Alibaba Files IPO in the U.S, Four problems that irritate Amazon, but threaten Alibaba’s existence, Apple is No. 2 after Amazon in online retail, Zulily’s Delivery Problem: the Packages Pile Up, Aramex Partners With InPost For Middle East Parcel Locker Network, Singapore’s GIC leads $170 mln investment in Brazil’s Netshoes and much more

It is finally here – Alibaba has started the process to go public and be listed in the US. They are clearly managing the process – they still have not indicated whether they will be listing on the NYSE or the Nasdaq. The initial document contains a few caveats and is indicating that only a billion dollars is to be raised (that is not the final number) and I suspect that the investment banks are fighting between themselves for position. Potentially there is a $400 million prize awaiting the successful investment bank /s that ensures a successful IPO for Alibaba. There is a lot of information in the initial documents but not a single mention is seen regarding Taobao and Tmall (which in my mind is a potential gold mine for investors). Alibaba also faces challenges that normal western businesses are not privy to. Everyone seems to think that mobile is their biggest challenge for the future but I disagree (that is another blogpost coming soon).

A story worth noting is the giant $170 million round of funding that Netshoes raised. Netshoes is a business that gets very little press coverage but it is a giant pure play ecommerce business in Latin America. “This investment round is the largest in the history of Netshoes. It happens at a time of relative economic instability in the country, which proves the fact that good companies with solid fundamentals remain able to attract the attention of blue chip investors“, says José Rogério Luiz, Vice President of Corporate Development for Netshoes.” I can’t help but think we are close to a bubble in terms of ecommerce investment.

The ecommerce stories that caught my attention this past week:

1.  Tweet to Buy: How Amazon and Twitter’s Social Shopping Cart Works (WSJ) – “In a partnership between Amazon and Twitter, users of both get a unique—albeit fairly specific—ability: If you spot an Amazon product link on Twitter, you can now add it to your shopping cart just by responding to the tweet with the hashtag #AmazonCart.” This is clearly a proof of concept on a large scale – Twitter is making no revenue from this partnership and in typical Amazon style – the upside is all for the Seattle based ecommerce business.
2. Thailand’s BuzzCommerce to debut after receiving seed money from East Ventures (e27) – “According to an official statement, the funds will be used to boost development of BuzzCommerce’s web and mobile platform. The startup will begin with curating beauty products in Thailand. It seems that the website is still under development, and will only be available later this month.” Curation is one of the next steps of ecommerce and this is a very interesting concept and it will be interesting to see where it goes. Potentially a new angle for beauty ecommerce in South East Asia.
3. Yello Mobile buys out Indonesian price comparison site PriceArea (e27) -“The Korea-based mobile company has acquired PriceArea for an undisclosed seven-figure amount; going forward the site to focus on mobile.” This is an interesting acquisition for the simple fact that it was not Asian commerce powerhouse (Rakuten, Alibaba or Kakkaku) that purchased PriceArea but rather a mobile media company.
4. Delivery wars: Google follows Amazon with same-day delivery expansion (pando) – “The announcements demonstrate the importance of delivery infrastructure to ecommerce efforts. These companies have been striving towards same-day deliveries for a while; now that they’ve figured out how to operate them in a few cities, they’re ready to expand. It’s not yet changing the way most people shop — people do live outside the coasts, after all — but the expansions let Google and Amazon experiment with services that could make a huge impact in the future.” The Google vs Amazon battle has been taken up a level and is now on Amazon’s turf. Google needs to own shopping for their advertising business to stay relevant but Amazon is focused on keeping the dominance in vertical search.
5. Otto Group reveals its ecommerce project Collins (Ecommerce News EU) – “The Otto Group finally revealed its longtime secret project Collins. Using an open platform for third-party developers and contributors, the startups wants to attract young buyers. According to chief Benjamin Otto its claim is to make shopping for the younger generation as unique and inspiring as their digital world already is.” The Otto Group is in the fights of its life with competitors such as Zalando, Amazon and others. This sounds like a bigger version of Kickstarter that is focused on fashion but I am still not a 100% convinced and clear on this project.
6. Why Jeff Bezos, Amazon Are Now on the Hot Seat (The Street) – “Despite projecting second-quarter revenue to growth in a range between 15% and 26%, Amazon is now expecting a loss in the range of $455 million and $55 million. Last year, the company earned $79 million. Immediately thereafter the stock plummeted 14%, falling to a low of $288 three days later. While the stock has since recovered 6% to get to that $308 range, Bezos is on notice that valuation matters again.” This article is one that I re-read a few times. Is Amazon really on the hot seat? What can Wall Street do to change the lack of interest that Bezos has in pleasing in them?
7. Amazon and Twitter Offer Online Shopping Feature That China Has Had for Years (Bloomberg) – “This comes about two years after Sina Weibo, China’s largest microblogging site, gave users the ability to browse nearby goods and purchase them from within its mobile apps. Sina teamed up with Alibaba Group to integrate products sold by merchants on Taobao Marketplace, the country’s largest e-commerce website.” This is a pretty touchy subject – “Silicon Valley loves to portray China as a nation of copycats, but you don’t hear as much about the times when the Valley does some “fast following” of its own — or in this case, slow following.” When it comes to social commerce and interaction between social networks and ecommerce – the world is way behind China..
8. Alibaba Files IPO in the U.S. (WSJ) – “ahead of what is expected to be one of the largest stock listings in history. The filing showed the company had 231 million annual active buyers last year. A total of $248 billion was spent on Alibaba’s three shopping sites last year, roughly the same as the economy of Finland.” Lots of great information about a powerhouse that is without a doubt the biggest marketplace in ecommerce. Why have the kept the details of Tmall, Taobao off the initial information?
9. Why eCommerce Still Isn’t Clicking with B2B Executives (Forbes) –  “A major shift is happening in B2B commerce. It’s an online-driven, omni-channel transformation that is forever changing the way the world’s most successful B2B brands connect with, engage and retain their customers. In fact, B2B e-commerce has now more than doubled B2C, with $559 billion in 2013 sales. In many ways, it’s a brave, new world in B2B commerce—and it’s happening right now.” Brian Walker of hybris – writes a fascinating article on the importance of B2B ecommerce and why it is still not getting the attention from ecommerce executives.
10. Singapore’s GIC leads $170 mln investment in Brazil’s Netshoes (Reuters) – “Brazilian online sports goods retailer Netshoes has received a new round of $170 million investment led by Singapore’s sovereign wealth fund GIC. Other investors include Tiger Global Management, Singapore state investor Temasek Holdings, Iconiq Capital and Kaszek Ventures, GIC said in a statement.” Absolute massive validation for Netshoes that can raise a record round inside tough economic conditions in Brazil. Clearly, the business is managed properly and growing.
11. Alibaba could change American business (Fortune) – “By going public, Alibaba will get its hands on billions of additional capital. The company’s market cap could hit an eye-popping $150 billion. That puts it immediately into the “high rollers” category, and it will be a player wherever it chooses to spend the cash and enhanced borrowing capacity.” Lots of hurdles inside the US for Alibaba but they will change markets and the entire ecommerce vertical.
12. Amazon expands it distribution center in Italy (Ecommerce News EU) – “Amazon has expanded its distribution centre in Italy. In Castel San Giovanni, placed in the province of Piacenza, one of Europe’s most innovative distribution centers arises. It’s 70,000 square meters big and by opening this new distribution center there will be about 1,000 new jobs.” Amazon is slowly moving to protect their European business from competitors. Lots of investment going into logistics in Europe at the moment for Amazon.
13. Google Needs to Rule Online Shopping to Show Its Ads Really Work (Wired) – “Why? In the end, it’s all about advertising, Google’s main source of revenue. The less often consumers think of Google as the first stop for online shopping, the less incentive brands have to advertise there. What’s more, if Google can get shoppers to not only start their product search on the site but buy and even pay for that product, the company can show advertisers just how well Google ads work.” Advertisements are the printing presses for Googles money to invest into business. They cant be outside the shopping vertical as then those businesses see no reason to spend millions on Adwords, PLA’s etc.
14. No progress on online payments: most eCommerce transactions still happen offline (Velaasia) – “Vela MD Susie Sugden talks about the difficulties with electronic payments in Indonesia, and why most successful online retailers are still relying on offline payment methods like bank transfer and Cash On Delivery.” I read this article and can agree with alot of this as in emerging markets credit cards are still in its infancy.
15. Alibaba Owns 40 Percent of ShopRunner, the Company That Wants to Take on Amazon (Re/code) – “The company said in today’s IPO filing that the $202 million investment it made last year in e-commerce outfit ShopRunner gave it a 39 percent stake in the privately held company. That obviously doesn’t give Alibaba majority control of ShopRunner (yet), but it’s a sizable chunk of a company that has designs on competing with Amazon.” ShopRunner, which I wrote about late last year I suspect will potentially be a revenue driver in China for Alibaba but I am battling to see how it can compete directly with Amazon..
16. ‘Unparalleled Ruthlessness’ Awaits: Jack Ma’s Letter to Alibaba Employees (WSJ) – “Mr. Ma who is famous for his saying “customers first, employees second, and shareholders third” did write a letter—but it was only to employees. Taking the eccentric, inspirational tone that has become his signature, Mr. Ma praises the perseverance of his employees—whom he refers to as Aliren, or Ali people in English—even as he warns of huge new pressures that Alibaba will face as a public company.” This is something to bookmark (I plan to write about it) as it highlights just how different Alibaba is in terms of culture and management in comparison to other ecommerce businesses.
17. Aramex Partners With InPost For Middle East Parcel Locker Network (Gulf Business) – “UAE-based logistics provider Aramex has signed a joint venture with InPost to setup a parcel locker network across the region. Under the deal a network of automated parcel lockers will be installed across all major cities and towns in the Middle East and Africa, serving as a location for businesses and consumers engaging in online purchases to collect and send packages.” Aramex continues to surprise me with their strategy and willingness to innovate. This is a genius concept (Please bring this to South Africa)..
18. Zulily’s Delivery Problem: the Packages Pile Up (WSJ) – “The company is selling things it doesn’t physically have, putting its delivery system at the mercy of suppliers. When they drag their feet, the delays get passed on to customers. Zulily has this risk baked into its model, for good and bad. The benefit is the company can offer a giant range of products without investing an Amazon-scale fulfillment system — it can become huge in years, not decades.” This is a massive potential issue for Zulily and something that can make them lose investors and customers. Waiting 2 weeks for a delivery – you must be kidding me..
19. Flipkart Launches Amazon Prime Like Subscription Service; Great Move (NextBigWhat) – “For Flipkart and Indian e-commerce companies which are slowly moving away from free shipping (which was earlier the norm), this is an important move to keep customers hooked. Because customer’s aren’t charged for shipping every time they buy, it reduces friction at the time of purchase.” This is an interesting idea and clearly Flipkart wants to stay ahead in India. No costs mentioned which makes me wonder if it is going to be expensive.
20. Apple is No. 2 after Amazon in online retail (Venturebeat) – “Apple now holds the number two spot, according to data from trade publication Internet Retailer, with online sales reaching $18.3 billion in 2013. The company took the position from Staples, which had been Amazon’s runner-up since 2006.” This surprised me and highlights the pressure that Angela Ahrendts will be under at Apple.
21. Amazon and USPS expand Sunday delivery to 15 more cities, will reach ‘large portion’ of U.S. this year (Geekwire) – ” The Seattle company tonight announced the expansion of Sunday delivery to cities in Texas, Ohio, Indiana, Kentucky, Louisiana, Oklahoma and Pennsylvania. Amazon says millions of packages have been delivered on Sunday since the program started. The company says it is working with the Postal Service “to continue to roll out Sunday delivery to a large portion of the U.S. population this year.”” Bezos is continuing to ensure that it will become impossible to compete with Amazon in the US. Clearly, 2014 is the year for logistics at Amazon.
22. Four problems that irritate Amazon, but threaten Alibaba’s existence (Quartz) – “In its filing, Alibaba reminded investors of some of the unique issues it faces. These are challenges that any company operating in China has to deal with, but since Alibaba gets nearly all of its revenue from China, and likely will for some time to come, they present several major threats.” Being a Chinese powerhouse like Alibaba or Tencent has its own challenges. How does Alibaba solve them?
23. Amazon’s Wholesale Slaughter: Jeff Bezos’ $8 Trillion B2B Bet (Forbes) – “But there’s one thing Bezos hasn’t been talking about: AmazonSupply, an e-commerce site targeting the unsexy but hugely lucrative wholesale and distribution market. His silence is especially surprising as the site has the potential to turn into the most important development in the company’s history since it started selling books.” If Jeff Bezos does not want to talk about a business inside Amazon – there is a reason. The same goes for the advertising juggernaut that Amazon has build..
24. Alibaba-backed Cainiao Becomes Second Largest Shareholder of Logistics Platform KXTX (TechNode) – “Cainiao Network Technology has completed investment in logistics platform KXTX, becoming the second-biggest shareholder of the latter. This is the first external investment launched by Cainiao Network since its establishment one year ago. Both sides confirmed the investment, but declined to reveal the details. It is reported that the investment was several hundreds of millions yuan.” Alibaba is also ensuring that the Chinese ecommerce is completely defensible from competitors. The investment into logistics by Alibaba and subsidiaries is truly astounding.
25. Alibaba, ShopRunner, eBay: is Philly’s e-commerce legacy fading? (Philly.com) – ”
    Alibaba’s interest in ShopRunner was widely reported last year; “China’s eBay” has apparently replaced America’s eBay as the group’s big outside investor. Rubin controls the group through his Conshohocken holding company, Kynetic.” Michael Rubin, continues to make the right decisions – sell GSI Commerce to eBay. From a new company Kynetic and then build businesses that are growing.  I don’t the Philadelphia has lost ecommerce, a lot of it is done in California but they have some serious talent managing a potential powerhouse (Kynetic).
26. Why Ozon raised $150m (Tech.eu) – “We want to invest more in our logistic infrastructure (warehouses, pick-up points) as well as further develop our assortment. Ultimately, the goal is to ensure the best customer service through faster delivery, wider assortment and better prices.” Ozon’s CEO Maëlle Gavet is one of the most straight talking CEO’s in ecommerce. The whole funding round was strategic and clearly they are also trying to protect their market from eBay etc.
27. Alibaba should be watched, but doesn’t spell doom for Amazon (BizJournals) – ““Alibaba, because it is a successful company, is a competitive threat to watch, but I’m highly confident that in the end, Amazon will continue to remain the market leader in U.S. e-commerce,” said Tom Forte, internet analyst for Telsey Advisory Group.” The battle between Amazon and Alibaba will be seen not in the US or China but rather in markets where neither business has an advantage through holdings or infrastructure..

Till next week. Onwards.