Rakuten Archives - Electric Thoughts in a Digital Era

Amazon launches Kindle unlimited, eBay has a negative quarter – eCommerce stories of the week

Last week was dominated by 2 stories – eBay posting disappointing results and Amazon unveiling a “all you can read” Kindle package. The eBay news is not surprising – Google hit the company with a search penalty based on low quality content and also eBay is still battling with the after effects of being hacked. Those two elements by themselves will harm any Internet business – together they will harm a large business for a few quarters. The bad results could not come at a worse time for eBay. They have potential competition entering a part of the business (11 Main) and am also facing less than desired results on their eBay Now business.

Amazon seems to be moving at a faster rate than normal with regards to the ecommerce business. The Kindle unlimited service seems to me to be an unAmazon product. The selection at launch is poor (not one of the big 5 publishers has books that you can read) and seemingly this product went to public release inside 7 days. I am still trying to understand why Amazon would want to do this? Is it a reaction to Oyster? Is it to force the big 5 publishers to provide them with ebooks? or is this primarily to drive more revenue to the Amazon published ebooks?

The real reasons behind Rakuten’s Viber purchase

Rakuten, the Japanese ecommerce giant has done it again. They have bought another company that has raised alot of questions about their merger and acquisition strategy. Viber, the messaging company that uses wireless internet to do phone call is now a Rakuten company.

The issue with Rakuten for me is that they have little or no strategy on acquisitions in comparison to their direct competitors like Amazon, Alibaba and eBay. The company seems to be moving away from being a commerce based business to being a media distribution company. Their recent acquisitions: Wuaki.tv (streaming movies), Pinterest (crowd sourced curated content), Kobo (eReader) are all not really commerce related but bolt on acquisitions for a company that does commerce.

Purpose of acquisition

Viber is a messaging and VoIP service operator and has approximately 280 million global registered users, and monthly active users over 100 million. Viber apps on smartphones allow users to have conversations, and through its high quality functions users can send and receive messages and images, thus Viber offers a hybrid range of services rarely found on competing platforms. Viber is rapidly growing numbers of users, especially in emerging countries.

The Company decided to acquire Viber to strengthen its global platform through the use of Viber’s range of customers in the Company’s E-Commerce and digital contents services.

Pinterest – a bubble waiting to burst?

“There are a lot of people who think we’re in a bubble,” Andreessen said, “which makes me think we’re not. I hope everybody thinks we’re in a bubble, though, because it helps keep prices [for making equity investments] down.” Marc Andreessen in conversation with Kara Swisher

When I think of eCommerce, a few companies come to mind. The usual suspects with their multiple verticals are always on alert for new potential threats. Amazon, eBay and Alibaba are all on most shoppers minds and in most cases are habits. Habits are what all e-retailers want, a subconscious process and actions that lead to profits. Remember those articles related to purchases during intoxication, that grabbed the attention of anyone associated with eCommerce. It is a bit extreme but it makes my point.

Strategy is what drives the important players. Amazon always have a feel for what goes in their various verticals but if they cant compete with the market leader (which is not related to their holdings) then in most cases they buy the companies outright. Zappos is the example always mentioned as Jeff Bezos realised he needed to acquire them before any of his competitors do. In other cases Amazon have invested in companies (LivingSocial) and then created their own version of the business (AmazonLocal) in growing vertical. This is seen in verticals that are created at great speed by competitors (Groupon) and then a response is needed. I call these market responses and these companies in general either survive or die at a very quick rate. (For the record, LivingSocial has been an investment hog and headache for Amazon).