Aramex shows good results from its emerging markets theory, Amazon adds Flow to its mobile app, Flash sales have to go mobile or they will die, Newegg launches a Prime competitor, Alibaba valued at a $153 billion, Amazon enters Brazil with the Kindle, Wayfair valued at $2 billion and much more.
I have a question which is bordering on being rhetorical but it is worth ponder over. What is the total amount of money spent in ecommerce to counter Amazons total domination of the business? In the 20 years of its existence there has been billions of dollars invested to counter the movements of the Seattle based online retailer. They are currently single-handily changing the ecommerce ecosystem through most competitors going to the marketplace model (longtime readers will be aware that I don’t think that is a good idea) and indirectly leading to competitors going out of business. Amazon is the only business that can make little or no profit and the financial world is fine with it. The current race to compete with Amazon Prime is another economic impact for Walmart, eBay and now Newegg. So with that as background how many billions has been spent on combating Amazon?
Alibaba has been valued at a $153 billion but the more I read the more I wonder what businesses will be part of the IPO? From an investor point of view I believe they will be hoping for Tmall. Taobao and Alibaba, Alipay and Aliexpress but I think it will be Tmall, Alibaba and Aliexpress. I would be surprised if any other businesses are floated but I am speculating at the moment…
This past week had a non-commerce story in it that will have an impact on ecommerce in my opinion in the next 2 -5 years. Microsoft licensing Foursquare data is a very interesting story – why? Local and Local commerce is at the moment nothing more than a thought. Foursquare is the one business that will bring a full scale bidding war between all the big technology companies. The amount of legacy data they have will make them a very difficult business to compete with – as businesses that competes with it are worth billions – Yelp etc. Imagine an ecommerce business that has a dominant payments platform acquiring Foursquare (which will be an expensive acquisition) – that should scare any ecommerce business as local, payments and mobile is part of the next wave of ecommerce.
The news that caught my attention this past week:
- Beyond the check-in: Foursquare’s future of location-based commerce is closer than you think – “This latest move puts Foursquare in even greater competition with Yelp, the $5 billion public restaurant discovery giant. The company won’t be able to compete on resources, but Foursquare has an advantage based on its location data and social graph. And while Foursquare’s reviews and recommendations are personalized and generally effective, Yelp has devolved into a cesspool of mostly useless 4- to 4.5-star ratings. If Foursquare can become the default restaurant search and ordering platform, and ultimately extend that success into other verticals, then it may have hope yet for living up to all that early promise.” Foursquare is an outlier – however, if they build a great commerce execution they will become a target for Google, Amazon, Groupon and whomever needs a proper local commerce play.
- Indonesia’s Shopious pivots from traditional e-store to Instagram-based fashion store aggregaton – “The business model is quite simple: sellers pay a monthly subscription. Merchants who want to list 10 product photos pay an IDR 35,000 ($3) monthly fee or IDR 50,000 ($4) for 20 photos.To get merchants to pay up, first, Shopious lists sellers and their products for free. Second, when customers start commenting that they want to buy the products, Shopious will contact the seller to start paying the subscription. Third, if sellers don’t want to pay, they’ll immediately get kicked out of Shopious.” This is seemingly a trend where a new platform becomes a commerce potential play. Still some challenges with regards to payments and transaction ability on a platform that is essentially a canvas for photography..
- Amazon Prime Was Too Good to Be True After All – “The price of “free” two-day shipping is about to go up. That was the message from Amazon executives last week, who said that shipping costs would probably force them to raise the price of the company’s popular Amazon Prime program. Now $79 per year, the cost could go up $20 to $40 more.” This is being made a bigger deal by the press than what they reality is. The customers will easily pay the price increase as the benefits outweigh the costs for non Prime membership.
- Zalando may be preparing for an IPO – ” Zalando has gathered three banks to advise the German fashion retailer on what may be Europe’s biggest float since the dotcom bubble. Zalando’s choice has fallen on Goldman Sachs, JP Morgan en Morgan Stanley, but the shoe and fashion store has yet to formally appoint them.The initial public offering could value Zalando at more than 5 billion euros. Although that might seem small compared to Amazon from the United States or the Asian Rakuten and Alibaba, still with that value it would compete to be or become the biggest European store that’s basically purely online.” An IPO makes sense as growth as slowed down and with all of the ecommerce valuations going into bubble territory, Zalando’s biggest investor Kinnevik most probably wants to capitalise on the momentum seen in the ecommerce investment space.
- Lessons for eBay: How Kunal Bahl plans to make Snapdeal a $1-bn company – “In the past four years, Bahl has seen the start-up he co-founded through thick and thin. An e-commerce venture, Snapdeal was first positioned as a daily deals site but, as that market imploded, the founders were able to reposition (often called pivoting) the company into a broader e-commerce venture. “In year one [April 2011-March 2012] we sold some 600,000 items; we are now shipping 2 million every month,” says Bahl.” Snapdeal is potentially the biggest ecommerce story to come out of India. They have pivoted from daily deals to pure ecommerce and then caught the attention of global investors. Indian ecommerce is becoming the battle of 3 – Flipkart, Snapdeal and Amazon.in.
- Down by the River…Amazon Style – “Amazon has created the next great revolution in B2B supply chain management and it is part of the reason why no other retailer will ever catch up with them in the field of e-tailing. Quite simply, Amazon allows a vendor multiple ways to sell consumers under a system that in the parlance of today can only called distribution-neutral. It is this reason as much as its facing to shoppers that makes Amazon invincible.” Amazon has 5 ways to ensure that they can monetise a sale via their platform – name me any other business that has that kind of selection for partners?
- $2B Wayfair Valuation a Big Statement in Winner-Take-All E-Commerce – “One day later, Wayfair announced its annual sales figures, saying it collected $915 million in revenue for 2013, up 55 percent from the previous year.” Wayfair is clearly on the way to an IPO and are clearly building a case for investors to invest in their business. This is a company that was quiet until it reached a billion dollar in revenue and now wants to ensure that they get mentioned as the best of the rest (not eBay or Amazon).
- Inside Is A New Indoor-Location Platform That Uses Your Phone’s Camera To Figure Where In The Mall You Are – “Despite some very hefty rivals, Shopcloud reckons it has a chance at building traction in a still nascent space with its platform agnostic mobile system (albeit smartphones need the necessary camera & sensors for Inside to work) — and owing to its proprietary (and patented) indoor location pinpointing algorithms.” This is another part of retail which is becoming a battle ground as bricks and mortar try to leverage technology to gain insight into customers.
- Online Grocery Shopping Is Back, and This Time It’ll Work – “I’m not sure why Amazon thinks this is a great sector to play in,” says Sucharita Mulpuru, a retail analyst at Forrester Research. “It’s very capital intensive and there are probably better ways for them to use their money.” But it is moving forward, and this shows that the company sees promise somewhere. Mulpuru surmises that Amazon is betting it can use its heft to change the landscape for groceries as it has so many other consumer product categories. The prize is a big chunk of the $1 trillion grocery market.” Online grocery shopping is a hot topic in ecommerce circles at the moment – why is their all of this interest in it? The size of the opportunity is massive but most of all the interaction between customers and retailers / online groceries has become less frictional.
- Google’s DoubleClick Search Ramps Focus On PLAs And Ecommerce With New Commerce Suite – ” In a sign of where its focus lies and the growing importance of PLAs in the search ecosystem, today Google is introducing the DoubleClick Search Commerce Suite, what it calls “a smarter, faster, product-centric layer to search management”. ” Google wants to be a part of ecommerce and is strategically using Adwords to make its own case for being a big player.
- Flash Sale Sites: Go Mobile or Die – “Flash sale shoppers make quick evaluations and impulse-driven purchases. If they’re interested in something, but can’t buy it right away, there’s a good chance that sale is lost forever. And the last thing you want to do is to miss out on a sale because your shopper is in the bathroom and unable to complete a purchase the minute they get your email. And since 75% of all Americans bring their smartphone to the bathroom, there’s actually a very good chance this could actually happen.” Flash sales are in a period of change as mobile which accounts for about 40% of total sales is beginning to outrank tradtional desktop sales.
- Amazon sees a future in mobile commerce – “Amazon is beginning to gain momentum when it comes to mobile commerce. The company has already established a strong presence in the mobile space. As of June 2013, approximately 57% of the retailer’s user accessed Amazon with a mobile device. With the launch of Amazon’s Login and Pay service in October of 2013, the company has seen more mobile activity. Amazon is expected to find even more momentum in the mobile field as it continues to develop various mobile-centric initiatives.”
- Aramex emerging markets strategy “paying off” after another record year – Global demand for online shopping helped Aramex international express services to thrive in 2013, with the division’s Q4 revenues up 11% year-on-year, to AED 285m and full-year revenues up 9% compared to 2012, to AED 1.057bn. Aramex said e-commerce is developing at a rapid pace in emerging markets in the Middle East, Africa and Asia, and the delivery company can capitalize on this demand.Hachem said along with the emerging markets strategy, his company would also look to continue to build on the growing business-to-consumer activity, “further developing and strengthening our e-commerce services to create more efficient platforms and systems for e-retailers across the globe”. Logistics in emerging markets is a huge opportunity and clearly Aramex have seized the opportunity.
- Newegg Launches $50 Amazon Prime Competitor – “Meet Premier, Newegg’s $49 answer to Amazon Prime. With free three-day shipping, discounted expedited shipping, and free returns, it’s a legitimate competitor to Amazon’s proven customer loyalty program.” Opportunity comes knocking as Amazon talks about raising the price of Prime and suddenly quite a few companies mentioned Prime-like businesses. Newegg’s service is a day longer than Amazons and also does not have the benefits that Prime has (online video, free Kindle books).
- One-Minute Review: Amazon’s ‘Flow’ Image Recognition Beats Barcode Scans – Flow has been around for a while as being desktop only. Adding it to the mobile app is clever as it makes the ordering of products easier. Add predictive shopping with this and Amazon is unbeatable on mobile.
- 10 advantages of selling on Ozon, Tmall and Allegro – “There are many brands who have not considered selling on marketplaces like eBay and Amazon, let alone Ozon, Tmall and Allegro. But it’s an opportunity only the foolish would dismiss out of hand. For many brands it can bring in another big chunk of revenue if done well and a customised page on eBay for example, doesn’t necessarily devalue a brand’s image.” The globalisation of ecommerce is currently ongoing and being able to sell in Russia, China and in Eastern Europe will become a necessity for brands.
- Amazon Lays Foundation for Giant Video Advertising Business – “In many ways, Amazon’s advertising business still remains a mystery. The company doesn’t break out the size of it in its earning reports, and Amazon exec presentations on it at industry events are often low on details.” Advertising and AWS are the businesses that Bezos is not keen to divulge size and revenue on as this is currently secondary services that Amazon leverages to scale. I believe both of them are multi-billion dollar businesses that are being carefully managed to not give competitors the opportunity to compete with Amazon.
- In Russia: The Deliveryman Gives Fashion Advice – “To make matters worse, the country’s postal service is widely considered unreliable, a potential hurdle for anyone starting a Web shopping business. Yet Lamoda and domestic rivals Ozon.ru and Wildberries have made proverbial lemonade of that shortcoming by employing armies of trained advisers to serve as both couriers and mobile stores.” Russian ecommerce is clearly an outlier like China due to the challenges that logistics provides ecommerce businesses. The try on and return programme described here is seen in multiple emerging markets as that is how the fashion ecommerce businesses try to minimise the return costs.
- Amazon tests Brazil’s retail jungle with its Kindle – “Amazon Inc. started selling its Kindle online in Brazil on Friday, expanding from ebooks into retail for the first time in Latin America’s biggest and most challenging ecommerce market. By shipping its ereader devices across this immense country, Amazon will now get a taste of Brazil’s notorious logistics problems, widely seen as a deterrent for a full-fledged retail operation like the one it has in the U.S.”
- AliPay Neared 300 Million Users as of 2013 – “Alibaba’s payment arm AliPay announced that nearly 300 million users have registered the service as of the end of 2013, recording overall 12.5 billion transactions in the past year.” Alipay is one of the unsung heros inside Alibaba which is making the overall business a difficult competitor.
- You Can Explain eBay’s $50 Billion Turnaround With Just This One Crazy Story – ”
But Milo had the home Abraham wanted. It was an old house near the main eBay building. There was a porch out back for weekly barbecues, and lean-back chairs for lounging. An upstairs library with a fireplace became a conference room equipped with Nerf guns, an Xbox, and a Nintendo. Over the next year and a half, the team built Milo’s technology into eBay. It powered a product called eBay Now, which enabled shoppers to use a phone to order a product from a local store and get it delivered in under an hour. The Milo team became known as the eBay Local team, with Abraham in charge. As it expanded, Abraham gave up his own desk. He liked to walk around. When he needed to sit to do work he’d take over the library.” I have heard multiple versions of this story and clearly Jack Abraham had the ability to change eBay due to support from John Donahue – my question is why was eBay unable to retain Abraham after recreating the homepage?