Amazon vs Hachette, Alibaba updated IPO prospectus

I have been ill and thus am still catching up on reading all the stories that have happened in the ecommerce industry over the last week. There are 2 major stories that has my attention at the moment – Amazon is currently in tough negotiations with Hachette and Warner Brothers. Secondly, Alibaba has updated their IPO prospectus after the initial draft was deemed lacking of detail (critical detail I might add).

I wrote in 2012 that Amazon is potentially its biggest competitor and the happenings of the last 2 weeks have reinforced my belief that Amazon needs to be careful regarding supplier negotiation. Hachette’s books not being in search results or having buy buttons on their product pages only affect one company – Amazon. Remember that Amazon is the starting point for users looking to purchase products and if the products are not available, users will leave the Seattle based based and head off to Walmart, Google Shopping. What complicates this situation is that Amazon is the largest seller of books in the US (I would not be surprised if it was the same for DVD’s etc). Clearly there is more this story but Amazon is having to play defence at a time in which ecommerce is changing due to a Chinese behemoth…

Alibaba on the other hand have filed an updated IPO filing with additional details such as key partners and more details about their 2 marketplaces (Tmall and Taobao). I find the timing of the unveiling of 11main also very interesting – it feels to me like it is almost a research and development business that will lead to a bigger acquisition. Alibaba is going to be controversial – the partnership structure as well as how the business is structured is going to pose questions for would be investors. As I said and keep saying – this will change ecommerce as an industry unlike any other IPO.

The news that caught my attention for the last 2 weeks:

EBay Makes Latin America Push with Local Languages, Currencies (WSJ) – “E-commerce giant eBay is betting on Latin America’s fast-growing Internet use and adoption of online shopping by adding sites in local languages and currencies to boost its presence in the region.EBay last week launched sites in Spanish for 18 Latin American countries, and Portuguese for Brazil. Before that, eBay users in the region were directed to a site in English, priced in dollars.”
The online Apple Store’s humble beginnings (Ken Segall) – “By today’s standards, that insert was pretty tame. The first online Apple Store was but a shadow of what it was to become. But it’s safe to say that, even before there was an iMac, the Apple revival was well under way.”
Flipkart set to raise $500 mn from DST Global; could be the biggest deal so far (Economic Times) – “Even before the ink has dried on its deal to buy online fashion retailer Myntra, Flipkart is plotting its next phase of growth by raising a new round of funding that could be its biggest so far. Russian investment firm DST Global will pump in about $200 million (over Rs1,200 crore) into the Bangalore-based online retailer, according to two people with direct knowledge of the negotiations. The final deal size could be as much as $500 million (almost Rs3,000 crore), the sources said on condition of anonymity.”
It Seems a Matter of When, Not If, Etsy Will Go Public (Ecommerce bytes) – “Going public is a favorite exit strategy for investors to get a return on their investment – and investors do want an eventual payoff. Etsy investors include Burda, Accel Partners and Index Ventures in addition to Union Square Ventures. When Etsy raised $40 million in funding in 2012, the deal was rumored to value Etsy at more than $600 million.”
Lazada launches in Singapore with a new site and logo (TechinAsia) – “Lazada extended its footprint in Southeast Asia today as it officially launched in Singapre. At a media event held late this morning, co-founder and managing director Martell Hardenberg unveiled the new company’s new localized site, Lazada.sg.”
JD.com Has been Added onto WeChat as the Shopping Channel (Technode) – “JD.com, the leading Chinese online retailer that recently went public on the NASDAQ and Tencent has a stake in, has been added onto WeChat (aka Weixin) as the “Shopping” channel under the tab of Explore (not official translation) — above the Game channel, and Mobile QQ, the mobile version of Tencent’s flagship instant messaging product QQ.”
Chasing the Latin American retail consumer- the story of MercadoLibre (CNBC) – “Founded in 1999 by CEO Marcos Galperin, who wrote the business plan for the company while working on his MBA at Stanford University, the e-commerce site went public in 2007 in a $400 million offering. It is now the largest e-commerce site in Latin America, holding a 25 percent market share.” Fascinating read on a large regional powerhouse.
Takealot’s Kim Reid talks new millions, expansion and the future of ecommerce (Ventureburn) – “There’s potential right through the continent. The naysayers of ecommerce I find very strange. If you have a look at South Africa, the retail market right now is in excess of R550-billion. The penetration of online commerce of total retail is anything between less than 1% and slightly over 1% of that. Now, if you look at developed markets like the States and Europe — the UK is predicted to go to 23% of retail in 2016. The US is looking at anything between 14 and 15%. India is growing like anything at the moment on the ecommerce side.”
Alibaba to sink $250M into SingPost, Singapore’s postal service, in an effort to clinch Southeast Asia (TechinAsia) – ” Chinese ecommerce giant Alibaba announced today that it has purchased a 10 percent stake in SingPost, Singapore’s national postal service, for S$312.5 million (about US$250 million). The two companies have also signed a “memorandum of understanding” that will allow them to enter further discussions over the formation a joint venture.”
Online Shopping in Russia Grew By 25% in 2013 (The Moscow Times) – “Russian Internet stores sold $15 billion worth of goods and services last year — 25 percent more than in 2012, an Internet research company said. The total value of material goods traded on the Internet was $10 billion last year, while sales of digital goods and tickets made up the remaining $5 billion, said Boris Ovchinnikov, the founder of Data Insight, Itar-Tass reported Wednesday. “
South Korea’s version of Amazon gets US$100M funding (e27) – “South Korea doesn’t need an online “everything” retail store like Amazon; it’s got its own in the form of Coupang. The online service is now US$100 million richer, thanks to a round of financing courtesy of venture company Sequoia Capital.“
Amazon launches clothing store in Spain (EcommerceNews.EU) – “Inditex gets some serious competition, now Amazon has opened an online clothing store in Spain. It offers a 700,000-item catalogue featuring 2,000 labels. It’s the fourth online clothing store Amazon opens in Europe, after the United Kingdom, Germany and France got their own Amazon clothing stores.”
Germany’s Samwer brothers are said to prepare to take Rocket Internet, their Web incubator, public (BloombergTech) – “Rocket Internet GmbH, the online startup investor founded by Germany’s Samwer brothers, is planning an initial public offering that may value the company at more than 3 billion euros ($4 billion), according to two people familiar with the situation.”
Flipkart Leads India’s e-Commerce Market, Acquires Myntra (Srimana Mitra) – “Analysts believe that the acquisition will not only help Flipkart expand presence in the fashion segment, but also compete with giants like Amazon and eBay. Amazon is pushing their presence in the Indian market by expanding advertising, product categories, and services like next day delivery.”
eBay Invades Mercadolibre’s Home Turf (The Motley Fool) – “Mercadolibre, which is an e-commerce and payments site fashioned in the image of the much larger eBay (NASDAQ: EBAY), has been hammered during the past six months as currency devaluations in key markets, including Venezuela and Argentina, have threatened to undermine Mercadolibre’s broader growth story. These fears may ultimately prove shortsighted, but they certainly aren’t the only risks facing Mercadolibre. In fact, online auction kingpin eBay also appears to have its sites set on Mercadolibres backyard, as well.”
The Amazon of Russia Is Building Its Own UPS; While Battling the Black Market (Wired) – “The end result is that OZON now has a hold on Russia that Amazon doesn’t. In solving problems Amazon never faced, OZON is among a growing list of companies that are using their home-field advantage to shut Amazon out of some of the world’s fastest-growing markets. As with mobile devices and everything associated with them, the biggest opportunities in online retail lie in countries where the full menu of 21st-century digital options are just coming to billions of people. But seizing these opportunities isn’t as simple as Amazon importing its model and flipping a switch.”
To watch Alibaba and Amazon battle for online shoppers, keep an eye on Malaysia (Quartz) – “Take Malaysia, a country with a fast-growing middle class with access to the internet. The country’s consumers are facing higher living costs, which makes it a perfect microcosm of the cost-conscious, plugged-in consumers that Alibaba and Amazon desire.“
Alibaba and China’s Shipping Problem (BusinessWeek) – “Big international carriers such as UPS and FedEx are niche players, hampered by government policies that limit their range. “It’s very, very competitive, very rate-driven, and on-time delivery, until not that long ago, was a problem for many of the shippers,” says Cathy Roberson, an analyst at Transport Intelligence. “You’ve got lots of mom-and-pop companies.””
Google is enlisting major shippers to expand delivery service (WSJ) – “Google Shopping Express said Tuesday it will expand its overnight-delivery service in coming months across northern California so that it will stretch from the Oregon border to Fresno, roughly 400 miles to the south. Google said it is working with “major shipping carriers” to fulfill the orders, which can be placed by 7 pm for delivery the following day.”
Online sales in Europe will grow to €233.9bn by 2018 (EcommerceNews.EU) – “Ecommerce sales in Europe are expected to grow with a compound annual growth rate of 12% from 2013 to 2018. This will result in an online retail market that’s worth 233.9 billion euros by 2018. This predicted growth will be mostly because of more sales happening via mobile devices like smartphones and tablets.”
Turkey’s booming e-commerce outruns major players (The Daily Sabah) – “Turkey has become third in the world in using mobile devices for e-commerce, leaving Russian, Chinese and U.S. markets behind, the country’s bankcards body has claimed. Six percent of Turkey’s online shoppers used their mobile devices for their purchases in 2014, a rate which brings Turkey to the third in the world after England and Germany.”
SA e-commerce on cusp of boom? (TechCentral) – “Does Takealot’s mega deal mean e-commerce in South Africa is on the cusp of a boom? In short, the experts say the answer is a qualified “yes”. Although there have been several notable e-retail failures in recent years, demand is growing strongly — and this is leading not only to big investments by established players but also the emergence of many start-ups hoping to cash in.”
Shopping gets snappier in iOS 8 with Safari credit card scanning (Venturebeat) – “The updated version of Safari will enable Apple gadget owners to input credit card data by snapping a photo of their card, reports 9to5Mac. When folks using iOS 8 go to enter credit card info into Safari, an option will appear to “Scan Credit Card,” which will prompt them to position their card inside a frame and snap a photo with the built-in camera.”
JD.Com Spurs eCommerce Rally on Mobile Revenue Outlook (Wechat channel leads to 8x increase in sales) (Bloomberg) – ““JD.com’s sales data is proof that popular social media platforms like WeChat can indeed help e-commerce companies make money,” Henry Guo, an analyst at JG Capital, said by phone from San Francisco. “Online shopping is really hot in China, so companies like JD.com, Jumei, etc. are doing well as they are dominant players in certain segments.” “
R-Mart: Ghana’s Largest Online Shopping Mall ( The mind of Malaka) – “The linchpin of Roger’s business model is and has always security, which is how RMart distinguishes itself from Ghana’s other mega-online merchandizer, Tonaton.com. Whereas Tonaton (which literally translates as “buy and sell”) is an online classified platform that models itself more along the lines of an Ebay or Craigslist, where individuals can buy and sell used products or excess merchandise, R-Mart exclusively serves as a platform to purchase from vendors who have been verified by Ghana’s Registrar-General.”
Five Global Marketplaces All Brands Must Know (Forrester Research) – “Global online expansion is not the same game it was just a few years ago. Today companies are taking a multi-pronged approach to international expansion and looking at a variety of different ways to tap into online shoppers in different markets. One approach that has been gaining momentum is the use of global marketplaces.”
Amazon expands middleman role in latest online payments push (Reuters) – “Amazon.com Inc will start managing subscription payments for start-ups and other companies – the latest in a series of quiet moves the e-commerce giant has made into PayPal’s turf over the past year. The service, which launches on Monday, allows the company’s more than 240 million active users to use credit card details stored on Amazon.com to pay for services such as a monthly phone bill or a digital music subscription. Amazon then charges a fee on each transaction.”
Wal-Mart Expects 30% Rise In Its E-Commerce Revenues This Year (Trefis) – “Despite this hefty growth, the e-commerce channel hasn’t had a noticeable impact on the retailer’s results as it accounts for less than 3% of Wal-Mart’s overall sales. Even as the retailer witnessed double-digit growth in e-commerce revenues in Q1 fiscal 2015, the channel contributed just 30 basis points to its U.S. comparable sales. Nevertheless, e-commerce is one of the two most important growth channels (other being smaller format stores) for the company that are likely to play a crucial role in the long run. In a recent shareholder meeting, Wal-Mart stated that its e-commerce revenues are likely to increase to $13 billion this year from $10 billion in fiscal 2014.”
No SEO, No Paid Search – So What the Heck IS eBay’s Search Strategy? (Wordstream) – “This is not really new news; we heard about the preliminary results last year, and pretty much everyone in search marketing had a good hearty laugh – because eBay has long been known for its embarrassingly crappy ad strategy. The study is done now, and while it’s not completely terrible, it’s definitely misleading, as well as confusing in terms of what this says about eBay’s marketing strategy.”
Google Testing Product Carousel for Search (CPC Strategy) – “Google has been leveraging its Carousel and knowledge graph for some time to allow searchers to get access to more information within search- without the need to click out to external pages. Today, our search team spotted a continuation of Google search test for Product Ads within the Knowledge Graph Carousel.“
The mCommerce Opportunity: Why Mobile Enabled Commerce Will Yield the Next $100B Startup (Trinity Ventures) – “For entrepreneurs eager to capitalize on the mCommerce opportunity, the first step is to understand the lay of the land. The mCommerce ecosystem falls into six primary categories: Mobile Payments, Retail Enablement, Mobile Retail, Marketplaces, On-Demand Services, and App-Based Services.” A fantastic read on the next commerce “unicorn”.
eBay’s local delivery plans unravel: eBay Now may shut down (Venturebeat) – ” Two years after launching its local delivery service eBay Now, eBay plans to shut it down, a VentureBeat source claims. Born out of the $75 million acquisition of Milo, eBay’s local team launched eBay Now in 2012 alongside competing same-day services like WunWun and Postmates. The race to conquer local delivery is red-hot — recent entrants include none other than Google and Uber – but despite eBay’s head start, the company may ultimately sit this one out.”
Amazon Said To Start Selling Babysitting And Other Home Services Later This Year (TechCrunch) – “Amazon wants to be your one-stop shop for everything – including trades and services, according to a new report by Reuters. The company is looking at debuting sales of things like babysitting, handymen services, painters, haircuts, home repair and more. The move would extend Amazon’s range of competitors to sites like Angie’s List and Craigslist.”
Online Shopping’s Hottest Product: Free Shipping (WSJ) – ““I think the key thing that we see is that the cost of delivery still trumps the timing of the delivery. As long as it’s cheap and hopefully free, people are willing to wait for those deliveries,” says Bala Ganesh, UPS’s retail director.”
‘Uber for logistics’ is already happening in Asia, and Uber is getting left behind (TechinAsia) – “In Asia, however, where the logistics industry remains less sophisticated than that of the US, “Uber for logistics” is already happening. Moreover, the companies offering logistics-on-demand face a market size that likely far exceeds the market for late-night fried chicken. By shunning fancy black cars in favor of no-frills white vans and trucks, Hong Kong’s Easyvan and Gogovan have beat Uber to the punch.
Andreessen Horowitz bets $44M on Instacart (Venturebeat) – “To monetize, Instacart sets its own prices for goods — a decision that recently resulted in a cease and desist order from a key supplier, Trader Joes, a source familiar with the matter claims. That system quietly inserts additional fees and often pushes the price of goods above other competing services.”
Dubai’s Aramex acquires Australian courier service (Arabian Supply Chain) – “Aramex, the Dubai-based logistics and transportation solutions provider, today announced its acquisition of Mail Call Couriers, a courier service in metro express deliveries in Australia. The new acquisition strengthens Aramex’s Asia-Pacific proposition and provides Aramex with important, technology-driven delivery capabilities in Australia, Aramex said in a statement.”

Onwards. Till next week.