It is the beginning of 2015. I believe that 2014 contained some clues to the new year and the future of ecommerce. There were some stories that made us all go wow – (The Alibaba IPO) and also some interesting developments across the globe. Global ecommerce is a topic that interests me and it is clearly visible in all ecommerce markets (both developed and emerging). The year contained plenty of stories that could make an appearance in the following post but the following was what caught my attention consistently.
IPO’s (Initial Public Offerings)
We saw 4 ecommerce specific IPO’s. Alibaba, Zulily, Rocket Internet and Wayfair. Three of these IPO’s occurred in the US and Rocket Internet listed on the Frankfurt stock exchange. The biggest surprise is without a doubt Zulily – they are the anti-Amazon. Delivery is a longer than normal process and they are a niche based business. Alibaba – well what has not been said. The biggest IPO in history, Billions raised and now the next phase of their lifecycle starts. Investment into ecommerce businesses. Rocket Internet went public and have been told by market what they feel about their operation. Generally – the growth has been negative and their businesses continue to raise millions of Dollars. Wayfair had a quiet post IPO and I believe will be a business to watch in 2015.
Investors looked at certain countries in more detail:
Indian ecommerce had Billions of Dollars invested into it. Flipkart, Snapdeal and Amazon all got capital injections that defied belief. The outlier for me in India is SoftBank and I believe that they hold the key to the market. Do they invest more into Snapdeal or co-invest with Alibaba to ensure that Snapdeal becomes an Alibaba acquisition? India in 2o14 reminded me of China in the early 2000’s. Money was invested all across the market as investors wanted to ensure that they have an entrant in the race. Indian ecommerce is going to be a huge battle between the 3 big three in 2015. All of them have lots of capital, hiring aggressively and I believe that we are 6 – 18 months away from consolidation.
There was one big move in the market and that was Tiger Global investing $520 million into B2W Companhia Digital. Brazil will be a battle ground in 2015. MercadoLivre, Buscape, OLX / Bomnegocio and B2W will all be battling for customers. B2W Companhia Digital is using the capital for logistics and thus will be a big factor in 2015. I expect this to be a very competitive region in 2015.
Ozon raised money via a diversified holding company Sistema and its mobile carrier subsidiary MTS. A master stroke as currently the Ruble is severely down valued and ecommerce companies such as Apple has had to reprice items to keep up with inflation. It is also most probably a synergistic investment as well as a mobile carrier will help with distribution of Ozon into more Russian customers.
Amazon had a seesaw 2014 and ended on a rather negative note. Jeff Bezos is under pressure from Wall Street and his investment thesis ( the long long term is also under the microscope). The Fire Phone was dead on arrival, the Kindle continues to be a huge asset (we still don’t know total sales volume) and investment into logistics and AWS. 2015 is going to be interesting – the investment thesis will be under shareholder pressure and does Amazon make a profit in 2015. The grocery business is a low margin capital intensive vertical that Bezos clearly wants to be a player in.
They started the year as being in close with PayPal and via Carl Icahn pressure will spin off PayPal in 2015. The marketplace business that Devin Wenig will run is going to be under the financial microscope for the first time. Does eBay become a takeover target or an acquisition? PayPal is also no longer closely tied to eBay and thus will need to work in 2015 on new revenue streams. eBay will need to decide whether they continue with the mobile business in Brazil, China and Russia as well. Also their strategic investment in Snapdeal will become either something they will sell to other Snapdeal investors (SoftBank) or they will need to be part of the next round of funding. Share dilution is the last thing eBay needs in India.
South East Asia
Tokobagus is the company that will be something to keep an eye on in 2015. They raised a $100 million from Sequoia and SoftBank and will need to grow their user base. Do they enter new markets or focus on becoming undisputed marketleader in Indonesia?
Offline to Offline commerce innovation is being driven in these markets via chat apps. Does Line continue to be a partner for Xiaomi (as Xiaomi also raised lots of capital)? Does WeChat make more in roads into South East Asian ecommerce?
The above is a high level overview of 2014. The year contained many stories that had impacts in markets not mentioned above. If 2014 is an indicator of the year ahead – then we are in for a busy year of investments, consolidations etc.