A blog on eCommerce, Social Commerce, Comparative Shopping Engines & Business

By Hendrik Laubscher

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The FBA Roll-up Delusion

I have been tracking a sector since middle April that has been gaining momentum. The acquisition of Fulfillment by Amazon (FBA) businesses by venture-backed companies or PE investors seems to be the 2020 fad.

In 2017-2019, the B2C e-commerce sector saw direct-to-consumer e-commerce investment at scale. It has cooled down to a degree, as questions over sustainability, vertical integration, and real impact became normal. In 2020, venture and private equity believe that rolling-up many FBA businesses into a holding company are the solution. I am not so sure about that.

The FBA Delusion
Source: Imgflip
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Brands are Trees

Since the beginning of 2020, a new phenomenon is happening. Large brands (think PepsiCo, Kraft Heinz, Nestle) are opening direct to consumer websites. The same brands remain committed to their wholesaling and retail partners. Why is DTC for these brands a big deal?

If the small upstart disrupts the large incumbent its worth a lot of PR yet an incumbent can be nimble its panic. What is going on here?

Source: Whisper
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Should Amazon be doing more regarding Tax Nexus in the US?

Let me start off by saying that I am not an accountant nor a financial professional but I believe that there is a story that has been developing that can impede Amazon’s dominance in the US. Amazon is a hybrid marketplace in the US as it is both a retailer and allows third parties to sell to their customers to ensure that they can be the “Everything Store” that has virtual shopping isles that has an infinite length.  Amazon has inadvertently created a situation in which sellers are generating sales to States without them knowing the location of their products due to them using Fulfillment by Amazon (FBA). As Amazon moves products to warehouses all over continental US these sellers are generating Tax Nexus in States that could lead to an increase in tax to certain States.

Amazon has been seen by many and a certain leader as not paying tax and thus negatively impact retailers in the US. Amazon has started collecting taxes in most states to ensure that they can build logistics facilities closer to customers in various US States.

According to CNBC, after 1 April, the only states in which Amazon won’t collect taxes are Alaska, Delaware, Oregon, Montana and New Hampshire. These five states don’t have sales levies.

Map of US State Sales Tax Collection


Amazon has over the years made it clear that they are not responsible for the products that are sold on their marketplace nor are they required to enforce the collection of sales tax by third party sellers.


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A Review On Walmart’s Ecommerce Efforts Post Jet.com Acquisition

I have purposefully not commented on Walmart’s ecommerce efforts after the retail giant acquired Jet.com. There were many immediate reactions to the acquisition but the simple truth is that no-one had any idea how it would end up. Let me be clear – the acquisition is a long term bet by Walmart on Marc Lore and his team to grow their ecommerce efforts. This is also a reflective post in which I am trying to be as objective as possible.

The day Walmart & Jet.com shocked the entire ecommerce industry

On 8 August 2016 Walmart shocked the ecommerce industry by announcing their acquisition of Jet.com for $3.3 billion.  $300 million will be paid via Walmart stock. The acquisition ensured that early Jet.com investors made large returns on their bet but no-one expected Walmart to be the ultimate end game for Jet.com as the company rapidly gained size via heavy spending on advertising, low pricing and buzz.

The initial thinking was that Jet.com was acquired due to the business taking market share away from Sam’s club. Jet.com used bulk sales and technology to provide customers with low pricing. It is important to note that while Jet.com was a startup Marc Lore ensured that he never mentioned Jet.com as an Amazon competitor but rather it was described as online version of bulk retail operations seen at Sam’s Club and Costco. I also need to mention that once Jet.com launched publicly it initially was going to use a membership fee to subsidize the low pricing it would provide to consumers. In a space of 6 months Jet.com moved away from the membership fee as customers were not willing to pay another subscription to a retailer (I believe that this was aimed at Amazon Prime but Lore under estimated the impact that Prime has on customers.)

I strongly believe that until the day of the Walmart acquisition, Jet.com did not have a business model that was sustainable nor clearly defined their future.

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