eBay invests into Snapdeal, Lazada’s big bet on Southeast Asia, How online shopping is helping Nigeria fix its Internet reputation, Tencent to invest in JD.com?, Copycat Business Model Generates Genuine Global Success for Start-Up Incubator, Google ups the importance of commerce, Rakuten has big plans for Europe and much more.
There are 2 stories that has dominated the ecommerce landscape in the last week and they both have eBay in them. eBay lead a massive round of funding for Snapdeal and pretty much told the world that they will be acquiring Snapdeal in the coming months / years and Carl Icahn has been pressing the eBay board for a split with Paypal. The Icahn story has become something akin to a mud wrestling battle between the 2 parties and I think it is pretty poor form for this to be playing out in the public domain. Sure, as an investor in a public company it is important to hold the management and directors accountable for their actions but this mudslinging is not doing any party any favors.
The talent exodus continues at fab.com. I wonder how many of the staff in hindsight would have taken employment from fab.com if they knew the rocky road that they would be on down the line? It is interesting to note that the only senior management staff member that is around is the CEO Jason Goldberg.
The stories that caught my attention this past week:
- Indonesia E-Commerce Braces For Explosive Expansion – “The world’s fourth-most populous nation will have doubled the number of Internet users to 125 million by 2017, and smartphone ownership will rise from 20 percent now to 52 percent in that same time period. That means its e-commerce business is expected to be approaching a “big bang” moment, said Ellyana Fuad, the Indonesia chief executive for Visa, the Financial Times reported on Friday.” Is Indonesia trying to battle India for being part of the ecommerce BRICs? I tend to think so but the market in Indonesia is growing at a faster rate that what was seen in India.
- Worse than Wal-Mart: Amazon’s sick brutality and secret history of ruthlessly intimidating workers – “When I first did research on Walmart’s workplace practices in the early 2000s, I came away convinced that Walmart was the most egregiously ruthless corporation in America. However, ten years later, there is a strong challenger for this dubious distinction—Amazon Corporation. Amazon equals Walmart in the use of monitoring technologies to track the minute-by-minute movements and performance of employees and in settings that go beyond the assembly line to include their movement between loading and unloading docks, between packing and unpacking stations, and to and from the miles of shelving at what Amazon calls its “fulfillment centers”—gigantic warehouses where goods ordered by Amazon’s online customers are sent by manufacturers and wholesalers, there to be shelved, packaged, and sent out again to the Amazon customer.” This was a great read and somewhat unsettling as it paints a really bad picture of Amazon’s practices with regards to people management. Is this the reason why Bezos wants to have robots in his fulfillment centers?
- #Homescreen2014 – “What can 1000 homescreens tell us about the way people use their phones. Excerpted from the betaworks shareholder book. Commerce isn’t core to the workflow that people have on their phones, yet. Venmo (formerly a betaworks investment) is on 2 percent of homescreens, Paypal is on 1.3% and Square’s app (Cash) is on 0.5 percent of homescreens sampled.” This was a fascinating read and for ecommerce executives that have mobile on their mind, a very important fact to keep in mind.
- Why Bitcoin Matters for Africa – ” I use Zimbabwe as an example because it is one I am familiar with, but similar economic situations have unfolded across various continents. Peru, Brazil, Angola, Yugoslavia (at the time when it still existed) and a number other countries have all suffered from crippling hyperinflation, and in many cases this was caused by impulsive, foolish “human error” in the form of printing money without thought for the consequences. Here is where Bitcoin comes into play. Since bitcoin is a decentralized currency that is controlled by algorithms rather than one or a small handful of individuals, there is no option to simply “print more money”. This precludes governments from instituting reckless monetary policies and subverting entire economies on little more than a whim.” I read this post and re-read it and it makes alot of sense. Will bitcoin come to Africa? It is slightly being used in South Africa..
- Bekker Says Naspers Must Focus on E-Commerce With New CEO – “Bekker, who transformed Cape Town-based Naspers from a print publisher into the world’s biggest emerging-market media company, will be replaced by the firm’s recently-appointed head of e-commerce Bob van Dijk. Bekker, 61, is taking a yearlong sabbatical to travel and research future growth opportunities before taking over as chairman. “The main requirement for the Naspers CEO at this point of our evolution is to manage our e-commerce businesses,” Bekker said in an e-mailed response to questions. “Bob is one of the most senior e-commerce execs in Europe.””
- Amazon Officially Rolling Out Three Kindle Fire Tablets in Chinese Market – “After tapping Chinese tablet market with Kindle Paperwhite and Kindle Fire HD series last June, Amazon is going to deepen is forays into the market by officially releasing three Kindle devices on Amazon China in a roll tomorrow, including two latest refresh of the Kindle Fire lineup, Kindle Fire HDX 7” and Kindle Fire HDX 8.9”, as well as Kindle Fire HD.” This is somewhat interesting as Amazon will be competing with Alibaba who has a very large tablet business in China. I still think Bezos has not given up on China.. yet.
- Neiman Marcus Missed 60,000 Alerts As Hackers Stole Credit Card Info – “Remember how Neiman Marcus revealed that hackers accessed credit card info for brick-and-mortar store customers? Turns out, during the eight-month period when hackers were snooping around the company’s system, they set off nearly 60,000 security alerts. That seems like a lot of pop-ups to casually dismiss.” Retailers have had a tough time in the US regarding credit card processing and it seems the problem has affected many more shoppers than what was previously reported.
- How Ben Lerer competes with Amazon – “How do you compete with Amazon? By having things that Amazon doesn’t have. At Thrillist, we sell you stuff you need that you can’t find anywhere else. Almost half of what we sell is exclusive to us, with a big portion of that stuff actually being made by us. You can’t price-check an item on Amazon that they don’t cover.” Interesting advertorial on Thrillist and how they compete with Amazon.
- German ecommerce grows 42% to €39bn – “The German ecommerce industry grew 42% last year, so that it now is worth 39,1 billion euros. For the upcoming year a growth of about 25% is expected. Clothing is by far the most important product category in German ecommerce and women are a major source of revenue online”. Interesting insights into German ecommerce what is very interesting to note is just how big marketplaces are as a percentage of total sales in German ecommerce.
- 100M Mobile Payments in 7 Days, Alipay Triumphed Through Spring Festival – “During 2014 Spring Festival,over 100 million payments were made via mobile Alipay, accounted for 52% of overall payments by Alipay in this period, according to the data from Alipay Wallet (the mobile client of Alipay). It was also revealed that the real-name user of Alipay approached 300 million by the end of 2013. These users made 12.5 billion payments in the past year. More than 100 million of the users turned to mobile for most of payments, and finished over 2.78 billion payments totaling over 900 billion yuan (USD 147.5 billion).” I think we can now say that Alipay is the biggest mobile payments business in the world..
- Amazon clashes with German greengrocers – “According to Bild Zeitung, people are being trained in the United States to offer the same service in Germany, with AmazonFresh offering practically the same fresh products you can find in your average German supermarket like vegetables, fruit, fish and meat. The project should start no later than in September 2014.” It is clear to me that Amazon is trying to ramp up their businesses in their core markets to make sure that they can counter any competitor.
- Alibaba Launched Tmall International, an E-commerce Site for Overseas Products – “Chinese e-commerce giant Alibaba Group recently launched Tmall International, a site dedicated for business entities outside China, where overseas brands and merchants can sell their products directly to Chinese online shoppers. The newly launched international platform provides genuine products that are produced or sold in overseas markets. In addition, the platform offers a direct delivery service. Merchants on the platform also offer Chinese language customer service through Alibaba’s instant messaging platform Alitalk, as well as 72-hour shipping, and product return facilities in mainland China.” Alibaba is moving out of their home market into new markets..
- A better e-commerce experience: Channel Intelligence and DoubleClick Search team up – “Today we’re excited to announce that DoubleClick Search will integrate feed management and optimization capabilities from Channel Intelligence. As an add-on solution to the DoubleClick Search Commerce Suite, the first step in this integration combines the data feed expertise from Channel Intelligence with the core workflow and optimization features from DoubleClick Search. Especially with the announcement of Shopping campaigns, having a detailed product feed is crucial for retailers to run high-impact search campaigns.” Google clearly has ecommerce in their sights but it wont be done the traditional way… Advertising products for ecommerce businesses has grown at a rate of knots.
- Hointer brings the best of digital to bricks-and-mortar – “T he old way of shopping can peacefully co-exist with the new,” insists Nadia Shouraboura. “It’s about giving shoppers options.” Shouraboura, who honed her retail chops at Amazon, is CEO of Hointer, a one-of-a-kind store in Seattle that brings the technology consumers love into a traditional store. I think that Hointer is the example for next generation commerce businesses. Blending together the best of physical retail with ecommerce.
- Lawsuit alleges Amazon Prime third-party prices are inflated to cover shipping – “Amazon is being accused of encouraging third-party sellers to inflate prices to help cover the cost of shipping, even though customers who pay for Amazon Prime, are supposed to get that benefit for free.” It is clear that Amazon Prime is currently under the microscope by customers, competitors and this story raises a few interesting questions. How does Amazon recover the costs from Prime Users?
- More Trends In Emerging eCommerce Markets – “In our research, we’ve talked about some of the trends that mark early-stage eCommerce markets. This year I’ve been to a few events to talk about how different eCommerce markets are evolving – today we see that: Retailers’ ownership of logistics networks is now widespread, The nature of the competitive landscape varies greatly.” This is an extension of a post that was written in 2013 on trends in ecommerce in emerging markets.
- Zulily takes aim at Fab.com, plans big expansion in home products category – “So, what’s next for the fast-growing and profitable daily deals site?For one, the Seattle company is expanding beyond its historic niche of baby apparel, toys and accessories with plans to launch new product categories, building on its new-found success in the women’s apparel and home decor areas.” Zulily seems to have timed their IPO to perfection and seems to be growing really aggressively. What happens when Zulily enter the home goods vertical and dominates fab.com?
- Japan’s Rakuten is quietly striving to become the king of e-commerce in Europe – “During and since 2010, Rakuten has acquired e-commerce leaders in the US (Buy.com), Brazil (Ikeda), Germany (Tradoria), the UK (Play.com) and Russia (Ozon.ru – a minority stake) as well as Thailand, Malaysia, Indonesia and other countries. It’s also interested in social and other media, having bought video-on-demand company Wuaki.tv back in 2012, and investing a ton of money in Pinterest.” Rakuten is one ecommerce company that is growing primarily through acquisitions. Eastern Europe is currently in their sights and I must confess they are going to be spending lots of Euros to buy companies as the markets in CEE are super competitive.
- Mad Money Cramer says Zulily can ‘beat’ Amazon; stock soars 40% after big earnings release – “CNBC “Mad Money” host Jim Cramer was extremely bullish on Zulily this morning, even calling the Seattle-based daily deals site for moms and kids’ products the first legitimate competitor he’s seen to fellow Seattle online retailer Amazon.com.” Just read that for a minute and think about that. The markets are frothy and I must confess this article only signalled to me that the Internet bubble is alive and well. The beginning of the end for investment as it seems the dot com boom will look like a small event…
- Lazada’s Big Bet on Southeast Asia – “Bittner added that while US and Europe and even second tier of BRIC (Brazil, Russia, India and China) nations were ahead of the e-commerce development curve, the Southeast Asian market has a lot of potential and room to grow. “The market is still very young and we are helping pioneer that market.” Lazada has moved past the point of an acquisition in my mind and I suspect that they will IPO as non of the global ecommerce powerhouses (Amazon, eBay, Naspers, Rakuten and Alibaba) has shown signs of acquiring ecommerce businesses in Southeast Asia.
- How online shopping is helping Nigeria fix its Internet reputation – “The chance to be the ‘Amazon of Africa’ and to dominate e-commerce in Nigeria, and the rest of Africa, is one that entrepreneurs, and increasingly investors, are taking seriously indeed. Two companies, Konga and Jumia, are increasingly setting the agenda for e-commerce in Nigeria after starting and testing their businesses in the hottest crucible of them all; Lagos.”
- China’s Alibaba ventures further into fulfillment and banking – “The retailer launches a project to help solve logistics woes in the country and starts offering Chinese interest-bearing savings accounts.” Alibaba is becoming a multi-business rubiks cube that will become very difficult to analyse. They want to control the entire ecommerce value chain plus other day to day services which customers use.
- eBay Leads Giant $133.7 Million Investment in Indian Shopping Site snapdeal – “EBay contributed a large majority of the total investment, according to a person familiar with the deal, while existing investors took part on a smaller scale. Last spring, eBay also led a $50 million investment in Snapdeal, which has now raised more than $200 million to date.” eBay is clearly keeping an eye on Indian ecommerce – what happens when they acquire Snapdeal?
- Walmart acquires Seattle-based Yumprint to add recipe tech to grocery delivery – “@WalmartLabs, which operates as the tech brains behind the big-box retailer, has acquired Yumprint of Seattle.Walmart plans to use the company’s recipe technology for its grocery delivery efforts on Walmart.com and Walmart To Go. Yumprint founders Wes Dyer and Chris Crittenden will join the @WalmartLabs team, and move to the lab’s headquarters in San Bruno, Calif”. Bolt-on acquisition to make customer grocery shopping easier.. Walmart is going into Seattle to buy businesses to compete against Amazon.
- Online Shopping is Big. It’s Also Tiny – “The other part is how small the online shopping industry still is, even as Amazon nears its 20th birthday.Even on the friendliest turf for online shopping — computers and electronics — Internet stores are claiming just 25% of the market.” Very interesting insights into US ecommerce – the percentage of retail to ecommerce is still heavily in favor of retail commerce; yet it would not seem like that is the case..
- Will Tencent buy a stake in China’s second-largest e-store? So far, signs point to yes – “Amid swirling rumors that Tencent (HKG:0700) is keen to boost its flagging e-commerce operations by taking a stake in the Amazon-esque JD, the Wall Street Journal claims today that Tencent has appointed Barclays to advise on taking a stake in JD. That’s according to the mythical beast that is “a person familiar with the matter.”” The reality is that Tencent is in a position of weakness in ecommerce in comparison to Alibaba. This is primarily to ensure that Tencent can shift ecommerce assets to an ecommerce business and have them compete against Alibaba with investment from Tencent.
- Amazon tries to seduce large fashion houses – “Amazon is trying to seduce several important fashion houses, like Abercrombie & Fitch, Ralph Lauren, Lord & Taylor and J. Crew into a deal, where it would be able to gather information and premium customers. Amazon’s benefit would be the fact that it could gather information about the sales, according to Reuters, which has heard it from several sources involved in the deal. Apparently, more than 10 chains are currently in talks with Amazon.” Amazon is trying hard to get into fashion ecommerce and this is also to be seen as a way to bolster their Prime business.
- Copycat Business Model Generates Genuine Global Success for Start-Up Incubator – “Other Rocket-backed e-commerce start-ups, including the Latin American e-commerce site Dafiti and its Russian counterpart Lamoda, also have secured large market shares in some of the world’s fastest-growing developing economies. To succeed, they have had to tweak their business models for emerging markets. That involves offering cash-on-delivery services where few consumers have credit cards and running large fleets of delivery trucks where local logistics and infrastructure remain basic.” Some interesting tidbits on how global Rocket Internet make their staff think. They have disrupted venture capital, the process of taking businesses international and traditional business development..
- Asos and DPD doing some really interesting things around delivery options – “They can then choose between five different options, including delivery to a safe place, collect from nearest depot, deliver to a neighbour and a delivery upgrade to before 10am or Saturday morning delivery. Customers can change their options from a smartphone, tablet or desktop computer at any time if they can’t be at home.” The flexible delivery concept is one that will be seen more and more at ecommerce companies. Very clever way to ensure that the customers gets the item when it suits him / her.
- Explaining Nextag’s Poor Performance – “So if Google traffic – perhaps also the highest quality traffic – is being removed from Nextag’s partner network, advertisers are left paying Google CPCs for sub-Google standard traffic. We believe this is the primary issue plaguing Nextag’s performance and the cause of the drop in quantity and quality of their traffic.” Fascinating insights that highlight the predicament big businesses face when Google changes the rules and programmes that they have.
- Russia’s Online Retail Leader Says ‘Amazon Has No Chance’ – “Russia has become the it girl of e-commerce. Even amid a slowing economy, the country’s online shopping increased 26 percent last year, to 510 billion rubles (about $14 billion), according to Moscow’s Data Insight, and could double by 2015. The dark horse leading the race right now is Ulmart, an online retailer that reported $1.2 billion in sales last year. It has succeeded by doing what Amazon does not. Instead of wooing customers with low-cost home delivery, Ulmart encourages them to pick up their orders at urban outposts and warehouses that double as stores.” Ulmart has become a company that seems to have passed on the logistics costs to customers through collection etc. Amazon is not the business Ulmart should be worried about there is 2 Chinese companies that are part of Alibaba that could come into Russia and make disruption occur.
- Lot18 Founder Has Invented A Tiny Home Device That Turns Water Into Wine In 3 Days – “It’s like a Soda Stream — a contraption that lets anyone make their own soda — but for wine. The Miracle Machine is an affordable device that fits on a kitchen counter. It turns water and a handful of ingredients (available for purchase on James’ website) into wine in three days. Wine recipes will be available via mobile app and users can choose whether they want to create a Merlot or a Cabernet Sauvignon. The device has a fermentation chamber that “ uses an array of electrical sensors, transducers, heaters and pumps to provide a controlled environment for the primary and, as needed, secondary fermentation stages.” This is a very interesting concept..
- MercadoLibre prepares to launch shipping services in Mexico – “Latin American e-commerce firm MercadoLibre expects to launch its MercadoEnvíos shipping service in Mexico soon, CFO Pedro Arnt said in a conference call with investors.” Mexico seems to have become a market that is a lot more popular for investors or incumbents.
- Unnecessary Vertical Integration and Harry’s $100 Million Dollar Mistake – “A good rule of thumb is to choose vertical integration only when it’s necessary to protect your company’s value. Only after carefully analyzing the risks involved should a company opt for vertical integration; even then, a surprising number of companies fail to manage the move successfully”. Chad Rubin makes a very interesting point about vertical integration. I must say that vertical integration has made Apple unbeatable in the hardware space and Made Eyewear a huge competitor for Warby Parker. However it takes careful research and thought to ensure that the investment is done to protect market position.
Onwards. Till next week.