Electric Thoughts in a Digital Era | A blog on eCommerce, Social Commerce, Marketplaces & Business

The 10 ecommerce stories for the week of 30 March 2013

Google unveils Shopping express in San Francisco, Amazon acquires Goodreads, Walmart does Lockers as well and much more.

It is April fools day which leads to a complete lack of trust in news today. Readers, my post today is what was news last week and no funny stuff. Last week was an interesting week and I think is a precursor to where the rest of the year is leading to. Google has unveiled their Shopping Express service in San Francisco and surprise surprise the first merchants listed are all retailers that have been burned by Amazon. I think this is a stake in the ground moment for ecommerce. North American ecommerce is clearly Amazon vs Google but the interesting tidbit is that Jeff Bezos was an early investor in Google. Amazon Prime is the gold standard in terms of logistics and I wonder how many millions of dollars Amazon has spent on it over the years? Yes, I think Google is now a player but they still have considerable work to do to catch up to Amazon.

Talking about Amazon, the Seattle business has acquired Goodreads for $150 million if AllthingsD has it correct. The question is why did it take so long? I think Amazon will continue to buy businesses that can compliment their Kindle ecosystem. I have a feeling that this was also done as a defensive move to ensure that none of the competitors could acquire Goodreads. I always come back to the fact that books and content is key to Amazon’s future. Readmill, you better be ready, Amazon may come knocking soon.

It seems eBay is looking more at the emerging ecommerce markets. Today’s news that they have played a role in the new round of funding in Snapdeal does not surprise me one bit. The BRICS will play a very big role in ecommerce over the coming years. I wonder how eBay is going to approach Russia as that seems their next target.

The 10 e-commerce stories for the week ending 22 March 2013

The Samwers launches a new fund, Price Comparison gets hot in South East Asia, Walmart gives us a glimpse into the future and more.

Is Rocket Internet going to be around in 5 years time? That is the question I have had on my mind for the last few weeks. Internet businesses is a funny thing, the movement in the markets can mean that irrelevance happens quickly. Groupon is a great example of this.

Thus the news that Manuel Koser is moving away from being MD of Zando is indicative of an entrepreneur who is moving on to a new venture and not one being sidestepped by investors. Rocket Internet has a recipe that works and their staff are some of the most efficient individuals I have met.

Emerging market ecommerce is a high stakes game full of risk, trust and lots of work. Will Rocket Internet IPO? As time goes on, I am leaning more towards one of their vehicles (Big Foot 1 or Big Foot 2) being made the investment opportunity.

Bigfoot I, in which Kinnevik owns 33%, was the first fund they launched and comprises
Dafiti (online shoes and fashion in Brazil), Lamoda (online shoes and fashion in Russia)
and Namshi (online shoes and fashion in the Middle East). These three companies are
built on the same platform and systems as Zalando, and Lamoda and Dafiti in particular
are performing very well. Dafiti currently has the best infrastructure and very high volumes while Lamoda has the best momentum. Bigfoot I is well funded but might need some
additional injection to fully progress with the expansion plans.

Bigfoot II, in which Kinnevik owns 34%, was the second fund they launched and
comprises The Iconic (online shoes and fashion in Australia), Zalora (online shoes and
fashion in South-East Asia) and Zando (online shoes and fashion in South Africa). This
fund is a little younger and might need some additional funding to progress with the
companies’ expansion plans.

The other story that dominated my thoughts was the sudden split between Rakuten and their joint venture partner in Indonesia. Rakuten has now done this on 2 occasions and everytime it has left a deal after 12 months. I think it is clear that Rakuten are slowly learning that joint ventures sometimes is not the best way to enter a market. Hiroshi Mikitani clearly wants a bigger slice of global ecommerce but they have to manage their market entrance strategy better.

The 10 e-commerce stories for the week ending 15 March 2013

Ma announces his successor at Alibaba, eBay says paid search has no effects, Google make plenty of changes and more.

Middle of March is normally the start of news that relates to end of quarter information. SEC filings, quarterly results and lots of press coverage is the norm. The point is we are almost done with quarter one and Alibaba did the unthinkable. Jack Ma, the founder of the biggest ecommerce business in the world has announced his successor. Jonathan Lu is to take over from Ma and his appointment I think is a very strategic one. One, he is one of a handful of Alibaba senior management who has vast knowledge of the entire operation. Also, I think his background in finance has helped him. It is clear that an Alibaba IPO is coming and he will be the person meeting with banks etc. One other thing to note, is that Alibaba has decided to appoint a local executive and not an international CEO to lead them into the future. Alibaba in my mind is going to be a threat for all ecommerce businesses in the coming years.

The article or story that dominated my thoughts was the eBay story over Paid Search ads. eBay claim that they have results to backup their conclusion that paid search is ineffective. “Overall, paid search turns out to be a very expensive way of attracting new business: The study’s authors estimate that, at least in the short-run, paid ads generate only about 25 cents in extra revenues for each dollar of ad expenditures. (For branded keyword searches, the additional revenues are close to zero” It is a fascinating read but I think a few things needs to be said. One, eBay has proved this for their own keywords and have tested their own hypothesis. I generally think that paid advertising is to be used in a controlled manner as it can lead to unsustainable growth (hello Groupon) but this raises some eyebrows in the direction of Google Adwords. Also keep in mind, that eBay has a reputation of bidding on low quality keywords which must be taken into consideration. Google answered this situation in 2012 and I must say I think we might see more of these stories in the coming 12 months. Adwords is the revenue driver for Google and they will defend it aggressively.

The Great Technology War between Giants

2012 was a year in which a bigger picture formed inside my thinking. Ecommerce is my day job and I think we are in a great period for commerce. Let us be clear about one thing, retail and ecommerce is no longer 2 channels. It is one massive opportunity for businesses and entrepreneurs to assist customers buying items whether it be online or in-store.

Mobile commerce in its current format is not the endgame in my mind. We are only scratching the surface on what mobile devices can do. Augmented reality, location and a variety of other things will play a role in commerce in the coming years.

Regular readers will be aware of my thinking regarding the big five. It is not the animals found in the game park but rather the big five technology businesses. I have written about it in the past when I looked at the Amazon effect but these companies drive the technology used by us on a daily basis.

Alibaba Names Jonathan Lu As New CEO, Replacing Founder Jack Ma

Yesterday, was a significant day in the history of Alibaba. Jack Ma announced to the world that he will be succeeded by Jonathan Lu Xaoxi. Does the new heir apparent seem to be a new unknown? I tend to think so but Lu is Ma’s choice and that speaks volumes.

Lu, is like Ma one of the few Alibaba executives that has experience and knowledge of all 25 Alibaba businesses (a brief summary of the Alibaba holdings is seen below). That is significant as he will need to manage all of these holdings after they were all realigned to be separate businesses.