Electric Thoughts in a Digital Era

Author: Hendrik

  • Amazon doing an FBA pilot

    Earlier today a reader contacted me with some very interesting information on a pilot that Amazon is testing currently. The contents of the communicated has been redacted to protect the identity of the source but a few things are clear to me.

    One – Prime is becoming more important for Amazon to combat the impact that Google will have on their business and bottom line. Being able to provide a standard Amazon experience to all shoppers and then leverage Prime to enable more transactions just highlight just how valuable Prime is for the Seattle company. Amazon Prime is the worlds greatest loyalty program.

    When Bezos and co create a revenue generation opportunity via a new investment or feature it is to be leveraged multiple times to recoup that investment. This very factor makes me realise just how far Amazon is in front of their competition. Think of it as Lean Startup meets Walmart.

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  • The 10 ecommerce stories for the week of 19 July 2013

    PLA’s are a direct threat to Amazon, Wayfair to make a billion in revenue by year end, Shopzilla buying Zappli and moving their advertising network across the Atlantic.

    Google posted their results this past week and it was reasonable to say the least. However, a few things stood out – Product Listing Ads is now a big revenue driver (not surprising) and it is clear that the move to optimised Adwords ala PLA’s is aimed at Amazon. The other thing that is becoming also more visible is that Google has a mobile problem in terms of revenue. Google is clearly concerned over the impact that Amazon has in ecommerce thus PLA’s are being used as an offense against the Seattle giant.  They have been testing a few things the last few weeks but while mobile is a revenue concern companies have an opportunity to compete with Google.

    The most interesting story for me this past week is Shopzilla. This company is in my view the most forward thinking regarding comparison shopping. First, they acquire a mobile commerce business called Zappli which has lead to talent getting bigger roles inside Shopzilla. On a side note here, I wondered why Jody Mulkey left Shopzilla for Ticketmaster and it now makes sense. His position has since been taken by a Zappli executive. Secondly, Shopzilla moving their advertising business to Europe is also indicative of a company trying to leverage their assets in markets that are not as competitive as those seen in the US.

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  • Thoughts on SA e-commerce

    I have had 2 articles on my mind that has lead to a few thoughts on the state of South African ecommerce. Paul Galatis wrote a very interesting analysis on why ecommerce in our country is lagging and then Andrew Lynch asked out loud what is wrong with ecommerce in South Africa? Paul and Andrew are both entrepreneurs in the ecommerce space in South Africa thus the articles hit home for me and it lead to this post.

    Paul mentions that the reason why we are behind is not due to the normal factors mentioned in conversations over coffee etc. Instead, it is due to retailers not paying enough to ecommerce and thus not executing it to the masses.

    We’ve all heard the arguments and many of us have used them repeatedly: South Africans are nervous to use their credit cards online; internet speeds are slow; the postal service is unreliable; we don’t trust that our orders will actually arrive; we still want to touch and feel products before we buy them; and that South Africans shop differently to people in the rest of the world. I used to tell that story but now I have a different idea.

    I have been in the ecommerce space for close to 5 years and can unequivocally state that the industry has moved forward. There are many more ecommerce businesses in the country now that what was the norm back in the early 2000’s. The growth is seen in the fact that almost every retail category (home goods, electronics, pharmacy, clothing, wine etc) are now represented by an online business that competes with the physical retailer we all are accustomed to visit. Payment gateways have doubled in providing prospective entrepreneurs with options to process credit cards. So, what is the matter and why are we always asking about the state of the ecommerce industry?

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  • The 10 ecommerce stories for the week of 30 June 2013

    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.

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  • Amazon goes grocery shopping outside Seattle

    Jeff Bezos must be the pied piper of commerce. His creation Amazon is slowly moving out of its traditional market (online) and disrupting retail. He clearly wants to ensure that Amazon can supply any product to any shopper in the US. (International focus is to intensify in the next 5 years in my opinion as current countries of operation become saturated)

    The onslaught into retail and the high street started with the Amazon Price Check app. The idea was to enable shoppers to scan and compare products and then buy through Amazon at a discount.  In this specific case Bezos used the shopper as an intelligence network that would enable Amazon to create pricing data for retailer product.  It is telling that this happened in 2011 and if one looks back it was the beginning of their challenge to retailers in the US.

    On Dec. 10, Amazon promoted a new “Price Check” mobile phone app by offering shoppers a 5% discount—valid only for that one day—on items they found in brick-and-mortar stores, but purchased online through Amazon instead. The app enables in-store shoppers to scan or snap a photo of a product. It then immediately compares prices with Amazon’s. The app is prompting an outcry from small retailers, who say the site is using their independent stores as its own showroom.

    “The goal of the Price Check app is to make it as easy as possible for customers to access product information, pricing information, and customer reviews, just as they would on the Web, while shopping in a major retail chain store,” he said.

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