Ozon raises $150M capital, Rakuten to enter India?, Google acquires Rangespan, Amazon working on a computer chips, Mobile users contribute 50% of Snapdeal’s sales, Rakuten Taiwan and Google join forces in e-commerce market, Looks Like Groupon Wants to Take on Costco (And Amazon Pantry, Too) and much more..
Rakuten is talking about entering the Indian ecommerce market. It seems that they are interested in entering the market via a travel business. The Japanese company has global ambitions but I cant help feeling that they are entering the market to late. Flipkart, Snapdeal and Amazon have pretty much sown up the market and entering the market for Rakuten this late will cost millions of Dollars. The travel market is also competitive and thus this concept is one that Rakuten already executes well in Japan. Time will tell what Rakuten wants to do in India but it will be spending lots of money by entering a very competitive landscape.
Groupon has also shown its hand with Groupon Basics. The daily deals business that grew at an astonishing rate has been pivoting over the last 12 months to a combination of local and now pure play ecommerce. The problem that Groupon will face with this vertical is selection. Currently they have a 100 products for sale and the competition (Costco, Amazon Pantry and Sam’s Club) has a much bigger selection. Can Groupon really afford the battle with these grocery behemoths? I think not..
The stories that caught my attention this past week:
- Warehouse Automation Startup Grey Orange Robotics Secures Series A Funding from Tiger Global (NextBigWhat) – “The startup, founded by BITS Pilani alumni Samay Kohli, 27 and Akash Gupta, 24 has been operating in the field of robotics for some time now and their products are changing warehouse management of many companies in the country. The company today has over 35 engineers and customers like Flipkart, which is backed by Tiger Global as well. Grey Orange is also in talks with some international logistics and retail companies.” This is a very clever move by Tiger Global, the business clearly supports the other Tiger Global businesses (Myntra, Flipkart ) in Indian ecommerce. Thus by investing into Grey Orange, Tiger Global ensures that they can accelerate the growth of this supplemental business for their other assets.
- Ifrosh tests cardless e-commerce platform in Iraqi Kurdistan (Wamda) – “To help fill this gap, Omar and Ali came up with the idea for an online, community-based marketplace to connect merchants and consumers. The name, ifrosh, comes from the Kurdish word ‘to sell’, and is currently running a test period on the American University of Iraq, Sulamaini (AUIS) campus before launching in beta at the end of the summer.” This was a great read on a potential feel good story for Iraqi ecommerce. I always think these stories highlight the opportunity that commerce and technology has in places that are going through tough socio-economic challenges.
- Mobile users contribute 50% of Snapdeal’s sales, registered 10 fold growth (Economic Times) – “Other ecommerce companies are also focusing heavily on the mobile platform. Snapdeal’s competitor Flipkart gets about 20% of its orders from mobile applications and expects mobile users to contribute half its total sales in a year. For fashion site Myntra mobile users were responsible for 80% of their growth in the first three months of the year. The company expects mobile to contribute 40% of its sales by end of the year.” Mobile ecommerce is a big deal globally but it seems that India is a leader in terms of actual effect on the bottom line for the big ecommerce companies. Snapdeal has moved to 50% of sales inside a 18 months of the first mention of mobile sales percentage..
- Alibaba I.P.O. May Unleash Global Fight Over Users (NY Times) – “The initial public offering expected soon in the United States by Alibaba Group Holding, China’s largest e-commerce company, could surpass the amount raised in the I.P.O. of Facebook. It would not even be surprising if it surpassed the combined amounts raised in the I.P.O.s of Facebook, Twitter, Google, Amazon, AOL and Yahoo. But unlike the flurry of attention that accompanies high-profile floats by American tech stars, Alibaba’s stock offering has barely registered among the valley’s tech set.” Regular readers will be aware that I believe that everything changes post Alibaba IPO for ecommerce.
- China’s Alibaba could reclaim some of its payments spinoff Alipay (WSJ) – “A stake in the affiliate, called Alipay, could significantly raise the future value of Alibaba, now preparing an initial public offering already expected to be one of the largest in U.S. history. Even if an agreement over Alipay is reached, it isn’t expected to take effect before the IPO, the people said, and would face regulatory review in China.” If this is true then it is a big moment for Alibaba. Remember that Alipay is not part of the IPO as Jack Ma moved it to a different holding in which he has significant ownership. Alipay is the trojan horse that is going to be going into markets (Russia and Latin America) and putting Alibaba close to new customers.
- Mixed emotion as I step away from Magento (Magento) – “I’m proud of all the accomplishments that we have achieved together, and of the many friendships that have been built. I will continue to champion Magento and very much look forward to your future success. The company is in a great spot now for me to move on to my next adventure.” Roy Rubin moving on from Magento is big news. That will make it that all of the Senior Magento staff have now departed the business. Is it a case that earn-outs and targets have been achieved or that Rubin has decided to move on..
- Rakuten Taiwan, Google join forces in e-commerce market (Want China Times) – “Google and the Taiwan unit of Japanese e-commerce giant Rakuten teamed up on Tuesday to bring Taiwanese small and medium businesses easier access to Google’s advertisement tools. Under the partnership, Google will offer its AdWords keyword tools to boost website traffic and sales for over 2,800 Taiwanese retailers on Rakuten, which will provide its own e-commerce consulting services to small and medium enterprises in Taiwan interested in using Google’s keyword tools.” This deal highlights the opportunity that South East Asian ecommerce presents. Google clearly feels that the market is ready for online marketing and thus the partnership with Rakuten is a win-win for both companies.
- Amazon beefing up same-day delivery service with a couple new cities, new flat pricing for Prime members (WSJ) – “The e-commerce giant is set to broaden its same-day shipping service starting Thursday by allowing later ordering times in some places and adding Dallas and San Francisco to the dozen cities where it’s available.” Amazon is accelerating the roll-out of same-day delivery to more cities in the US. What is very interesting is that Las Vegas has been removed from having same-day delivery and in typical Amazon style no mention as to why that is the case.
- A Huge Russian Ecommerce Company Just Raised $150 Million (BetaBeat) – “Russia’s leading ecommerce company, OZON Holdings, announced today that they’ve just raised $150 million.The funding was led by Sistema, a Russian diversified holding company, and Mobile Telesystems, a Russian telecommunications provider. Each reportedly traded in $75 million for a 10.8 percent stake in the company.” Ozon raising money is interesting and more importantly I wonder where the money will be invested – acquisitions?, investment into the current business.
- E-commerce Q1 2014 Revenue Up 11% Since Last Year (MarketingLand) – “Custora says online retail revenue growth has consistently outpaced total retail revenue, with e-commerce experiencing a 16.9 percent increase in 2013, while total retail only grew 4.2 percent.” I am not overly surprised by this report, ecommerce in the US is clearly grew as more customers bought online in Q1 2014.
- The First WeChat Experience Store Opened by Chinese Discount Store Chain Shopin (Technode) – “Shopin was one of the first bricks-and-mortar discount store chains in China when its first store was opened in 2000. Recently it opened the very first WeChat experience store in Hangzhou, China that enable customers to purchase goods in the store with WeChat app.” This will be a development to keep an eye on. WeChat experience store in a country with millions of WeCbat users are active in.
- Looks Like Groupon Wants to Take on Costco (And Amazon Pantry, Too) (Re/code) – “Groupon today unveiled a new category of goods for sale, dubbed Groupon Basics, that’s supposed to appeal to the kind of bulk-order buyers that frequent the Costcos and Sam’s Clubs of the world.” Massive moment for Groupon and their retail ecommerce ambitions. Lots of things (bigger selection, logistics) that are still challenges for them in comparison to their competitors.
- Now Indian startups can show their wares on Snapdeal (e27) – “Snapdeal.com, India’s online marketplace, has introduced a new platform – ‘Launchpad’ for innovators and inventors across the country to showcase products on the website. The platform will help entrepreneurs and startups market and reach their products to nearly 25 million Snapdeal users in over 5,000 cities and towns.” Interesting concept that Snapdeal has started. This reads like a direct competitor to Kickstarter but also provides another use case for the Snapdeal platform.
- Amazon jogs into wearable tech with new retail storefront (Geekwire) – “The company announced today that it is opening a new online wearable technology storefront with a selection of devices from companies like Samsung, Jawbone, Basis and GoPro. It’s designed to offer users a place to visit and explore wearable technology all in one place, including fitness trackers, smartwatches, and wearable cameras.” Amazon playing the retailer card here – a destination landing page for the Internet of things category.
- Here’s how Flipkart is offering same day delivery in 10 cities (Medianama) – “Ravi Vora, Senior VP – Marketing at Flipkart told Medianama that this service has been in the works for some time now, since it requires co-ordination between the company’s technology team, operations team, logistics & warehousing team, its logistic partners and also its customer platform. He claims that they are currently covering 50% of the e-commerce audience through these 10 cities and claims to be the only e-commerce platform in the country offering this service at such a scale in the country.” Flipkart is pushing their competitors with all kinds of innovation. The thing that strikes me with these kinds of programmes is that Flipkart always trials concepts before rolling them out to multiple cities etc.
- EBAY MYSTERY: It Just Made A Move That Will See Its Tax Bill Surge (EBAY) (Business Insider) – “However, there was one thing that was highly unusual: eBay decided to repatriate $9 billion in cash that was overseas. In doing that, it took a $3 billion tax hit, so it only keeps $6 billion of its cash.” This past week eBay had their earnings call, normal service until this little announcement came. Why would eBay repatriate cash and pay an enormous amount of tax? Simple that amount of cash gives them the opportunity to react to potential acquisitions and also be able to counter a big marketing push by Alibaba.. Is this a potential play to acquire MercadoLibre and have a 100% control?
- Report: Amazon Is Working On A New Kind Of Computer Chip (Business Insider) – “Now Amazon is apparently trying to create its own home-grown computer server chips, according to job postings, new hires and some unnamed sources unearthed by Stacey Higginbotham at Gigaom.” If this is true (which I think is the case) then Amazon is going to be playing in the server technology scene soon. Bad news for Intel but ultimately building your own chips is what the big boys (facebook, Google and Apple) do. Here is the question that no-one is asking – will be seeing ARM based processors inside future version of Amazon tablets and phones?
- Amazon: 33,300 More Mouths To Feed (Ycharts) – “At 124,600, Amazon’s total employment is roughly equal to that of Johnson & Johnson’s or Procter (JNJ) & Gamble’s (PG). Granted, most of Amazon’s workers are lower-skilled and lower-paid, many working in its warehouses. But the operation is becoming plenty complex.” Amazon has been hiring aggressively and I suspect that to continue to the end of this year.
- Google buys Rangespan, grabbing retail and big data smarts (Venturebeat) – “Google has bought London startup Rangespan, which developed technology that can help retailers identify which products and services will be most in demand in the future.” Google is investing into another data play for Google Shopping – not surprising but how this impacts the retailers will be interesting.
- Fab May Suffer Yet Another Round Of Layoffs (Techcrunch) – “We’ve heard that design-focused e-commerce site Fab is planning another round of layoffs. At an internal meeting today, sources tell us that the company said it would be making a decision on the final number of people to be let go by June 1. One rumor floating around is that the company could reduce headcount by another 60 employees. Fab currently has 305 employees worldwide.” I thought this ended but clearly the fab layoffs will be seen in the news again. Remind me again – why fab will become like Amazon?
- Flipkart’s Myntra acquisition talks stalled for now and here’s why (Medianama) – “Myntra Chief Executive Mukesh Bansal wants the company to stay independent after the acquisition, but everyone else wants the companies to pool in resources to put up a fight against Amazon. Apart from independence of Myntra, Bansal is also expecting an infusion of $150 million into Myntra so that it can expand operations and meet its growth plans.” The Flipkart / Myntra acquisition story is off then on and now stalled. I understand that Myntra wants to stay independent but as this story develops Amazon continues to grow an operate at scale in India.
- Is Alibaba’s Evaluation Too High? (China Internet Watch) -“According to Bloomberg’s data, Alibaba’s evaluation reached $168 billion, in that way, Alibaba would surpass Amazon’s market value. Carlos Kirjner, Sanford Bernstein’s analyst, claimed that Alibaba’s evaluation was too conservative and suggested to increase Alibaba Group’s evaluation to $245 billion.” Alibaba’s valuation I think is upwards of $200 billion, and you cant really compare it to Amazon, eBay or any other ecommerce business. Clearly dominant in China and with lots of momentum I cant see why Alibaba will be valued below $200 billion.
- Same-day dreamers – Online firms are plunging into same-day delivery again (The Economist) – “Most competitors in the same-day business are focusing on cities with lots of rich consumers prepared to pay for time-saving services. But turning a profit will still not be easy. Andrew Schmahl of Strategy&, a consulting firm, says a survey of 1,000 American online shoppers it conducted last year showed most were reluctant to pay anywhere near enough to cover the cost of speedy deliveries.” Is same day delivery really a requirement for ecommerce companies? The issue with same day delivery is costs and at the moment it is a race to the bottom in my mind.
- The Evolution of e-Commerce Logistics (Eye For Transport) – “In developed economies, e-commerce logistics represents the latest big driver of change in logistics and physical distribution networks, which have evolved substantially over the past 40 years or so.” Fascinating article on a topic that flies below the radar in ecommerce – logistics.
- Facebook Rolls Out Billing Info “Autofill” For Simpler Checkout To 450K Ecwid E-Commerce Merchants (Techcrunch) – “Facebook today announced a partnership with e-commerce site platform Ecwid to let its 450,000 merchants easily integrate Autofill With Facebook, a feature that lets customers pull in credit card, billing, and shipping info they’ve stored on Facebook.” Facebook unveiled a bunch of features at F8 and this is clearly a play for facebook to leverage its data for partners, to enable easier usage for customers. I still dont know how I feel about facebook having my credit card details..
- The ComiXology Outrage (comicbook) – “For those of you who don’t know what I’m talking about, as of yesterday, Comixology removed the storefront from its digital reading app for comics on the iPad and iPhone. It didn’t replace it with anything, just a link that takes you out of the app to the Comixology website. No big deal, right? Just one (or two, or three, as it turns out) additional step for the fanatic comic book reader to access comics on his digital reader. Nothing to get upset about.” This was to be expected as Amazon did the same for their Kindle app inside Apple’s ecosystem. I understand the frustration as Gerry Conway makes a great argument for why the Amazon purchase of ComiXology is going to hurt the comic book business. A simple question – why did the founders then sell to Amazon?
- Alibaba Tmall Partners Ten Home Appliance Brands to Experiment with C2B (TechNode) – “Tmall, the online business-to-customer marketplace of Alibaba Group, has reached partnership with ten Chinese home appliance brands to experiment with customer-to-business model on twelve production lines.” Very interesting concept and another potential use case that Tmall could offer to other merchants on their platform.
- Priceminister co-founders leave 4 years after acquisition by Rakuten (Rude Baguette) – “France’s #1 eCommerce player, Priceminister (acquired by Rakuten in June 2010) said farewell to cofounders Pierre Kosciusko-Morizet (PKM) & Pierre Krings,who said au revoir to the company they co-founded in 2001 in a blog post published on the company’s blog yesterday.” It seems that many of the businesses that Rakuten acquires loses their founders after earn-outs etc. This is something that Amazon does really well – they hold on to the founders of the businesses they acquire.
- If Google search is for information, Pinterest wants to be search for inspiration – “Last night Pinterest introduced Guided Search, a means of combing the app for pins that suit your needs. Users can comb various categories like “hairstyles” or “recipes,” and the app will prompt potential tags to include in the search like “short” “for women” “easy” or “dinner.”” I am still not understanding why Pinterest is staying away from commerce – this is an advertising play and clearly more aimed at discovery than transactions. Is the end game that Pinterest is acquired by Google?
Till next week. Onwards.