Amazon has gone up a few gears and are moving at a speed I have not seen before. First they subtly tell the world that they are working on an advertising product to rival Google’s advertising monopoly and then the Seattle-based behemoth acquires Twitch. Currently it feels like Bezos is asking questions to the Google founders because they are trying to get into the vertical that Amazon dominates (ecommerce).

I think the Twitch purchase was based on a few factors: Twitch did not get the answers it desired from Youtube. Secondly – Amazon has always bought content based business – DPreview, IMDB, goodreads etc, so this is not a completely new thing. Twitch adds a few things to Amazon’s business – a community to are deeply connected with gaming (ads to a gamer will lead to conversions and sales while watching a video of someone playing). It adds another data source to Amazon enormous data-based business model and as VC, Mackey Craven points out this might be also for technology.

Alibaba is to IPO in September with trading of shares to begin from the 8th. This is the moment the entire ecommerce industry has been waiting for. It changes the entire industry as suddenly there is a new player that has a lot of cash that can go into underserved markets. I expect them to do something big in the US to rattle Amazon’s & eBay’s cages. I am speculating but believe they will acquire a few businesses in South East Asia and move aggressively in markets such as Latin America, the Middle East and India. Rocket Internet and Zalando’s IPO’s are also potentially affected by this IPO – if the market accepts it (unlike what happened to facebook) I suspect their IPO’s to be at the end of September.

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Readers, since my last post a lot of things have happened. It clearly is the last 6 months of the year as news keeps breaking, Amazon launches new product after new product, Alibaba is still to IPO etc. Over the last 2 weeks, 2 companies have been on my mind: Rocket Internet and Wayfair. Both are in the process of raising funding and both operate in 2 verticals that are not dominated by Amazon.

Wayfair in my mind is an example of 2 founders that understood the market and benefits of having a central business before anyone else did. Let us be honest, Wayfair started as a collection of niche ecommerce businesses that consolidated into CSN Stores and then into what we all know as Wayfair. Think about this – in 2011 when this company announced that they did a $1 billion in total sales I remember seeing a lot of posts about “who is this company”.  Well fast forward 3 years and we have the IPO of a Boston behemoth that is going to be a big vertical business that will make things difficult for Amazon, eBay, Etsy and One Kings Lane. What is interesting to note is how little VC investment they have taken as well as how much control the founders have.  I think their IPO will be a success (In ecommerce terms they will be known as the company that IPO’d before Alibaba).

Well, what can I say about Rocket Internet. They are one of the few companies that I know of that is able to add $1 billion to their valuation inside 7 days. Clearly something is going on at the German incubator as they have sold 20% of their business to 2 investors. First they sell 10% to the Philippines Long Distance Telephone (PLDT) company which valued the business at $4.5 billion. In less than 7 days they sold an additional 10% to United Internet from Germany at a valuation of $5.7 billion. Just when we all thought the selling off of parts of Rocket Internet companies were complete, they announce a consolidation of shares with existing shareholder (Holtzbrick Ventures) which leads to Holtzbrick Ventures owning 2.5% of Rocket Internet. Are we going to see the much anticipated Rocket Internet IPO?

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Amazon waited all of 24 hours for Flipkart to officially announce their $ 1 Billion fund raising amount to announce that they will be investing $2 billion into India. This is a big deal for a few reasons – it is clear that India is an important part of Amazon’s future thus they did not wait to announce this massive investment into Amazon.in. It clearly is an arms race between Flipkart and Amazon for market leadership in Indian ecommerce but I cant help but wonder this leaves Snapdeal. Does Snapdeal look for more investment? I am honest when I say Indian ecommerce has me thinking – is it the size of the opportunity that is leading to this investment race? Is it investor angst that India might become another China? Those not familiar with Chinese ecommerce – the market is dominated by one company (Alibaba) and international investors got shun by local investors. I don’t necessarily think that Indian ecommerce is at all similar to Chinese ecommerce but there are definitely similarities.

The other big news is the TrunkClub acquisition done by Nordstrom. I believe Nordstrom to be one of a handful of retailers that understands ecommerce; thus they continue to acquire ecommerce businesses that will provide them long term sustainability. Every acquisition that Nordstrom has done is to provide them with scale in a part of retailer that they were lacking. Their investment into Bonobos was to ensure that they have a front row seat at the men’s fashion industry. Hautelook was to ensure that they could provide their digital clients with a selection of deals. Trunkclub is in my opinion a combination of a lifestyle and business acquisition. Lifestyle is to be able to provide male clients with a stylist to help them solve a clothing situation. The business part is to add this on top of their own business to their clients. I am a Nordstrom fan (visit their stores when I am in the US) and believe that they will continue to acquire ecommerce companies that fit their needs).

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The week is in the record books and a few stories dominated the ecommerce industry. Unconfirmed reports that Flipkart is / has raised a billion dollar round. This round of capital is supposedly led by DST, Tiger Global and Accel Industries. Flipkart has me scratching my head – it is burning cash at astounding rates?  I get the feeling that investors are interested in the company due to the size of the opportunity in Indian ecommerce. Is this the last round of investment before an IPO? What will the company be doing with the fresh round of capital? I believe that Flipkart will be looking to augment their mobile commerce efforts – thus a mobile wallet / payment startup is a target. I suspect that some of the cash will be going to a new facility for the staff to work at (not to be confused with a distribution center). Is Flipkart going to be the Indian version of Alibaba?

The week also contained Amazon results and lots of blogposts and opinions have been made public about the companies poor performance. Lets recap what the company has done in 2014 – launched Kindle Fire TV, launched a Fire phone, invested heavily in Prime and grocery delivery. Then Amazon has been hiring new staff in all of their various businesses, spend millions on new content for their video platform and is facing pressure in their Webservices business which has lead to discounts for customers. Put all of that together and it is clear that Amazon is spending any profit back into their business which is what Bezos has been doing for the last 10 years. Is Bezos testing WallStreets patience or is WallStreet willing to continue to believe in Amazon and Bezos?

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The week contained stories in which ecommerce companies are looking for future business success (Rakuten) and a look into the success of PayPal prior to their acquisition by eBay. Rakuten seems to be going more horizontal and after a serious streak of acquisitions they seem to be looking at something akin to what Google is doing with Google Ventures. Rakuten is a multi-national technology company that has ecommerce in their stable of companies. Hiroshi Mikitani made the majority of his wealth with ecommerce in Japan but has steadily diversified with payments, marketing services, regional ecommerce businesses and now with this $100M investment fund. I think one just needs to look at what  Jeff Bezos and Jack Ma have done with regards to investing in startups to realise that this is somewhat normal.

PayPal seems to be having a year of spotlight; first from Carl Icahn and then their CEO leaves and they are clearly in a spot of bother. eBay is going to have to make some decisions regarding PayPal in the next 18 months and what I find really interesting is that none of the founders is trying to make a case for them to stick with eBay. PayPal was a catalyst for the mobile payments industry and the sad reality is that they have became a victim of their initial success. They have bought a lot of mobile payments companies but it still seems to me that they have a cultural problem. Compare the current state of PayPal with that of new kids on the block Stripe and Klarna (they are in combination what PayPal is currently). It is clear that the newer companies are growing faster and in the long term  could become competitors for PayPal.

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