Readers, since my last post a lot of things have happened. It clearly is the last 6 months of the year as news keeps breaking, Amazon launches new product after new product, Alibaba is still to IPO etc. Over the last 2 weeks, 2 companies have been on my mind: Rocket Internet and Wayfair. Both are in the process of raising funding and both operate in 2 verticals that are not dominated by Amazon.
Wayfair in my mind is an example of 2 founders that understood the market and benefits of having a central business before anyone else did. Let us be honest, Wayfair started as a collection of niche ecommerce businesses that consolidated into CSN Stores and then into what we all know as Wayfair. Think about this – in 2011 when this company announced that they did a $1 billion in total sales I remember seeing a lot of posts about “who is this company”. Well fast forward 3 years and we have the IPO of a Boston behemoth that is going to be a big vertical business that will make things difficult for Amazon, eBay, Etsy and One Kings Lane. What is interesting to note is how little VC investment they have taken as well as how much control the founders have. I think their IPO will be a success (In ecommerce terms they will be known as the company that IPO’d before Alibaba).
Well, what can I say about Rocket Internet. They are one of the few companies that I know of that is able to add $1 billion to their valuation inside 7 days. Clearly something is going on at the German incubator as they have sold 20% of their business to 2 investors. First they sell 10% to the Philippines Long Distance Telephone (PLDT) company which valued the business at $4.5 billion. In less than 7 days they sold an additional 10% to United Internet from Germany at a valuation of $5.7 billion. Just when we all thought the selling off of parts of Rocket Internet companies were complete, they announce a consolidation of shares with existing shareholder (Holtzbrick Ventures) which leads to Holtzbrick Ventures owning 2.5% of Rocket Internet. Are we going to see the much anticipated Rocket Internet IPO?
The news that caught my attention over the last 3 weeks (it is a bumper edition):
7 online marketplaces for artisans in the Arab world (Wamda) – “Online marketplace platforms have started popping up all over the internet to fill various gaps in the market. The overarching objective of the platforms is to allow artisans, artists, designers, and small business owners to showcase and sell their creations to a broader audience regionally and internationally.”
Walmart’s investment in open source isn’t cheap (Infoworld) – “The investment in open development also brings other tangible benefits. Walmart gets much more thorough testing of new features since early adopters in the community shake the issues out of new code before Walmart’s more conservative deployment policy puts it in production. The company also finds it much easier to hear from good applicants when it needs to hire — Walmart has been getting about a dozen qualified candidates for every Node opening it advertises. Not to mention performance — the framework turns out to be really good for Walmart’s workloads: “The Walmart mobile servers built using Hapi were able to handle all mobile Black Friday traffic with about 10 CPU cores and 28Gb RAM,” according to a later blog.”
How ModCloth Built a Culture of Tech Experimentation (Fashionista) – “That’s especially true for mobile, which is in many ways the ideal platform for delivering the fun. More than 50 percent of ModCloth’s traffic now comes from mobile, be that on the app or a web browser, and the more fans play around and window shop on their phones, the more the engagement-to-purchase ratio is going to increase. Swiping through products on Love It or Leave It is designed to be addictive, but it’s not necessarily going to result in an immediate sale.“
India’s ecommerce poised at $43 bn in 5 years: Meet the key growth leaders ( The Economic Times) – “Indian e-commerce is projected to explode from $10 billion to $43 billion in the next five years, according to Nomura’s India Internet Report last month. There are 11 categories, and within them 42 players, that are poised to shape this blazing path.”
Twitter Is Working With Payments Startup Stripe on Its Commerce Initiative (Re/code) – “Twitter’s long-awaited plan to let its users make purchases right from a tweet is nearing, and payments startup Stripe will have a role in the business, multiple industry sources tell Re/code.Later this year, Twitter is expected to unveil buttons within tweets that say “Buy” or some variation of the word; after clicking on the button, shoppers are expected to be able to enter in payment and possibly shipping information without leaving Twitter’s service.”
Alibaba’s 11 Main Addresses Rumor It May Ban PayPal (EcommerceBytes) – “After a rumor surfaced that Alibaba’s new U.S. marketplace 11 Main might be considering dropping PayPal as a payment method, we checked in with company spokesperson Abbygail Reyes. Her response to our inquiry: “11 Main enables consumers to use credit cards directly and PayPal to purchase items from shop owners at 11 Main. We’re aiming to provide the best possible consumer experience and many shoppers prefer an easy, direct way to pay using a credit card.”Many online marketplaces support PayPal (with one notable exception being Amazon). Etsy, for example, had relied quite heavily on PayPal to facilitate payments but has since launched its own Direct Checkout, though it continues to allow its sellers to accept PayPal for payments.”
Can Bigcommerce become the next big name in e-commerce? (Fortune) – “Until now, the appeal of Bigcommerce’s eponymous technology has been simplicity and its ability to scale along with merchants as they grow. “To some, this will mean the difference between success and failure,” said Steve Case, who as a board member advises Bigcommerce on U.S. entrepreneurial trends. “Even just five years ago, if you wanted to create a compelling offering, it could cost hundreds of thousands of dollars. Now, you can get up and running in hours for less than $100 per month.””
How Rocket Internet’s Dafiti is helping to shape the future of e-commerce in Latin America (The Next Web) – “Today, Dafiti is the only fashion e-commerce to operate in the five biggest Latin American markets. We are leader in all countries and our focus is to consolidate our presence and expand our portfolio in each one of them.”
JD gets online shopping boost from WeChat, sees $10 billion in consumer sales in Q2 (TechInAsia) - “JD (NASDAQ:JD), China’s second biggest ecommerce company, saw RMB63.0 billion (US$10.2 billion) in consumer sales [1] in Q2 2014, the firm revealed today in its newest earnings report. That expenditure by its users is up 107 percent on Q2 2013. That came from 163.7 million fulfilled orders during the three-month period. About 24 percent of those came from mobile shoppers.”
Amid slump in flash-sales sector, Rue La La is hit hard (Boston Globe) – “The e-tailer said it has “experienced tremendous growth” since it was bought by current parent Kynetic in 2011. The company declined to comment further on its business plans, but its fund-raising efforts come amid broad changes in the industry — not all favorable to the flash-sale business model. Flash-sale sites, which typically put high-fashion clothes and accessories on deep discount for a few days or even hours at a time, came of age during the recession, when designers and manufacturers needed to quickly unload surplus inventory. But now that the economy is in recovery, piles of unsold designer duds are harder to find. And the once-white-hot growth rate that marked so many flash retailers has cooled considerably.”
Shopzilla Pivots From Comparison Shopping To Marketing Services (AdExchanger) – “But the company will soon become primarily a marketing services company. Its consumer brands will be secondary. Shopzilla claims that it processes more than one billion retail data points monthly across the path to purchase. Shopzilla harnesses data from myriad sources, ranging from product listing ads across a network of 3,000 publishers, its owned-and-operated sites and 26 million Bizrate surveys a year. Through its Bizrate business, Shopzilla syndicates ratings and reviews by consumers who have transacted on online retail sites to Google, its search distribution partner. Bizrate essentially helps power retailer rating and merchant reviews; Google’s seller ratings are then incorporated into Product Search and AdWords ads.”
5 Emerging E-Commerce Trends To Watch (StrategyEye) – “E-commerce is one of the most established and robust types of digital business, after all, the process of exchanging goods for money has been tried and tested for a while. However, there’s an increasing split between the giants of the space offering any product you can Google and those looking to offer the consumer something more. Venture capital is also continuing to pour into the sector or a global basis.”
Ocado – a disruptive company to rival Google? (Techworld) – “Not content with being the world’s largest dedicated online groceries retailer, Ocado is building an end-to-end retail platform that it hopes to roll out to partners across the world, similar to Amazon’s model, but for groceries. The retailer believes that the 25-year deal with Britain’s fourth biggest supermarket Morrisons, signed in 2013, is the first of many that it hopes to sign. To go beyond the Ocado and Morrisons tied up and support this ambition, Paul Clarke, CTO of Ocado, is on a mission to recruit the best and brightest technology experts. He claims that people who apply and get jobs at Ocado are also doing second interviews at major tech companies like Google. Here, he provides an insight into the depth and breadth of technology research and development he is responsible for at Ocado, where robotics, smart vision systems, Google Glass and Internet of Things are just some of the areas that the company is looking at.”
Hybrid model Ulmart successful: sales grow by 31% (EcommerceNews.eu) – “So last-mile delivery isn’t really a profit-creating option, which lead to Ulmart, Russia’s leading online retailer, taking a different approach. It allows customers access to its fulfillment centers (of which there are 29 in the European part of the country) and this hasn’t done the ecommerce company any harm. Russia is a different market. Why should force consumers to request home delivery if culturally it is not really a sought after service”, says Brian Kean, Ulmart’s Director for Communications and Investor Relations.”
Takealot snaps up e-retailer Superbalist (TechCentral) – “According to Takealot, the acquisition of Superbalist will help it target “millennials” – young people who reached adulthood around the turn of the century. “The millennial generation is deemed to be the most powerful and relevant market on the planet and we have managed to acquire a business run by millennials, focused on millennials,” Reid said in a statement on Thursday. “They have a great team and we are going to have fun building the business together.””
Shipbeat Is A “Logistics-As-A-Service” To Solve E-Commerce Delivery Woes (TechCrunch) – “Denmark’s Shipbeat, which is currently running a beta in its home country, plans to offer an API that aggregates the services of leading parcel delivery companies, such as UPS, Fedex, Royal Mail, Deutsche Post, and DHL etc., in a bid to solve the delivery woes of small to medium-sized e-commerce businesses and enable them to give customers all of the delivery options they desire.”
Online shopping is the future. So why do so many Web retailers want to be in stores? (Washington Post) – “Shoppers suddenly paid more attention to un-flashy pieces often overlooked online. More women bought multiple necklaces that could be worn together. And perhaps most importantly, co-founder Daniella Yacobovsky said shoppers typically purchased three times as much merchandise as an online BaubleBar customer. “Having the opportunity to touch and feel our product is a big value,” Yacobovsky said. After three years as an e-commerce darling, BaubleBar and many other Web retailing pioneers have discovered the old school benefits of having a brick-and-mortar store. Rent The Runway, which rents designer clothes by the day, plans to open a standalone store in Manhattan’s Flatiron district in September. Products from Etsy, a dominant online marketplace for handicrafts and vintage goods, will soon be available in independent boutiques and some major chain stores such as Nordstrom. Birchbox, the subscription service that delivers beauty products to customers’ doorsteps, opened a brick-and-mortar flagship in New York in July.”
SA’s WumDrop is like Uber for deliveries (TechCentral) – ““The whole point is that delivery in South Africa is not great, and the guy doing the delivery should not just be a delivery guy — he needs to be of the same quality as the store attendant and that is what we are trying to replicate.””
Alibaba introduces self-pickup delivery spots in Hong Kong as it flexes its logistics muscles (TechInAsia) – “Chinese ecommerce giant Alibaba announced today it will introduce self-pickup delivery across Hong Kong today for goods purchased on Taobao Marketplace Hong Kong, in partnership with 7-11 and Hongkong Post, the city’s government-run postal service. Now, users based in Hong Kong who buy goods off of Taobao Marketplace can opt to pick up their items at one of over 200 designated locations. 125 of these locations belong to Hongkong Post, while 7-11 and a bevy of local logistics providers operate the remainder.”
Watch out, PayPal just made 150M consumers “one touch” buyers (Pando) – “The launch of One Touch PayPal does not mean Venmo is going away. For those users who prefer the more social experience – transactions are posted to an in-platform newsfeed where users can comment and like this activity – Venmo will continue to live on beside PayPal, according to Braintree CEO Bill Ready. But you can start to see the lines blurring between the two worlds.”
Delivery Start-Ups Are Back Like It’s 1999 (NY Times) – ““The reason it is such a good idea now is the exact same reason it was so horrible before: the network effect,” said Nabeel Hyatt, a venture partner at Spark Capital, which has invested in Postmates, a courier service that delivers from any store or restaurant. Not even half of American households had an Internet connection in 1999; today 98 percent have access to a connection. And it certainly helps that customers and couriers all have smartphones. This means a higher density of users and potential users, who can instantly reach couriers whenever they are in need, eventually leading to scale.” A great read.
This is absolutely huge. Uber is finally launching on-demand product deliveries (in Washington D.C.) (Venturebeat) – “Uber is set to launch an on-demand product delivery service in Washington D.C. today, dubbed “Corner Store,” according to a company blog post that was briefly released this morning and later pulled. The re-posted announcement is available here. Starting today, a limited set of Uber users can order convenience store goods — such as “allergy medicine, diapers, toothpaste and over 100 other items” — via Uber’s app.”
Now it’s time for Silicon Valley to profit from the new Indian ecommerce laws it helped shape (Pando) – “A lot of Silicon Valley readers might be rolling their eyes reading these stories of corporate hijinx and legal evasions in the nascent e-commerce sector —ascribing it all to India’s venal bureaucracy, or to India’s change-resistant culture that “just doesn’t get it.”” A great read with lots of interesting insights into foreign investment etc.
Ideeli relaunches as ideel (Internet Retailer) – “Ideeli, which Groupon Inc. bought earlier this year for $43 million in cash, launched the revamped ideel Thursday. “Coco Chanel once said that simplicity is the keynote of all true elegance,” says Lisa Kennedy, head of Ideel, in a blog post announcing the new name and look. “In order to help customers achieve style and elegance in their daily lives, we have to first lead with a simple and elegant name and design. And we think the new look and feel of ‘Ideel’ helps us get closer to that ideal.””
Ibibo’s online marketplace Tradus pivots to a grocery-only marketplace (Medianama) – “Once a horizontal e-commerce marketplace, Naspers-owned online marketplace Tradus.com seems to have pivoted to become an online grocery-only store. Note that the company had started selling groceries by tying up with local sellers in April this year. Consumers could order groceries such as dal, rice, sugar, tea to dry fruits from local sellers through this service. It was initially available in Delhi, which seems to have rolled out to Mumbai and Bangalore in the past few months. “
German Web Firms (Rocket Internet, Zalando) Look to Alibaba for Clue to IPO Success (WSJ) – “Owners of two German Internet companies quietly hope Chinese e-commerce giant Alibaba Group Holding Ltd. pulls off a successful initial public offering next month, according to people familiar with the matter and fund managers. The European firms aren’t investors in Alibaba and could someday be rivals, but they aim to list shares soon after Alibaba and worry that hitches with its flotation could damp their own prospects.”
Jingdong GMV Exceeded US$10B, Increase of 107% YoY in Q2 2014 (China Internet Watch) – “JD.com had approximately 38,000 merchants on its online marketplace as of June 30, 2014 and a total of 62,061 full-time employees as of July 31, 2014. JD.com’s share of China’s online direct sales market reached 54.3% in the second quarter of 2014, according to iResearch.”
Jabong partners with coffee shops and fuel outlets to expand delivery (The Economic Times) – “In dozens of India small towns, online retailers cannot deliver customers goods at their doorstep because of challenges ranging from poor road connectivity to fear of robbery. Jabong, one of Indias biggest fashion retailers, is doing the next best thing with its NextDoor service where customers can pick up what they have ordered online at the nearest coffee shop, petrol station or tour operator.”
Can Bigcommerce become the next big name in e-commerce? (Fortune) – “In the past six months alone, the Australian-born company fortified its senior executive ranks with high-profile hires from Amazon, PayPal, Google, and Twitter. It brokered a high-profile deal with Magento, the market leader, that promises to bring thousands of new customers to it. And it broke the lease on its new San Francisco office because it is hiring so quickly that it now needs triple the space it originally anticipated.”
New Shopping App Spring Makes It Scary-Easy To Buy Things With One Swipe (Business Insider) – “On Spring, users upload credit card information, sizes, and shipping addresses only once. The app stores everything so checkout is as simple as swiping left to right on a buy button for every purchase after. There’s also no shopping cart; Spring has worked out an agreement with many of its partnering brands to get rid of shipping fees in lieu of lower transaction fees on the back end. “
Saudi Arabian e-commerce to reach $13bn by 2015 (e-commercefacts) - “The e-commerce market in Saudi Arabia could rise to as much as $13.3 bn in 2015, reveal results published by research firm PixHeart.” A nice infographic with data is seen on the article.
The Amazon / Hachette War (Lefsetz) – ” This is not about books. This is about corporations. And power. And the rights of not only artists, but individuals. There’s a fiction in America today that corporations are our friends. Amazon even pushes the paradigm by saying all its efforts are for us. Pitting writers against readers in a sideshow that deflects from the truth that this really only about money, Amazon’s bottom line.”
Amazon retail partners get special privileges, can limit sales of their products by resellers (Bloomberg) – “Companies such as Burberry Group Plc (BURBY) and Levi Strauss & Co. that have formed a partnership with Amazon have scored unusual deals that let them control how their merchandise is sold through the world’s largest online retailer, according to a study by market researcher L2 to be released this week. The companies have been able to limit the sale of goods from third-party resellers, a practice Chief Executive Officer Jeff Bezos has traditionally let run unimpeded over objections from some brands.”
Why Nordstrom Paid $350m For A Startup They Could Imitate (Linkedin) – “TrunkClub brings a fast growing revenue base, along with a whole new set of customers who may previously haven’t had any interaction with the Nordstrom brands. Nordstrom’s relationship with labels means more selection for TrunkClub, and, as Pando pointed out, it’s network of Nordstrom Rack stores could lead to synergies and savings around damaged merchandise that is returned. But ultimately, this acquisition is about getting out ahead of a new world of men’s fashion that goes beyond just how and what they buy to how they see their relationship to clothing.”
Japan’s Rakuten Buys Startup as It Mulls U.S. Entry (WSJ) – “Rakuten, Japan’s largest online retailer, has bought Slice, a U.S. based e-commerce app, as it plans a possible foray into the U.S. The purchase, for an undisclosed sum, gives Rakuten technology to analyze users’ spending patterns and delivery choices. Slice mines users’ e-mail in-boxes for receipts from Amazon, Nordstrom and other e-commerce sites to consolidate their purchase history, send alerts about package shipments and monitor price changes to help users obtain subsequent rebates.”
As Alibaba IPO looms, China mulls taxing Alibaba users (MarketWatch) – “s the U.S. stock debut of leading Chinese e-tailer Alibaba Group draws near, China is considering launching its first-ever taxation of the country’s massive e-commerce market, state-run media reported Wednesday. The State Taxation Bureau is carrying out “intensive research” and has set up a special team to study a policy framework on taxing e-commerce, the Economic Information Daily quoted unidentified sources as saying.”
Q&A: How Amazon Will Spend $2 Billion in India (WSJ) – “Amit Agarwal, the vice president and managing director of Amazon Seller Services Pvt. — Amazon’s Indian unit — said the site that was launched last June already offers 17 million products, more than any other online marketplace in India. While most sites do not announce annual sales, analysts say Amazon is probably the third largest in India in terms of transactions, after Flipkart Internet Pvt. and eBay-backed Snapdeal.com which is owned by Jasper Infotech Pvt. Customers don’t pick a shopping site by looking at their top lines, Mr. Agarwal said. Instead they focus on the selection of products, prices and delivery.”
Top Countries Referring Traffic to the E-Commerce Industry (SimilarWeb) – “This resulted to this table you see here, which gives you a clear understanding of the main markets that are already generating traffic in this industry. What you can do with this data, for instance, is start analyzing existing competitors in each of these countries, using the Website Analysis section on the PRO, and look for lucrative markets with low competition.”
MTN to plow R2.4 billion into e-commerce venture (BusinessTech) – “MTN says it expects to invest approximately R2.4 billion (EUR168 million) over the next two to four years into Africa Internet Holding (AIH). MTN acquired 33.3% OF AIH, a joint venture between Rocket Internet and Millicom International Cellular, to develop internet businesses in Africa.”
Google and Barnes & Noble Unite to Take On Amazon (NY Times) – “Google and Barnes & Noble are joining forces to tackle their mutual rival Amazon, zeroing in on a service that Amazon has long dominated: the fast, cheap delivery of books. Starting on Thursday, book buyers in Manhattan, West Los Angeles and the San Francisco Bay Area will be able to get same-day deliveries from local Barnes & Noble stores through Google Shopping Express, Google’s fledgling online shopping and delivery service.”
Alibaba Courts Talent From Nokia (WSJ) – “Fear not, those laid off from a recent restructuring at Microsoft. Alibaba, the Chinese Internet behemoth, plans to come to the rescue.Splashing a “Nokia, welcome to Alibaba” banner across its website, the Chinese e-commerce giant is seeking to recruit Nokia engineers in China to beef up its mobile offerings.”
Amazon expands same-day delivery service in NYC, DC, Dallas and 3 other cities (Geekwire) – “Amazon is expanding its same-day delivery service in six metros, including New York City and Washington D.C. The company announced the expansion Tuesday evening, noting that customers in the Baltimore, Dallas, Indianapolis and Philadelphia areas will also now be able to have orders delivered on the same day if purchased online by noon.”
Wanelo Tests In-App Purchases in Bid to Be the Amazon for Millennials (Re/code) – “In recent weeks, Wanelo has started quietly allowing people to order and pay for clothing from some retailers directly within its app. For example, I was able to proceed through the full checkout experience within the app — including entering shipping and payment information — for clothing normally sold by Nordstrom and Bloomingdale’s. At one point, the screen displayed a message indicating that it was checking to see if a product was currently in stock.”
Will New E-Commerce ‘Darling’ Flipkart Threaten Success Of Chinese Giant Alibaba? (Industrial Distribution) – ““Just compare their shipping volumes over the past 12 months – Alibaba shipped 5 billion units and Flipkart did 60 million,” Tompkins says. “Flipkart will not be the big player that many are projecting, and they will be limited to their home country. Last year, 231 million people in China used Alibaba, while Flipkart reported only 22 million network users in India.” As for products sold, there is simply no comparison. “We’re looking at 1 billion unique items sold by Alibaba versus 15 million unique items sold by Flipkart.””
FedEx and UPS packages increasingly arrive via the post office (WSJ) – “For FedEx alone, the post office delivers an average of 2.2 million packages a day, or about 30% of the express-mail company’s total U.S. ground segment. UPS won’t specify how much of its shipments go through the post office, but a regulatory filing indicates those types of lightweight shipments accounted for 40%—or about 37 million packages—of its total increase in ground shipments in 2012. The post office is lapping up the extra package-delivery business from its private-sector rivals because it badly needs growth. In the past decade, it has lost more than 30% of its most profitable product—first-class mail—to the Internet.”
Till next week. Onwards.
Related posts:
Rocket Internet to IPO?
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The Predictive Theory on Rocket Internet
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