It’s only fitting that on February 29, in a leap year, we take a look at companies around the world taking a big leap into e-commerce and what their results look like. Highlights include the US, UK, Indonesia, India and South Korea.
We start with Nordstrom CFO Michael Koppel who said that merged retail channels have a higher cost. Waterstone’s e-commerce director Ed Armitage warned retailers to fix the basics before spending hugely on new technologies. CEO William Tanuwijaya‘s e-commerce company Tokopedia is set to become Indonesia’s first $1 billion unicorn. South Korean global marketing group Cheil Retail consolidated operations under one retail banner.
New Flipkart CEO Binny Bansal plans to take on Alibaba, Amazon, Baidu and other competitors by focusing on e-commerce and the supply chain to compete better. Alibaba-backed digital payments company Paytm plans to develop an e-commerce platform exclusively for luxury goods. Internet pioneer K Vaitheeswaran laments the e-commerce business “some day” profits model. Forbes says the next big thing is programmatic commerce where your fridge, freezer, dishwasher and other smart home devices monitor and reorder products for you automatically. Then there is that other hot trend – store closings as losses mount at Sears, Kohl’s and Best Buy. Finally, there’s that pesky problem of chargebacks whether you’re a retailer off-line or online. Signifyd hopes it has the technology to respond to this $120 billion chargeback problem.
Nordstrom discovers the high cost of merged channel
Nordstrom CFO Michael Koppel said in an investor call last week that a merged-channel “business model has a high variable cost structure driven by fulfillment and marketing costs in addition to ongoing technology investments.” That’s CFO-speak for “it usually costs more.”
“In evolving with our customers, we made significant investments to enable customers to shop in multiple ways. This has resulted in market share gains, but also structural changes to our operating costs. For example, e-commerce now represents over 20% of our sales, a notable increase from 8% five years ago,” Koppel said. “With our increased investments to gain market share along with the changing business model, expenses in recent years have grown faster than sales.” Via computerworld.com
Waterstone’s e-commerce boss: Fix the basics before showboating
The e-commerce director at Waterstone’s has a firm stance when it comes to what the high street will look like in 10 years (“probably not much different”) but claimed that those retailers likely to thrive between now and then are channeling their immediate efforts into the unsexy task of fixing the basics of the on and offline experience.
It comes amid a surge in tech companies promising retailers a myriad of solutions and innovations to help woo more customers through their doors. As Mobile World Congress draws to a close, it’s clear such conversations around things like artificial intelligence and virtual reality are only going to gather pace.
Indeed, many of Waterstone’s fellow high street giants have tried to “future-proof” themselves by investing swathes of cash into start-up incubators (like John Lewis), digital showrooms (see Argos) or testing things like beacons in store (as Ted Baker and House of Fraser have done). Recently, The Drum spoke to New Look’s digital boss Jack Smith who outlined its plans for how approaching things like virtual reality. Via thedrum.com
Tokopedia set to become nation’s first Unicorn
William Tanuwijaya was helping small companies build websites when he began shopping an idea for Indonesia’s first Internet shopping hub. It took 11 pitches to get funding, but his startup is now verging on becoming the nation’s first unicorn.
The son of a factory worker created Tokopedia in 2009 just as the economy and Internet usage mushroomed in the world’s fourth-most populous country. A then-record $100 million funding round that included SoftBank Group Corp. and Sequoia Capital in 2014 announced the nation’s coming-of-age as a bona fide destination for technology investment.
Tanuwijaya is the poster child for Indonesia’s online boom, a 34-year-old entrepreneur who started without family money or credentials and now hobnobs with government officials. With his company taking its name from the Indonesian word for store, he wants Tokopedia to become a local answer to Alibaba.com, and he credits that drive to some dismissive advice he received from a potential investor in 2008. Via dealstreetasia.com
The new face of retail: Behind Cheil Worldwide’s focus on this ‘highly fashionable’ channel
Cheil Worldwide, the South Korean marketing services group which is part of the mighty Samsung empire, posted some interesting news last week – that it was consolidating its entire global retail resource under a single banner. Called Cheil Retail, the new unit will be led by Simon Hathaway as the global chief retail office. Hathaway will head a team of 1,500 people across 52 offices and 43 markets – so it’s a big, and international, network.
What will Cheil Retail do? Well, it’ll be a lot more than simple shopper marketing. According to the press blurb issued by the company, “[Cheil Retail] will work across both traditional retail and ecommerce, offering onmi-channel solutions for clients.”
The interesting part is the “omni-channel” bit. Although many commentators make a distinction between ‘retailing’ and ‘ecommerce,’ the two things are actually the same; the distinction comes about, I think, because of the disruption wrought by online giants like Amazon on ‘traditional bricks and mortar’ retailers. Via thedrum.com
New Flipkart CEO Binny Bansal Wants to Be the One True King of Ecommerce; Will Focus on Commerce & Supply Chain to Take on Alibaba, Baidu!
Only a few weeks after being named as the CEO of Flipkart, Binny Bansal has made it clear that his ambitions are sky-high. He plans to make Flipkart, currently the number 1 ecommerce site in India, a force that will take on the likes of Alibaba, Baidu and Amazon ! The company will focus on commerce, supply chain operations and customer service for the same. Binny Bansal has given himself 10 years to create a giant that will lead this sector.
Binny Bansal will also focus on expanding the warehouse business-eKart. The competition in Indian ecommerce sector is heating up. Snapdeal has been acquiring multiple rounds of funding in the last couple of days. Amazon on the other hand is slowly and steadily trying to create its dominance in the Indian market. Amazon is said to have invested about %540 million in India since the beginning of 2016. Via techstory.in
Paytm plans to launch ecommerce platform for luxury products
Paytm may foray into the luxury space through an online and mobile e-commerce platform exclusively for luxury products, said a report in The Economic Times quoting sources. According to sources, Paytm has roped in marquee luxury brands like Gucci, Fendi, Furla and Burberry for its mobile luxury platform Anasa and is in talks with more brands.
The Alibaba-backed digital payments and e-commerce is also reaching out to Indian retailers of luxury brands for Anasa. A Paytm spokesperson, however, categorically stated that the company is not planning to enter the luxury space right now. Via dealstreetasia.com
Will e-commerce companies (n)ever make money?
I recently read three interesting sets of news items relating to the e-commerce scene in India. The first set reported the financials of major Indian e-commerce firms for 2014-15 and it seems things are not as bad as I envisaged. In fact, they are worse. Without exception, losses have mounted faster than sales have grown and margins remain unclear.
The second set was an announcement by the founder and CEO of a leading Indian e-commerce firm that his company would become profitable in three years from now. The same CEO had made the same announcement two years ago, a change in the year when profitability would be achieved. Another e-commerce CEO suggested that in a fast-growing market, growth is the only metric worth going after. In other words: we cannot waste time trying to make money now, when customers are falling over themselves to shop with us, but we will think about it later when there maybe other competing and superior alternatives available. Sounds strange to me. via Your Story
The Next Big Thing in Retail: Programmatic Commerce
Imagine this: you wake up in the morning and your coffee machine, as it pours you your first cup, tells you it’s almost out of your favourite blend. Rather than making a mental note to yourself to remember to buy some more on your next store visit, your machine instantly does the ordering for you – adding it to your shopping basket, along with the detergent that needs replacing, the toothpaste you’re running low on, and the mascara that is just about to dry out.
When you leave for work, you get an update that the order will be delivered to the trunk of your car that afternoon. You then get a notification that it’s your friend’s birthday, and based on social media data that your digital assistant has pulled, you are recommended an ideal present to buy. You automatically add that to the checkout also. Welcome to the age of programmatic commerce: a world where mundane repeat purchases and those easily solved by data insights, are automatically done for you. Via forbes.com
The hottest trend in retail? Store closings as sales plunge at Sears, Kohl’s & Best Buy
It’s not easy being a big retailer these days. Amazon is eating almost everyone’s lunch. And consumers aren’t spending as much as many economists thought they would — despite lower gas prices and rising wages. It seems that people are saving more and paying down debt.
That’s bad news for the likes of Best Buy, Kohl’s and Sears. All three reported their latest results on Thursday. Via kfor.com
Helping e-commerce with those pesky chargebacks
So it was exciting to hear about what Signifyd is doing for this problem area. The company is all about risk assessment. What it does behind the scenes is to apply analytics to more accurately assess the risk around e-commerce transactions. What that means for the actual merchants is that Signifyd can offer a 100% financial guarantee against chargebacks.
When you consider that e-commerce fraud has a $9 billion net cost and a $120 billion cost in lost revenue per year, you understand that this is an important offering. The existing solutions offer a risk score and rely, to an extent, on human assessment to decide whether or not to accept a transaction. Now, using machine learning and behavioral analytics, the process can be automated. Via computerworld.com
Venture Capital Update
Join us tomorrow as we take an in-depth world tour to give you an update on where venture capital is hot and where it’s not.