Electric Thoughts in a Digital Era - Page 2 of 43 - A blog on eCommerce, Social Commerce, Marketplaces & Business

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.

The End of the Algorithm

When I started in e-commerce the algorithm was akin to a secret. It was immovable nor helpful but eas needed to be respected as it could hurt businesses.

Over the last 18 months, it has become clear that we are at the beginning of the end for the algorithm. Regulators are no longer satisfied with companies negatively impacting businesses, sellers, or customers. Self-regulation failed as platforms could grow revenues through the use of an algorithm without oversight, nor were there any consequences for anomalies that benefited one side of the platform partnerships.

Increasingly, European regulators are asking platforms and marketplaces for data and explanations of recommendation services or their algorithms that determine search results. What data is being used to calculate the location of listings (never mind relevance or accuracy), or how are recommendations being developed to drive additional consumer purchases? As artificial intelligence gains momentum and usage by platforms to drive personalization across various parts of the web, e-commerce, as we know, is likely ending. Bias, inaccuracy, and irrelevance can negatively impact platforms, consumers, and brands. Regulators want transparency to offer a level environment as competition intensifies in all e-commerce markets.

the end of the algorthim driven by Europe

Amazon To Challenge Chinese Cross-border Marketplaces

Amazon has had Chinese cross-border marketplaces such as Shein and Temu in their periphery more than what they will admit to. Chief Executive Officer Andy Jassy indirectly mentioned the companies when he referred to “cost to serve” in his annual shareholder letter. Amazon adding a dedicated discount store on its marketplace for Chinese goods that are cheaper and shipped at slower speeds enable them to play both offence and defence to competitors.

A decade ago, no marketplace would think about launching in the US, Germany, UK and emerging markets such as Brazil as in all cases a market leader exists. The four Chinese Dragons – Shein, Temu, TikTok Shop, and AliExpress are all connecting customers to Chinese manufacturers who have factories that are idle and are in need of orders to drive revenues and be able to pay salaries to staff. Cross-border e-commerce has evolved from being a niche to a direct competitor to marketplaces in global markets in offering customers access to cheap goods made in China shipped in days instead of hours to consumers.

Daydream, The Future of Commerce?

This past week felt like a blast from the past. Three funding announcements made me look twice and double-source the information to ensure it was correct. Daydream raised a $50M Seed, Waabi raised a $200M Series B, and Zepto raised a hefty $665M funding round. At a time when funding news is sparse, and check sizes are smaller, this is big news. I want to focus today on Daydream which I feel is exciting and maddening.

Daydream is trying to create a new form of personalized search. Enabling customers to experience women’s and men’s fashion in a new manner. What does that mean?

Can We Talk About Amazon Accelerators?

Over the last six months, I have spent hours and days researching Amazon accelerators. This is another sector created during the pandemic, seemingly driven by business modeling and the need to monetize the Amazon ecosystem. Does this make sense long term?

Amazon accelerators are agencies that have tried to replicate Amazon’s vendor services. They purchase products from brands at wholesale pricing and then sell them on Amazon. The brand generates revenue from purchase orders, and the accelerators then sell them on Amazon with higher margins to generate profits. What can go wrong? Simply put, a lot.

Agency meme regarding advertising content