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Here’s what you should know today.

1. Alibaba spending $1b to boost Lazada stake to 83%

Jack Ma’s Alibaba is hiking its stake in prominent Southeast Asian online retailer Lazada to 83% for roughly $1 billion.

The fresh infusion comes a little more than a year after the Chinese ecommerce behemoth snapped up a controlling 51 percent stake in Lazada for the same amount, bringing its total investment so far to over $2 billion.

Lazada will continue to operate under the same brand following the investment.

Lazada gives Alibaba a door into a nascent but populous market amid slowing growth and increasing competition, largely from JD, in China.

Ma previously gave a tall order of generating at least 50% of the group’s revenue from overseas. Lazada’s acquisition was a big step in that direction.

“The ecommerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us,” Alibaba Group CEO Daniel Zhang said in today’s press statement on the additional purchase.

Read the rest of the story here.

 

2. Alibaba-supported logistic firm files for IPO in the US

Chinese delivery firm Best Inc, backed by ecommerce giant Alibaba Group Holding Ltd, has filed for an initial public offering in the US.

Best’s biggest business line by revenue is its express-delivery unit, followed by its freight-delivery division and supply-chain management services.

Alibaba, whose 23% stake makes it the biggest existing shareholder, accounted for about 70%  of Best’s express deliveries in the three months through March.

Best posted a net loss of US$198.1 million on revenue of US$1.28 billion last year. The company warned that it expects costs to continue to increase, extending its trend of net losses. Best plans to use the proceeds from the offering for general corporate purposes.

Read the rest of the story here.

 

3. Recommended Reading: Net-a-Porter owner opens tech hub in London

The owner of the Net-a-Porter luxury fashion website is to hire at least 100 more IT experts over the next two years as it shrugs off the impact of the Brexit vote to open a tech hub in the UK.

Yoox Net-a-Porter, the Milan-listed parent group, plans to invest more than €500m (£440m) in technology, warehouses and delivery systems in London and elsewhere to double the size of the business by 2020.

With a turnover of nearly €2bn, about half from orders made via mobile phones, YNAP is the world’s biggest online luxury fashion retailer. Shares in the group jumped more than 8% on Monday amid rumours that Alibaba, the giant Chinese internet marketplace, was considering buying a stake.

The two companies had merged their different cultures well and had shown they were able to sell $130,000 (£100,000)-plus watches via Whatsapp or a £35,000 Valentino dress via a mobile phone.

Read the rest of the story here.

 

 

 

Retail has gone through a revolution. A glance at recent headlines indicate that many global brands in Q1 alone such as BCBG and Urban Outfitters have shown signs of trouble. The former filed for bankruptcy, citing changing consumer habits and increased competition from online players as key factors and Urban Outfitters stated that the ‘retail bubble has burst’. 

According to Bloomberg, shoppers’ visits to retail stores in the US are declining every year, leading industry veterans to wonder, “is anyone not seeing large foot traffic declines?”

Online retail, on the other hand, is thriving in the US. Retail sales through digital channels, including mobile sales, increased by a massive 23% in 2015.

One player enjoying this shift is Amazon. The company now accounts for 43% of all online retail sales in the States and has ventured aggressively into different verticals; from private label fashion brands to groceries. It also made entries into new markets, to the Middle East through the acquisition of Souq, a possible entry into Australia and a rumored entry into Southeast Asia.

A key aspect to its growing success is its omnichannel strategy – allowing shoppers to buy whenever, wherever. The company has been using offline to compliment its online platform, for example, with the launch of its offline bookstores in the US and its trial launch of Amazon Go, an offline grocery store that allows shoppers to scan items and pay through the Amazon Go app. 

Traditional retailers try their hand at omnichannel

The omnichannel strategy focuses on the idea that providing a ‘perfect’ shopping experience requires an integration of online and offline experiences. This is to encourage cross-channel shopping so that customers who shop only in stores will begin also buying online, and vice versa.

Although brick ad mortar players have an advantage here, pure-play brands and retailers are testing offline strategies to offer enhance their entire brand experience. Online brands such as NET-A-PORTER used this strategy back in 2012 by launching offline pop-up stores and eye wear brand Warby Parker launched its first offline store in 2013.

In Southeast Asia, more players are following suit. Thai online fast fashion label Pomelo has launched pop-shops in Bangkok and Central Group bolstered its online presence with acquisition of Zalora.

Retailers are counting on an omnichannel strategy to be their “killer app”. But is this true?

Harvard Business Review teamed up with an anonymous US retailer that operates hundreds of offline stores across the country to find out.

Out of the 46,000 study participants who made a purchase during the 14-month period from June 2015 to August 2016, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority used multiple channels during their shopping journey – these are the omnichannel customers.

Omnichannel customer behavior

Findings showed that omnichannel customers loved using the retailer’s touchpoints in all sorts of combinations and places, such as purchasing offline and having the product delivered at home, or targeting in-store customers with personalized messages to their phones.

Shoppers were found to be avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They were also leveraging their smartphones to compare prices between stores and to download discount coupons but it’s important to note that,

Among customers who lived close to a store, no type of coupon made a significant difference to shopping or profits – HBR

The more channels customers use, the more valuable they are

Omnichannel shoppers spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. With every additional channel they used, the shoppers spent more money in the store.

Customers who used more than four channels, spent 9% more in the store compared to those who only used one channel.

Omnichannel shoppers were also more loyal. Within six months after an omnichannel shopping experience, these customers logged 23% more repeat shopping trips to the retailer’s stores.

Findings suggest that deliberate searching beforehand led customers to 13% greater in-store purchases. This disputes arguments about the popularity of impulse buying and showrooming, which refers to how traditional shoppers conduct their research in the store and then buy online.

This particular retailer sees the rise of webrooming, consumers that go online to browse products before going offline to buy the products in-store.

Whether the richer, multi-touch point shopping experiences of omnichannel led shoppers to spend, return, and advocate more remains an open question – no causation can be determined – but the case for omnichannel retail is positive.

In a developing market like Southeast Asia, department store culture is huge but ecommerce is only beginning to emerge – less than 4% of total sales. Whichever player is able to reach omnichannel success first looks to capture a large share of the region’s $150 billion retail opportunity.

Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a multi-channel experience that online pure plays simply cannot match. – HBR

Findings in this article were taken from “A study of 46,000 shoppers shows that omnichannel retailing works”, published on Harvard Business Review.

Here’s what you should know today.

1. Malaysia’s Cradle Fund starts direct equity investments with new $1.8m program

Malaysian government-owned Cradle Fund, a key influencer in the nation’s startup scene, has unveiled a new investment product which will make direct equity investments in early-stage startups.

DEQ800, the name of the new program, is a step away from Cradle’s role as co-investor and marks its continuous move from grants towards equity investing. Cradle has allocated a total of US$1.8 million for DEQ800, which will inject between US$67,000 and US$180,000 into tech startups

 Cradle has planned up to 10 direct equity and about three co-investment deals in 2017.
Read the rest of the story here.

 

2. RHL Ventures targets proven, successful startups that need funding

Founded by wealthy Southeast Asian offsprings of Malaysia and Singapore’s wealthiest families, RHL Ventures has backed two startups since its debut last year.

Which ones? One of them is Singapore based Perx, which has morphed from a retail rewards app to provide corporate clients with data and analysis on consumer behavior. Sidestep, an app (backed by Beyonce) that allows fans to buy concert memorabilia online is another.

RHL Ventures are proving access for US startups that want to enter Asia, but only think about China.

In Southeast Asia, RHL has positioned itself between early-stage venture capitalists and large institutional investors such as Temasek Holdings Pte. The firm said they want to fill a gap in the region for the subsequent rounds of funding – series B, C and D.

Read the rest of the story here.

 

3. Recommended Reading: Inside the unraveling of the Thrillist-JackThreads marriage of content and commerce

Back in 2010, Thrillist bought flash-sale site JackThreads for a skimpy $10 million, and Lerer gushed that it was a “win-win,” a “spectacular” company with “lots of potential.”

The idea was to give Thrillist a foothold into a new revenue stream by plugging the users of the going-out guide for guys into JackThreads’ private shopping community. A perfect blend between content and commerce.

Ultimately, Thrillist realized that the ecommerce business is a low-margin grind, and content and commerce were hard to mix organizationally

“It’s comically expensive to do it right. Everything gets destroyed by Amazon,” said Ted Gushue, ex-executive editor editor of Supercompressor, Thrillist’s ecommerce vertical.

Read the rest of the story here.

 

4. Community Chatter: NET-A-PORTER looks to the middle east 

Source: BusinessofFashion’s twitter page