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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


Amazon to tap Brazil beauty obsession with cosmetics partners. Amazon is recruiting major Brazilian cosmetics firms Grupo Boticario and Natura Cosmeticos to sell via the logistics platform it is developing in Brazil, three people familiar with talks told Reuters, making an early play for the world’s fourth-largest beauty market. Reuters

Amazon’s Clever Machines Are Moving From the Warehouse to Headquarters (A must read). In a major reorganization, the retail veterans who once decided what to sell on the site have lost out to the marketplace data scientists. Amazon.com Inc. has long used robots to help humans move merchandise around its warehouses. Now automation is transforming Amazon’s white-collar workforce, too.  Bloomberg

Tencent flagship store on Tmall vanishes after 24 hours (The battle between JD.com and Alibaba continues to escalate). Tencent got everyone talking on Tuesday when it opened the 腾讯旗舰店 (Tencent Flagship Store) on the Alibaba owned Tmall. However, in less than 24 hours, the flagship store was found unavailable on the Tmall site. TechNode

Amazon CEO Bezos is Knowingly Complicit in Online Sales of Counterfeit Goods, According to Report. Selling counterfeit products on the markets available in the United States is illegal. It would just be nice if the law applied to Amazon like it does to everyone else. IPWatchdog

Over 3k M'sian businesses drawn to eBay's 'Go Global' platform. Global e-commerce platform, eBay, which launched its 'Go Global with eBay' initiative almost a year ago, has managed to attract more than 3,500 Malaysian businesses. “Efforts in Malaysia are being localised across
Asean with a strong focus on Thailand, Singapore and Indonesia,”  Malaysiakini

Wish Is a Counterexample. If anything Wish is proof that not all consumers want Glossier and Warby Parker experiences. Not all consumers want to follow brands on social media. Sooner or later it is the consumer who is paying for the brand’s social media posts. Many care the most about price. For
them commerce being boring is not a problem. Boring makes it more affordable. Marketplace Pulse

Noon-eBay deal will 'localise global shopping experience' - CEO. Noon’s partnership with eBay will “localise a global experience” by giving customers in the UAE and Saudi Arabia access to products that are currently only available through e-commerce websites based outside of the region, according to CEO Faraz Khalid. Arabian Business

India’s e-commerce companies face Walmart and Amazon onslaught. In a market that has already attracted significant investment by Walmart and its US rival Amazon — which has committed $5bn to Indian expansion after being beaten out by Alibaba and others in China — do smaller homegrown peers have a chance to compete?Financial Times

Pinduoduo in disputes with store owners after a quality crackdown. Store owners believed Pinduoduo executed improper standards when evaluating their products. The platform launched a wave of internal quality and authenticity check to crack down on counterfeit goods. Suspicious products examined would be
labeled in quality ranks A, B, C, and D, in which A stands for the worst situation. As punishment, Pinduoduo will freeze the store owners’ business trading accounts and orders. The owner is demanded to compensate consumers’ loss by paying up to 300% respective sales revenues. TechNode

Amazon India launches
lending marketplace for sellers. Amazon India has launched a marketplace for lenders and sellers to allow sellers to choose from competitive rates and loan offers. It will also open its APIs to lenders to plug in and lend to the sellers as part of the new programme, called the seller lending network. The Economic Times

Etsy is raising seller fees and introducing new subscription plans while promising to boost its marketing budget to bring more buyers to the site. One positive thing worth noting: listing fees are not increasing. But transaction fees (commissions) are rising from 3.5% to 5%, and they will begin including not just the selling price, but shipping as well. EcommerceBytes, Fast Company

Tmall Launches Try-Before-You-Buy Service. The new service will let Alibaba Super Members with a Zhima credit score of over 550 to order clothes without payment and try them for seven days. If they decide to keep them, Tmall will automatically deduct the cost from their Alipay accounts. If not, shoppers can return them free of charge. Alizila


Kentucky man convicted of selling counterfeit cycling helmets on eBay. After a four-day trial, Matthew S. Stepp of Shepherdsville, Kentucky, was found guilty Friday of eight counts of mail fraud and three counts of trafficking in counterfeit goods for selling counterfeit high-end bike helmets on eBay. Bicycle Retailer

Back Market raises $48 million for its refurbished device marketplace. French startup Back Market is taking advantage of this fragmented industry to create a marketplace and aggregate all refurbishers on a single online platform. Back Market has generated over $110 million in gross merchandise volume (GMV) over the past three years. The service is now live in France, Germany, Spain, Belgium and Italy. The company just expanded to the U.S. TechCrunch, EU Startups

Catch Group reports losses after $24.9m writedown. E-commerce company Catch Group reported a $17.8 million loss for the year ended 30
June, 2017, after booking a $24.9 million impairment on the value of its goodwill. The writedown was in the company’s services business unit, which comprised its daily deal business, Scoopon, which it sold to Lux Group on 1 December, 2017. Internet Retail Australia

Amazon block arbitrage traders from Amazon business -
Tamebay

eBay Announces First-Ever Community Sneaker Drop - eBay Inc

Naspers is in talks to invest in Southeast Asia’s Carousell - TechCrunch

Online Coupons Work in the Moment but Don’t
Seem to Alter the Seller-Shopper Relationship (Fascinating Research) - UCLA Anderson

Weekly Marketplace Insights


It if can be automated, it will be automated all in the name of speed

This past week, Spencer Soper wrote a fascinating piece about the increasing role of data science and automation at Amazon's retail business. I have been thinking over the last few weeks that automation, robotics and data science have become the part of market-leading marketplaces such as Amazon, JD.com and Alibaba. Almost like a new set of levers that can be added to the levers such as pricing, selection and repeat purchases.

Large marketplaces are able to leverage customer and sales data to provide solutions that lead to speed. Increasingly across the globe, speed is becoming a lever for large dominant marketplaces. Marketplaces still are not able to deal with events that are unique nature ie. natural disasters as the data they use to modelling is more aimed at normal operations.

Speed is the critical element for customers that are making a purchasing decision when starting their product searches on Amazon or Google. This is where I am taken back to a 2016 conversation in which Bill Gurley from Benchmark talks about the changes in e-commerce. Automation and logistics have ensured that the top of the purchase funnel has forever changed, this is the reason why Google continued to struggle in its battle with Amazon. The kicker to this argument is emerging markets like India which uses traditional forms of delivery via Kirana stores to get products to customers, yet in China and India, innovation is happening at faster speeds than what is seen in European and US marketplaces.

Consider Home Depot's announcement that they will be investing $1.2b into logistics. Home Depot continues to be a first mover in their execution of being an independent business that can withstand Amazon's impact. When I attended Shoptalk in March, I attended a talk that was done by a senior JD.com staff member about the role that automation has for new logistics facilities. Logistics is and will be a moat for product marketplace businesses as it provides a large defensible against potential market entry and also provides marketplace users (buyers and sellers) the platform to be able to transact in a manner that provides customer assurance without the need of escrow services. 

While Amazon has been reluctant to talk about the impact of automation and robotics on their business, Chinese marketplaces are investing into these levers to ensure that they can provide services that lead to same-day delivery. JD.com has a logistics facility that contains four staff members in it. Drone delivery is already being done in China as these businesses have understood the impact that speed has on their bottom line. McKinsey has a great "Deliver on time or pay the fine: Speed and precision as the new supply-chain drivers" post that indicates that supply chains are at the forefront of investment and in my opinion will determine the winners and losers.

Automation of logistics is not going away, the use of data science and technology to calculate user demand and the needed supply will become the norm of the market-leading marketplaces.

The above is the reason why I take a global look at the marketplace industry. There is not one region that has a complete solution that has determined market leadership. I also believe that in the product marketplace industry the winner takes all philosophy is not correct as total addressable market sizes continually go larger as new customer join the internet, do their first transaction on a marketplace etc. I have in private said that I believe the marketplace leaders are looking across the globe for solutions at other large marketplaces and that they either take business models verbatim into their business operations or make changes based on their internal data or base it on their understanding of their customer based on data.

To repeat, automation of logistics is not going away, the use of data science and technology to calculate user demand and the needed supply will become the norm of the market-leading marketplaces. The need for speed in operations, planning and execution will determine who can remain standing when the global businesses start looking at going into markets that contain large incumbents such as Amazon and Alibaba.

Onwards.

B2C (Business to customer) news


Google Enters Deal With Carrefour to Sell Food Online in France. By early 2019, French shoppers will be able to buy Carrefour’s products through Google platforms including Home, Assistant and the Google shopping destination in France, the retailer said in a statement. Carrefour didn’t comment on the financial structure of the deal. Bloomberg

Is Amazon No. 1 or No. 2 in furniture now? One Click said Amazon’s mattresses and box spring business jumped 82% to more than $1.1 billion last year. Bedroom furniture sales increased 45% to more than $800 million, and living room furniture sales were up 40% to more than $550 million. Furniture Today

Goldman Sachs PE Unit Buys Slickdeals From Warburg Pincus. Goldman Sach's private equity arm and Hearst Corp. have acquired online coupon and deal-sharing company Slickdeals from Warburg Pincus, according to a statement Thursday. The deal valued the Las Vegas-based company at more than $500 million, according to people familiar with the matter. Warburg Pincus -- which invested in Slickdeals in 2012 -- will generate a return of 7.2 times on its investment from the sale, said the people, who asked to not be identified because the matter isn’t public. Bloomberg

Amazon catching up to Chewy in pet supply market. Although not jumping into the pet supply game until recently, Amazon is already
rivaling online giant Chewy.com. Amazon is close to Chewy in unbranded searches on Google and Amazon, like Chewy, launched a private label of pet products earlier this year. FierceRetail

Tired Old Brands Can’t Stomach Amazon-Whole Foods. For the lumbering giants of the packaged-food and consumer-products industries, things are getting rough. Packaged-food and consumer-products companies—including heavyweights like Kraft Heinz Co. and Procter & Gamble Co.—are the worst-performing basket of stocks in the S&P 500 Index over the past year.  Bloomberg


The home-flipping startup Opendoor requires a lot of money. It now has $325 million more.And SoftBank could come next. The real estate industry requires a lot of money to challenge it: Startups like Opendoor — which buys houses from people and flips them — not only need investment to grow into more cities, but also serious lines of credit in order to purchase homes. Recode

Google adds tools for brick-and-mortar stores to boost interest from online shoppers. Despite the growth of Amazon and other e-commerce giants, offline commerce — buying goods from brick-and-mortar stores — still accounts for around 90% of all retail spending. So in a bid to bridge the divide between online and in-store commerce — and potentially get itself a bigger piece of the action — Google is announcing a number of new features for Google Shopping aimed at physical and local merchants. TechCrunch, Google

Costco to launch e-commerce business in Japan in 2019. Costco Wholesale Japan Ltd. plans to launch an e-commerce service in 2019, officials said, with the company aiming to take advantage of the growing popularity of online shopping services here. The Japan Times

Rocket Internet Scores Best IPO as Online Furniture Seller Soars in Debut. Home24 rose as much as 35
percent on the online furniture retailer’s first day of trading in Frankfurt, the best ever share debut for a startup backed by Rocket Internet. Home24, which sells home furnishings such as sofas and lamps via its websites and apps, rose to a high of 31 euros after setting a final offer price of 23 euros, near the top end of its range. Bloomberg

J.C. Penney plots 650 Fanatics shop-in-shops. In 50 top sports markets, the stores will host a "premium" Fanatics shop, with 1,300 sq. ft. of space, featuring 55-in. mounted flat-screen televisions, back wall fan graphics, sports paraphernalia, an oversized headwear wall and iPads connecting to the retailer's online Sports Fan Shop. Retail Dive, J.C. Penney

Online baby retailer changes name as shoppers wait for purchases in Australia. An online baby clothes retailer accused of failing to deliver goods purchased through its website is still operating despite telling its customers it had gone out of business. Oopsie.com.au went offline earlier this year after dozens of complaints to NSW Fair Trading and more than 150 posts on ProductReview.com.au from buyers claiming they had not received their orders. The Sydney Morning Herald

Why Meal Kits Are Going Offline - Eater

Prime savings to reach around half of Whole Foods Market stores this week - TechCrunch

 

D2C (Direct To Customer) news


The Story of Great-tasting Beverage Brand Based In New York City. "As soon as we started serving RISE on tap, people from all over started asking us for more. To keep up with demand, we moved our production facilities from our kitchens to a garage and on to to the brewery where we brew today.” Drinkpreneur

BarkBox cuts Facebook spending in favour of traditional channels. The subscription service, which delivers boxes of dog treats and toys starting at $21 per month, has spent around 75
percent of its ad budget on Facebook since launching in 2012. In April, it cut that to 25 percent to spend more on TV, direct mail, events and retail, with plans to add radio and out of the home. Digiday

How web-mostly retailer Untuckit tailors stores - DigitalCommerce 360

Fashion e-commerce news


Zara Goes High-Tech in Race With Amazon. Inditex is benefiting from investments in technology that are boosting efficiency online and in stores, helping the Zara owner contend with Amazon’s foray into the fashion aisle. Inditex has rolled out a wave of new technology at select Zara stores around the globe in recent months, including augmented reality and hologram displays of clothes, as it moves to erase the lines between online and in-store operations. A new concept store in the U.K. uses robot arms to deliver internet orders to walk-in customers. Bloomberg

LVMH targets growing jewellery sales with online boost. LVMH, the French group behind the labels Louis Vuitton and Celine, is launching a dedicated jewellery section on its multi-brand e-commerce site, joining rivals jostling for a slice of one of the fastest-growing luxury goods businesses. Reuters

Xiaohongshu 小红书aka Little Red Book or RED)  is fostering e-commerce via word of mouth. As part of the e-commerce revolution for purchasing better products, Xiaohongshu’s unique positioning as a trustworthy, celebrity-approved distributor of overseas products is a great channel for brands that look to capitalize on the social commerce trend. TechNode

Zulily looks beyond children's clothing. A: I think
about Amazon as a place to go when I need something. Zulily is more about getting up at 6 a.m., getting my coffee and going to Zulily to see what it's selling. San Francisco Chronicle

Rimowa is launching a new online identity under LVMH ownership. Tuesday, Rimowa’s new European site, built with the agency R/GA, is relaunching with its first full e-commerce store and a new offline-online inventory strategy that unites the two retail groups. With the rollout, new digital services like repair appointments and customer service will be introduced to customers. The brand’s first e-commerce site in the U.S. will follow in September. Glossy

How Depop is catering to Gen Z and millennials to get an edge over resale competitors
.Now with 10 million users, and buoyed by a recent $20 million Series B round of funding, Depop rivals the likes of peer marketplaces like Poshmark and ThredUp.Today, the U.S. makes up 30 percent of total users, mostly comprised of sellers and buyers in the Gen-Z and young-millennial demographic. Glossy

eBay Pitches Luxury Brands on Benefits of Marketplace Ads - EcommerceBytes

 Mobile commerce


Shopping app Wish building an empire on $2 sunglasses to rival Amazon, Walmart. Szulczewski also said Wish hit 75 million monthly active users this April, has over 1 million merchants on its site and offers a selection of over 200 million items. The company expects to ship over 1 billion items this year. CNET

WeChat launches new shopping function that lets you shop on JD.com with just a few clicks.WeChat has launched a new shopping function that lets people shop on JD.com with just a few taps. Now simply by entering consumer product related keywords into the search box at the top of the WeChat homepage or the search function in the “Discover” tab, top search results popping up are product pages JD.com. TechNode

Instagram’s new shoppable tags follow lead taken by Chinese social commerce sites. Shopping tags that link directly to a product listing are not new: China’s social commerce companies have been using them since 2015, and Facebook tried something similar in the same year. South China Morning Post

Instagram adds shopping tags directly into Stories. Instagram’s shoppable tags are about to pop up in Stories. The company started testing the feature back in 2016 with a limited set of 20 partners. Since then it’s been a hit, expanding broadly to regular brand posts in the feed. Starting today, hitting a little shopping bag sticker in a Story will lead you to more details on the cute and/or dope thing that caught your eye and how to score it. TechCrunch

HomeFixer teams up with Hirsch's for simplified home improvement in South Africa. According to Craig Smith, special projects manager at Hirsch’s the HomeFixer app is a natural extension of the Hirsch's digital presence. “The collaboration enables us to offer deals to qualified customers when they are actively engaged in home improvement projects. By meeting the needs of the ever increasingly-online South African consumer, Hirsch’s and HomeFixer are able to tap into the growing digital economy, which is so prevalent.”  Bizcommunity


Uber Eats Boss: All We Think About Is the Customer. As Uber Everything head Jason Droege explained on stage at Skift Tech Forum today, those statistics are born out of a relentless focus on how to personalize every customer interaction on the app so they get exactly what they want as quickly and reliably as possible. Skift

Japan Mercari's IPO to raise $1.2 billion after top-of-range pricing - Reuters

Deliveroo fattens its market presence by opening to restaurants that do deliveries - TechCrunch

Will 11 Street Turn from an Ugly Duckling into a Swan?  Business Korea

Shopping apps poised for profitable 2018 after 54% growth - Retail Dive

Alipay launches in 20 European countries in 2018 - EcommerceNews Europe

Stats and other interesting news


Microsoft takes aim at Amazon with push for checkout-free retail - Reuters

Sea is looking to boost war chest with $400m capital raise - Tech In Asia, Dealstreet Asia

Kogan.com founders 'reluctantly' sell shares worth $42 million - The Sydney Morning Herald

Ford Is Working on a Self-Driving Delivery Service with Postmates - Fortune

There are 173,000 e-commerce websites in France - EcommerceNews Europe

Number of online stores in Austria has tripled in ten years EcommerceNews Europe

Ocado's fulfilment vision points way to a faster future - The Grocer

Tencent Tests Delivery Robot - Marbridge Consulting

South African property funds mull office conversions for online retailers - Business Live
This is issue 174, sent 17 June 2018.

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