The past week has contained stories that has me shaking my head in disbelief (Argentina and Russia restricting ecommerce) and thinking about the future of ecommerce. What is the future of ecommerce? The short answer is I am not sure. I see a combination of mobile commerce with personalization, location based services that includes social commerce in some way or form all together. Social commerce has been on my mind for the last few weeks as I think Asia is showing everyone that messaging is also part of the future. I will continue the thoughts in a longer post on social commerce soon..
I am going to be a bit controversial in a minute as I think ecommerce in Argentina and Russia got given the short end this past week. Long story short in both cases have legislation ensured that importing of international goods from international merchants (eBay, Amazon and Alibaba) become a long and difficult process. I believe that in both countries are the incumbents (MercadoLibre and Ozon) benefiting from this sudden change but in both counts the biggest losers are the locals buying from these international juggernauts. I have a fundamental problem when corporates use legislation to slow down the progress of companies that innovate and do better customer service than local companies. This development surely will hurt Russia’s position as an emerging market that ecommerce investors are looking at.
The big news story this past week for me is Tiger Global spending $200 million dollars to acquire Alibaba shares on the secondary market. (A great scoop by Alistair Barr at USA Today).The fact that based on that the company is valued at $125 billion then I think Chase Coleman did some great tactical buying before the IPO. Don’t forget that by becoming a shareholder he and his team also gets a front row seat at the plans that Alibaba has. Keep in mind that Tiger Global has investments in China, Russia and India and Latin America then the argument can be made that this is a defensive move made by Coleman. Whether he sells the shares after the IPO will show the world what the plans are (I think they will hold on to the shares and once the IPO occurs look for Tiger to add to their holdings thus becoming a big shareholder in the public version of Alibaba).
The stories that caught my attention this past week:
- Amazon to launch Sunday deliveries in the UK – Amazon is to strike another blow against the high street by launching a Sunday delivery service across the UK. The online retailer is to offer the deliveries in seven areas, for shoppers frustrated about missing deliveries during the week when they are at work. Amazon has clearly turned up the volume on certain markets in the last 6 months with regards to logistics etc.
- Retailers, brands explore growth opportunities in Africa – Nevertheless, breaking into African markets can be a challenging and costly exercise. And while urbanisation is increasing, a majority of Africans still live in rural areas making distribution and marketing tricky.“I think the question for a lot of companies is how far do you want to go … and how big is your commitment to Africa?”
- Skimlinks Says Its Affiliate Linking Technology Drove $500M+ In E-Commerce Sales Last Year – One thing that doesn’t seem to be a big priority is mobile. While that seems to be where a lot of publishers and startups are putting their energy nowadays, Navarro said that when it comes to actually making purchases, there doesn’t seem to be much traffic from mobile, “So I don’t think we’re missing out on too much yet.” Remember this is the company that powered affiliate comission for Pinterest for a while so ecommerce is part of their business in a big way.
- Mobile takes 10% of total European e-commerce this Christmas as cross border boom – Research shows that this past Christmas across Europe mobile payments accounted for an average of 10% of e-commerce transactions, with the UK and Netherlands seeing 19 and 16% respectively of e-commerce payments being made over mobile. With the evolution of the markets, increasing consumer trust, widespread technology penetration and confidence in purchasing from cross border suppliers, the term “e-commerce” will become redundant.
- Will Google have to start a marketplace? – Google is clearly aiming to be the destination for product searches with the launch of Product Listing Ads (PLA). However, some industry experts are wondering whether to win in this space Google will need to go beyond simply advertising products and launch a fully-fledged marketplace. This rumor makes an appearance once a quarter and in my own mind I don’t think Google will create a marketplace, they have another asset that they can use to hurt Amazon…
- Alibaba’s Ma: Company Faces Unprecedented Challenges – ” As Wall Street looks forward to big windfalls from Alibaba Group Holding’s anticipated initial public offering this year, the Chinese e-commerce company’s founder and chairman Jack Ma told employees the company is facing “unprecedented challenges. In a letter to employees dated Monday, which was obtained by The Wall Street Journal, Ma praised employees for a banner year, but also warned of difficulties to come as the company seeks to compete for the more than 500 million people in China who connect to the Internet using smartphones.” Ma has already identified where Alibaba has to be to remain relevant and his company is aggressively trying to grow mobile commerce and mobile usage.
- In 2-3 Years, Flipkart Will be Largely an M-Commerce Company: Sachin Bansal [Interview] –
We will focus on PayZippy, our payments platform, e-books and our mobile experience. Category expansion is also on our minds. In 2-3 years, we will become largely an m-commerce company. The more I read about Flipkart, the more I realise that the founders are in it the for the long haul and the opportunity that Flipkart has is massive. Think about it – whoever is the first company in Indian ecommerce to execute properly will be a very difficult company to challenge. They also have a scale advantage in terms of market opportunity as seen in China (a smaller scale).
- Mobile underpins eBay’s ambitions to own the direct-to-consumer market – eBay is betting on mobile and its ties to retailers to help compete against Amazon in the direct-to-consumer space, where the auction giant is reportedly eyeing a bigger role.
- Amazon Innovates With Its Business Model, Not Drones – Amazon’s business model innovation certainly allows it to deliver a diverse portfolio of customer value propositions that serves as its main competitive advantage. Culturally, a continuous focus on business model innovation keeps the company connected to its entrepreneurial roots — an advantage that should be coveted by even the largest of companies. A great read on one of the tools Amazon uses to keep ahead of its competitors.
- Alibaba: The First Real Test for Amazon’s Business Model – However, the ultimate test for a business model comes not from being the disruptor but from how resilient it is to disruption itself. One the most interesting challenges that 2014 is going to bring is the IPO of Alibaba in the United States. Alibaba is not only a very successful disruptive company in China but also brings to the table a completely different business model than Amazon’s. A great post on the future battle between 2 behemoths.
- Alibaba on tour: Chinese tech giant draws a crowd in Amazon and Microsoft land – In case the crowd needed to be reminded of Alibaba’s status as an e-commerce powerhouse, a handout touted the record-setting sales of more than $5.7 billion recorded by the company’s platforms on Nov. 11, also known as “Singles Day” — eclipsing its U.S. counterpart, Cyber Monday. Interesting that Alibaba staff visit the home state of their biggest competitor..
- Amazon revenue has increased at least 25% a year since 2008 – Amazon groups fees from third parties into a category called services, the revenue from which makes up about one-fifth of Amazon’s sales. Services revenue also includes sales from Web services, digital-content subscriptions and cobranded credit cards. The Internet retailer, which reports earnings next week, credited a 45% jump in services revenue for the company’s 23% increase in overall sales for the first nine months of last year.
- The Value of PayPal and eBay Together – No other payments competitor has achieved PayPal’s success – because no other competitor has a commerce platform like eBay. PayPal is successful precisely because we are part of eBay Inc., not in spite of it. eBay Inc. has helped drive our success for more than a decade, and we continue to believe we’re far more valuable together. The fact is that if PayPal is ever spun off into a seperate company the entire ecommerce ecosystem will see just how dependant eBay is on the business to grow.
- Hello, smart commerce – Smart Commerce is beginning to happen in cities like London, San Francisco, New York, and Chicago. In the months ahead, it will extend far beyond those hubs. A great post which makes me excited about the future of ecommerce.
- Q&A: Alibaba’s CTO on Amazon, smartphones and the Chinese tech giant’s global ambitions – Alibaba may not be a household name in the United States yet, but the company is a giant in China — with a dominant e-commerce platform, growing cloud computing system, smartphone operating system and even a finance business. It’s sometimes described as Amazon, PayPal and eBay combined, with a bit of Google thrown in for good measure.
- Amazon and EBay Inch Into India’s E-Commerce Market – For U.S. e-commerce companies, some of the most tantalizing expansion opportunities lie in India. Hong Kong-based investment bank CLSA forecasts that the country’s e-commerce market, now at $3.1 billion, will grow to $22 billion in the next five years.
- Alibaba invests $15 million in US-based luxury e-commerce site – China’s Alibaba Group has made a $15 million investment in 1stdibs, the fast-growing luxury e-commerce site that links dealers with well-known interior designers and their affluent consumers to shop for vintage design, jewelry, couture and fine art.
- European online retailers looking at emerging markets – Market expansion is seen as a real ecommerce growth opportunity this year. Almost nine in ten European executives, surveyed by CyberSource, are planning to increase focus on expanding their ecommerce business into new markets in 2014. Emerging economies like Russia, Brazil and China are amongst the most popular destinations. This will be occur a lot more in 2014 as business look to enter markets with customers whom are looking to shop more aggressively than what is seen in Europe.
- Startup Instacart hopes to dominate grocery delivery – But Instacart’s secret to early success may also be its eventual undoing, some analysts say. The startup sped ahead without any formal agreements with the grocery stores where it buys its customers’ orders, which means Instacart pays full price for groceries just like any other shopper, and its customers often pay above full price to make the business profitable. I ask again why did it take Amazon years to move out of Seattle with AmazonFresh?
- India’s Snapdeal Looks to Join the $1 Billion Club – Credit Suisse is leading the funding round, the person said.With more than 20 million users, Snapdeal is prepping for a possible initial public offering in the U.S. within the next year and is on a pace to reach $500 million in sales in its fiscal year ending in March, said a spokesman. The Indian e-commerce market is expected to grow to $22 billion within the next five years, from about $3 billion today, according to investment bank CLSA.
- Why Ecommerce Companies Are Eyeing Brick-and-Mortar Retail – The two-year old company, which allows users to buy clothing from other users and from boutiques, has hosted a number of offline events for its users, and Manish Chandra, the company’s founder, says that local commerce will play an important part in the company’s strategy moving forward. A few interesting learning in the post on the future of ecommerce.
- Alibaba vs Amazon – the 2014 Edition – Something I wrote in response to the HBR post on the threat that Amazon’s business model has from Alibaba. It boils down to efficiency (Amazon) vs Scale (Alibaba) and the companies are not the same.