Amazon Prime increases price, Tencent invests into JD.com

Aramex streamlines Middle East deliveries with launch of My Address, Zulily to spend heavily to fill mid-level manager gap, sparked by insane growth rate, Alibaba resorts to mobile app platform to keep afloat, eBay M&A History and Trends, Central European ecommerce to grow to €93.3bn, Amazon raises the cost of Prime by $20, A pivotal moment in Chinese Internet history as Tencent-JD Tie-Up Takes Aim at Alibaba and much more

The last 2 weeks have been full of news and in most cases the news will have industry impact for a considerable amount of time. Amazon increasing the price of Prime is not unexpected as I believe Amazon has had no choice but to increase the price of the worlds best loyalty programme. The reality is that there is no other service for users to go to but in most cases the value exceeds the costs of Prime.

The biggest news without a doubt over the last 2 weeks is the investment of Tencent into JD.com. I see it as a defensive move on the part of Tencent prior to Alibaba going public. Alibaba is rumoured to be raising $15B and then will be in a position to invest aggressively into local and international businesses. If Tencent did not invest into JD.com then they were in a position to get seriously beaten in commerce in China and in Asia.

This is going to be a bumper edition of news as I have not written in 2 weeks:

Mobile is creating a breed of ‘super shoppers’ that account for 70% of UK retail spend, eBay study finds – “According to the study, Super Shoppers are busy. They’re starting, pausing and resuming purchase journeys across channels as they fit shopping into their busy lives. They are benefitting from seamless shopping experiences as they decide when and where they shop, through features like stock checking and click and collect, and brands’ mobile and social media offers.” The mobile user is a completely different customer whom browses differently and purchases on a desktop in most cases..
Aramex aims to tackle inconsistent addressing in Middle East with new service – “The first system of its kind from a logistics company, My Address will improve Aramex ‘s efficiency and customer service by eliminating these bottlenecks in its daily operations. Using a web interface, Aramex customers will be able to pinpoint their exact position as well as select a delivery time when they place an order. Each customer’s address details will then be saved securely for their future deliveries.” This is a very clever service from Aramex as it leads to a service for a market that is not structured in terms of addresses etc.
Zulily to spend heavily to fill mid-level manager gap, sparked by insane growth rate – “Shares of Zulily surged 68 percent this week as a result, giving the five-year-old company a hefty market value of more than $6 billion. It didn’t hurt that CNBC’s Jim Cramer swooned over the stock, noting that Zulily “can beat Amazon” and calling it a “revolutionary company.”” Zulily is clearly on a growth spurt but I cant help but wonder if they are potentially growing too fast.
Vipshop Reports Unaudited Fourth Quarter and Full Year 2013 Financial Results – “Total operating expenses for the fourth quarter of 2013 increased by 108.6% to US$133.7 million from US$64.1 million in the prior year period. As a percentage of total net revenues, total operating expenses decreased to 20.5% from 21.4% in the prior year period.” Vipshop is another company growing aggressively.
Image Recognition Startup Slyce Raises $9M To Be The Amazon Flow For Everyone Else – “Toronto-based startup Slyce has raised a new round of $10.75 million in funding, led by Beacon Securities, and including PI Financial, Salman Partners, Harrington Global and more. The company builds image recognition tech, and wants to be the Amazon Flow for every other retailer on the planet, enabling point and shoot shopping with smartphone cameras.Besides partnering with major retailers, including proof-of-concept pilots with five of the top twenty retailers in the U.S., as measured by revenue and sales volume, Slyce is also exploring opportunities with using image recognition to tag items for mobile gift registries, and to receive coupons for products ID’d or for equivalents looking to better compete.” Very interesting concept and seemingly a startup that is becoming a partner for a variety of retailers.
Tokopedia and new rival clash over battle for online merchants – “There has been some confusion in the last couple of weeks for merchants of Indonesia’s marketplace site Tokopedia. These merchants have been contacted over the phone and email by new rival Elevenia, saying that Elevenia is a partner of Tokopedia and encouraging the merchants to sign up on Elevenia as well.” In a competitive market like Indonesia – this does not suprise me at all as Tokopedia is a marketleader.
Inside Warehouse drills down into verticals with ecommerce tool for publishers – “”We were going step-by-step and we realized that retailers do not create any added value to a sales process,” says . Users are already finding content, so the question to them was why they were trying to drive content from pubishers to webshops. Their solution is an ecommerce solution for publishers, similar to Helsinki-based Kiosked, which delivers in-site webshops through a publisher’s visual content, or other similar ideas like 72lux in the US and Atosho in Denmark.”
Personalized e-retail tech gets Reflektion $8M from Intel, Nike – “This seems like the latest thing in marketing — not just targeted advertising but entire tailored experiences for individual shoppers. It does add an Amazon-like recommendation experience, although one might fairly question whether most product catalogs are large enough to warrant it.” Recommendation engines are now becoming part of the marketing mix of ecommerce businesses and thus this seems like an interesting business.
Alibaba resorts to mobile app platform to keep afloat – “Chinese e-commerce giant Alibaba is turning to its Taobao mobile shopping app platform to boost transactions in China via mobile devices as it works to survive in the market after sales at its online shopping platform Taobao, the largest e-commerce website in Asia, dropped sharply, the Beijing-based China Business newspaper reports.” Interesting and one has to wonder whether this is another IPO related promotion. Surely this cant be sustainable..
eBay M&A History and Trends – “Since the start of 2009, eBay has disclosed 31 company acquisitions. 2011 was eBay’s most active for acquisition activity when the firm acquired 12 companies including Zong and A16Z partner Chris Dixon’s previous startup Hunch. eBay’s first and only acquisition of 2014 was for 3D graphics startup PhiSix. Its largest acquisitions in the period were GSI Commerce, now eBay Enterprise, for $2.4B and Gmarket for $1.2B, now eBay Korea.” eBay has been acquiring companies to bolster their entire business for a while yet I wonder are there any tangible results that can be attributed to an acquisition?
Walmart to expand in e-retailing in India, planning marketplace model akin to Amazon, eBay – “Months after it put its brick-and-mortar expansion plans in India in deep freeze, Walmart Stores is quietly readying a major e-retailing push in India with an electronic marketplace business model akin to that used by US-based Amazon and eBay Inc.” India is a different market with legislation (FDI) related to ecommerce investment. The fact that Walmart has invested into China via Yihoadian so this is not really a surprise. A marketplace in India is a solution that takes care of the FDI requirements..
Westwing increases net revenue to EUR 110 million in 2013 and grows nearly 3x – “The Rocket Internet company is active in Germany, France, Spain, Italy, The Netherlands, Russia, Poland, Switzerland, Austria and Brazil, and is headquartered in Munich, Germany. In six of these countries (Germany, Italy, Russia, Spain, Poland and Brazil) Westwing is running its own logistics centers.” It has little competition in its vertical (home and living) in the markets in which it operates but what happens if competition arrives?
30% of Ecommerce Site Traffic Came from Mobile in 2013 – “f you’re curious about what the state of ecommerce looked like last year, ShopVisible recently released a report that highlights mobile benchmarks, payment methods, shopping channels and more for 2013. What it found was 30 percent of site traffic came from something other than a traditional desktop/laptop, and up to 7 percent of total online revenue came from comparison shopping engines.” Not surprising at all yet I think the 30% might be a little light in terms of mobile traffic.
3 Key Answers to Mobile Commerce Trends and Other Factors Affecting the Global eCommerce Landscape – “2014 marks a crucial shift in the global eCommerce landscape that U.S. online retailers need to tracking. For the first time, North America will no longer lead the world in B2C eCommerce sales. According to eMarketer, the Asia-Pacific region will surpass North America’s share by an estimated $42.6 billion in 2014, and the gap will widen to $142.9 billion in 2015.” Have you thought about International ecommerce aka cross border ecommerce?
India’s Flipkart hits $1B in sales with >20% of sales via mobile device – “Indian ecommerce flag bearer Flipkart has hit $1 billion in sales. This is a coming of age for Indian ecommerce as the market leader hits the target a year ahead of schedule. Global ecommerce giant Amazon reached the same target seven years after its launch. Flipkart, launched in October 2007, has achieved this milestone a few months faster.” Flipkart is a year ahead of their $1B in sales target however one has to wonder how much those sales have cost in terms of marketing costs. I find it increasingly interesting that the words “repeat customers” have not been mentioned.
Central European ecommerce to grow to €93.3bn – “With an average growth rate of 19% in 2012 the ecommerce industry in Central Europe was growing almost as hard as the European average, which is 19.9%. The region’s ecommerce market was worth 75.9 billion euros in 2012, but it’s expected to have grown to 93.3 billion euros last year, which comes down to an increase of 23% in 2013.” Germany is a massive part of the growth seen in this report yet one has to wonder if the economic conditions have not assisted in driving users online..
Comparitive Analysis of JD and Amazon Financial Performance – “Guotai Junan Securities did a profit analysis for Amazon, it found out that if other operating revenue was excluded, the gross margin would drop by 3 to 4 percentage points. Amazon’s net profit margin was around 3% before 2011, which indicated that if other operating revenue excluded, the company’s net profit margin was zero. In the recent years, Amazon’s third parties revenue kept growing, probably accounted for 30%. Therefore, the source of Jingdong’s profit came from interest income, government subsidies and tax refund. B2C was still at a loss, it was similar to Amazon but Jingdong’s profit was not sustainable.” Fascinating research into 2 similar ecommerce businesses, the major difference between them is that Amazon is a market leader and JD.com is still battling Alibaba in China..
Ex-PayPal MD launches Singapore-based payment gateway for the Middle East, Africa, Asia – “As a “payment gateway for the emerging markets,” with the tagline “your language, your currency,” the platform has an ambitious scope: it aims to deploy aggregated payment services across the Middle East, Africa, and Southeast Asia, (think Stripe for emerging markets), while offering logistics solutions, as well as loans to merchants that meet certain criteria for sales volume.”
Amazon Debuts An Official Mobile App For Amazon Sellers – “Amazon quietly launched a new mobile application designed for Amazon Sellers, the individuals and businesses who leverage Amazon’s scale to reach the company’s millions of shoppers by listing their products on Amazon’s site. Amazon Seller, as the app is simply called, offers a suite of mobile tools that allow sellers to search and scan barcodes of items, check prices, sales ranking and reviews, list items, as well as communicate with customers.” Interesting that Amazon launches a seller focused mobile app but yet still has some weaknesses in terms of tools that can be used by third party sellers.
Here’s How Social Ecommerce Site Fancy Wants To Crush Other Virtual Storefronts – “But social ecommerce site Fancy just launched a new “Storefront” feature to let merchants create their own shops that CEO Joseph Einhorn says gives sellers more perks than any other services out there.” Fancy is clearly growing and this newest feature will ensure that they stay ahead of Pinterest and other competitors.
Amazon’s War On The House Of Otto, Germany’s $18 Billion Family – “For six decades such values have served the Otto family well. Today you can almost hear Jeff Bezos’ famous braying laugh emanating from Seattle. The Otto way of doing business is up against the age of Amazon, in which scale, brashness and speed rule. Otto thought he had digital retailing figured out: No entity sold more clothes online last year, and the Otto Group also operates the world’s largest mail-order retail operation. But last year, for the first time, Amazon’s sales in Germany ($10.5 billion) eclipsed Otto’s ($9 billion). And the trend lines are far uglier: The Otto Group’s sales are up 17% in Germany since the recession, while Amazon’s have doubled since 2010.” Fascinating article on yet another market and business that Amazon has disrupted..
Hointer’s Vision Of The Future Of Retail Uses Robots To Put The Focus On Shopping Experience – “At this year’s Dx3 digital business expo in Toronto, one of the highlights was a Seattle-based company called Hointer that’s aiming for nothing short of a complete revolution in the way we buy clothes in stores – and it’s using robots to make it happen.” Hointer continues to be a fascinating company, are they a sign of the change that will occur to retail.
Kozmo II – The Sequel: A Look at App Store Data for Same-Day Delivery Service – “n the running to win share of the same-day delivery market are companies both public and private. Among the venture-backed startups offering same-day delivery apps of goods including food and grocery are Instacart, TaskRabbit (through its DeliveryNow service) and Postmates. eBay, Amazon and Google have also launched apps and there is the possibility that Uber may one day turn to the same-day delivery space as well. In fact, eBay has actually acquired Shutl and Google has acquired BufferBox to further their delivery ambitions.” Is same-day delivery the last step towards offline and online integrated?
Goldman: There Will Be as Much Mobile Commerce in 2018 as E-Commerce in 2013 – “Goldman says that by 2018, we’ll be seeing roughly as much mobile commerce ($626 billion) as we saw in e-commerce last year. In the shorter term, we’re talking a tripling from 2012 to 2014.” This specific article left me wondering what now?
“The Million-Dollar Question: 4 Solutions on How to Grow E-Commerce in Latin America” – “Latin American retailers have historically struggled to bring buyers online because of inconsistencies in shipping and logistics, according to eMarketer. Customers oftentimes do not trust the postal service because it lacks consistency in service, or packages may never arrive. And FedEx and UPS are oftentimes prohibitively expensive.” Very interesting..
Alipay is Ready to Soar Within and Beyond China – “To expand beyond the online marketplace, Alipay in 2013 revamped its mobile wallet solution to facilitate mobile payments at the physical point of sale. The expansion into mobile payments has been widely successful. In early 2014, Alipay reported processing nearly $150 billion in mobile transactions in 2013, dwarfing PayPal’s reported $27 billion in the same year. Alipay is also seeking to expand geographically. In 2014 and beyond Alipay will be deployed in a number of countries with large Chinese populations like Taiwan and Singapore, with a full-scale global rollout possible down the road.” Alipay is a big part of Alibaba’s global shift..
With 10 Mn Visits a Month, Comparison Site Junglee Will Continue to Get Amazon’s Attention [Interview] – “Amazon launched price comparison site Junglee in February 2012. Since then, the site has quickly become the country’s biggest in the category. With the launch of Amazon.in, there was some speculation that the site wouldn’t continue to be on Amazon’s priority list for India.” Junglee is clearly growing at a rate of knots and seemingly is going to be staying around while Amazon.in grows..
Amazon plans revamp of U.S. shipping with mix of private fleet, regional carriers, USPS – “James Tompkins, who runs Tompkins International, a Raleigh, N.C.-based consultancy, said Amazon has divided the nation into three segments based on population size: The top 40 markets, which comprise about half of the U.S. population; the next 60 largest population areas that account for about 17 percent, and the remaining areas, which account for about one-third.” Amazon is trying to protect it’s biggest market from competitors and in the process lock the market down. I wonder if UPS had a better festive season 2013 then were they part of this plan?
A pivotal moment in Chinese Internet history as Tencent-JD Tie-Up Takes Aim at Alibaba – “The new week is just beginning, but it could well go down as a pivotal moment in Chinese Internet history with Tencent’s new announcement of an e-commerce alliance with JD.com that could threaten the dominance of sector leader Alibaba. The tie-up, which was first rumored last month, will see Tencent pay $215 million for 15 percent of JD.com, which will also receive some of Tencent’s e-commerce assets including a minority stake of its flagship Yixun.com B2C service.” Fascinating development in Chinese ecommerce – where does this leave Alibaba? Still market leader or looking for bolt on acquisitions?
Tracing Modnique’s International Expansion Strategy – “Since that time, Modnique has been under a process of fine-tuning as its leaders prepared to launch into new markets. This process began when the company started delivering to over 150 different countries on the day it launched, but has since culminated in region-specific websites being launched in Russia as of November 2013, and more recently in Australia, Canada, Belarus and Ukraine.” Interesting that Modnique has grouped Marketing and mobile into 1 portfolio…
Amazon raises the cost of Prime by $20 – “Prime will cost $99, up from $79, in the United States. This is the first time Amazon has raised the price of the loyalty program for U.S. shoppers. The program offers free two-day shipping and other benefits, such as video streaming and e-book lending.” It had to happen yet I suspect Amazon Prime will continue to be a massive part of Amazon’s continued domination in certain markets.
Ocado sees opportunities from Amazon move into groceries – “British online grocer Ocado sees Amazon‘s push to sell more groceries as more of an opportunity than a threat, believing it will encourage big international retailers to look for partners to help them get set up in e-commerce.” Ocado clearly has done their homework but I sense they are using Amazon’s move into grocery as a way to convince more partners to join them..
Online shopping: is SA ready for it? – “While the battle for consumers and market share among retailers in brick-and-mortar stores still dominates and rages on, the e-commerce industry, though still in its infancy in South Africa, is starting to show potential.” The simple answer is yes!.
Layoffs hit eBay’s Magento division; product chief exits – “EBay has laid off dozens of people in its Magento e-commerce software division, two people familiar with the moves told Re/code. The total number of affected jobs is near 50, one of these people said.” Is this a strategy change or Magento not growing as eBay expected..
Amazon looks to pump up Kindle sales with monthly payment – “According to Amazon, customers who want to take advantage of the offer will be charged 20 percent of the device’s price up front, plus applicable tax and shipping charges. The remaining 80 percent will be broken down into four monthly payments charged to their credit card. Amazon will not charge interest or finance charges and there are no hidden fees. Because the sale is being put on a credit card, there is no need to fill out an application or for a credit check to be conducted.” Super clever move by Amazon and will lead to more people having Kindles..
E-commerce revolution drives European retail IPO rush – “European retailers are flocking to list in 2014 but traditional high-street chains are notable by their absence, replaced instead by the online, discount and convenience players that are shaking up shopping. The flood of retail initial public offerings (IPOs) after a long drought is partly driven by recovering consumer confidence, but also by the fundamental changes wrought on the industry by the advent of e-commerce and shifting shopping habits.” It is all good and well to IPO but how many of these businesses will be around in 5 years time?
Alibaba reportedly planning April IPO – “Chinese e-commerce monolith Alibaba is reportedly planning to hold an initial public offering as early as April. The company is expected to list in New York after encountering regulatory issues in Hong Kong, and has reportedly tapped Simpson Thacher & Bartlett, Credit Suisse, and Morgan Stanley to handle the IPO. It’s said to be seeking at least $15 billion in funding.” Massive news with massive implications for the entire ecommerce industry.
Amazon China builds its own delivery network – “As it has in the United States, Amazon.com Inc.’s China subsidiary is building a nationwide network of distribution centers. What’s different is that Amazon China also employs workers who deliver the goods to the consumer.” How much money is being invested into logistics in China for ecommerce? My guess – $20B in total.

Onwards. Till next week