Google shutters commerce search and wants do retail, eBay not keen on the new The Marketplace Fairness Act and ecommerce news from Africa, France and Russia

We have gone past the middle of February and this past week was a historic one. It flew below the radar but Amazon this week got the wheels moving on their “tax problem”.  Most ecommerce businesses fear 2 businesses – Google and Amazon (outside North America, Rocket Internet is added to the conversation) and both have a considerable say in what happens in ecommerce. I  believe Jeff Bezos is a master negotiator and many people have said that tax collection was going to become a problem for Amazon.com. However, if you are skating where the puck going is to be then this supposed liability becomes a huge asset. Let me explain.

Amazon has had the advantage of not collecting sales tax in a large part of the company’s history. That tax was never collected as Amazon found ways to ensure that they pay the lowest taxes to ensure their sustainability. Needless to say, that tax money was never collected but that was given to users when they bought via the Internet. Wait what? The money was never given to the user but the fact that Amazon was cheaper than retailers or competitors was and is in some cases a competitive advantage. This is one of the big pillars of the Bezos mantra and something that most business executives don’t understand (the only person that does was Sam Walton). Lower prices is a huge asset for any retail business and Bezos has ensured that his company is seen as being pro-consumer. Low prices and a great experience is one of the big things that drives Amazon. In the last few years tax collection has become something that many thought would cripple Amazon, yet it is becoming increasingly clear that it is becoming asset.Why?

Well, Amazon is now playing the PR game well. They want to pay taxes and are using their business requirements as a negotiating tool with State legislatures. Bezos mentions something like ” We will pay state taxes and in exchange for a better end result for everyone, Amazon will build a Fulfillment Center in your state. We provide employment to the people of your State” to Senators  and suddenly everyone wins. The various States get access to tax payments from Amazon, Amazon gets closer to their customers and being able to ship merchandise in a more timely and economical way.

Retailers have played this whole situation wrong and this week can be seen as a timely reminder to us all that you need to think strategically on competitors. Retailers in the US needed to ensure that Amazon only has Fulfillment Centers in Kentucky and Nevada as this would have ensured that Amazon would have paid substantially more for getting packages to consumers all across the US. The Marketplace Fairness Act is going to drive Amazon’s future in the US into dominant position.  Suddenly, eBay is fighting against the Marketplace Fairness Act as they believe it would hurt small businesses. Interesting, that now an additional sales taxes for marketplace sellers becomes a concern for eBay. I don’t think their concern is related to small businesses at all but rather it focused on a large Seattle competitor getting a solution to a long standing problem. While I am on the topic of eBay, I must admit that I am interested in how they can claim to be able to scale same-day shipping. Building an uber like service is going to solve this problem in which you are in the most crucial part of the consumer transaction cycle. Really? Surely, the last thing you want to do is a crowd sourced solution?

The stories that caught my attention this week:

1. CEO John Donahoe Says eBay Is Building the Uber for Delivery – This sounds like a brainstorming idea at best. Unused logistics capacity and bidding on drivers to take merchandise to customers seems far fetched to me.
2. Amazon meets Indian officials in bid to relax law restricting foreign e-commerce firms – Does this confirm that India is on Amazon’s priority list? I tend to think so however, until the Indian government allows majority ownership by a foreign company of an Indian business, I cannot see Amazon entering the Indian ecosystem.
3. Google Quietly Shutters Commerce Search For E-Retailers – Google is trying to get their house in order in terms of ecommerce. Is this a precursor to something bigger or a sign of a re-focus internally on products that are making revenue?
4. Aramex Launches Shop and Ship in Dubai: What it Means for E-Commerce Merchants – Aramex provides a service which enable Middle East residents the opportunity to be able to buy online and it the merchandise to be shipped to Aramex and then to the customer. This also opens Dubai to businesses such as MarkaVIP, Souq, Sukar, and Namshi.
5. Future retail stores will focus on experiences before products – Retail is changing due to the effects of the economy and technology (mobile). Experiences is the only way in my mind that retail can ensure that it stays unique from other channels of commerce. If retailers don’t adapt, then they will become a collection space for customers.
6. Rakuten.com Shopping’s new look, explained– Rakuten acquires companies and then rebrands them and then changes business models to ensure that marketplace functionality is seen on their platforms. Does rebranding all of your assets, make sense? This post looks at the steps Rakuten took to rebrand Buy.com to Rakuten Shopping.
7. E-Commerce in Lebanon: An Overview – A fantastic article about ecommerce in Lebanon which contains a thorough look at the country and it’s ecommerce industry.
8. The State of E-Commerce in Latin America in 2013 – A great summary and look at ecommerce in Latin America. There are 2 countries at the moment which is seemingly getting more traction with ecommerce and they are Mexico and Colombia. Is it a case of early mover advantage or market saturation in the other Latin American countries that is driving this growth in Mexico and Columbia?
9. Russian ecommerce is reaching a tipping point. It’s time that Europe and the US took note – Maëlle Gavet is one of my favorite ecommerce authors. She is the CEO of Ozon.ru, a giant in Russian ecommerce and a thought leader in terms of ecommerce. The post contains a very good summary of the challenges ecommerce businesses face in Russia. Is it too late to enter the Russian ecommerce market?
10. CEO Weekends: Sunglasses.com.ng CEO Jaime Moreno On Nigeria’s Amazing Potential & eCommerce In Africa – Nigeria, South Africa, Egypt is at the moment the ecommerce markets getting attention from ecommerce investors. Is Africa the next big ecommerce battleground?

Bonus Links for this week:

• Amazon receives 1 euro out of every 5 in German e-commerce – If you doubted Amazon’s effect on global ecommerce, here is yet another sign of it is size. A developed ecommerce market full of competitors and Amazon makes 20% of the industry revenue..
• China’s 360Buy Unwraps Massive New Funding Round of $700 Million – 360Buy has raised more money, it seems they do this quite often. It has raised $2.5 billion since it first got investment back in 2007 and what does it have to show to investors? Being number 2 to Alibaba or am I missing something..
• Rakuten posts record year-end revenue of $4.7b, but $305m restructuring loss drags down net income – Rakuten took a financial knock due to the restructuring of Play.com and Buy.com. Is this a sign that the investments are under pressure from competitors or is it just the after effects of changing to the marketplace model?
• Google going retail? – This makes sense as Google needs to get their chromebooks and Android devices into hands of customers. However, retail is not in their DNA and this contains a fair amount of risk for Google. Do they hire a high level retail executive and give him or her the opportunity to build this from the ground or do they acquire a struggling retailer?
• Best Buy to make internet price matching permanent to prevent ‘showrooming’ – I think this will speed up the end of Best Buy. Price matching is a great marketing idea but unsustainable in the long term.
• Walmart’s Massmart takeover sparks US interest in Africa A fascinating read on the effects of Walmart’s acquisition of Massmart. When a very large global business enters a market it raises it’s profile to other businesses looking for new markets to enter.
• After eliminating the competition with help from the government, Amazon to “harmonize” commission rates in France – A fascinating tale of Amazon and their commission structure in France. What happens to all their owed taxes I wonder?
• Apple’s Retail Strategy Proves That If They Build It, You Will Come (And Spend) – Apple understands retail better than most of their competitors. It does not look like retail, feel like retail but Apple is making handsome profits from its retail operation across the globe.
• Zalando doubles sales to €1bn, breaks even for the first time in home region – Zalando breaking even is big news. “The fact that we reached breakeven in our core region already in our fourth year proves the success of our business model and has encouraged us to invest even faster into building leadership in the international markets.” Enough said.
• Morgan Stanley’s Latest Alibaba Estimates Suggest It’s Worth $66 – 128 Billion – Morgan Stanley having assign forward net income targets for Alibaba Group is very interesting. Does this mean that the long awaited IPO is around the corner?
• The makings of a successful subscription ecommerce business – Nic Brisbourne has a list of all the characteristics a successful subscription ecommerce business should have. Definitely worth bookmarking if you are interested in that vertical.
• PriceMachine shows Wize Commerce’s future – Something I wrote on Friday after reading about PriceMachine. Is comparison shopping engines in developed markets going to be around in 18 months time? I personally fear for their future.

Onwards..