Electric Thoughts in a Digital Era

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  • The 10 ecommerce stories for the week of 9 August 2013

    Assessing Zimbabwe’s readiness for eCommerce, Google launches a vehicle insurance comparison service, The battle in China between Tencent and Alibaba is on and much more.

    It is Wednesday and if I look back in the last week on my twitterfeed, RSS reader (yes – it is not dead) and by all the email I read then I can categorically say we are in for a very interesting 12 months ahead. In China, the 2 super powers are beginning to battle one another. Alibaba in my mind is a company that scares me (I have a long post coming on the East’s ecommerce powerhouse) it has scale, has 2 dominant platforms (Taobao and TMall) and increasingly is showing their intentions. Their biggest direct competitor Tencent is the social powerhouse that has most of China on their networks. They have a trojan horse called WeChat I think is going to be a big deal. Tencent wants to play in ecommerce but Alibaba is ensuring that their walled garden is protected. Alibaba blocking WeChat is a big deal and I think is a sign that we are going to see these businesses spend millions of dollars to disrupt one another.

    In the US – last week was literally the Jeff Bezos show. There was so much news that I wrote a separate post on it. Did anyone notice the timing of this PR fest? Suddenly all the negativity in Germany regarding labour relations is no longer front of mind. I personally think that Bezos is leveraging something that he can control. He speaks seldomly to the press and does a good job of repeating the trusted customer focus gospel. AmazonFresh is Bezos going after retail and creating a defensible against any competitor (Walmart, Google and the rest). Amazon and Alibaba are the same in my mind – they have the potential to shut businesses down.

    In South Africa, there is a battle looming between the banking sector and ecommerce businesses. The biggest loser is the ecommerce industry. I am all for secure payments but surely the process should not have a negative effect on transactions and the ability to complete them. This is one of the reasons I think mobile has another potential impact on ecommerce – being able to act as a digital pass to allow transactions.

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  • The week in News for Amazon (AMZN)

    The week that ended was one that had the entire digital industry looking at a Seattle, Washington company. Amazon and its founder Jeff Bezos had quite a bit of ink, pixels devoted to them. There is such a lot to think about, it kinda lead to one post on the topic (The 10 stories post is going to be written as soon as this is done).

    Washington Post

    When I read about Bezos selling his stock, my attention got diverted into “I wonder what Bezos has in mind..” and then I got busy at work. When Bezos sells stock (which generally occurs very seldomly) generally it means cash is needed for something (normally an acquisition). The fact that he spent $250 million to buy the Washington Post and made it clear that the acquisition is in his private capacity for me are clues that this purchase was long time in the works. No-one saw this coming which communicates just how close Bezos keeps his cards to his chest

    Why?

    Bezos has bought the Washington Post to save a business that is facing extinction. The long term thinking that Bezos has shown will ensure that Washington Post survives. There are a few things that Bezos has shown me with this purchase:

    1. He loves content. May it be books, e-books or news, he has a love for knowledge. The Washington Post is another platform that creates thousands of words and articles per year. The need for news will always be a factor in newspaper’s long term future. You cant create algorithms for that – human editors and writers are needed.
    2. If an opportunity arises that leads to an acquisition – Bezos will take the chance but it will be on his terms. There is a reason why he purchased one of the most historical newspapers in the US. It may be influence, the opportunity to change the newspaper industry, potentially have another business that he can leverage to provide sales to his day job (Amazon.com) – may it be a Kindle etc.
    3. The Washington Post provides another data set for Amazon to potentially incorporate into their algorithms. (I wonder if the Washington Post will be seen on Google news when the sale completes?)
    4. The Washington Post is Bezos second news related investment. Earlier in the year, Bezos invested in Business Insider.

    The Washington Post under Bezos’s ownership is going to be something worth keeping an eye on.

    Amazon – The Art Gallery

    Amazon has also announced that is selling art. Needless to say this news will concern art gallery owners. It is becoming clear that Amazon wants to be the “Walmart of the web”. Being able to buy whatever you need, Amazon is to be your starting point towards a purchase.

    Amazon.com, Inc. today announced the launch of Amazon Art (www.amazon.com/art), a marketplace that gives customers direct access to more than 40,000 works of fine art from over 150 galleries and dealers. At launch, Amazon Art will showcase artworks from more than 4,500 artists. The store is one of the largest online collections of original and limited edition artwork for purchase directly from galleries and dealers.

    The art space will be disrupted by Amazon or it might be another story as seen with Amazon’s struggle with wine selling.

    Amazon moves into Russia

    Amazon has started to hire for staff in their Kindle division in Russia. The Kindle Store is the trojan horse for Amazon as that is normally the first path to market entry. We have seen this same behaviour when Amazon entered India and Brazil.

    When I first heard about this news, I thought Amazon was going for a strictly digital play. But if the detail about the trademarks is true then the Kindle Store is but the tip of the spear. Amazon is probably repeating the strategy they used when they launched in Brazil. Their first operation in that country was the Kindle Store, which launched in December 2012. So far as I can tell Amazon has yet to launch a retail operation in Brazil, but it is probably in the works.

    The emerging markets are steadily getting more attention from Amazon. Brazil, China, India and now Russia is seeing more investment from the Seattle company. Ozon.ru has been placed on notice, Amazon is on the way.

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  • Additional Trends In Early-Stage eCommerce Markets

    Yesterday, Forrester analyst Zia Daniell Wigder wrote a very interesting and thought provoking post on Early-Stage eCommerce Markets. I agree with Zia on her 4 main points for an early stage ecommerce market:

    1. Purchase decisions are made largely based on price
    2. Online purchases are dominated by consumers in tier one cities.
    3. Cash on delivery rules.
    4. Mobile phones are many consumers’ first point of connectivity.

    On the point over mobile – I am torn as early adopters in general will first visit a website via their desktop but with the early-stage markets (Pakistan, Sri-Lanka, Uganda, Ivory Coast) mobile is the way in which all users access the web. However, truth be told mobile commerce is ultimately a player in all markets (early-stage, developing and mature) as the technology is still an unknown for most businesses.

    After thinking about those 4 initial themes, there are a few themes I would add to her post:

    1. Low user trust – In early stage ecommerce markets, user trust of platforms is low thus escrow and cash on delivery is used. This is seen in both India, Russia and China.
    2. No clear defined market leaders in horizontals or verticals – In all early stage ecommerce markets I note that there is no local defined market leader that all users are aware of. Thus the ability to enter the market exists and this is where Rocket Internet aims there efforts.
    3. Logistics is a challenge – Initially all users are needed to use a handful of logistics providers as the global players (DHL, UPS and Fedex) may not to be an option for merchants due to high costs.
    4. Low credit card penetration – I found this to be the case in most early stage ecommerce markets with Turkey being the exception to this. India, Africa and the Middle East are currently battling this specific market growth deterrent. I am fully aware that this point is not new but ecommerce and online commerce is ultimately built on the premise that you can transact over the web via bank issued cards.
    5. Not many Global ecommerce investors are seen in these markets – MIH/ Naspers, Tiger Global, Rakuten and others are not really seen in these early  stage markets as they believe that the markets are investment heavy. They wait for further growth before starting to invest. Rocket Internet is the counter argument here (with all of their multiple rounds of investment).

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  • The 10 ecommerce stories for the week of 2 August 2013

    Pinterest shows it’s ecommerce aspirations, Amazon does an experiment with Collections, Insights into rural China ecommerce and much more.

    The week that ended on Friday can just as well be called the “week of competitors”. Across the ecommerce landscape competitors had Mexican stand offs with one another. The eBooks saga with Apple has taken a very interesting turn with the judge ordering that Apple should allow outward links to Amazon and Barnes & Noble’s online bookstores. Apple have already said that they will contest the recommendation from the judge but I wonder how Amazon has kept below the radar on this matter over the years?

    Pinterest has finally shown their commerce play but price alerts and extra pin types, really? Well they have been placed on notice by Amazon. Amazon debuted Collections which looks a lot like Pinterest but no-one noticed something else. The facebook like buttons on Amazon product pages have disappeared. Increasingly, I am thinking that Amazon is placing greater emphasis on their own platforms.. I am still not convinced over Pinterest and their future.

    Then in China, Alibaba revoked the usage of WeChat by their users. WeChat is a Tencent property (a very large competitor to Alibaba in China but not directly competitive in ecommerce). Increasingly, Alibaba is also becoming more restrictive on their platform which is understandable, yet I cannot wonder whether this is is a platform battle as well?

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  • The 10 ecommerce stories for the week of 26 July 2013

    Amazon earnings, Google retires it is mobile shopping apps, Bigcommerce raises capital, eBay takes Now to the desktop and much more.

    The week that finished was full of ecommerce news. Needless to say it was dominated by Amazon’s earnings which missed. I am not too surprised as Bezos has been investor mode since early January. Content has been acquired aggressively and increasingly I think Amazon is playing defensively to ensure that Google has no impact on their future. Tom Szutak, provides the minimum amount of information on analyst or investor calls as Amazon ensures that no-one has an idea about their future.

    Google on the other hand are also making their ecommerce play known. The rumored hangouts play called Helpouts is supposedly to use hangouts to facilitate a marketplace like experience. Surprising? Not at all, in actual fact this sounds alot like what Taobao does between sellers and customers. The question arises – how does Google facilitate transactions on this platform? I still don’t think we have seen Google’s commerce play but increasingly they are doing their bit to become a commerce player. I also think that commerce will be done the Google way.

    The announcement that Google is shutting down their comparison apps is also not too surprising. Why? Think about it, what has Google been focusing on the last 12 months? Product Listing ads, which have a mobile product as well. Apps dont allow for these ads to show so Google is driving users to use mobile search to enable conversions to occur via the mobile product extensions.

    We want to focus our efforts on Google Shopping and Google Search, to create a better, more consistent shopping experience across all devices. To help us focus on that goal, we’ll be shutting down the standalone Google Shopper app on August 30.
    Going forward, you can search directly on Google (or use the Google Search app on mobile devices) or visit google.com/shopping in any browser. Our best features are there: you can compare prices, shop on the go, find a product in stock locally, check out product photos, read reviews or find product details.

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