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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Amazon interested in Europe, WeChat disrupts the shopping experience, Netshoes builds a mobile empire, Fab downsizes their New York operation and much more.

The first week of October is in the record books and it contained a lot of ecommerce news. In weeks gone by, I have had time to think and it is pretty clear ecommerce is now a global business. The competition might no longer be corner store but rather a very large venture backed business that can influence your customers . I have a suspicion that the visitors to this past weeks Shop.org Annual Summit was more international than in years past. (For the record, that is one event I still want to attend..).

If I look into the news of the past week – then it is pretty clear that mobile and logistics is the new differentiators. Mobile is still the one part of ecommerce that is still in its infancy (yes, I know it is important) but best practices etc is still very much kept inside businesses. Logistics on the other hand is the reason why venture capital and investors are putting their Dollars / Euros for the long haul ROI. Take the news that Amazon is looking at Distribution centres in the Czech Republic and Poland. Is that a reaction to the labour issues the business has faced in Germany or a case of getting closer to their customers? I tend to think it is a bit of both.

Netshoes is arguably one of the biggest ecommerce businesses in Latin America. Generally, there are few times in the year in which businesses like Netshoes provide detail. I found their mobile business as discussed at Shop.org interesting. Why? They are firmly aware of when users use their mobile app (hello football broadcasts) and have done specific features to leverage their own catalog. Geo-location and mobile remarketing via a partnership with Google. I have a feeling we are going to see businesses doing a lot of predictive analysis and personalisation to bolster their mobile products.

Well, Fab.com has laid of 101 of their staff members. They have since beginning of the year downsized their operation by 37%. AllThingsD had an article over the downsizing due to a bad bet over flash sales. I dont particularly agree with that as being the cause for their retrenchments nor is the answer a faster road to profitability. I am not going to go in detail as I am going to write a post on it as soon as this weekly recap is done.
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Amazon powers ebook market in Japan, Rakuten acquires Viki, eBay acquires decide.com and much more..

I have had a busy September thus far – travelled to an undisclosed location, thinking about some ecommerce related posts and digesting all the ecommerce news that is hitting my inbox and RSS feeds. Thus you are not seeing things – I am writing catch-up posts that should have been written earlier in September.

Rakuten must feel like they can’t win. They are the dominant ecommerce business in Japan and they have expanded to other markets (UK, Germany and Brazil) but in most cases they end up against one business Amazon.com. Amazon has also not been shy in competing in Rakuten’s backyard and cleaning out certain verticals. I must confess I read Marketplace 3.0 written by the CEO of Rakuten and am left unsure whether Rakuten has the foresight to be able to compete against Amazon, Alibaba and others. Rakuten has also bought business to equip itself against competitors (Kobo etc) but in the greater scheme of things are these businesses scalable to compete against the heavyweights?

Rakuten acquired Viki which can be seen as an entry into the streaming of digital content and also will play a great role in validating Singapore’s startup community. I have a feeling we are going to be seeing a lot more startups being acquired out of Singapore.

On a sad note – one of my favorite ecommerce businesses will be shutting down at the end of September. Decide.com has been acquired by eBay and will be used in the seller side of the marketplace. I cant help but notice the irony in eBay acquiring a Seattle company to beef up its marketplace business. Decide.com I believe is going to be seen as a mark in the sand as I don’t think this is the last time we will see machine learning and data orientated ecommerce startups flying below the radar. eBay is essentially doing a acquihire of some of the smartest people in ecommerce. eBay will need to ensure that they leverage the decide.com IP as they will add massive value to eBay sellers tools in order to price better etc.

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Flipkart shelves plans for IPO, eBay has 6 hour downtime, Why Tencent invested in Fab.com, market intelligence / stats for Latin America, China, Japan and South East Asia.

We have entered the last quarter of 2013 ( where did the year go?) and certain story lines have begun to develop. Chinese ecommerce is now in full on battle mode. Alibaba and Tencent have been at odds with one another but this week JD.com revoked the payment options from both Alibaba, Tencent and others. It is pretty clear that market leadership is not up for grabs but a turf war is on. Payments, merchant communication and infrastructure are all being fought between the different companies. (I suspect that the winners will be Alibaba and Tencent as JD.com’s money will run out sometime).

eBay had some issues this week – they were down for 6 hours; no formal announcement has been made as to the reasons for the downtime but we are in the revenue generation part of the year. Operational ecommerce staff are getting ready for festive and all of its challenges. eBay have their work cut out – they are facing the ecommerce Gorilla in the room (Amazon) in the US so these issues are to be at a minimum.

Flipkart has been busy. They raised money ($200 million) from investors and are now steadily adding revenue generation opportunities to their business. A payments business plus a partnership with self-publishing business are all in progress. India is a tricky market filled with government regulation which makes foreign investment an interesting exercise but the large population has everyone interested in the market.

Amazon is increasingly showing their international strategy. Why? Well, every developing nation they have entered have been via their Kindle Store. Mexico joined Brazil, Russia and India in having an ebook store. Mexico is going to be interesting to keep an eye on as it is one of the fastest growing emerging markets. The past week also provided an article that highlights the size of Amazon’s business in the US. It is massive and has the potential to become even bigger.

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Amazon invests $13 Billion into warehouses, Bing sunset Bing Shopping, VANCL raises its 7th round of funding and much more.

The last week made me realise something (nothing profound) and that is that ecommerce is now global. It is done primarily via 2 models – either take a recognizable name and open businesses across the globe ( Amazon and Rakuten) or invest into businesses in multiple regions (MIH / Naspers, Rocket Internet and Tiger Global). The point is that the Internet has provided an opportunity for entrepreneurs to sell pretty much anything online. (For those interested, this past week – I had a delivery from Japan, the US and 3 originating in South Africa). I cant think of any other business that has that kind of opportunity for entrepreneurs and executives to create meaningful businesses.

Jeff Bezos is a clever man. Long time readers will be aware that I consider him the standard for ecommerce executives. However, Bezos is increasingly having to face challenges from multiple angles. One, I think retail businesses have now realised in the US that they need to be aware of the threat that Amazon possesses. That is nothing new but the considerable advantages that Amazon had over traditional retail is slowly becoming less. The marketplace act will ensure that tax is now collected in every state. I find it very interesting how everyone thinks this is a problem from Amazon – Bezos is already on the way to make that into a benefit for Amazon. How? He has invested heavily into distribution centers. I think we can safely assume that Bezos has already planned for any eventually. One – he is making his competitors ( hello Walmart, eBay and Rakuten) spend heavily. Secondly – one thing we all forget is that Amazon has become a habit and one click buying is easy to do. Why does everyone still question whether Amazon will be around in 5 years time? I think I am going to answer that in another post soon.

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