Amazon launches the Kindle FireTV & Amazon Dash, Homeshop18 to IPO – eCommerce stories of the week

Flipkart and Mynta to merge?, Google licenses Room 77 software, Alibaba will impact e-tailing in the US, Online Fashion: A Venture Scale Opportunity That Silicon Valley Does Not Understand, Amazon launches the Kindle FireTV & Amazon Dash,  Homeshop18 to IPO , Amazon builds India business quietly, Fanatics announces Doug Mack as new CEO and much more

Last week was one of my favorite ecommerce weeks of the year. Amazon announced that they are to announce their results and Bezos’s typical shareholder letter contained a few nuggets. Let me say this, Amazon missed a huge marketing moment by not having Bezos unveil the new Kindle FireTV. If Amazon wants to play in the same ecosystems as Google, Alibaba and Apple then Bezos needs to be used more as a marketing angle. So where was Bezos, as seemingly not even Amazon staffers knew his location ( loved the New York times asking Bezos to call his office)? I suspect he was in Seattle ensuring that the AmazonDash launch goes without any hiccups, don’t tell me he was completing the ComiXology purchase, that was completed months ago by Jeff Blackburn (folks, trust me the Internet mergers and acquisitions space is one that is controlled by CEO’s, lawyers and secrecy).

Talking of mergers, in India the merger between Myntra and Flipkart is supposedly almost complete. India is clearly the current battle ground for ecommerce investors such as eBay, Amazon, Tiger Global, Naspers and Accel. The flipkart deal in my mind is another step in market consolidation in Indian ecommerce. Tiger Global and Accel got tired of doing investments in 2 companies that are battling eBay and Amazon. Rather invest into 1 powerhouse and move towards a point of market ownership. Flipkart, as much as their management will deny will buy businesses in verticals that they believe they are weak in.

The stories that caught my attention the last 2 weeks:

  1. eBay Signs Retail Chains to Same-Day Delivery Service (Ecommercebytes) – “While Best Buy, AutoZone and ToysRUs were among the first retailers to participate in eBay Now, the list of retailers now participating include the following featured stores: The Home Depot; Office Depot; Walgreens; GNC; Radio Shack; Macys; Microsoft; Guitar Center, Bloomingdale’s and Urban Outfitters. ” eBay is in need to continue building out Now – is it profitable? Who knows but in terms of their future getting into offline retail is key.
  2. Sluice uses big data to help Amazon merchants manage demand and never run out of popular items (Pando) – “Los Angeles-based Sluice launches into a closed beta today within the Amazon marketplace ecosystem. The advantage of piloting the product within Amazon’s walled garden is that Knight’s software can see more detailed data than on other platforms and thus better calculate, for example, the true cost of running out of stock of a popular item.” I find this concept to be brilliant and I would be surprised if they are not acquired in the next 18 months. Sluice is playing in an ecosystem that is at the moment wide open.
  3. Amazon announces FireTV (The Verge) – “Competition for the living room is fierce, and one of the pressing challenges Amazon immediately faces is making Fire TV stand out in a world of Chromecast, Apple TV, and Roku. Based on today’s unveiling, the company is off to a good start.”  The FireTV is at the moment yet another device for the living room, Amazon clearly is going to keep updating the hardware to make it more compelling but yet again this device is geographically limited..
  4. Google Tests Product Images Within Organic Listings (Search Engine Land) – “It seems Google is testing showing product images in the organic, free search result listings, for certain e-commerce sites. This was first spotted in a Moz thread for a site that sells ski equipment named evo.com. Here is a picture of the organic listing that shows not just rich snippet data for pricing and stock..” The more I see these tests the more I think my theory on Google shopping is right (I am working on a long post on this topic).
  5. LivingSocial quits Southeast Asia with $18.5 million sale of regional business to iBuy Group (Tech in Asia) – “Malaysia and Singapore-based entrepreneur Patrick Grove’s flash sales business shopping spree continued its onwards march as iBuy Group (ASX: IBY) bought LivingSocial’s Southeast Asia businesses for US$18.5 million just yesterday.” LivingSocial is clearly in a clean up mode to ensure that they can either evolve into a new business ala Groupon or they will go into the history books.
  6. Semantics and Definitions; Klevu Turns E-commerce Search fields Smarter (Arctic Startup) – “Klevu relies purely on academical logic; It’s a smart search engine specifically built for e-commerces relying on analysis of semantics and what you could think of as an automated virtual dictionary.” Search in ecommerce is now a necessity and this is going into a field that is also wide open for new entrants. SOLR, Endeca and enterprise options are difficult for small and medium sized operations to get right. How long Klevu sticks around is another question?
  7. Expedia is giving away paid apps for free with Apple’s blessing (Geekwire) – ” Through a partnership with Apple, Expedia plans to recommend a new application every month for download, much like the Starbucks app, which also doles out free songs and apps away on a weekly basis.” Expedia must be paying Apple quite a bit for this promotion and I wonder what the requirements are for third parties such as Expedia to be an appstore as such.
  8. Amazon Will Now Allow Returns Using Lockers (WSJ) – “The service will help address a problem that has plagued Amazon and other e-commerce retailers. As much as a third of all online purchases are eventually returned, by some estimates, making it costly for merchants that in some cases pay for shipping in both directions. Packaging and shipping orders is a major expense for Amazon. The company has been on a warehouse building frenzy in recent years, constructing facilities close to urban centers to speed delivery times. Amazon spent $8.59 billion on order fulfillment in 2013, up from $6.42 billion a year earlier.” A typical Amazon move, build an asset and then repurpose it to generate extra revenue from it. Super clever and would be interesting to see adoption rates in 12 months time.
  9. Four reasons why Indonesia is the world’s most perplexing e-commerce frontier (Quartz) -“Indonesia has been described as the next frontier for online retail. Industry observers say the country’s millions of new internet and smartphone users make it ripe for a “big bang” in e-commerce. As a result, e-retail firms from eBay to Rakuten are fighting for a foothold in the market, but there are a few traits that make Indonesia’s e-commerce market both fascinating and extremely difficult.” Indonesia is moving into becoming a very important market for ecommerce investors – massive opportunity but some large challenges.
  10. Homeshop18 IPO: Fineprint and Facts So Far (NextBigWhat) –  “Homeshop18 has filed for a $75 Mn IPO at NYSE. Owned by Network18, Homeshop18 has hit $51 million in sales by for the 12 months ended September 30, 2013. Here are a few key facts and disclosures made by the company in its preliminary prospectus to the SEC.” This is a fascinating summary of a company looking to IPO before the market goes bad. Mentions that they wont be profitable soon and their gross transaction value is decreasing every year. Frothy market me thinks.
  11. Andreessen Horowitz seed investments by sector – ecommerce in front (The Equity Kicker) – “The chart above is for all their seed investments since 2010 and is a firm vote for ecommerce, although it would be interesting to see what the trends are within sectors. Looking at the sub-industries of Andreessen Horowitz seed-stage investments over the past four years, we see that the venture firm has completed its highest number of deals to eCommerce companies. A16Z-seeded eCommerce startups include Homejoy, Getable and Shoptiques.” This was a surprise as I did not realise just how much investment into ecommerce A16Z has done..
  12. What’s next for Shopping campaigns and retailers (Google) – “Shopping campaigns offer a truly retail-centric and seamless approach to PLAs. We’re very excited by the positive feedback we’ve heard so far and will continue to build tools and features into this new campaign type to help you manage your PLAs. Thus, we’ll be retiring the regular PLA campaign type and asking all PLA advertisers to upgrade to Shopping campaigns by late August 2014, at which time all remaining PLA campaigns will be automatically upgraded.” Google is driving hard with PLA’s and the results are pretty spectacular. I still contend that PLA’s is google’s trojan horse to make organic search engine results irrelevant.
  13. Next up for disruption: the grocery business (Fortune) – “The grocery business is loaded with friction, at least from a purely economic perspective. Once a week or more, shoppers must drive to stores, traipse through aisles hunting for what they want, and stand in lines — a gigantic, continual waste of time, patience, and gasoline. Grocers, which stand between food producers and consumers, must maintain chains of stores dotted across a geographical region or across the country, and each store must be serviced by a complex logistical and transportation infrastructure. If any industry is ripe for disruption by online shopping, it should be the grocery business.” Groceries are a big industry but the margins are thin and the investment is huge does this mean that only Amazon and Walmart can battle it out?
  14. Amazon builds India business quietly (Business Standard) – “In just over 10 months of existence in India, Amazon, the biggest online retailer in the world, has become the largest in the country, too, in the number of products its e-commerce sites stock. At 15 million products, Amazon India has overtaken home-grown e-commerce portals such as Flipkart and Snapdeal. While Flipkart offers close to 10 million products, Snapdeal offers four million-odd. US-based portal ebay offers over 1.5 million products in India.” Amazon has quietly built a big business in India and from what it seems are not spending the money like Flipkart and Snapdeal to acquire the growth..
  15. Online Fashion: A Venture Scale Opportunity That Silicon Valley Does Not Understand (Sramana Mitra) – ” If I synthesize what I see is the core issue with online fashion, it is that entrepreneurs are thinking of the industry as a distribution channel a la Amazon, with price being the core differentiator. This is a gigantic mistake. Flash sales sites like Vente-Privee and Gilt Groupe focus squarely on price. Other experiments are in social media. Polyvore is a Pinterest like social media site where people put outfits together. It’s a toy, although, their bet is that they will make affiliate commissions in the range of 10-15% from the overall online fashion e-commerce industry, which isn’t a bad bet. It has brought them investment from Benchmark. The closest to what I would like to see, although it has no visual merchandising, is also a Benchmark company called Stitch Fix that sends a personalized selection of items to people’s homes. Customers can pay for what they keep, and return the rest. I don’t like this one, because I don’t want things to be sent over that I have not had a chance to see online first. The logistics of return, to me, are not attractive.”  Fantasic post on a topic that I agree with – we have not seen the perfect execution in terms of fashion online.
  16. Russia’s biggest e-retailer has ambitious growth plans (Internet Retailer) – “With $1 billion in sales, Ulmart.ru is cooking up an initial public offering and plans to quadruple its fulfillment space in the next 18 months. The company also plans to expand its SKUs from 63,000 to 85,000 by the end of the year. That will help it reach its goal of $10 to $15 billion in annual sales in the next five years.” Russian ecommerce is super competitive and very difficult to understand in my mind. Lots of challenges (payments, logistics etc) but e-tailers have not made a significant hole in total Russian retail.. Why?
  17. Amazon’s Magic Wand and the Unrelenting Race to Make Shopping More Convenient (Recode) – “Before Dash, Amazon announced in February that it was adding a technology called Flow to its main shopping app on mobile phones. A user taps on the Flow feature in the app, points the phone at a product in their home — say, a book or a bottle of shampoo — and Flow is supposed to quickly display the product page on the phone’s screen.” Amazon will continue to innovate and create data streams on what will win. Dash and Flow might seem gimmicky but is to have on focus – less friction for a transaction. All the sales go easily to Amazon and the customers wins.
  18. MallForAfrica links overseas ecommerce sites to Nigeria’s growing consumers (Ventureburn) – “A startup called MallForAfrica connects online shoppers in Nigeria to international e-tailers in the UK, Europe and the US and takes care of the transaction from payment to delivery and, perhaps most importantly, security.”
  19. How Long Can RetailMeNot’s “SEO Empire” Survive? (Search Engine Land) – “While RetailMeNot has some name recognition it doesn’t really qualify as a brand. Most visitors to the site are searching on Google rather than visiting it directly. Its most engaged and loyal users are those of its mobile app.” RetailMeNot will survive as long as Google will let them – an SEO solution such as seen with RetailMeNot is unsustainable as Google will change their algorithm and then RetailMeNot will fall inside organic results.
  20. Payments.. global growth.. with controlled chaos (Tom Noyes) – “A brief view on what is happening in global payments growth, debit, banking and data. Why moves here are so important to banking, commerce and payments.” Noyes writes a fascinating post on payments and their impact on commerce, I wondered why Amazon was left off the list of technology companies listed..
  21. Google Licenses Room 77 Software in Mobile Travel-Booking Push (Bloomberg) – ” Google Inc. (GOOG) wants you to reserve a hotel room from your smartphone, and it’s spending money on the technology to make it happen. The biggest Internet-search company is licensing hotel-booking software from Room 77 Inc., a startup backed by Expedia Inc. (EXPE), according to a letter sent today to Room 77 shareholders that was obtained by Bloomberg News. Room 77 co-founder and Chief Technology Officer Calvin Yang and many of its engineers are joining Google, the letter said.” An absolute massive moment in terms of travel bookings via mobile – Google is clearly working on something. Licenses technology but takes all the developers from Room 77..
  22. What Alibaba’s IPO means for e-tailing in the US (The Next Web) – “Does Alibaba’s IPO mean that the Chinese e-commerce giant will conquer the US e-tailing market, challenging established players like Amazon and eBay? It’s very unlikely. On the contrary – instead of posing an immediate threat to online retailing in the US, Alibaba’s IPO could potentially benefit brands and e-tailers in North America.” Alibaba will impact US e-tailing – how? I am still thinking about that – there is a few things that will happen. A major acquisition, investment into startups and a role out of Alipay..
  23. MercadoLibre acquires two Latin American real estate sites (Dealbook) – “MercadoLibre, based in Buenos Aires and traded on the Nasdaq, will pay about $40 million in a cash transaction for 100 percent control of VMK, MercadoLibre’s chief executive, Marcos Galperin, told DealBook. About $5 million of that depends on the company meeting certain milestones, said Mr. Galperin, who was visiting São Paulo this week.” MercadoLibre is protecting their assets in Latin America – but they are clearly growing at a rate..
  24. How the Starbucks and Square payments venture ran out of steam (Geekwire) – “One of the central themes of the report is how the company has failed to generate revenue from products beyond payment processing — a world already dominated by giant incumbents and digital behemoths, like PayPal. Starbucks was supposed to a key partner in those efforts, and Howard Schultz was supposed to play a role in advising Square, as a member of the company’s board.” Why this failed is beyond me, I think the reality is that Square needed Starbucks more than what Starbucks needed Square. Square has a revenue generation problem..
  25. How Uber Plans to Beat Amazon With Bike Messengers (Wired) – “For now, Uber is still all about rides, a product that will be Uber’s undoing if it falters. If delivery doesn’t work out for now, on the other hand, no big deal. Amazon hasn’t solved that problem, either. And if delivery does work for Uber, Amazon and everyone else will have to take notice that maybe this is what same-day was waiting for: not the company that knows how to sell, but the company that knows how to move.” Uber is a potential disruptor but they still need to prove the business model for UberRush. Remember bike messengers is nothing new, yet the scale that Uber can bring to it is massive..
  26. Bazaarvoice gives up on its merger with PowerReviews (Internet Retailer) – “In response to losing an antitrust suit after buying PowerReviews—Bazaarvoice’s top competitor in online ratings and reviews—for $168.2 million in 2012, Bazaarvoice is selling that part of the business to competitor Viewpoints, it announced today. The deal, which is still subject to court approval, is expected to close this summer.” This acquisition should never have occured, I still think there is a lot more to this than what the general public is aware of..
  27. Fanatics lands One Kings Lane CEO Doug Mack (TechCrunch) – “One Kings Lane CEO Doug Mack is leaving the home goods e-commerce company. Mack will be joining sports site Fanatics as CEO.” Massive news with a lot of implications; One Kings Lane will look for a new CEO and Fanatics continues to move forward. Sheesh Michael Rubin is a powerful ecommerce executive.
  28. Ex Jumia CEO, Raphael Afaedor Launches New Ecommerce Venture (TechCabal) – “e now know what Raphael Afaedor’s has been working on since he left Jumia. After a three-month quiet period, Raphael is diving right back into the deep end of Nigerian ecommerce. This time, he’s launched an online grocery delivery service called Supermart.” Very interesting move by Afaedor but is there really such a big need for online grocery delivery in Nigeria?
  29. Amazon preparing to release smartphone (WSJ) – “Amazon.com Inc. is preparing to release a smartphone in the second half of this year, according to people briefed on the company’s plans, part of a broad push into hardware that would pit it against Apple Inc. and Samsung Electronics Co. The retailer has been demonstrating versions of the handset to developers in San Francisco and its hometown Seattle in recent weeks, these people said. People briefed on the company’s plans have been told that Amazon aims to announce the phone by the end of June and begin shipping phones by the end of September, ahead of the holiday shopping season.” Amazon unveling a phone is a rumor at best at the moment – they have to unveil the device soon as Samsung and Apple are both in replenishment cycles..
  30. 10 Reasons Why Alibaba Blows Away Amazon And EBay (Forbes) – “Alibaba will compete most directly with on-line retailers like Amazon, EBay or Zalando in Europe. Rakuten in Japan, Kobo in India, Wuaki in Spain and other major on-line providers with strong presence in their home and adjacent markets. Every major brick and mortar department store and specialty store is also operating sophisticated shopping sites offering value and fashion. It is time for a wake-up call to many on-line retailers that free delivery is not the only incentive customers demand when they shop on-line.” There is 1 major reason – scale.

A belated happy 16th birthday for Ozon in Russia.

Till Friday. Onwards.