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Here’s what you should know today.

1. Singapore Press Holdings sets up new venture with freelance services startup

Prominent media organization Singapore Press Holdings (SPH) announced today that its wholly owned subsidiary, SPH Interactive, has invested $709,000 in a joint venture with Malaysia-headquartered startup RecomN.

Recommend.sg, which will incorporate SPH’s online business directory portal, STDirectory, which contains around 100,000 small businesses. It will be operated by RecomN.

RecomN launched in Malaysia in 2014 to be a portal for a number of different services, from cleaners to technicians to music teachers. It recently re-branded to Recommend.my, allowing users to contact service providers directly, browse user reviews, and check their portfolios through photo albums.

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2. The real cost of ecommerce logistics

In 2015, almost 60% of online transactions included free shipping, according to the National Retail Federation.

“Any retailer who still is holding on to the past, that shipping isn’t free for me so I can’t offer free shipping, will find themselves not being relevant to the retail world,” said Satish Jindel, president of ShipMatrix, a shipping operations consulting company.

Amazon lost $7.2 billion from shipping last year, the difference between Amazon’s shipping cost and what they charged for it.

 Though lowering the cost of delivery, they’re still charging the customer in some way, partly by adjusting their product prices on a real-time basis, based on supply, demand and the buyer’s habits, just like an airline. Customers don’t realize they may be paying more for their goods.

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3. Recommended Reading: Amazon goes offline with Amazon Fresh pickup and bookstore

Amazon opened up its first New York City bookstore location last month, bringing its total number of physical bookstores to seven. And in Seattle, AmazonFresh Pickup opened to the public for the first time, allowing customers to place orders online and pick them up from a drive-in location.

While both boasted seamless transactions — for paying Amazon Prime users — each had a few quirks.

 No cash is accepted. Customers check out as a $99/year Amazon Prime member and receive discounted prices, or pay with a credit card and pay full list price. Transactions are pretty seamless — as long as you are a Prime member and have downloaded and installed the app.

“Amazon is sort of looking 5-10 years down the road that you need to have some kind of physical footprint out in the world,” said Paco Underhill, retail consultant. “When bricks and mortars catch up with the omnichannel world they’re going to give Amazon a run for their money.”

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Here’s what you need to know today.

1. Thailand’s Power Buy will be going omnichannel

Power Buy is an electronics retailer that operates under Thailand’s retail giant, Central Group. The department is a permanent fixture in Central Department store’s offline locations nationwide.

Currently, Power Buy has 86 locations spread across the country, and its new omnichannel strategy will leverage from that.

Power Buy also has an online platform, and management believes the integration of online and offline will lead to an 8% increase of sales for this year.

Power Buy will make it easier and quicker for online consumers to shop on its website, and train its staff to integrate technology touch points in offline stores. Employees will be able to use tablets to check stock lists and look for discounts right away in store, which will lead to better service for customers.

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2. How is Amazon disruption grocery?

There’s no real mystery to why Amazon would be so assertive in grocery: Total 2015 U.S. supermarket sales were $649 billion, according to the Food Marketing Institute.

As a high-frequency purchase, grocery makes a lot of sense for Amazon.“They want that consistent customer back in the fold. Most consumers look at grocery shopping as utilitarian. It’s not passion purchases, so to some degree any time you remove the pain points you win. Grocery is ripe with opportunities,” said Brendan Witcher, Forrester analyst.

“Forget about department stores. Groceries is where retail is going to be won over the next five years.” Cooper Smith, research director at digital insights firm L2.

As Amazon learns the ropes of grocery retailing, that leaves a window open for traditional retailers to move assertively to maintain shopper loyalty. But the window is narrow — and shuttering quickly.

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3. Recommended Reading: How Boohoo is beating the rocky American retail market

The online pure-play brand that quickly churns out trends targeting a Gen Z and millennial audience reported a 145 percent revenue growth in the U.S. in its financial year ending February 28, from $17 million to $43 million.

Boohoo is quickly gaining ground in a market that has proven volatile for retail. Department stores like Macy’s, JCPenney and Sears are closing hundreds of physical locations, while retailers like American Apparel, Wet Seal, Payless, Rue21 and The Limited have filed for bankruptcy.

Boohoo’s focus, meanwhile, on the American market kicked into gear over the past year, including its acquisition of Nasty Gal. While it recognizes the value in a physical retail presence, Boohoo’s biggest competitive strengths play out online.

“Retailers have been able to follow the same playbook for decades, only to have recently had the rug pulled out from under them,” said Drew Ungvarsky, CEO of digital agency Grow.
“Younger, online-born companies have room now to come in with a new relationship between the physical and online space. Ultimately they’re finding a reason for people to go to the store.”
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Here’s what you should know today.

1. Fintech startup Wecash raies $80m in Series C 

Fintech startup Wecash announced today that is has raised US$80 million funding in a series C round led by China Merchants Innovation Investment Management.

Founded three years ago, Wecash is the first online credit evaluation platform in China.

Wecash will provide credit assessments within three minutes once the required data is provided. After being connected to users’ social media accounts for credit certification, the online credit assessment service enables users to obtain various services such as capital borrowing and lending.

Wecash founder and CEO Zhi Zhengchun said the company will use the funds to enhance its lending artificial intelligence, enrich offline and online consumption scenes.

Read the rest of the story here.

 

2. Ralph Lauren shifts to ecommerce

Facing falling sales, Ralph Lauren announced that it would shutter its flagship Polo store on New York’s Fifth Avenue and continue cutting jobs, shifting the savings to its ecommerce business.

However, the brand may face some digital challenges.

Consumers now pay more attention to products than brands, a trend reflected in search behavior. In the past year, search volume for non-branded terms such as “polo shirt” grew twice as fast as branded keywords like “Ralph Lauren,” according to L2’s study. In addition to brushing up on its more superficial digital assets, Ralph Lauren will need to confront this new reality.

Read the rest of the story here.

 

3. Recommended Reading: Why Amazon is so focused on groceries right now

Recently, Amazon has intensified its efforts in the grocery space. Last year, the company expanded its AmazonFresh delivery program to a number of new cities and lowered the price from $299/year to $15/month, equal to a substantial drop.

Just last week, Amazon announced a new program called AmazonFresh Pickup at two locations in Seattle where customers will soon be able to order groceries on their phones and then retrieve them at a drive-thru kiosk.

The opportunity is huge, with nearly $1 trillion in annual sales, but the timing of its current push is curious

With speedy delivery and tens of millions of items available on its website, Amazon has long aspired to be a one-shop for its customers. But groceries has long been a weakness. Most Americans shop for fresh food multiple times a month, and losing out on that frequent purchase means shoppers depend on rivals like Wal-Mart and Costco, rather than just looking to Amazon for all their needs.

Read the rest of the story here.

The five most valuable companies of today account for almost $2.4 trillion in market capitalization combined while only employing around half of the people that normally attend the New Year’s Eve celebration in New York City’s Times Square.

This number may not tell us much per se but when we think that the whole continent of Africa with a population of 1.2 billion people has a combined GDP of $2.2 trillion, (International Monetary Fund) we realize that there was never a time in recent history where so much wealth was generated by such a small number of people.

If we think of these tech giants in simpler terms, we have a company connecting people (Facebook), another one organizing the world’s data (Google), one that’s aspirational (Apple) and another that makes businesses more efficient (Microsoft).

Amazon, on the other hand, is set out to become the world’s marketplace.

And even to this day, they continue to hold true to its original mission statement, which we can consider as their “Box Two”, which is to be “earth’s most customer-centric company, where consumers can find anything they want to buy online and at the lowest price” (Amazon.com).

In its annual letter to shareholders, Jeff Bezos characterized Amazon as an “invention machine” which three main pillars or “Box One” are: Prime, their marketplace and AWS. Not only will Amazon Prime members account for 50% of American households this year but they also spend more than twice as much and order much more frequently than non-members.

Members not only get free and fast delivery but other benefits such as video streaming, which in the end results in higher conversion rates and retention. The company is allocating almost $6 billion on original content next year.

With more than 63 million members spending around $1,300 each year and a retention rate of more than 90% (Consumer Intelligence Report, 2016), numbers seem bright for Amazon. We also see that last year, Amazon alone was responsible for 51% of the growth in US ecommerce while expectations are set on the fact that total global sales are predicted to reach $28.3 trillion by 2018 with ecommerce accounting for 8.8% (eMarketer, 2014).

Lastly, when looking into Amazon cloud service, AWS, we find that they lead adoption rate with 57% and around $10 billion in revenue this year. Spending on public cloud Infrastructure as a Service (IaaS) hardware and software are also expected to reach $173 billion within the next ten years – the market growth potential is massive.

Amazon ‘Box Three’

The new global logistics paradigm

Not that long ago, only a handful of retailers offered free shipping. Now, everyone is forced to try and do so, hoping they won’t run out of oxygen before it happens. Amazon has changed the rules of the game for the retail industry with its tremendous access to cheap capital that allows them to make multi-billion dollars investments in their fulfillment infrastructure.

They have opened more than 180 fulfillment centers across the globe surpassing any other retailer and only last year, they opened 28 sorting centers, 59 delivery stations and more than 65 Prime Now and Fresh delivery hubs with the intention of delivering goods to consumers in less than 60 minutes.

Amazon also offers a platform called Fulfillment by Amazon (FBA), which is a way for third-party retailers to take advantage of Amazon shipping infrastructure. FBA saw its active users grow more than 50% last year while nearly 50% of total third-party units delivered was through this platform.

To this day, the Achilles heel for Amazon continues to be its shipping costs, which account for 11% of its overall sales and have increased each year to almost $12 billion in 2015. Shipping fees collected – mostly through Prime users – are only 50% of all shipping transportation costs making this situation unsustainable in the long-run.

Amazon needs to reduce its dependency on external providers and change the role it plays in the delivery of products.

The Seattle-based company has not sat quietly and recently made of series of moves to strengthen its logistics arm:

  • obtained a freight-forwarding license through one of its Chinese contractors that allows them to sell space in cargo ships potentially becoming a sort of travel agent for freights
  • leased 40 US cargo planes that could account for 20 to 30% of its cargo volume independently
  • started testing the usage of parcel-drone delivery under the “Prime Air” platform
  • utilizes more than 30,000 robots at its warehouses
  • started delivering packages under the “Amazon” brand with leased truck trailers.

Amazon has also recently focused on its “last mile” strategy, which is the final and normally most expensive part of a package’s trip to a customer’s front door.

Amazon started to team-up with delivery startups in Europe, mostly the UK, and introduced its own crowd sourcing delivery service called “Flex” that uses contract drivers to deliver its regular packages directly competing with FedEx, UPS and if thinking about future possible business models, with Uber.

Amazon has also filed a patent to use transient warehouses that would allow smaller vehicles to access items from places other than brick-and-mortar locations.

This is Amazon’s move into expanding across the supply chain by focusing on logistics components that were previously outsourced — first inbound logistics and then home delivery.

Once they have built a sustainable and efficient transportation network over the next 5 to 10 years, others will be able to use it and Amazon will market it accordingly, just like they did with their cloud computing business.

This way of doing business is explained by Freightos CEO Zvi Schreiber in Techcrunch as being part of the development process at Amazon. First, you identify some inefficiency and start developing a technological solution internally, then as you scale that solution and it becomes a platform, you can offer it as a paid service to third-parties.

Amazon has done this for things like product development and warehousing to payment systems.

Figure 1. Amazon’s vertical integration in the supply chain (Freightos, 2016)

In the following years, we are going to see a disruptive change in the current transportation business as Amazon will not only compete domestically but it will also become a global delivery company capable of moving goods directly from China to consumers in the US or Europe through its transportation network that ranges from cargo ships to drone deliverance.

Nowadays, ocean freight continues to be mostly a “paper-based” industry with room for technological improvement with consumers keen to have faster and cheaper access to a broader range of products from around the world and merchants eager to have a broader market.

This is what Amazon believes is a unique opportunity to enter both the $1 trillion market of cross-border online sales and tap into the $350 billion ocean freight industry.

Disrupting fashion

Although most of Amazon sales comes from either books or consumer electronics, there’s one category that has seen tremendous growth over the past few years: clothing.

Amazon has invested heavily in setting itself as a fashion destination for anyone looking to buy clothing online. Many designer brands have decided to be on the platform to take advantage of its huge consumer base, its excellent supply-chain management and the fact that Amazon has promised them full price on their listings.

Figure 2. US sales of apparel and accessories (Quartz, 2016)

On the other side, we see that all major department stores have witnessed their stocks fall last year as their long-term market outlook seems rather obscure with more people turning to Amazon for apparel.

Macy’s had to close 100 stores last year and it’s said that others like Nordstrom and Sears would have to cut down around 30% their stores in order to have the same level of sales per sq foot as pre-recession (2008) times.

Amazon has shifted its initial strategy about fashion to start offering more high-end designer names in its listings somewhat successfully with “accessible luxury” brands but most higher-end luxury labels still don’t want to be associated with what they consider to be a “simple marketplace” and diminish their brand equity.

Luxury is defined mostly as a customer experience that is difficult to replicate online and by no means in a template-ized format where their listings would be next to fast fashion or lower-end brands. But this could turn out to be a good opportunity for Amazon to acquire brick-and-mortar stores in exclusive locations -Macy’s for example – and build what could become an aspirational brand in the future, much like how Apple went from being a tech company to a luxury one.

Even when they are not officially on the platform, high-end luxury brands like Louis Vuitton also have products listed on Amazon. We can see that even when their products rank higher than other prestige brands, the bulk of their sales happened in the grey market through third-party sellers.

This phenomena involves mostly apparel and fragrances brands who can’t control the flow of counterfeits or legitimate discount listings.

Amazon keeps a close eye on the volume of these listings but only for partner brands, as is the case with Calvin Klein who after signing a partnership with Amazon went from having 7,824 SKU fragrances in 2014 to only 38 one year later.

This is the way that Amazon forces high-end brands to become partners and have an official store inside the marketplace.

Amazon’s move into the fashion industry does not only involve increasing brand equity by bringing higher-end brands into its platform but also positions them as a key player.

To do this, the company has launched its own private fashion label hiring executives from top luxury fashion companies and launching seven in-house brands.

They understand that branding is shifting towards the consumer and with its loyal and affluent Prime user base,they will surpass every department store out there and become the largest clothing retailer in the US by 2017.

Amazon entering our house

In a recent conference, NYU professor Scott Galloway stated that our previous understanding of how market capitalization is made in the tech industry has completely changed in the last few years. In the past, we would argue that value was dependent on the amount of users we had and how engaged they were and we could cite Twitter as a clear example of this with its vast (but declining) user base.

He argues that the algorithm for value is now based on how many “receptors” we have,

How much user data and user behaviour patterns we can collect and what we do with this data for the consumer in terms of intelligence.

Amazon had pioneered this idea long ago when they enabled shoppers to make informed purchases through user reviews while reinforcing search algorithms. This algorithm works by comparing historical and recent sales to determine a sales rank, which it then uses to support search placement.

Based on the user recent purchases and what product listings they visited, Amazon shows a customized home page relative to each person and while they provide users with the most information than anyone else about a product, they also ensure consumers that they are selling it at the lowest possible price.

While BestBuy and Walmart change their prices about 50,000 times each month, Amazon does it 2,500,000 times each day reinforcing the idea to Prime users that they don’t have to go anywhere else to buy something online.

Almost 20 years ago, the world of ecommerce was shaken when Amazon filed a patent for a “one-click” payment system that allowed customers to avoid the hassle of entering their personal information each time they make a purchase. This patent covered a business method with such a broad definition that created an initial technological lead by Amazon for many years.

With the recent introduction of the “Dash” button, Amazon now offers these “one-click” purchases within the household as a way for consumers to effortlessly order goods for their everyday lives but have no desire to spend time purchasing it, such as cleaning detergent, for example.

This was a bold move by Amazon to lure consumers away from brick-and-mortar stores and also learn even more about their users purchase history.

At the same time, it came at almost no cost for them because 150 brands were each sponsoring their own version of the “Dash”. But it doesn’t stop there, as Amazon launched a device called the Echo that uses cloud-based AI Alexa to perform tasks that range from answering queries about the weather to controlling smart home devices and making purchases.

Alexa has recently been opened up to external developers and more skills are introduced each week by the community – over 3,000 as of now. With sales reaching 3MM units this year, even other tech giants like Google had to come up with their own version of the Echo (using “conversational actions” instead of skills), to not miss the opportunity of entering ‘our’ house.

Conclusion

Not many companies have a broader “Box Three” than Amazon does at the moment. It has the ambition to disrupt not only the retail and fashion industries but also global logistics and content-on-demand to name a few.

Amazon is already the undisputed leader in ecommerce and cloud infrastructure (“Box One”) and have an affluent and loyal Prime user base.

My prediction is that Amazon will continue to secure this user base by spending more each year on generating original content for its users. The budget for next year ranks 3rd worldwide only after ESPN and Netflix.

It will also add more special perks such as “Prime Day” and finally continue providing an ever faster and cheaper service for consumers.

As Jeff Bezos said in a recent conference, “I don’t think anyone will ever want to spend more in shipping and have longer delivery times”. These users belong mostly to upper-middle class households that have yet to shift most of the purchases they do from offline to online.

Amazon wants to capitalize on that by offering a seamless experience to users through Dash and Echo for everyday item replenishment and through Amazon Fresh and Pantry for grocery delivery.

Amazon will surely open brick-and-mortar stores that will serve as warehouses and offer curated items with a 5-star user rating along with user reviews similarly to what they currently do in its Seattle bookstore or the recently opened cashier-less convenience store they call “Amazon Go”.

Amazon Go serves as proof that vertical integration is key to this kind of disruption as no other company would have ever pulled something like that off through corporate partnership.

As only 3 to 5% of the shopping we do is actually enjoyable and we prefer to do it in brick-and-mortar stores, Amazon understands that to capture the mid-high end market, they need to transform its brand into an aspirational one. For that, they need to provide a disruptive shopping experience inside its stores and make a name for themselves in the fashion industry.

Finally, through all this user generated data, Amazon machine learning algorithms will learn our purchasing behavior over time and eventually be able to “predict” what our purchases will be, only asking for confirmation before ordering the groceries for the week.

That way, most of today’s purchases, both offline and online, will happen through Amazon thus increasing the current Prime user yearly expenditure from $1,300 to $10,000 pushing market capitalization to a trillion dollars.

By Nicolas Metallo, the original article can be found here. Editing by ecommerceIQ

Here’s what you need to know today.

1. Amazon source reveals Southeast Asia strategy

What markets are Amazon targeting? The source said Singapore will serve as the company’s launching pad to sell food throughout Australia and Southeast Asia, while another hub in Vietnam will eventually allow Amazon to sell into other Southeast Asian countries and parts of China. The Philippines, Thailand, Malaysia and Indonesia are viewed as target markets.

Going local Amazon will try to source locally as much as possible to cut costs, but if it does have to ship it in, they’ll ship it from Singapore. They’ll start putting a lot of inventory in Singapore, which means that an Australian customer will most likely get their product from Singapore, not the US.

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2. Alibaba goes Down Under to help businesses go global

Alibaba Group has launched its latest overseas headquarters in Melbourne this past weekend. The new office will support 1,300 Australian and 400 New Zealand businesses selling on Tmall and Tmall Global.

What else is Alibaba planning to do in Australia? The giant plans on building the entire operating infrastructure for regional businesses to expand globally, which includes cloud computing, online payments and logistics.

Not to mention Ma also signed a memorandum of understanding with Australia Post to bring the state-run logistics firm to Southeast Asia’s ecommerce market via Alibaba-owned Lazada Group.

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3. Singaporean startup Yojee uses AI and blockchain to help logistics businesses

Yojee has built software that uses AI and the blockchain to help logistics businesses coordinate their fleets and make the most out of existing last-mile delivery infrastructure.

The system is powered by machine learning and automatically assigns delivery jobs to drivers, reducing the need for a human dispatcher. This lowers costs for logistics providers and makes deliveries faster for customers. It also uses blockchain technology to track transactions and deliveries so that they can always be verified.

Tackling the last mile problem: “A recurring message from founders and CEOs was that selling is getting easier because the market is growing, but delivery is still very difficult,” said co-founder and CEO, Ed Clarke.

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Winding down from a busy day? Here’s what you know today.

 

1. Amazon Poised to Enter Southeast Asia With Singapore Launch in Q1 2017

Amazon is likely to offer its Prime delivery service alongside its AmazonFresh grocery service. It may potentially use Singapore as an obvious entry point into a fragmented new market, and also as a hub for the region.

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2. Lazada Confirms Acquisition Of Singaporean Grocery Startup, RedMart

Lazada is spending $30-40 million to buy Singapore-based RedMart. Officially the deal is undisclosed and scheduled to be completed before the end of this year.

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3.Goldman Strongly Suggests Subscription Service For Apple

Goldman Sachs is recommended that Apple do: Offer an Apple subscription service that includes premium content, certain services and iPhone products. All in the name of growth and loyalty.

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