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In a not-so-shocking move last month, retail giant Target acquired a grocery delivery startup for more than half a billion dollars to better compete with Amazon in the US.

Given the latter’s influence on the state of retail over the last decade, there has been a wave of excitement and fear sweeping the industry on a global scale.

The gradual consumer preference for digital has forced traditional businesses, predominantly in developed markets, to restructure internally or shut down. Case examples include retail leaders Macy’s, Sears, and American Apparel, whose legacies are now read about in bankruptcy stories.

Today’s headlines are revealing retail behemoths getting pushed to a corner by a new breed of entrants shaking up the retail status quo with business models revolving around ecommerce, omni-channel, click and collect. These new companies also tend to execute faster, reach further and understand how to utilize the goldmine that is the internet.

But understanding that “digital disruption” or “retail innovation” is needed within a traditional corporation isn’t merely enough to bring about real change.

The speed at which businesses incorporate digital channels will determine their chances at survival and relevancy to the next generation of consumers.

But by the time they come around to asking, “am I moving fast enough to catch up to my competitors?”

It’s already too late.

Shopping sprees in the West

Companies in the US felt heat from the Amazon Effect much earlier than India or Southeast Asia did, ensuing panic in direct competitors like Walmart, Target and Home Depot and forcing them to act quickly.

In the last two years alone, large corporations like the above invested over $5 billion in acquiring digital companies to beef up their portfolios.

While most of these companies have the capacity to carve out resources to build their own ecommerce operations in house, the pace at which the internet industry moves doesn’t wait for employees to learn “Digital 101”.

Not to mention the additional pain points such as internal resistance, lack of ecommerce talent and channel conflicts. Large corporations in general tend to struggle when venturing outside of their core competencies. The quickest way to patch up your business is to buy what you don’t have.

In regards to Walmart’s total $4 billion acquisition spree,

“Walmart is buying a new consumer base — upper-middle-class people who normally wouldn’t shop at Walmart — and these new relationships would bring higher margins.” — Jim Cusson, president of retail branding agency Theory House

And the “buy what you don’t have” trend is prevalent across the industry as more traditional players gobble up digital startups. In the last eight months alone,

Walmart [retailer]: acquires Bonobos for $310 million in cash and last mile delivery startup Parcel
Sodexo [food management]: acquires majority stake in Paris-based online restaurant and food delivery startup FoodCheri
Home Depot [retailer]: acquires online business of retailer of textiles and home decor products The Company Store
FTD [flower delivery giant]: acquires on-demand flower startup BloomThat
Target [retailer]: acquires same-day delivery startup Shipt
Luxico [luxury home rentals]: acquires US-based text messaging platform for hotels Hello Scout
Albertsons [grocery retailer]: acquires meal kit company Plated
McKesson Canada [healthcare supply chain]: acquires marketplace for natural healthcare and beauty products Well.ca

“Quality exits like this don’t stem from a ‘for sale’ sign tacked to the door.” – Chris Arsenault, board member at Well.ca

Of course, the enormous price tags of these acquisitions could be spent on buffing up the in-store experience but the returns would take a long time to see whereas Target’s own online sales growth from Q1 2015 to Q3 2017 show how successful the company has been able to leverage ecommerce.

Target ecommerce growth from 2015 to 2017. Source: Bloomberg

While an acquisition may seem like a quick, easy solution, there are numerous factors to consider to avoid backlash such as price point adjustments and consistent branding. Without understanding how digital can compliment the current business model, it’s likely the new asset will simmer and die in a couple of years. Simply put, don’t buy ecommerce for ecommerce sake.

Absorbing a digital company on the other hand brings about mountains of data, new customers, a solid brand, fresh talent and a seat at the hippest place where everyone hangs out, the internet.

Movement in the ASEAN region

As with most trends, they eventually infiltrate markets on a global scale and Southeast Asia is no exception. Even a couple of years before Amazon’s lackluster entry in Singapore, a few traditional retailers took the acquisition route to capture digital opportunity early.

Sephora bought online beauty retailer Luxola in 2015, Central Group acquired fashion e-tailer Zalora Thailand in 2016 and last year announced a joint venture with Chinese internet giant JD.com.

What has driven this flurry of activity by corporations across the world?

It is avoiding what Jeff Bezos describes as “Day 2”. An idea explained nicely by Bezos in his letter to stakeholders:

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.” – Jeff Bezos

Which day does your company operate in?

Here’s what you should know today.

1. Lazada TV goes live in Malaysia

Lazada TV, which made its debut on 19 May will instead, be home to live and pre-recorded shows on home improvement, make up and fashion tips, cooking shows and more.

Lazada TV uses Facebook Live as its platform, leveraging the country’s appetite for social media channels. By rolling out this new channel, the ecommerce platform will be able to reach new and existing consumers through a different medium. This should be an interesting way to present different products, from cooking equipment to cosmetics, and consumers can check the schedules on Lazada’s website.

Read the rest of the story here.

 

2. Singapore’s StashAway raises $2.15 million to help users make investment decisions

StashAway is a software you can subscribe to for a monthly fee, a so-called robo-advisor – designed to help you make smarter investment decisions without having to pay an expensive consultant.

StashAway was founded by Michele Ferrario, former CEO of the Zalora Group, Freddy Lim, former managing director and global head of derivatives at Nomura, and Nino Ulsamer, who has previously managed software companies.

Closing this round means StashAway has enough cash to be eligible for a retail fund management license. The Monetary Authority of Singapore’s minimum capital requirement for this is S$1 million, according to StashAway.

The funds will be put towards its launch in Singapore, set to go live next month.

Read the rest of the story here.

 

3. SoftBank’s Vision Fund raises $93 billion in its first close

This makes it the largest tech fund in history.

The Japanese telecom giant revealed that its VisionFund has closed an initial commitment of $93 billion from a bevy of high profile backers. They include Apple, Qualcomm, UAE-based Mubadala Investment Company, Saudi Arabia’s PID public fund, Foxconn, and Foxconn-owned Sharp.

The fund is committing to a minimum of $100 million deal checks, with a focus on both minority and majority deals with companies that are either private or public.

In terms of specific areas, SoftBank said its areas of focus include internet-of-things, AI, robotics, infrastructure, telecoms, bio tech, fintech, mobile apps and more.

Given the credentials of the companies backing it and its sheer size, the Vision Fund is unprecedented in tech venture capital and it’ll be truly interesting to watch how it is deployed.

Recent deals include Indian fintech unicorn Paytm, virtual reality Improbable Worlds, China’s Uber killer Didi Chuxing, and global connectivity company OneWeb.

Read the rest of the story here.

 

4. Recommended Reading: How to build a beauty brand in the digital age

Welcome to the lightning-paced modern-day beauty world, where the customer is not just always right, but intimately involved.

A brand’s distinct point of difference and most basic reason for being are its most precious commodities.

Vision, authority and aspiration are still everything — what have we got without them? — but the role of the consumer has fundamentally changed. Instead of passively waiting to be told what she wants and what to do, and then obediently showing up with her wallet, she is now part of the initial, and ongoing, conversation. She has a say.

Read the rest of the story here.

Thailand Post plans to introduce four new services this year to support its move to a more digital postal organization, reports The Nation.

The four new services are:

    1. Prompt Post is designed to cut queuing time, is a pre-registration application in which people use a ready-to-send box before accessing post offices nationwide.It also has a pre-load application that allows customers to pre-register from their homes, automated post machines and automated deposit machines – the first one will be located at Suvarnabhumi airport.
    2. Messenger Post is an express delivery messenger and pick-up service for delivery nationwide. The service will allow postmen to collect products at home and at organizations.
    3. THP card is an e-money service applicabale for Thailand Post products and service fees.Thailand Post also plans to develop the THP card into an e-wallet for Thailand Post fee payments. It will also team up with Cambodia Post to provide a cross-border delivery service for Cambodian customers who make online purchases from Big C stores online.
    4. Cross-border delivery services

Satit Pittarat, Chairman of Thailand Post says “Thailand needs to adapt to the changing times by improving all its system, including services and investmen.t”

The enhancement would be developed under three key concepts, standardization, modernization and satisfaction to respond to the government’s “Thailand 4.0” initiative. Thailand Post has targeted revenue growth of 22.6% to 24 billion THB this year with a net profit of 3 billion THB.

Thailand Post also plans to renovate 1,300 of its counters by the end of this year.

A version of this appeared in The Nation on August 19. Read the full version here