Electric Thoughts in a Digital Era

Author: Hendrik

  • Is fab.com really that fab?

    Fab.com has been on my mind the last few weeks as I wanted to have an indepth look at the company after I wrote about the refocus in May 2013. I don’t know whether I got bitten by all the hype but the fab.com story is beginning to feel like never ending story. At the momment the fab’s story goes like this:

    Raise funding – Unveil a new feature – do Press ->  lay-off staff  – do press on the future of the company and then restart the process.

    Pre-face

    Fab.com is a business that started as a gay social network. Went nowhere and then pivoted to a flash sales business. Many iterations later and $300 plus million raised fab.com is now in a critical phase of its lifecycle. Why? The fact that they have raised hundreds of millions of dollars from investors (like Andreessen Horowitz) and for all intensive purposes have not a lot to show for it. Thus it will make raising money in future more difficult. What happened to all the raised money?

    Acquisitions

    Fab.com has been in my own opinion way too aggressive regarding acquisitions. They have acquired competitors in Europe over concerns that a investment accelerator called Rocket Internet may hinder their growth in Europe.  The businesses they acquired:

    January 2012 – FashionStake (US)
    February 2012 – Casacanda (Germany)
    June 2012 – Llustre (UK)
    November 2012 – True Sparrow (India)
    May 2013 – MassivKonzept  (Germany)

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  • eBay acquires Shutl, same old Amazon seen in quarterly results, Fab redesigns – Ecommerce stories of the week

    eBay acquires Shutl and is subject to an investigation, same old Amazon seen in quarterly results, Fab redesigns and much more.

    It was a bumper news week for the ecommerce industry. Amazon announced a second quarter in which they made a loss but their stock price increased. I have been thinking about Amazon.com in some detail and think these quarterly results is only giving the world a partial look at the Seattle based business. Amazon has increased their free shipping amount for the first time in 10 years to $35 and then in the analyst call mentioned that “millions of Prime members were added in the last quarter.” Coincidence? I think not.

    Google is increasingly using maps and local to compete with Amazon. For me the hypocrisy seen in the last few weeks regarding Hummingbird, Banner ads in Search and these new PLA managment campaigns are all designed to do one thing – make Google more money. I can honestly say – Google is no saint but their “we care about our users” line can be kept in Mountain view meetings. Anyone notice that since Marissa Mayer left all the things she stood for has been changed.

    Alibaba has not yet decided where they want to do their IPO. First it was Hong Kong, then New York and now Hong Kong is seemingly back in the good books of Alibaba management. The bigger story is that Alibaba has unveiled an investment group that will be seen in the US. I personally think Alibaba is going to hard into the US. Why? Jack Ma wants to show Amazon, eBay and other that his company is the most powerful ecommerce business in the world. He will invest in startups like ShopRunner, Fanatics and others. Alibaba will be able to invest a few billion if they want to.

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  • The ShopRunner story – and why it is important

    It is not often that an entrepreneur has a successful business twice. Most entrepreneurs have one major exit and then they  become Angel investors. While they are building their business for the second time they either take money off the table from investors or the take their companies public. Michael Rubin in my opinion is one of the most unmentioned commerce entrepreneurs there is currently. However don’t let the lack of press coverage fool you – he is a serious heavyweight from Philadelphia.

    Rubin sold his enterprise commerce business to eBay for $2.4 billion. GSI commerce as it was called then had some serious retailers as clients. eBay had a massive weakness in the enterprise space and fixed that by acquiring Magento and GSI Commerce.

    Rubin pioneered an innovative pay-for-performance business model that fueled GSI’s organic sales growth, which he then complemented in recent years with 11 strategic acquisitions. GSI became one of the largest publicly-traded Internet companies, facilitating billions of dollars of merchandise sales for its customers, with 2010 revenues of $1.4 billion and more than 5,000 employees. As part of the transaction, eBay divested certain assets to Kynetic, specifically all of GSI’s online licensed sports merchandise business (Fanatics) and 70% ownership in Rue La La and ShopRunner.

    Magento for me is the trojan horse for eBay as that business is used globally and has commerce partners in emerging markets. GSI Commerce was and still is the big success that Michael Rubin had. How he convinced eBay to spin ShopRunner, Rue La La and Fanatics into a new business (Kynetic) is worth a book. I hope Rubin decides one day to write a book..

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  • Apple appoints a new commerce chief, ebay hires a CPO – Ecommerce stories of the week

    Apple appoints a new commerce chief, Google becomes a $1000 stock, eBay hires a CPO from Apple and Alibaba is no Amazon..

    Apple is a brand trying to regain its vibrancy after the passing of their inspiration and leader Steve Jobs. However, one of the things Jobs did that gets lost in all the iDevices and rumors is the fact that Jobs understood the importance of retail. He was the only big technology CEO thinking about the long term effects of retail on his business.

    When I travel, I make a point of visiting the local Apple store if they are in the country. Why? Apple has in my opinion created the closest execution of what I believe retail will be in the next 5 years. The news that Apple has appointed Angela Ahrendts as its new chief of retail is not a surprise at all. Ahrendts brings a few things to the table for her new role. She has turned around a brand that was almost dead into a highly successful global fashion brand. She has ensured that Burberry is a dominant player in Chinese luxury retail and lets be honest, Apple has battled in the emerging markets. I agree with Greg Betinelli that Ahrendts is going to have her hands full as Apple is a completely different challenge in comparison to Burberry.

    Google had their earnings call this week and they had a massive quarter. Wall Street loved them and then the stock became a $1000. I suspect that in the next 12 months that will increase to anything in the range of $1250 – $1500.(Please note I do not own Google stock nor is this to be seen as financial advice).

    Why? Google Shopping will have a massive 4th quarter as PLA’s will make a lot of revenue. Secondly, they are now beginning to show their hand related to commerce. Local is where they are going to be focusing on.  The local reviews and “City experts” is all about another data point for the Mountain view behemoth. Yelp is officially been placed on notice..  Google is now going to flex its commerce muscles – first by adding data to their Trusted stores program “when consumers roll over the Trusted Stores badges on e-commerce sites—the badges are typically found in the bottom corners of the sites—they will see performance data from StellaService.” They will also be adding (depending on user settings) customer images and reviews to ads.

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  • The Secrets of Bezos, ShopRunner gets funding from Alibaba – Ecommerce stories of the week

    The Secrets of Bezos, Shoprunner gets funding from Alibaba, Flipkart raises more capital, Google being investigated in Brazil and Zulily wants to IPO

    Readers – don’t stress this is the 10 ecommerce stories for the week of 10 October just with some changes. Moving forward the week ending post will contain the headline stories in the title as the old title was not doing it for me.

    We had a bumper week of ecommerce news – Amazon’s secret sauce got into the public eye for the first time. I for one cannot wait for Brad Stone’s book on Amazon. I have a feeling it will become mandatory reading for any ecommerce executive who wants to understand Amazon’s business. I read One Click – the last book on Amazon and felt it was a regurgitation of known news. I think anyone could have guessed that the difference maker at Amazon is its founder Jeff P Bezos. There are 3 people in the ecommerce industry that I view in the same sentence as Bezos – obviously Bezos as the father of ecommerce, Jack Ma from Alibaba whom created a juggernaut. Lastly, the chairman of Naspers Koos Bekker is also in this conversation. All 3 are visionaries, skate where the puck is going to be and speak very seldom to the press. When the speak to the press they always mention the core of their business as the driver of their thinking.  I will be tackling this topic in some more depth in the coming months..

    The Story of the week for me is ShopRunner raising $200 million which was lead by Alibaba. It is becoming clear that same day / 2 day shipping business is now where every ecommerce business in North America wants to be in. Amazon started the arms race but ShopRunner is a big story. Why? One – Alibaba leading the round of an potential bolt on is new (I think we will see this occurring a bit more until Alibaba does their IPO). Secondly, ShopRunner is part of the Kynetic stable which is a business I keep reading about. Kynetic was formed by Michael Rubin when eBay acquired GSI commerce and then they spun Fanatics, ShopRunner and Rue La La off into a new entity (Kynetic). ShopRunner is lead by Scott Thompson who was Yahoo!’s CEO until his qualifications got questions. Thompson is playing coy about what the funding will be used for but I think it could be a variety of things (international, additional partners etc).

    Flipkart raised an additional $160 million for logistics and investment into payments and ebooks. I have seen this before and the Flipkart story is a beginning to a long journey. A few things stood out for me – only one existing investor took part in this round (Tiger Global Management) and that the round in total was $360 million. That makes the total investment into Flipkart a giant $550 million.

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