Trouble at The Iconic, Square enters the marketplace space, Amazon wants be a digital art dealer and Fab raising money

Fab.com has been in my thoughts the last 2 weeks. Are they growing too fast? Do they play the PR game and what is their future? Those 3 questions have been circling in my thoughts and in all honesty I am more unsure about this business than before they raised the money.

14 million users, $310 million raised and many acquisitions. Those 3 things together does not make any investor jump for their checque books, in all honesty it raises question. I am a Jason Goldberg fan ( I read his blog and I get the daily fab emails) but I think we need to look at a few things in context.

One – they consistently mention becoming an Amazon of design. Amazon is business that is non repeatable and it is a behemoth. eCommerce is a margins game and fab with respect is going to battle becoming a $1 billion dollar business. Why? I don’t they can scale the business to make that kind of revenue globally. What makes Amazon scary is that it has a variety of methods to make revenue (AWS, Prime, Marketplace, Fulfillment by Amazon etc) what does Fab have that can be seen in a similar manner? At the moment nothing. Secondly, this created version of ecommerce – emotional ecommerce is really a Goldberg creation. No other industry analyst, CEO, VP has made mention of that. I get that they need to create themselves a niche but I think fab needs to take a few lessons from Amazon. Be transparent but really try to tone down the rhetoric and focus on achieving customer happiness and make a lot of revenue before telling everyone about it.

If one looks at the business that resembles fab in commerce then IKEA is the clue to fab’s future. IKEA is a monster of a business but you have to research them in depth to understand them. My biggest concern with fab at the moment is that the current model relies heavily on them being able to source the right product to sell. It is ultimately Bradford Shellhammer and Jason Goldberg’s passion for design that is going to ensure fab’s long term future. How do you replicate that? Algorithms, research or buying businesses? I think we will see Fab playing in the $250 million per annum space and being a market leader in design and apparel but not be a behemoth.

Before I completely lose the plot of this post, the stories that caught my attention this past week:

1. Daniel Tumiwa Shares His Story and Lessons Learned at Multiply – Daniel Tumiwa gives a great account on what happened at Multiply, the marketplace that was close at the end of May in Indonesia. It is great that he is educating the ecosystem on the lessons he learnt at Multiply to ensure that ecommerce in Indonesia continues to grow.
2. Rocket Internet investor Kinnevik acquires another slice of Zalando for €100m – Kinnevik is slowly ensuring that they become the majority owner of Zalando. I have been saying it for a while but Zalando is the biggest asset that Rocket Internet has.
3. In Search of Tech Cred, eBay Builds a New Engine for a New Identity – Search is no longer a differentiating factor for ecommerce businesses. It has to be done well otherwise you lose your user before monetisation can occur. Project Cassini is arguably the most important project that eBay has undertaken in the last 5 years. Time will tell whether it is the answer to their queries.
4. Nordstrom: Old-School Department Store or Tech Incubator? Or Both? – If you want to get an idea of where retail and ecommerce is going then Nordstrom should be on your radar. I see them as being the most progressive retail business in the world. They are ensuring that they are staying relevant by investing in ecommerce startups.
5. A $1.2 trillion global payday for e-commerce – Global ecommerce is no longer a theoretical phrase. It is a reality and it seems APAC should be on investors minds.. I have a few posts on the way on this topic.
6. 12 Digital Technologies Retailers Are Investing In – it is a checkllist of all the things an ecommerce business should have and for executives to check off.
7. Tesco to sell online – This is a rather important piece of news related to China. It seems western businesses are trying again to enter China. Second time – better execution?
8. Cracks begin to emerge in Iconic model – The Iconic is Rocket Internet’s Australian fashion business and it seems that they have some cracks appearing. The mere fact that Oliver Samwer is in Australia is telling me that the issues are rather large..
9. Square makes its move with online retailers – This is not too surprising but it is an interesting move made by Jack Dorsey and the square team. In a sense this seems to be a extension into online commerce which leads me to wonder whether they ran out of physical stores that were using square to process their payments?
10. Amazon’s Next Move: Fine Art – Amazon supposedly is launching a digital art store. What is really happening is that Amazon is targeting a niche that no online retailer has been able to properly execute. Art dealers will always look for ways to get more buyers looking at their art and potentially make sales.

Onwards..