December 26th, 2022: VF Corp CEO departs, Coupa to be taken private, Shein explores online marketplace, Amazon’s lawsuit with European Union
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It’s December 26, 2022 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
VF Corp CEO Departs Unexpectedly
Procurement SaaS Leader Coupa To Be Taken Private by Thoma Bravo
Fast-Fashion Giant Shein Exploring Online Marketplace
Amazon Settles Lawsuit with European Union
- and finally, The Investor Minute which contains 8 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….
VF Corp. CEO departs unexpectedly
Dive Brief: Steve Rendle has stepped down from his roles as CEO, chairman and president of VF Corp., effective immediately, the company said Monday. VF runs Supreme, Vans, The North Face, Timberland and Dickies.
In the middle of Q4 a retail CEO, Chairman and President resigned pretty suddenly.
Companies telegraph these things for months, and have a successor lined up. The new CEO comes from an Independent Member of the Board, which is usually not part of any serious company succession plan except in a "case of emergency, break glass" situation.
* Health?
* Serious malfeasance?
* Declining fundamentals?
* Behind-the-scenes investor reboot? (my vote)
This is really unprecedented from what I can tell. The new CEO is an independent director who has spent their entire career in CPG. Clearly they are just there to keep the wheels on and find the successor.
My bet is some serious financing or capitalization effort was in the cards, and one investor made a demand that current leadership had to go, and they accepted. We may never hear about this, or we might...
>> closer
[References:]
Our Second Story
Procurement SaaS Leader Coupa To Be Taken Private by Thoma Bravo
The stock market is no place for unprofitable growth stories right now, at least according to private equity.
What's Coupa you might ask?
- It's a SaaS company
- Fairly dominant in their sector
- Growing 30% y/y
- Stock down 62% YTD
- Purchase price a 77% premium over current stock
- But -38% net loss from operations per year
- Being taken private by Thoma Bravo
So the price paid is actually similar to the price earlier this year.
You might even say Coupa is a leader in SaaS B2B eCommerce - i.e. procurement and procure-to-pay :-)
Who else does this remind you of? Oh yeah, Avalara who was just taken private by Vista Equity Partners earlier this year.
Almost the identical situation.
BigCommerce has been coasting in this market for several years now, and is the most likely next shoe to drop here.
Shopify just crossed into -25% operating loss territory last quarter, but that is in striking distance of being able to change, especially since Shopify just got a Wall Street veteran CFO a few moments ago.
If you have:
- been public for some time
- consistently south of -25% net operating loss
- Beaten down 50%+ in the past year
- Growing > 25%+
then private equity thinks you are undervalued. What does that also mean?
Private equity expects the stock market to continue to punish these companies in the next 12 months, and could return them to the public markets in 3-4 years.
How about private companies? What does this mean for them?
* Any unprofitable growing private company will likely not reach the public markets because their Series D+ rounds are being devalued
* Any private company with greater than negative 15% net operating loss has some decisions to make to return to "default alive".
(I think high growth and above -15% will be rewarded handsomely).
This does not mean that the economy will be terrible in 2023. However, it does mean there are still existential risks out there (Ukraine, China) beyond the interest rate/inflation tick-tock which dominates the daily discussion.
If you're a venture-backed private company and want to think like private equity, then being able to survive more than 24 months of runway is the new benchmark.
That is, if you want to control your own destiny and decide on your own when it is appropriate to raise capital again.
All others may start heading for the exits.
[References:]
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Our Third Story
Fast-Fashion Giant Shein Exploring Online Marketplace
The Wall Street Journal has apparently been able to view an internal Shein memo which indicates that the company is exploring building an online marketplace. This would mean a few things:
Other merchants that sign up for the platform would be able to sell to customers.
Likely the company would expand beyond its traditional fashion assortment.
What’s my take here?
First, the fact that the company is considering launching a marketplace is _not exactly_ a scoop given that Shein has already launched a resale marketplace for its own products.
Second, a marketplace is a natural fit for a site with a ton of traffic which as one of the biggest fashion retailers in the world Shein definitely qualifies for. Why do sites with a lot of traffic fit for a marketplace?
Mostly because of selection. Any high-volume sites have a ton of zero searches, stockouts, and natural opportunities for upsell and bundling which are not taken advantage of. A marketplace allows a retailer to offer additional selection without carrying this inventory.
Third, a marketplace can also be a huge benefit to retail buyers because it allows them to “try before they buy” for its first-party business.
I was trying to think of any downsides to this for Shein, and I think the main one is simple: if you think about the types of brands that may want to be associated with Shein, it will probably not be the major brands.
As a result, will Shein just end up looking like another Wish.com? Finding the right answer to this question seems like the key to this marketplace initiative if it ever sees the light of day.
[References:]
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And Our Last Story
Amazon Settles Lawsuit With the European Union
Last week, Amazon agreed to a settlement with the EU about the commission’s investigations in 2019 and 2020 regarding these topics:
1 - Preventing them from using internal information against competitors obtained in their role as an operator but used in their role as a seller.
2 - Sellers will, in theory, be able to use Prime without Amazon logistics, and Amazon must set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime. Amazon must also add a second Buy Box if offers are unique enough in price or other characteristics.
Amazon will also not be able to send third-party logistics data to its carrier business.
My take:
* The first thing the cynic in me thought about was why can't Amazon can't just sign up for JungleScout or Helium10 like the rest of us ;-) Amazon is well-known to scrape the web for price discovery reasons, which isn't this non-privileged information?
* Smart sellers believe that even without using its internal marketplace data, Amazon still knows about its competition that is not on Amazon.
* Notice that it talks about which offers can "qualify" for Prime and now how they are ranked. My cynical view is this gives Amazon significant wiggle room in terms of actually implementing this policy. i.e. they are qualified, but without advertising, they may not appear ;-)
* Furthermore, this gives Amazon a license to finally enforce and promote standards on its FBM providers, which may, in other ways, end up consolidating the market around Amazon.
Look, many third-party logistics providers are just struggling to keep up with their own customers, and very few of them are in a position to challenge Amazon. I have long thought that instead of certifying the "seller" as part of its Fulfilled by Merchant criteria, Amazon should certify the logistics provider instead.
What's to prevent Amazon from being ruthless with this criteria and exploiting its competitive advantage in the market, built up with billions of dollars of investment in excellence?
Safe to say, if any European 3PLs benefit from this decision, it will be very few of them, and only after Amazon sorts out implementing its rankings and other factors, which could take some time.
* Lastly, the EU has acted on all sorts of things the US is not close at all to acting on. If the US won't act on a 92% Google search monopoly, what is the hope that they will act on Amazon?
Very little.
[References:]
https://ec.europa.eu/commission/presscorner/detail/en/IP_22_4522
https://www.linkedin.com/posts/rickwatsonecommerce_amazon-eu-activity-7011313406288748544-pTHm/
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It’s That Time Friends, for our Investor Minute. We have 8 items on the menu today.
8 items? Yes Watsonians we have been falling behind and need to catch up with the pace of fundraising news!
First
Data Startup Matillion gets investment from Databricks and Snowflake
Enterprise Data Integration Vendor Matillion takes money from two rivals and does two things: collecting data from various sources and transforming it into a format that can be used by data infrastructure like Snowflake and Amazon.
Matillion competes with data integration vendors like FiveTran.
Link: https://www.businessinsider.com/databricks-matillion-investment-snowflake-fivetran-2022-11
Second
Contentstack raises an $80M Series C For Its Enterprise Headless Content Management System
It seems like the headless content management system is exploding out there with fundraising in the two years, with players like Contentful being one of the leaders in this market, but literally a dozen others that keep getting funded.
Third
Zenlytic Raises $5.4m To Build Better Business Intelligence for eCommerce Brands
Unlike other tools, Zenlytic is focused on usability by the entire team. It’s also building a semantic layer which is able to automatically answer questions about your data.
The company is competing in a crowded space with companies like TripleWhale and Northbeam.
Link: https://www.prweb.com/releases/2022/11/prweb19013046.htm
Fourth
CommerceHub Completes Acquisition of ChannelAdvisor
This was announced earlier in the year, but it seems like this acquisition has finally closed. The company is looking to add a set of marketplace services for the brand partners in its portfolio. With this acquisition, CommerceHub is looking to be much more of a one-stop-shop for retailers and brands.
Link: https://www.commercehub.com/news/commercehub-completes-acquisition-of-channeladvisor/
Fifth
Attabotics raises $71M to grow its vertical robotic warehouse solution
While there are a lot of warehouse solutions, many of them are focused on automating an existing solution with robots that roam the floor. Attabotics is similar to other firms like Alert Innovation which aims to store items up instead of out. Also similar to alert, their solution works with both regular and refrigerated zones.
Sixth
German Price and Promotions Platform Buynomics Raises €13M in Series A Funding
The company has an idea that most companies make pricing decisions by the seat of their pants. Buynomics aims to become a system of record for helping Enterprise customers making commercial decisions on its pricing and promotions. I imagine if this becomes popular, such a solution would sit a level above the digital shelf analytics providers.
Seventh
Sustainable packaging marketplace Impacked raises $2.5M
While packaging tends to be an important procurement sourcing decision for a CPG manufacturer, Impacked hopes to help brands of any size make it easier to choose sustainable suppliers for its primary packaging.
Link: https://techcrunch.com/2022/11/15/impacked-seed/
And Finally…
Payload raises $4.7M for its developer-first headless CMS
What did I tell you? The headless CMS race continues. Some vendors are focused more on the needs of business users, and others like Payload are focused primarily on the needs of developers.
Link: https://techcrunch.com/2022/11/15/payload-raises-4-7m-for-its-developer-first-headless-cms/
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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. Want to discuss the topics on the show? Head on over to community.rmwcommerce.com to connect with other listeners!
Our production partner for the series is CitizenRacecar. The show is produced by Alex Brouwer; 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.
