ECOMMERCE: Let’s recap: Gilt Groupe: A long time IPO prospect who sold for a mere $250 million. Zulily: The hot flash sales winner that actually made it public… before it saw its stock fall by more than 60% and sold to QVC-- for admittedly, a comparative impressive $2.4 billion. Fab: The granddaddy of ambitious ecommerce 2.0 startups that out fundraised the lot of them and then had the most ignominious of fates a sale of less than $20 million.
RETAIL: Dick’s Sporting Goods Inc. prevailed at the auction for Sports Authority Holdings Inc.’s brand name and other intellectual property with a bid of $15 million, people familiar with the situation said Thursday. At an auction that started Wednesday, the fellow sporting goods competitor beat out British retailer Sports Direct International PLC, which came in second place at the auction with a $13 million bid, one of the people said.
MCOMMERCE: A lot of physical retailers think this is your enemy, that the phone is one of the things that’s causing retail to be under the pressure that it’s under,” he said. “But what I’d like you to do is I’d like you to hug it close. The use of phones in the store will actually help the resurgence of physical retail.
ECOMMERCE: Here is a list of ecommerce-related product releases for the end of June — from companies that offer services to online merchants. There are updates regarding Pinterest, cheaper shipping rates from Fulfillment by Amazon, and multiple updates on buy buttons.
ECOMMERCE: Those are Kiva robots, once the marvel of warehouses everywhere. Amazon whipped out its wallet and threw down $775 million to purchase these robot legions in 2012. The acquisition effectively gave Jeff Bezos, its 52-year-old chief executive, command of an entire industry. He decided to use the robots for Amazon and Amazon alone, ending the sale of Kiva's products to warehouse operators and retailers that had come to rely on them. As contracts expired, they had to find other options to keep up with an ever-increasing consumer need for speed. The only problem was that there were no other options. Kiva was pretty much it.
THE INFORMATION: Five times as many people now use Instagram as did in 2013. But despite that strong growth, Instagram has seen a worrisome trend. Between 2013 and 2015, the number of photos shared on average by each Instagram user fell, said two people briefed on the app’s internal data. And just as its parent Facebook has been trying to reverse a drop in how much people share about their lives on the social network, Instagram has to figure out how to deal with the decline in “sharing” on its service. Otherwise over time people may gradually visit Instagram less and gravitate to rival apps, particularly Snapchat, which in the past year or two has gotten much more buzz than Instagram.
ECOMMERCE: Each year brings a series of changes to the world of SEO in ecommerce. Much has been made about the position of SEO and whether you still should be using Google to boost your website over alternatives like social media. Regardless of where you stand on the issue, you should learn about the value SEO has for boosting your ecommerce business. Here are the main ecommerce SEO trends that have emerged this year for successful entrepreneurs to take advantage of.
BRAND: The “Gucci Garden” collection will sell solely via the brand’s ecommerce site, but will be limited to the markets of the United States, Canada, continental Europe, United Arab Emirates, Japan, South Korea and Australia. Women living in these markets who wish to shop in-store can do so via iPads placed in Gucci’s bricks-and-mortar locations, with items then being shipped to either the boutique or the consumer’s home, but only if she lives within the territory.
ECOMMERCE: There’s two kinds of ecommerce failures: Total absolute collapse and insolvency and yunno layoffs and maybe a downround but ultimately surviving. In traditional ecommerce right now, there’s not a lot else. That Birchbox had to cut staff and focus on profits shouldn’t be shocking, nor should it indicate that the company is going under anytime soon. But at the same time, let’s not sugar coat it: The company is having the roughest year it’s ever had.
ECOMMERCE: Walmart has just expanded its free, two-day shipping pilot to the entire United States. The program is called ShippingPass, and it competes directly with Amazon Prime, offering users free, two-day delivery on any item for an annual price of $49. This is just half the price of the $99/year Amazon Prime subscription, but it doesn’t come with the same access to Amazon’s streaming services like Prime Music and Prime Video.
Last Word: The (new) Lean Game of eCommerce
You're looking at the top three investors in eCommerce. What you won't see? Very many lean-operated eCommerce startups. When you read up on eCommerce trends on platforms like CB Insights, it will alarm you."Smart money VC's are backing away from eCommerce investment." Or, "Investment in the eCommerce sector is the lowest since 2014."
While there may be some truth in this, what I am seeing is a little bit different. The types of large scale eCommerce brands that need $100M - $250M of venture financing to achieve an exit are faltering. Why? The unit economics aren't there. And while we are in a perceived IPO lull (except for Twilio's recent magic), no one is going to acquire a company or take public a company with very little chance at profitability. I'm looking at you, Jet.com.
"But Amazon wasn't profitable for a while," you may be thinking. There isn't another Founder / CEO in the world like Bezos. There won't be another for a while and most would say that his re-investment strategy was deliberate. Profitability was an option, all along. Where there is hope and excitement in this sector? There are several startups in the eCommerce space that have grown intelligently, with gross positive margins, a path to profitability and less than $20M in overall venture financing.
Trunk Club was acquired for $350 million on ~ $20M in total financing. They were profitable and they had $8M of that $20M in the bank. No, this is not a unicorn exit. There won't be many in eCommerce over the next five years. But there will be $150-$400M exits. In a bit of ironic contrast, I don't see a positive outcome for Bonobos, a brand that has a cofounder in common with the other. Bonobos has raised at least $127M since it's inception.
So eCommerce isn't dead. Not even close. There will be a host of 50-60x returns on Series A VC financings to come. There is an increasing premium on frugality and path to profitability. There just won't be many $1B+ acquisitions or IPO's. If you ever hear a venture capitalist ask if you can build a $1B eCommerce company, it would be a fab time to end that conversation.
Bearish: eCommerce Startups that have raised $100M+ in venture financing Bullish: eCommerce startups that are bootstrapping or have raised < $20M.