Electric Thoughts in a Digital Era

Category: eCommerce

  • Q4 – What Is Next?

    Over the last two weeks, I have been seeing signals that make me concerned about the next twelve months. As someone who has looked at patterns for a large part of my career, these signals individually can be seen as news, but combined, they highlight a challenging year ahead. What happens in Q4 and in 2025?

    What am I seeing? I am seeing customer spending patterns change worldwide and large incumbents laying off staff. These incumbents are large-cap companies that rarely do layoffs, which tells me companies see a problematic financial time ahead. Yes, in most cases, these companies overhired but laying off 1000 or more people is about cost savings or shuttering businesses. Is this an early sign of the artificial intelligence impacting employment? I think not.

    Source: Cheezburger

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  • Walmart Sells Its Entire JD.com Stake – Implications

    Over the past week, I have been thinking about Walmart selling its entire JD.com stake unexpectedly. The implications of this decision have not been described adequately, nor have the future impact been discussed. What are the consequences for both Walmart and JD.com?

    This story started in 2011 when Walmart made an undisclosed minority investment in Yihaodian. In 2015, Walmart acquired the remaining shares in the e-commerce platform Yihaodian for an undisclosed amount. It is important to note that in June 2015, the Chinese government started allowing total foreign ownership of some e-commerce businesses. This decision was to encourage foreign investment and competition in the e-commerce sector. In 2016, Walmart sold Yihaodian to JD.com and acquired 5% of JD.com stock at a valuation of $1.5B. The company also started a strategic partnership with JD.com.

    The strategic partnership included:

    • JD.com will acquire the Yihaodian marketplace platform assets, including the brand, website, and app. At the same time, Walmart will continue to operate the Yihaodian direct sales business and sell products in the marketplace.
    • Sam’s Club China plans to open a flagship store on JD.com, expanding its high-quality imported products availability in China, offering same- and next-day delivery through JD.com’s nationwide warehousing network.
    • Walmart and JD.com are partnering to enhance product selection across China by leveraging their supply chains and expanding the range of imported products.
    • Walmart will be listed as a preferred retailer on JD.com‘s O2O JV Dada, boosting online traffic and allowing customers to order fresh food and items for 2-hour home delivery while maintaining its physical stores.

    Source: Walmart

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  • Making Sense of Qoo10’s Demise

    I started researching Qoo10 six months ago as I had not heard of the company. A Singapore-based marketplace operator who acquired Wish for $173M. When I think of South Korea, I think about the market leader Coupang, who acquired Farfetch in a market that contains some of the most sophisticated consumers in the world. I believe only Chinese consumers are more sophisticated than those in South Korea.

    Years earlier, I heard about Gmarket, which eBay acquired in 2009 for $1.2B. Gmarket was one if not the most important assets eBay acquired to grow its international business. Gmarket was one of the companies I heard of behind closed doors. In 2021, eBay changed its global philosophy and started selling assets to exclusively focus on its most important assets. eBay sold a majority stake in its Korean business to Emart for $3.6B in 2021. eBay retained a 19.99% holding of its Korean companies, including G-Market, IAC, and G-9.

    Source: Emart

    I mention Gmarket and its demise from market leadership to being another competitor to Coupang as an example of how quickly a market changes due to mergers and acquisitions activity happening.

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  • The Battle Between Amazon and Temu

    The Battle Between Amazon and Temu

    Over the last few weeks, I have been thinking about the battle between Amazon and Temu in multiple e-commerce markets. Who is winning, and when will this end? This will not end like Wish, as Temu has access to much more capital than Wish ever had. The question should be, how does this battle between two horizontal marketplaces end?

    In multiple markets, such as South Korea and China, consumer-to-manufacturer (C2M) marketplaces take market share away from dominant horizontal marketplaces. What is this all about? Which horizontal marketplace can offer Chinese factories/manufacturers access to consumers who want to purchase their goods?

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  • The Fundamental Stay The Essential

    AlleyCorp General Partner Marshall Porter wrote Retail Tech: The Biggest Retail Problems Remain The Biggest Retail Problems, which got me thinking. Is it a lack of understanding of what the fundamentals of e-commerce are? E-commerce in its most fundamental state is a logistics system that is driven by marketing and financial analytics. Why are entrepreneurs and startups not interested in solving the cost part of profit and loss statements? Is it a lack of interest by venture capital investors to fund these companies, or does it lack domain expertise from founders who can generate 10x returns on these opportunities?

    I do a fair amount of due diligence and in 2024 it has been mostly artificial intelligence companies trying to solve problems in a new manner. I understand that AI is the latest hype wave that has entrepreneurs and investors looking to cash in on and not miss out on. That said in retail and e-commerce has tangible opportunities that require technology to create new solutions for. Brands are in pain and do not have the correct tools available to them to solve inventory planning, logistics, and returns.

    fundamentals as explained by The Joker
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