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Hendrik's ecommerce Newsletter

This is a weekly newsletter of what I've seen in ecommerce and thought was interesting and has market impact.

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Marketplace news


How Amazon and eBay became a tax haven for Chinese sellers. In Europe, their marketplaces are used for a major tax fraud. Martin says he sold some of the same imported Chinese-made products as Chinese dealers on Amazon, but because he’s based in Germany, he’s forced to pay VAT or else risk fines or even a prison sentence. Meanwhile, he says Chinese vendors are avoiding their 19 percent VAT and spoiling his business. He cites the VAT fraud as the main reason for the lower prices of rivals from China that already benefit from cheaper procurement. The Verge

A Recent Shift From Amazon Retail Has Brands Scrambling. What's Next for Sellers? (A must read). If Amazon Retail is basically marginalizing or breaking up with smaller brands, now is a highly suitable time for those brands to reflect and re-evaluate how they do business with the Amazon marketplace. A brand should consider selling on Amazon through the third-party marketplace, either in conjunction with an authorized reseller that knows
best practice for selling and advertising on Amazon, or as the seller of record of its own brand (essentially a direct-to-consumer model) Entrepreneur

China welcomes its first comprehensive e-commerce law (a huge moment for Chinese e-commerce). If an e-commerce platform fails to take necessary measures to deal with the infringement of the legitimate rights and interests of consumers, they shall be ordered to suspend business for rectification and be imposed a fine of not less than 500,000 yuan and not more than 2 million yuan. Asia TimesWorld Trademark Review, Tech In Asia

Jack Ma says he isn’t about to retire from Alibaba but is planning a gradual succession. In order words, Ma isn’t abruptly leaving the company, but it seems that his role will be gradually reduced over time. Alibaba confirmed he’ll remain a part of the company while the succession plan is carried out. The exact details will be announced on Ma’s birthday, September 10.  TechCrunch, South China Morning Post

Amazon Orders 20,000 Mercedes Vans to Bolster Delivery ProgramDaimler is emerging as a beneficiary of Amazon booming package-delivery needs, with the e-commerce giant ordering 20,000 of the German automaker’s Mercedes-Benz Sprinter vans. Bloomberg, Retail Dive, The Seattle Times

Amazon Search Malfunctioned, Spurring Customer Complaints. Amazon search function wasn’t working for about two hours Wednesday, with customers around the country reporting problems. Thousands of people reported issues with the website of the world’s biggest e-commerce company, according to Downdetector.com, which tracks internet problems. Others complained about the glitch on Amazon’s social media pages. Bloomberg, CNET

Amazon's accounting system for sellers crashes a day after search malfunction. Multiple sellers told CNBC on Thursday that the back-end system for tracking orders and sales has been down since Wednesday afternoon. Although it's still recording customer orders, sellers are unable to access their daily sales numbers to see what products they're selling or how much they're making. CNBC

JD.com’s Premium Membership Program Surpasses 10 Million Users. Over 10 million customers of JD.com, China’s largest retailer, have joined the company’s premium membership program, making the pioneering initiative China’s most well-received loyalty program. JD.com

Five Years Later, Google Express Is No Closer to Beating Amazon. September 25 will mark five years since Google first launched Shopping Express, the e-commerce offering meant to challenge Amazon’s dominance. But despite Google parent company Alphabet’s staffing brain trust and impressive coffers, Express has done little to reinvent fulfillment—in fact, according to several current and former workers, it’s been running much the same playbook as other on-demand gig economy offerings. Gizmodo

Moët Hennessy, Alibaba to Unbottle ‘New Retail’ Experiences. Moët Hennessy will partner with the Chinese e-commerce giant to roll out online-to-offline initiatives in a push to draw more young consumers in its second-largest market after the U.S. The companies also will offer exclusive benefits and priority-purchase privileges for some of Moët Hennessy’s newest products in China to users of Alibaba’s shopping channels, including the B2C shopping site Tmall, Tmall’s Luxury Pavilion and the New Retail-driven Hema supermarket. Alizila

eBay Listings to Display on ESPN Sports Site. Going after sports fans, eBay announced its listings will appear on ESPN.com through an exclusive partnership with the sports news and commentary site, it announced on Tuesday. eBay said it will be the “exclusive provider” on ESPN.com in the following categories: sports equipment, fashion apparel, memorabilia, and collectables, and said, “With this collaboration, ESPN fans will be able to easily access and shop eBay’s millions of items.” EcommerceBytes, Engadget, PR Newswire

Walmart Tests New Last-Mile Grocery Delivery Service. Walmart is expanding its grocery delivery services with the launch of a new pilot program called Spark Delivery. It’s a crowd-sourced platform that Walmart says allows it to learn even more about the full last-mile delivery process. EcommerceBytes, TechCrunch, Walmart

Lazada Taps Data to Help Retailers Improve Shopping Experience. This access to Alibaba’s engineering resources, some of whom sat with the Lazada team, played a key role in driving Lazada’s recent efforts to deliver a more personalised and “vivid” customer experience, Jing said. He added that Lazada, too, had built up its own portfolio of robust technologies. Stressing that Lazada had to be more than just a business that facilitated transactions, he said the retail platform needed to extract more data and provide more customer insights that would enable its brand partners to deliver a better shopping experience. RetailTechNews

JD.com facing lawsuits inUS after Richard Liu’s arrest. Three US-based law firms have announced investigations on behalf of JD.com’s shareholders looking into whether the company issued misleading statements or failed to disclose information about the arrest of its CEO Richard Liu on rape charges. TechNode, Caixin

Pernod Ricard ups Amazon ad spend in
UK as platform delivers results. Pernod Ricard, owner of brands like Beefeater, Absolut, Chivas and Havana, has "dramatically increased" its ad spending with Amazon in the U.K., according to a report in The Drum. The marketer claimed it is the second-largest spirits provider on Amazon, grabbing a 10% market share. During a press briefing, Laurent Pillet, managing director of Pernod Ricard in the U.K. said sales grew by more than 100% with Amazon over the past year. Marketing Dive, The Drum 

More Info for Sellers as eBay Kicks Off New Managed Payments. In the two months since eBay invited some sellers to participate in its initial launch of “managed payments” that is scheduled to begin this month, eBay has provided additional information about the program, although questions remain. EcommerceBytes

Tencent, a minority shareholder, has first right to buy in future Flipkart share sale, says Walmart. US-based retail giant Walmart Inc has said that Flipkart’s minority shareholder Tencent would have the first 'right to purchase' if any shareholder of the Indian e-commerce firm sells “any shares or other equity securities to Alibaba”. Firstpost

Scales of endangered pangolin found for sale on Chinese e-commerce platform Pinduoduo. Packages did not display special government labels required for legal products. Tianma e-commerce department manager Cheng Xiujian told the Post the company did not sell processed pangolin scales because it was illegal. He suspected other companies were faking its quality certificates, which he claimed happened because its brand is well-known locally. South China Morning Post

Amazon Sets Its Sights on the $88 Billion Online Ad Market. Much of online advertising relies on imprecise algorithms that govern where marketing messages appear, and what impact they have on actual sales. Here, Amazon has a big advantage over its competitors. Thanks to its wealth of data and analytics on consumer shopping habits, it can put ads in front of people when they are more likely to be hunting for specific products and to welcome them as suggestions rather than see them as intrusions. The New York Times

The Ways of Wayfair (a fascinating look) - eDatasource 

Will the 'Amazon effect' take hold in the Middle East? - The National

Chinese e-commerce portal Yunji Weidian taps banks for U.S. IPO - Reuters

eBay built its own servers in a push to re-platform its backend infrastructure - ZDNet

Flipkart To Focus On Private Labels For Its Big Billion Days Sale Next Month - Inc42

All of Amazon’s Warehouses in One Giant Infographic - Visual Capitalist

Amazon Taxes Cited as U.K.'s Antitrust Cop Targets Loopholes - Bloomberg

Alibaba's Journey to Become Asia's Most Valuable Firm: Timeline - Bloomberg

Weekly Marketplace Insights


The Battle between Amazon and the logistics industry is just getting started
It seems that Amazon can operate as a saviour for industry who require sales, case in point, ordering 20k Mercedes-Benz Sprinters for Prime Delivery vehicles.
1. UPS, FedEx and USPS (to a lesser degree) can tell the world that they are not concerned about Amazon's movement into logistics. The truth is that Amazon is only getting started.
2. 
Amazon needs more capacity and the fact that the vans are covered in Prime logos is a two-sided tell. One - Amazon will be moving deliveries to Prime customers in-house in the coming 18 months. Amazon wants to protect this profitable sector from other companies. Secondly, Prime customers are growing fast and thus Amazon wants their partners (UPS and FedEx) to make Amazon a priority and deliver items faster
3. The battle between Walmart and Amazon in the US is about getting products into the hands of customers in the fastest way possible. By offering small businesses the opportunity to create a business for as little as $10k Amazon can play its employment card when it deals with potential anti-trust. Amazon has build customer expectations based on speed and convenience and as much as Marc Lore and Walmart want us to believe, getting products into the hands of customers should be frictionless.
4. These Prime vans provide Amazon with something it has wanted for a long time - control over the last mile part of deliveries. 
5. UPS and FedEx will need to look into ways in which it can protect itself from Amazon's encroachment - whether it is new services, investments or looking at other parts of the market (larger item shipping remains a pain point).

Jack Ma is not going anywhere, note the NY Times it's called succession planning
On late Friday afternoon, The New York Times broke a story that indicated that Jack Ma would be retiring from Alibaba. I will admit - I read it and then opened a browser tab and had a look on Alizila to see whether this story had any merits. No mention of it on Alizila - for me immediately meant that the writer at The New York Times misunderstood a comment made by Jack Ma.

A few notes to over-eager journalists
1. Why would Alibaba wait until late on a Friday afternoon to announce that their teacher and inspiration would leave and vacate his executive chairperson role? Alibaba has done everything to ensure that they foster trust and understanding from investors and an announcement that is not officially backed. The Friday news was late enough to note impact Alibaba's share price but Jack Ma is an important part of Alibaba.
2. Please check or contact the Alibaba communications team - if writing e-mails are to much work, a simple glance at Alizila could quickly provide you with clues whether an official announcement has been made.
3. Having seen Jack Ma recently speak, I can without a doubt say that any plans of succession will be done in a transparent way to not influence the stock price of Alibaba and not cause any unnecessary concern for investors.
4. I believe that Alibaba's leadership will have discussed and spoken with Ma on how to manage the transition period that will be arising - if he announces succession plans tomorrow. 
5. Alibaba is not a typical corporate - their leadership talk clearly and in a similar voice and Jack Ma will be celebrated before he moves on to investing his money into education and other philanthropic projects. The succession plan is one that I am interested in seeing as Alibaba clearly has planned their next steps in detail.
6. The New York Times (who I subscribe to) will now be read with some trepidation as this Friday mess lead to many many articles all over the Internet about Jack Ma retiring. Luckily the South China Morning Post could step in and correct an unnecessary article.

Richard Liu and JD.com
The point of this newsletter is to discuss e-commerce related news. Those of you attentive will have noticed that the level of detail on the arrest of the JD CEO is given some attention but not in a lot of detail. The law will need to take its course of action
What did I learn after the event:
1. Investors will be concerned as Richard Liu is seen as a key man and thus the uncertainty on the legal implications of the arrest in Minnesota. This uncertainty could negatively impact JD.com stock for the duration of this event. I note that Liu has not been charged.
2. Liu has majority control of JD.com (Liu controls 79% of voting shares and owns key assets). JD.com uses a variable interest entity (VIEs) structure, popular among Chinese internet firm founders, any future legal liability for Liu could have potentially grave implications for the online retailing empire he oversees -- as does its incorporation in the Cayman Islands.
3, The long-term implications for JD.com stock price would be a concern to shareholders. 


Onwards.

 B2C (Business to customer) news


Amazon now dominates Google in product search. From 2015 to 2018, Amazon surpassed Google for product searches, according to a report from Jumpshot released this week. The two tech giants switched places with Amazon growing from 46% to 54% and Google declining from 54% to 46%. Retail Dive

The factory towns of the future. Just as entire communities revolved around the automobile, steel and other industries in the last century, many places in America now depend almost entirely on e-commerce giants like Amazon. Axios

Hearst dives into commerce, memberships, for Bicycling, Runner’s World. Hearst Magazines has adopted a new business model for its sports titles, Bicycling and Runner’s World, to expand their reach into e-commerce and memberships. The membership benefits and prices haven’t been finalized, but the benefits will be in addition to existing ones and exclusive to members, like access to events and training, deals on gear, podcasts and personalized standalone newsletters.  Digiday

FreshDirect CEO abruptly steps down. The departure of Ackerman, who helped start FreshDirect 20 years ago, comes as the company moves into what it calls a “new chapter” of growth. FreshDirect recently opened a sprawling 400,000-square-foot distribution and manufacturing facility in the South Bronx as it looks to expand on-demand delivery through FoodKick, the service it started two years ago. Food Dive

How tariffs will affect the top US e-commerce companies.  Smaller players who sell on Amazon and eBay through their marketplaces and rely on Chinese suppliers may raise prices or have fewer offerings. 
Furniture sales stand to feel big repercussions from tariffs, especially for online retailers like Wayfair that operate with very low margins and heavy reliance on China-based products. Business Insider

TripAdvisor Hints at Its Growing Interest in Vacation Package Search. TripAdvisor has long offered price-comparison for hotels and flights separately. But the online travel search giant has been showing an increasing interest in offering flight-and-hotel packages as a product in more markets. Skift

Mobile-First Booking Startup HotelTonight Expands to Desktop. CEO Sam Shank said hoteliers were clamouring for an alternative to the conglomerates Booking Holdings and Expedia Group. Having a HotelTonight desktop presence would increase more volume outside of those two giants. Skift

Instant delivery sector off to flying start, but hurdles remain in China. Wang Xiaoping added that nearly 10 billion delivery orders were finished across the country last year, equivalent to 25 percent workload in traditional logistics. And the proportion is expected to increase to 50 percent, Wang predicted, as takeout business booms in China, instant delivery will maintain its growth momentum. ECNS

Otto Group seeks an investor for Hermes. The Otto Group is looking for a strategic partner for essential parts of its parcel delivery service Hermes. The German retail group is even ready to sell a majority stake in Hermes. And that might be interesting for major e-commerce companies such as Amazon and Alibaba, looking to gain a foothold in the European e-commerce market. EcommerceNews Europe

E-commerce giants rake in losses as market share war continues. In the first quarter online retailer Shopee Vietnam had around 30,000 orders a day, most of which were shipped free, according to a report by its owner SEA Ltd. Lazada also regularly offers discounts of up to 50 percent. But in this process these stores are bleeding, with Lazada, Shopee and Tiki all reporting losses  VN Express

Hershey’s Game Plan for Winning in E-Commerce. “Data acquisition and developing relationships with people are the lifeblood of businesses and from this standpoint we think we can win with our iconic brands,” Straton said. “Then you get smarter campaigns, sales lifts and returns on investments.” NOSH

Brooklyn Shopkeepers Test a Service to Fill in Amazon's Gaps. With EMain, local shops will be able to showcase their offers online, with the promise of free next-day delivery for local customers. The shops would eventually pay a small weekly subscription fee of $50 to $100 for the service. Bloomberg

Snapchat adds new styles as Spectacles V2s get used 40% more than V1. They look a lot more like normal sunglasses, compared to the jokey, bubbly V1s, so they could appeal to a more mature and fashionable audience. They go on sale today for $199 in the US and Europe and will be sold in Neiman Marcus and Nordstrom later this year, while the old styles remain $149. TechCrunch, The Verge

The emerging battle for e‑commerce warehouse space. As e-commerce companies compete for available new commercial warehouse space, many companies will make tradeoffs or decisions that serve their best long-term interest, Mark Mullen says. Digital Commerce 360

Wayfair, Cosmopolitan team for new collection.  Wayfair has joined forces with Cosmopolitan magazine on a collection of furniture and home décor. Called CosmoLiving by Cosmopolitan, the collection is targeted at young adults settling into their first apartments or homes “who want a chic living space that’s an extension of their personalities,” according to a joint statement from the two companies. Home Textiles Today

Green Man Gaming set for £100 million float - The Retail Gazette

Samara Capital, Amazon to acquire Birla's retail chain 'More', Goldman Sachs out - The Economic Times

Deuter Withdraws From Trial Participation In Walmart Premium Outdoors Platform - SGB Online

DHL E-commerce Receives Permission to use Electronic Motorbikes in Malaysia and Vietnam - Enterprise Innovation

D2C (Direct To Customer) news


Glossier CEO Emily Weiss on why the company won’t sell on Amazon (a good read). “I think it’s exciting that we are really at the dawn of e-commerce, and that there’s going to be so many paradigms. What we’re focused on building, is an emotional commerce experience which is focused on a breath of connection, and not a breath of product,” Emily Weiss explained. TechCrunch, Pitchbook

Goop Forced to Pay $145,000 and Refrain From Making Unsubstantiated Medical Claims. Gwyneth Paltrow’s wellness company has been ordered to pay $145,000 in connection with a settlement in a lawsuit filed against the company for making unsubstantiated claims about the benefits of its products. According to a complaint filed late last month in a California state court in Napa, Goop made unfounded claims about its $66 vaginal Jade and Rose Quartz Egg, and its Inner Judge Flower Essence Blend.  The Fashion Law

Brandless – A Fad Like Shake Weight or the Next Big Thing? (I believe that Brandless is built for an acquisition and my inbox shows many free-delivery and product releases which
costs capital.) No matter how one slices it, it is hard to extrapolate how Brandless will become anything more than a product company that will face a number of profitability roadblocks at every turn in the future. The only course may be to do exactly what the company is doing – to act like an infomercial. It can press the gas on the marketing wave and then get out at the right time after making gobs of money off of the impressionable public. The Robin Report

How craft brands are winning incumbent goliaths (a good read) - Medium

VC money is pouring into e-commerce — but are women getting a fair share? (a very good read) - Retail Dive

UNTUCKit to open its first international store and names Wayne Gretzky as a partner - Mr Mag, Glossy

Rapha Racing cuts jobs in a hunt for profitability under Walmart heirs - The Telegraph

Fine jewellery e-commerce startup Mejuri raises $5 million to open physical stores - Betakit

Heist makes its first move into physical retail - The Industry Fashion, The Current Daily

Allbirds takes flight offline with New York, San Francisco stores - Retail Dive, Business of Fashion

The furniture industry’s equivalent of fast fashion is here - Fast Company

Fashion e-commerce news


Behind the turnaround that netted Vinted €50 million (a good read). There was a strategic shift in product development, as well. The company focused on trust and safety between buyers and sellers and concentrated on two core markets: Germany and France. And, as Milda Mitkute, the company’s co-founder, told Forbes in an article earlier this year, the company shifted from a mandatory sales fee to a free product with additional paid services (like promotional marketing on the platform for sellers). TechCrunch

Zara Sets Goal to Sell Everywhere as Amazon Encroaches. Spain’s Inditex plans to make clothes from its Zara label and other brands available online anywhere in the world within two years, aiming to become one of the first truly global clothiers as Amazon encroaches into fashion. Bloomberg, Retail Dive

Amazon Adds J.Crew to Its Fashion Lineup. Shoppers can now find J.Crew fashion on Amazon through a new partnership between the fashion brand and marketplace powerhouse. The curated selection from the J.Crew Mercantile’s Fall ’18 collection includes clothing for men and women, all priced under $300. EcommerceBytes, Retail Dive, CNBC


eBay Expands Consignment Program Globally, Adds Luxury Watches. eBay expanded its consignment program called eBay Authenticate to include luxury watches. The program already includes luxury handbags. The company also announced it expanded eBay Authenticate to several European markets this month, including the UK and Germany. EcommerceBytes, TechCrunch, Bloomberg, CNET

UK online beauty retailer Hut
Group buys skincare products maker. The Hut Group, which operates cosmetics retailing platforms such as lookfantastic.com and glossybox, has acquired skincare products maker Acheson & Acheson. Reuters

Farfetch IPO carries a luxury price tag - Nasdaq

Zalando Taking E-Tail by Storm - Gartner L2

A complete guide to buying ethical clothes on a budget - Fast Company

Alibaba puts undisclosed strategic investment into clothing sharing and rental platform Yi23 - TechNode, China Money Network

Everything You Need To Know About Matchesfashion.com’s New Townhouse In London - Hong Kong Tatler

PostNord and Zalando continue their logistics partnership - EcommerceNews Europe

Mobile commerce


Instagram is building a standalone app for shopping (this could be a big moment for mobile shopping). Instagram is working on a new standalone app dedicated to shopping, The Verge has learned. The app — which may be called IG Shopping — will let users browse collections of goods from merchants that they follow and purchase them directly within the app, according to two people familiar with the matter. Instagram declined to comment. The Verge

Amazon has launched Hindi versions of its mobile website and shopping app in India to better target the more than 500 million people there who speak the language, The New York Times reported this week. The move makes Amazon the only one among the country's largest e-commerce players with such an offering. Retail Dive, The New York Times,
Yourstory

Deliveroo’s Marketplace+ coming to Australia. Food delivery service Deliveroo has announced its Marketplace+ program will launch in Australia in September, enabling businesses with their own rider fleets to join the app. Internet Retailer Australia

Amazon enters Japan's cashless payments fray. Amazon.com of the U.S. has brought the Amazon Pay service to unaffiliated brick-and-mortar shops for the first time -- in Japan. The big U.S. retail and tech group appears to see a lot of cashless potential in Japan, where most consumers still pay for groceries and other goods with banknotes and coins. Nikkei Asia Review

JD.com goes into ride-hailing. Jiangsu Jingdong Information Technology, a subsidiary of JD.com, quietly updated its information on China’s National Enterprise Credit Information Public System in late August. The update added online taxi booking, used automobile sales and public transportation services. TechNode

Luxury Brands’ WeChat Services Fail to Satisfy Customers - Jing Daily

Uber just launched Uber Cash - Business Insider

Williams-Sonoma App Visualizes Future of Furniture Sales - The Wall Street Journal

Grocery app use in 2018 jumps by 50% in the U.S. - The Business of Apps

Dozens of popular iPhone apps caught sending user location data to monetization firms - TechCrunch

 Stats and other interesting news


Stores around the world are about to get a tech makeover, thanks to China - Tech In Asia

Online commerce in South Africa to reach R45-billion ($3b) this year - TechCentral

Amazon confesses it loves humans as much as robots -
Tamebay

Carlsberg scraps plastic rings for recyclable glue - The Drinks Business

Group of Whole Foods workers aims to unionize - The Seattle Times, TechCrunch

Click-and-collect groceries: Sprouts to test curbside pickup - The News Tribune

Heidi Klum, Tim Gunn Jump to Amazon for Shoppable Reality Show - Women's Wear Daily

Amazon’s cashier-free Go store is coming to NYC - The InformationTechCrunch

Millennials top digital grocery shopping in the UAE: Survey - ZAWYA

China’s alcohol e-commerce industry worth $6.1bn - The Spirits Business

87% of UK retail purchases made online - EcommerceNews Europe

UAE Residents Splurge Dh36 Billion on Online Shopping in 2018 - Albawaba

Argos launches 'voice shopping' with Google Home - BBC
This is issue 186, sent 9 September 2018.

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