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Here’s what you should know today.

1. SoftBank nears tech fund closure with $95 Billion in funding

Chief Executive Officer Masayoshi Son’s investment pool has attracted interest from Saudi Arabia’s sovereign wealth fund, which said it would consider putting in as much as $45 billion, as well as technology giants such as Apple Inc. and Qualcomm Inc., which have also said they’ll participate.

SoftBank plans to contribute at least $25 billion of its own capital in the next five years, as well.

In the earnings announcement, SoftBank also disclosed that it contributed $5 billion to last month’s record $5.5 billion fundraising by Chinese ride-hailing giant Didi Chuxing.

Read the rest of the story here.

 

2. Coach buys Kate Spade for $2.4 billion

Coach Inc. will acquire Kate Spade & Co. for $2.4 billion or $18.50 per share.

Kate Spade in February said it was exploring “strategic alternatives,” following pressure in November from activist firm Caerus Investors, which urged it to consider a sale. Coach and rival Michael Kors have reportedly been eyeing separate bids on Kate Spade since January.

The acquisition is another step in Coach’s strategy to broaden its appeal to a younger, trendier customer base, Mickey Chadha, Moody’s vice president, said in a statement emailed to Retail Dive Monday. “The acquisition gives Coach additional product lines and expansion opportunities.

Coach is in a stronger position in the marketplace. Despite its pullback from department stores and discounts, Coach reported in January that second quarter fiscal 2017 net sales rose 3.8% to $1.32 billion from $1.27 billion in the year-ago period.

Read the rest of the story here.

 

3. Yoox Net-A-Porter reports fastest Q1 growth in Asia Pacific

Luxury and fashion e-commerce group Yoox Net-A-Porter reported a 15.4 percent increase in net revenue during the first quarter of 2017, according to a financial statement.

The report confirmed that there’s strong momentum in the Asia Pacific market, especially in mainland China and Hong Kong.

The luxury ecommerce group first entered the Chinese market in early 2012 after acquiring a local online shopping site “Shuke”. In 2015, Net-A-Porter’s merger with the Italian luxury online retailer Yoox, which further spelled opportunities for the site to expand into the Chinese market.

The latest financial report from Yoox Net-A-Porter also indicated a general pick-up of consumer sentiment across its major markets. The number of visits to the site reached 200 million, with a jump in both active customers and orders.

However, the online shopping site also has a lot of work to do in terms of localizing their offerings. For example, the Chinese website still does not offer UnionPay or Alipay payment solutions despite it being an issue brought up years ago.

Read the rest of the story here.

Amazon’s rapid expansion into private label brands

Earlier today, TechCrunch published an article titled “Amazon to Expand Private-Label Offerings—From Food to Diapers” detailing Amazon’s successful push into private label brands covering lucrative categories ranging from batteries, mom & baby to even perishable food items. The concept of retailers selling their own private label brands has been around for ages, mainly adopted by grocery chains with the goal to increase margins for often low-profit consumer packaged goods (CPG) categories. It’s not so much players like Amazon are doing this but how and why they’re doing this that should ring some alarm bells with brands.

The ultimate bait and switch

Global ecommerce giants like Amazon and, increasingly, local Southeast Asian players like Lazada and MatahariMall are offering perks to entice brands to open stores and sell through their platforms. This strategy resembles Ladies Night at clubs, where women are offered free drinks to indirectly lure men, who, more often than not, end up with a headache, alone and having burnt a hole in their pocket at the end of the night.

With aggressive promotions and subsidies from their hosts, brands often see quick short-term gains in online sales. The extreme example here is 11.11, a man-made online shopping festival during which retailers compete in the Discount Olympics. Obviously, brands benefit from spikes in sales but little do they know that they’re actually selling their souls in the long-term. It’s like crack, it makes you feel great for a while but sooner or later it’s hollowing out your body.

With the massive amounts of data generated on a day-to-day basis, these ecommerce platforms can easily identify consumer trends, such as best selling products and categories beyond what brands are able to see themselves. This data is then leveraged by retailers to develop and introduce their own private label brands to compete with the brands they partnered with in the first place.

Once launched, these platforms could favor their own white-label brands by giving them more visibility through favorable product placements as well as top rankings on internal search result pages.

The bigger picture

Players like Amazon and Alibaba’s Tmall aren’t really traditional ecommerce retailers. Their main objective is to use competitive pricing, often subsidized, on retail products to acquire more and more users, which they then monetize through other means such as Amazon Prime subscription fees for Amazon and onsite advertising and Alipay transaction fees for Tmall.

Amazon’s new CPG brands like Happy Belly and Mama Bear are only available to Prime members in a move to incentivize joining its $99-a-year unlimited shipping program that’s fueling Amazon’s retail growth behind the scenes.

In a post-Alibaba acquisition world, ecommerce power-players like Lazada could potentially increase awareness of their own private label brands through better placements on their marketplace, eventually forcing other brands to pay more for advertising to rank higher and get traffic.

With private labels, Amazon and the likes of Lazada also have more “room” to play in terms of pricing, allowing them to maintain sustainable low prices, keep driving more users and spinning the flywheel.

Strategies for brands

Brands like P&G, Unilever and Nestle should look at ecommerce marketplaces as a relatively easy way to test selling online but in the long-term, brands are arguably better off selling direct-to-consumer where they have full control of the brand image, customer experience and, most importantly, user data.

A case in point is Coach. The luxury brand was one of the first brands to set up shop on Tmall in China but recently closed down its official flagship store, leaving the brand with only a brand.com and WeChat presence. Many luxury brands have expressed concerns about the mass-market image of some of the bigger marketplaces.

Brands don’t have to pick between marketplace and brand.com only. Some brands like L’Oreal have adopted a multi-channel approach where their marketplace presence generates sales for their more mass and lower price point items whereas their brand.com site sustains long-tail and higher average order value sales.

At the end of the day, marketplaces are a great way for brands to jump into ecommerce. However, brands should be aware of the pros and cons and especially long-term implications of such a decision.

BY SHEJI HO

Wind down from a busy day with some ecommerce highlights of the day.

 

1. Indonesia’s Kudo raises an eight digit funding round from Emtek

Kudo CEO Albert Lucius said, the funds will be used to establish a “network presence” throughout suburban and rural areas in Indonesia. Read the full story here.

 

2. 1 in 10 of online shoppers get cold feet and abandon their basket

The report also found that price savvy younger consumers (18-to-24 year-olds) are the most difficult age group to convert from online browsers to buyers. Read the full story here.

 

3.  Thai Banks, NBTC agree on 5 step m-banking security plan

The participants have agreed on a five-step plan to tighten KYC rules to increase confidence in eBanking and mobile banking in the run up to the launch of Thailand’s Promptpay national mobile payments system. Read the full story here.

 

4. Coach closes handbag shop on Alibaba’s Tmall

A Coach spokeswoman declined to explain the reasons behind the decision, beyond saying it wanted to consolidate resources. Read the full story here.

 

5. Ant Financial Buys Startup EyeVerify For $70M, Eye Scan Payments in the Works For Alipay

EyeVerify checks identities through eye-vein patterns and creates a digital key equal to a 50-character complex password. Users hold their smartphone about 12 inches from their face so a picture can be taken, opening up apps or websites on their device. Read the full story here.