Alibaba’s IPO was one of the headline stories of 2014. The Chinese ecommerce business raised record amounts of cash that will allow them to pay shareholders back for showing faith in them. Alibaba is also in a position unlike any of their global competitors to aggressively acquire companies that will put them in good stead for the foreseeable future.
Alibaba has one major weakness and it is quite apparent in their M & A (mergers and acquisitions) strategy – they have done very little outside of China. It is understandable pre-IPO that they wanted to focus on China only and ensure that they are the undisputed market leaders in their home market. Post IPO they have to start looking at business outside China and ensuring that they are creating a sustainable business. I believe that in 5-10 years’ time that Tencent and JD.com would have made significant inroads on Alibaba.
2014 was a very interesting year for ecommerce on the African continent. There was acquisitions, mergers and overall lots of movement. Lets be honest for a moment – African ecommerce is not on the front pages of TechCrunch or on the radar of most investors. It is a long term ecosystem filled with the challenges such as logistics, low credit card penetration and most importantly customer distrust. When I wrote my year in review post, I wrote on regions which got lots of media coverage in 2014.
It is the beginning of 2015. I believe that 2014 contained some clues to the new year and the future of ecommerce. There were some stories that made us all go wow – (The Alibaba IPO) and also some interesting developments across the globe. Global ecommerce is a topic that interests me and it is clearly visible in all ecommerce markets (both developed and emerging). The year contained plenty of stories that could make an appearance in the following post but the following was what caught my attention consistently.
IPO’s (Initial Public Offerings)
We saw 4 ecommerce specific IPO’s. Alibaba, Zulily, Rocket Internet and Wayfair. Three of these IPO’s occurred in the US and Rocket Internet listed on the Frankfurt stock exchange. The biggest surprise is without a doubt Zulily – they are the anti-Amazon. Delivery is a longer than normal process and they are a niche based business. Alibaba – well what has not been said. The biggest IPO in history, Billions raised and now the next phase of their lifecycle starts. Investment into ecommerce businesses. Rocket Internet went public and have been told by market what they feel about their operation. Generally – the growth has been negative and their businesses continue to raise millions of Dollars. Wayfair had a quiet post IPO and I believe will be a business to watch in 2015.
I have been reading and thinking about the latest edition of the ecommerce cold war between Google and Amazon.
Google Inc. plans to push deeper into online commerce by enhancing its Google Shopping service with features that more directly challenge Amazon.com Inc.
Google has approached retailers about creating a “buy” button for its online shopping site that would be similar to Amazon’s popular “one-click ordering” feature, according to people familiar with the discussions.
It is becoming increasingly clear to me that Google has serious concerns over the ambitions and dominance of Amazon in product search. Bill Gurley made a very interesting point in a recent interview on Bloomberg (video) where he said that Eric Schmidt said the following when asked about their biggest competitor:
If you are looking to buy something, perhaps a tent for camping, you might go to Google or Bing or Yahoo or Qwant, the new French search engine. But more likely you’ll go directly to Zalando or Amazon, where you can research models and prices, get reviews, and pay for your purchase all at once. Research by the Forrester group found that last year almost a third of people looking to buy something started on Amazon — that’s more than twice the number who went straight to Google.
For one thing, these companies are each others’ biggest competitors, because in tech competition isn’t always like-for-like. Many people think our main competition is Bing or Yahoo. But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon. They are obviously more focused on the commerce side of the equation, but, at their roots, they are answering users’ questions and searches, just as we are.
The context is important here – Schmidt was talking to a European audience at a time when he was defending Google’s business to European legislators whom are currently looking at Antitrust cases for Google’s various businesses. The point is that Amazon was until this conversation never publicly mentioned as a search competitor for Google huge search index.
When I traveled through the US in October, I went to visit businesses that inspire me and to think about this blog amongst 22000 miles of travel. You would have noticed (my 5 readers) that for the month of October and November that I went radio silent. I was on holiday in the US and came back into peak online shopping season in South Africa.
While I traveled from New York to San Francisco I realised that my weekly recap posts were leading to no real value. I met readers in New York at the Gilt Groupe that solidified my point. The recap posts were great but after reading them – they go into the back of readers minds or are shared to teams.
After a long thought period I have decided that from this coming Sunday (evening CAT time) – I will be doing an ecommerce newsletter. I will continue to curate news that is relevant but it will be moved off my blog into the newly created newsletter. The original purpose of this blog was to be the place where I can share my thoughts with you my reader on topics that will effect your business and the ecommerce landscape.
Currently (and sadly I might add) I am the only user signed up for my newsletter – so sign up and join me in a new place but still with the news that you need to know.