August 19th, 2024: Salesforce acquires PredictSpring, Amazon announces new peak season fulfillment policies, Ace Hardware plots a new stores strategy TikTok, Temu founder shopping like a billionaire
It’s August 19, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Salesforce Acquires POS Platform Predict Spring
Amazon Announces New Peak Season Fulfillment Policies
Ace Hardware Plots a New Stores Strategy
Temu Founder Shopping Like A Billionaire
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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BUT FIRST in our shopping cart full of news….
Salesforce Acquires Enterprise POS Platform Predict Spring
Well it happened. Congrats to Nitin Mangtani CEO of Predict Spring on the exit, but this tells you a little bit about the state of Salesforce.
If you haven’t heard of Predict Spring, they are a SaaS-based POS platform which has gotten traction in the mid-market and lower Enterprise spaces. I find a few things curious about this deal.
First, it happens on the heels of Shopify gaining traction in Forrester and oher analyst reports.
Second, it happens as some larger retailers are starting to evaluate Shopify.
Third, did I mention that Shopify is pitching a unified platform message there your POS and eCommerce platform are provided by the same vendor?
Even if you don’t believe that Shopify is Enterprise-ready and dismiss them, you cannot dismiss the facts on the ground that Shopify is in a lot of Enterprise RFPs these days. That has to be worrying Salesforce. Not to mention the analyst thing.
You see, analysts tend to think in terms of capabilities matrixes. If your “vision is not complete” then you need to acquire someone to plug a hole. For Salesforce, that hole was POS.
Never mind their D2C eCommerce platform is lacking. Demandware is old, and when will eCommerce be rewritten on top of Salesforce Lightning? Not this year, I will tell you that.
It is unmistakable to me that Shopify’s messaging combined with recent analyst report worries caused this Salesforce move. Which to me just solidifies the fact that Salesforce is the new Oracle. With apologies to Nitin of Predict Spring, get ready for your engineers to leave over the next few years after you get sucked into the Salesforce borg. And while this move might save you with the analysts, it remains to be seen whether ot not customers will see through this or view it as a positive.
Usually there are benefits in the short-term, but where the cracks start to appear is in the medium term. After key employee lockups start expiring. We are definitely watching this move closely here.
[References:]
https://www.cxtoday.com/crm/salesforce-to-acquire-unified-omnichannel-retail-platform/?blaid=6391425
Our Second Story
Amazon Announces New Peak Season Fulfillment Policies
Amazon Peak Season Fulfillment Planning Coin Flip: Heads You Lose, Tails They Win
Amazon has announced their peak seasons policies and updated pricing. In just the last couple of weeks.
* First, peak season fulfillment fees have going up for the third year in a row. In a year where they are doubling free cash flow, this feels like a kick in the teeth. Thank you sir, can I have another?
* Amazon recommends sending items to FBA facilities in August and September (with a deadline of October 19th). In September and October Amazon will ensure those items are in the proper facilities. November and December the focus will be on processing orders.
* If you wait until November and December to send items to FBA, your items may not be processed in time for Black Friday.
* Amazon seems to realize that the "Goldilocks fees" they introduced for having too many items in FBA storage cannot apply during holiday. They are waived starting in July this year. That's the entire second half of the year. Given that, one might wonder the future of these fees, period.
Some thoughts and questions on these items:
* Many people many not realize that peak is shortened this year. Cyber Monday 2023 was Nov 27th. This year, Thanksgiving falls on November 28th! Cyber Monday 2024 is December 2nd. You are losing like 5 days of peak.
* The cost of fulfillment and processing mistakes is higher this year because there is less time to adjust.
* This is kind of a power move by Amazon to get their committed inventory which effectively locks out other channels. If you aren't thinking about Seller-Fulfilled Prime, perhaps now is the time to start thinking about it for 2025.
Holiday is starting earlier and earlier, and basically kicks off with Amazon's Prime Big Deal Days Event in October - so you are going to need your items there anyway.
* They want you to start sending items for Black Friday in August, and they announced this policy in August. Completely unacceptable. No. Stop. Ridiculous.
* Will this affect Buy With Prime? Asking for a friend.
* Amazon is preparing for a big third-party peak. How is this not positive news in some sense?
Wrapping up -- the world seems to be flipping out on this. If you want to know the reason I think more than any other reason this is an issue: CASH. Inventory is cash. More inventory is more cash. Better guess correctly?
The ideal in retail is a "flow/agile" model rather than a "big bang" model which this seems to be encouraging. It will force some sellers out of FBA into self-managed SFP or SFP providers. In nature, this would not be a snake eating a pig -- it would be more like a snake eating a barn. And by the way, that barn is your cash flow.
If you don't have a multi-pronged Amazon fulfillment strategy in 2024, you just inherited a new top priority in 2025.
[References:]
Our Third Story
Ace Hardware Starts a New Experiential Stores Strategy
Ace Hardware is trying to bring into focus a new experiential store model which is about service, brand showcases, and customers using product. Customers can connect not only with the product but with each other, as reported by Retail Dive.
Sound familar?
It's old retail. You see, idealized retail was about service. You talk to a salesperson who was knowledgeable about the product, who shows you the product in person while you are there. They talk to you about the advantages and disadvantages of competing brands, help you choose the level you need, and you come home a more confident consumer.
Somewhere on the way to the store, the industry got it wrong. Pile too much merchandise higher, poorly organized, and locked up.
And employees? Forget about it.
If you are lucky enough to find an employee, talk yourself into a mode to "bother them" (because that is what it feels like), you could have found the answer on your mobile phone in less time, and more accurately.
What you need is a place where you can do what you used to be able to do, either try it yourself or watch someone demonstrate it for you (like the Ginsu knife guy on late night TV, but in person - remember him?). This is what Dick's Sporting Goods is trying to bring back in House of Sport.
Ace Hardware is looking to do something similar with paint, power tools, grilling, and other home items. It seems likely to work if it can be executed.
How will they find, train, and keep staff is another matter? Will retail start hiring again? Truly? This is the most worrisome part to me. It will have to pay above market to get an above market employee.
[References:]
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And Our Last Story
Temu Founder Shopping Like a Billionaire
Interesting story from Bloomberg last week reported that the former Googler and Pinduoduo founder, Colin Huang.
Started Pinduoduo in 2015 selling extremely cheap products with incredible promotions. Grew quickly and became his net worth became $71.5B in 2021 at COVID's peak. From there it came crumbling down 87% in a year.
But the company created the Temu brand to expand out of China, and expand it has. Now Mr. Huang is China's richest person according to the Bloomberg Billionaire's Index. Jack Ma is 5th - who everyone knows in the West. But hardly anyone knows PDD or Colin Huang.
The goal of Temu? Essentially good deals. In a 2018 interview, the founder stated: "The goal is not to be cheap, but to make users feel like they got a good deal."
The downside of Temu continues to be how they treat employees and suppliers (Bloomberg reports that employees must work 11 a.m. to 11 p.m., six days a week, plus overtime).
Ouch.
On the supplier front, global marketplaces have never been given a gold star for treating suppliers well. Also given that Temu is in the EU, it is under regulation by an entity which isn't exactly seen as friendly to big tech companies.
I note that many in the industry seem to expect Temu will just go away, it will spend itself out of existence like Wish. I do not share the same view.
The difference? Wish raised $1.6B. PDD has $33.3B cash on hand. Obviously Wework proved you can spend any amount of money if you try REAL HARD, but to think a deal-oriented site needs that much capital even with advertising costs is a stretch in my mind.
Temu's market is white-label goods. Items you don't care what the name is. Incidentally, 77% of product searches on Amazon are unbranded. Not to say that much of Amazon is white-label goods, but especially in an increasingly unaffordable America (child care, healthcare, college, real estate) the value trend is not going away. Consumers are cheap, and getting cheaper.
So if you think that a somewhat trusted Temu isn't at least some threat to Amazon you are kidding yourself. In a world where missing 5% of your growth is a big deal, that's all it would take for Amazon to lose share. Combined with loss of first eCommerce searches from social shopping platforms, all is not completely rosy in the Amazon universe.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_temu-founder-actually-shopping-like-a-billionaire-activity-7228742243258421248-3Z6d?utm_source=share&utm_medium=member_desktop
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Retail Media Advertising Specialist GoWit Raises $1.3M
GoWit, a retail media advertising (RMA) platform, has raised $1.3M that will be used to enter global markets and invest in its technology. Is RMA the gold rush for ad tech startups?
Second
Analytics Platform Heatmap Raised a $4M Seed Round
Onsite analytics platform Heatmap has raised a $4M Seed Round of funding which will be invested in its technology and growth. Heatmap will develop HeatmapAI which will be used to create recommendations based on revenue data and website elements.
Third
Nonalcoholic Beer Brand Athletic Brewing Raises $50M
Nonalcoholic beer brand, Athletic Brewing raised $50M of equity funding that will be partly used to purchase a third US brewing facility and further distribution among global retailers. Consumers are increasingly looking for healthier options of existing CPG products that they consume.
Link: https://www.wsj.com/business/retail/athletic-brewing-company-nonalcoholic-beer-valuation-a743d2d6
Fourth
Enterprise Product Discovery and Search Platform Constructor Raises $25M Series B
Product discovery and search platform for enterprise companies Constructor raised $25M, which will be used for international expansion and investment in its technology. Congrats to the Constructor team on the new round, this is definitely an up and coming platform.
AND FINALLY …
Orium Acquires Gluo to Expand Its Composable Commerce Footprint into Latin America
Composable commerce consultancy and systems integrator Orium has acquired Gluo, an agency, for an undisclosed price. This is to enable the company to serve the US and expand its footprint in Latin America. Are we seeing the beginning of agency aggregation in niche sectors?
Today’s final word for the week is North Star:
It feels like with the world remaining uncertain, a lot of companies a realizing a simple fact: we only have a few years of investor support left post-COVID before we need to immediately start looking for an exit. While this can be worrisome, this is actually positive as well. In other words, you still have time to make a difference. While you are plotting your new strategy, the word North Star comes into my mind because all your strategies and tactics need to have purpose: growth and leading you towards the best exit possible. Does your entire executive team share the same goal and understand it? Are there a few common KPIs that your entire executive team looks at regularly to understand how the company is tracking towards the goal, or is one group celebrating success while pointing fingers at others? If this sounds like you, sounds like you need to clarify your company’s North Star values and KPIs to ensure the next few years go like you need them to. Good luck out there!
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Did you know that RMW Commerce has a brand new podcast? Check out The Watson Weekend for an unfiltered and lively eCommerce chat each week with me, Rick Watson, my co-host Jess Lesesky, and an array of interesting guests and topics. All focused on eCommerce. You can find the Watson Weekend by searching for it on iTunes, Spotify, or Youtube.
That’s all for this week! Till next time Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our production partner for the series is CitizenRacecar. The show is produced by Jose Baez; Production Manager, Gabriela Montequin.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
