bid for the debt of a steelmaker from Zhejiang, a coastal province in eastern China. The company has failed to pay back a 9.95 million-yuan loan, including interest, so a distressed asset manager is auctioning it off to the highest online bidder. Bloomberg News
How Tokopedia Aims To Better Shape Indonesia By Becoming Indonesia’s Taobao. Founders William Tanuwijaya and Leontinus Alpha Edison wanted to make sure that there is safety in online buying and that transactions between merchants and buyers were safe. Thus, Tokopedia was founded to serve as a middleman between the two – a C2C marketplace which connects consumers with small retailers and individual sellers and acts as an intermediary platform to facilitate their transactions. Inc42
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Fashion ecommerce news
How Farfetch founder José Neves built the $1.5 billion fashion platform. Amid tough economic times, it has built partnerships with more than 750 designers and boutiques, selling 1,500 brands to more than one million customers in 190 countries. Wired UK
A $4 billion clothing company created an exclusive brand for Amazon Prime. Amazon provides the opportunity for brands to access Amazon's most loyal customers. This experiment should indicate that apparel is the industry that Amazon is willing to concede to other brands as it grows its apparel business. Recode
‘Trapped’: How Amazon is cornering fashion brands into wholesale. As a wholesale partner, you’re falling victim to Amazon’s pricing model, which is a huge risk. But that’s the only way to unlock their distribution model. Fashion and Amazon are at a major crossroads.” Glossy
ASOS e-commerce success continues even as Amazon looms large. ASOS is a UK e-commerce champion that’s succeeded in large part by having a strong international presence that’s proved very useful in the current climate of a Brexit-battered pound. Diginomica
For Esther, new reward program is not about loyalty. An Australian online fashion business is using their reward program to learn about their customers. Interesting concept to create a sticky website but their must be significant benefit for the customer to participate. Internet Retailing Australia
To power the Poshmark community, it launched a wholesale business in late 2015. “We want to become the Salesforce for fashion, and the way to get started is to start with closets,” Tracy Sun, VP of merchandising and co-founder of Poshmark. “But it’s a pipeline for professional sellers, which is why we don’t talk about ourselves like a resale space.” Glossy
Entrupy, a NYC-based developer of artificial intelligence-based technology for authenticating high-end luxury goods, secured $2.6m in Series A funding. Entrupy provides a hardware-enabled SaaS patented technology platform which uses computer vision algorithms and microscopy to enable hundreds of secondary retailers and marketplaces to authenticate handbags and wallets from brands including Louis Vuitton, Chanel and Hermès. FINSMES
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Mobile commerce
A nice in-depth look at Amazon's mobile ecosystem - suffice to say there are many apps. Amazon’s main app may be cluttered and is home to far too many features, but Amazon, the company, is no single-app company. The sheer number and breadth of services Amazon’s mobile apps offer show why the online retailer wanted to own a popular mobile OS as well: They’re just doing a lot of very different things on mobile. Early Moves
Facebook continues to move into mobile marketplaces / classifieds. Facebook is not even selling ads specifically for Marketplace just yet — instead, it will take existing News Feed ads and put them inside the Marketplace tab free of charge to advertisers, as a way to experiment. Recode
Google continues to use their mobile search index as a way to generate revenue by allowing customers to book services. This map feature is a first step in aggregating salon and spa booking services. This is just another way of getting closer to the customer without doing the work. GeoMarketing, Google
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Stats and other interesting news
Amazon Prime and other Subscription Businesses: How do you Value a Subscriber? A fascinating read... What is new is that many more businesses have adopted a subscription approach, which makes them look a lot more like a company in the the cable television business than an auto parts manufacturer. 25iq
E-Commerce as a Jobs Engine? One Economist’s Unorthodox View. Mr. Mandel is turning heads from Washington to Silicon Valley with a provocative and unorthodox argument: He asserts that the move toward e-commerce is creating more jobs than are being lost in the brick-and-mortar retailing industry — and that these new jobs are paying much higher wages than traditional retail jobs. The New York Times
Umbrella-sharing startup loses nearly all of its 300,000 umbrellas in a matter of weeks. So even though it would be nice to grab an umbrella when walking home in a downpour, one thing seems clear: if sharing economy companies don't change the way that they keep track of their products, they won't stick around long -- whether it rains or not. Shanghaiist
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Thoughts on the news from this past week
Let me start by saying that while Brandless is a good idea and would solve problems in San Francisco, I dont see it being sustainable. Democratizing quality products is a great idea but the $3 pricing is not sustainable. Margin contribution, replenishment cycles and unit economics make me concerned. Yes, their investors are passionate about Brandless but this feels to me like a business that is being built for an exit in the next 2 years. Fast moving grocery items are a notorious margin business with razor thin profits and price is not a defensible moat. Could the end game be an acquisition by Walmart or a retailer?
Prime Day arrived and went by with Amazon selling lots of their devices. In typical form Amazon said it was a good day sales wise but was vague.
Why is Prime Day a big deal?
1. It is a middle of the year test for Amazon's logistics before festive season. Amazon wants to ensure that they never have a repeat of festive season 2015 and failed on time delivery.
2. With more countries and sales happening it would create a case of less conversions being made. Prime Day had a lower conversion rate than what was seen last year.
3. Its primary focus is to get Prime customer sign ups and get more Amazon devices into customer homes. Anything else is a bonus.
The Jet.com and Latch marketing partnership is a fascinating idea. I have to wonder if that indicates that work deliveries for online shopping is decelerating or it could be a case in which Jet.com wants to be able to save on delivery costs to New York based customers?
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