December 18th, 2023: Macy’s gets a buyout offer, recap from Amazon CEO Andy Jassy on CNBC, CommerceHub makes an acquisition and rebrands as Rithum, and Zulily files lawsuit against Amazon
Today’s episode of the Watson Weekly podcast is sponsored by Commercetools.
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It’s December 18, 2023 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Macy’s Gets a Buyout Offer
Recap from Amazon CEO Andy Jassy on CNBC
CommerceHub Makes an Acquisition and Rebrands as Rithum
Zulily Files Lawsuit Against Amazon
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
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BUT FIRST in our shopping cart full of news….
Macy's Buyout Offer a Sign of the Department Store Times
Even in a depressed corporate real estate market, when the book value of your real estate is a premium to your firm's overall enterprise value, then investors will circle. Arkhouse Management and Brigade Capital are making a $5.8 billion offer to take Macy's private, which was about a 32% premium to the current shares.
Macy's has over 500 stores in the United States, including one of the most iconic and recognizable locations in the United States at Herald Square New York City.
In Macy's case, these types of rumblings happened over the last decade also:
* WWD reports that $6B is a conservative estimate for the real estate now.
* In 2022, investment firm Cowen valued Macy's real estate as $7 billion.
* In 2014, Macy's real estate had a book value of $7.8 billion.
* Even the Herald Square location itself has been valued between $3 and $4 billion, according to some investors.
I'm not a real estate analyst, but Macy's primary business is clearly beaten down.
It reminds me of the movie "Founder" when the financial analyst (played by BJ Novak) tells Ray Kroc you are in the wrong business. "You aren't going to make money on a small prfit percentage of a 25 cent hamburger. You are going to make money on the real estate." In this case, you can substitute 25 cent hamburger for discounted apparel.
Perhaps retail isn't what it's cracked up to be for Macy's, and instead, it should allow someone else to operate more profitable businesses on its properties.
Inevitably, such questions come to all companies with a valuable asset trapped inside a company where the rest of the business is viewed as a liability. With investors circling Macy's on and off for the last 10 years whenever the retail sector gets beaten down, they may finally get their prize this time based on the retail department store outlook in the next 5 years.
>> closer
[References:]
Our Second Story
Recap from Amazon CEO Andy Jassy on CNBC
If I didn't know any better, Amazon was taking jabs at Shopify. In an interview with CNBC's Jim Cramer on Mad Money, he said the following:
* It's simple to put up a website.
* The hard part is finding customers, and pick/pack/ship.
Furthermore, he said that as a result of handling this hard part, Amazon even at its size, is great for SMBs. Of which it has a few million of them using its platform.
In truth, Amazon has been a boon for many businesses, but it's a little like the rabbit sleeping next to the wolf. Enjoy the benefits; don't get too comfortable, and sleep with maybe both eyes open.
Jassy believes that Shopify perhaps has the opposite proposition. Very aligned to merchants, but working on easy things.
As if commerce is easy (cue eyerolls 🙄 ), but I know what he means. Setting up an eCommerce store has now become as easy as setting up a blog -- and just as cheap. Shopify is dependent on its payment margins, which over the long-term could have downward pressure on margins if you believe that the industry will become more digitized, or based on crypto.
This is the same reason that Shopify's long-term bets will continue to be misunderstood if you view Shopify from a platform lens only -- some of its newer bets do not fit into this bucket. Shop App, in particular, is one of the more interesting elements. The loyalty and points business has largely stayed the same for 20 years.
Amazon and Paypal are waking up to the fact Shopify might be setting up a virtuous cycle here where they can control both supply and demand. In fact, this is the most logical outcome of their Commerce Components by Shopify bet -- access to more consumer behavior and influence. The reason?
Given the fact that most Enterprise retailers (where all the consumers are) are generally not replatforming unless there is a big corporate event involved, Shopify's biggest influence remains with Shop Pay and Shop Checkout. Why? It's easier to pull off.
All this adds up to one thing: The Shopify of the future is still much more likely to look like what Paypal might have been with great leadership than what Demandware might have been if they hadn't been acquired.
The eCommerce platform itself is a commodity sideshow.
A global payments engine, loyalty and points program combined with a media network is in their future. It's just a natural progression of the lowest hanging fruit in front of the company.
[References:]
https://www.linkedin.com/feed/update/urn:li:activity:7140328614100623360/
Our Third Story
CommerceHub Makes an Acquisition and Rebrands as Rithum
* I wasn't familiar with Cadeera but the company appears to power visual AI discovery solutions for retailers. When the company raised seed funding it seemed to focus on home decor. Think of it like AI-guided search and discovery based on your preferences.
* It seems more of an acqui-hire of a few key talented employees overall, based on the size of the company.
* I would expect that this fits into Rithum's strategy of helping retailers surface the right assortment, not just supply the right assortment. Which seems like a logical extension of the brand and could be a good growth avenue for them. There is somewhat a glut of "search/discovery/personalization" companies however, and so another offering will have to be very targeted.
* In other news, I can't say that I'm a fan of the new name. I understand it's part of the PE playbook, but 25 years of brand equity down the drain for what?
You had previously the best stock ticker symbol on the planet - ECOM (when ChannelAdvisor was public), and an extremely well-known name in CommerceHub (though more American-focused) for connecting retailers and brands.
No one cares what I think though about company names - ultimately its irrelevant 🤣 I find renaming makes it harder to understand someone than easier. In these types of situations I usually end up saying something like:
"Rithum." Who? "The old CommerceHub and ChannelAdvisor".
Just look at how long it's been since there has been an IRCE event, yet that's still what people call it. Does anyone actually call the Tappan Zee bridge the Mario Cuomo bridge? 😎
* PE is definitely active in the software market in different places. Over the past several years, one of the best examples was a company like Syndigo who made many acquisitions and then exited/recapitalized by Summit Partners, leading to some executive exits there.
* It's not lost on me that Logicbroker a year after its K1 investment/exit has seen former Syndigo executives take the helm. 👀
* It appears that Rithum (nee' CommerceHub) is on that same path, funded by Insight Partners. -> Acquire, combine, acquire, combine, acquire, combine, and then sell, sell, sell. 💰
Look, I don't hate the game -- it's all part of it, and especially in the past 10-12 years, there were too many companies funded, so it's natural that there will be a greater period of consolidation coming.
The same type of consolidation is constantly happening in the agency space and with budgets squeezed, I expect this type of activity to continue
[References:]
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And Our Last Story
Zulily Files Lawsuit Against Amazon
In the last week, flash sale site Zulily has accused Amazon of helping kill it.
In case you missed who Zulily was, which I can’t say I could blame, you, Zulily was a 2010s era flash sale site, and not even as popular as sites like Rue Gilt.
Here are the major claims I pulled out of the lawsuit from Zulily to Amazon:
* Amazon saw Zulily as a major competitor in 2019 and started targeting them.
* Zulily sought to display its prices as lower than Amazon on its own website.
* Upon seeing this, Amazon would compete unfairly with its suppliers by asking them to stop doing business with Zulily over time using its monopoly power and obeying Amazon’s price-parity rules. Zulily says that Amazon directly caused these Zulily suppliers to lose the Buy Box on Amazon for the same item.
* The end result led to the loss of at last half of Amazon’s suppliers.
* First, what is Zulily again? A flash deals site. When is the last time most of us visited a flash deal site? Comparing themselves to Amazon is somewhat humorous.
* Second, this is legal opportunism in the extreme. Especially coming off the back of FTC lawsuits against Amazon claiming .
The fact that most of the flash deals sites are dying off is not due to Amazon, after all look at Temu there are a lot of people going to deals sites. It’s because Zulily relied too much on a small concentration of suppliers.
Either way you slice it, it’s hard to compete with Amazon and it’s good to be the king.
[References:]
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Hey, Watsonians, did you know that apparel and home decor marketplace Jane.com abruptly shut down? If you were in our online community, you would! To stay on top of what’s going on in eCommerce and join the conversation, visit community.rmwcommerce.com today.
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It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Syrup Raises $17.5M Series A In Funding
Syrup provides AI-powered planning, buying, and inventory optimization for omnichannel commerce. Minimizing excess inventory and maximizing the correct inventory on hand is an overlooked part of e-commerce.
Link: https://www.martechcube.com/syrup-announced-17-5m-series-a-fundraise/
Second
Trackstar Raises $2.6M in Seed Funding
Trackstar, which develops a universal API for the supply chain, has raised $2.6M in Seed Funding. The new funding will be used to partner with more warehouse management systems. This looks like a supply chain version of the fintech platform Plaid.
Link: https://www.finsmes.com/2023/12/trackstar-raises-2-6m-in-seed-funding.html
Third
Kognitos Raises $20M in Series A Funding
Kognitos develops a process automation solution that uses natural language and generative artificial intelligence and has raised $20M in Series A funding. It seems to me that iPaaS vendors better pay attention to this natural language trend.
Fourth
eBay Invests in Sports Trading Card Company COMC
eBay has entered into a commercial agreement and invested an undisclosed amount in sports trading card platform COMC. The sports trading card sector is developing into eBay, Fanatics, and startups battling one another.
Link: https://www.retaildive.com/news/ebay-comc-investment-sports-trading-cards/701410/
AND FINALLY …
Omniful Emerges From Stealth and Raises $5.85M In Seed Funding
Supply chain and e-commerce enablement software-as-a-service (SaaS) solution has raised $5.85M in Seed funding. The company claims to do so many things, it’s hard to know which the founders are focused on.
Today’s final word for the week of December 18th, 2023 is Hurry.
As in, you better be in a hurry to finish your Christmas shopping, there are only so many days left.
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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.
