January 10th, 2022: Walmart leads in click and collect and curbside orders, Amazon’s potential web stores product, Fanatics buys Topps trading card business, and the U.S. retail sales growth
It’s January 10th, 2022 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Walmart drove 25% of Click and Collect and Curbside Orders in 2021
Could Amazon build a new Webstores product in coming years?
Fanatics is Buying Topps Trading Cards business in a nod to the digital future
Mastercard Report shows US retail sales grew 8.5% in November and December
- 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….
Walmart drove 25% of Click and Collect and Curbside Orders in 2021
According to a report from Insider Intelligence, Walmart gathered about 25% of revenue from all Buy Online Pickup In-Store and Curbside orders in all of 2021 which accounted for about $20 billion in sales.
This 25% number on its own is pretty breathtaking and indicates what a force Walmart is in retail, being about 5-6 times larger than rival Target. Target has one advantage over Walmart, however, and it’s that its own growth is about double Walmart’s due to the incredible consumer experience Target has created.
The report further goes on to say that these types of curbside and pickup sales are expected to grow 20% each year for the next two years. This is faster growth than both traditional eCommerce and retail sales combined, even though industry-wide these sales are still only 11% of total eCommerce.
Why are these omnichannel sales valuable?
First, stores become more productive because they now support more sales per square foot by fulfilling these digitally-initiated orders.
Second, these sales are more profitable than traditional eCommerce orders because the last-mile in eCommerce is the most expensive.
Third, these sales are very convenient to consumers because they don’t have to wait a few days for shipments to arrive; instead, they can pick up their items while they are out running other errands.
The final reason that these types of sales are valuable is that they can attract a different type of purchase or consumer than would be on Amazon, which is unable to offer curbside pickup due to the lack of physical stores. Over the long-term, this may prove to be the most important factor for a retailer like Walmart, which is looking for every opportunity to use its 5,000 stores against the increasingly powerful Amazon.
[References:]
https://www.cnbc.com/2021/12/30/walmart-drew-one-in-four-dollars-on-click-and-collect-market-researcher.html
Our Second Story
Could Amazon Build a New Webstores Product in Coming Years?
While some long-time industry observers might scoff at the idea, I happen to think that the time has come (again) for Amazon to re-enter the Webstore market.
Let’s set the backdrop. Over the past 10 years, companies like Salesforce, Demandware and Shopify have really shown the power of simple cloud-based software with its ability to create an entire ecosystem of services for merchants.
Amazon has three assets that could be helpful in this battle. One is distribution.
Amazon is the larger player online, where two-thirds of consumers start their shopping. No other platform comes with native marketplace integration like Amazon. Shopify even had its own native Amazon marketplace integration that it removed last year.
Advertising is part of distribution as well. Most brands on other platforms are forced to navigate difficult issues like cookies, analytics, Facebook, Google and Tiktok. Not only does Amazon have a wide and growing advertising reach in both keyword ads on its own website, most people aren’t aware that the company has a growing presence off-Amazon as well.
Second is payments. And in particular, I think the battle isn’t precisely about payments, it’s about the digital wallet.
Amazon has a wallet that contains hundreds of millions of consumer credit cards, something like what Shopify is slowly trying to recreate with its Shop Pay product.
Third is fulfillment.
Almost any growing brand has a huge problem with how to get products to consumers on time, and is forced to hire a third-party logistics firm to do so.
I’m struck by the fact that Amazon has doubled its logistics capacity in the past two years, which appears to me as more than the company would need on its own. That has my spidey senses tingling that Amazon has something up its sleeve here and plans to use this new capacity as the cornerstone of several major new initiatives.
What if Amazon gave every eCommerce store some amount of free warehouse space to start a store powered by Fulfillment by Amazon or FBA?
The big thing Amazon would be missing in its entry to the market? Trust. Not only the trust of merchants, but also the trust of agencies, application developers, and other partners.
From a go-to-market perspective, Amazon’s Webstore is more like its Amazon Web Services business than its traditional eCommerce business. That’s because in order to convince businesses, you need marketing, sales, onboarding and support similar to an enterprise software business.
Amazon would need to leverage all the experience and learning it has from its giant Amazon Web Services business and apply that to an entirely new domain.
Our Third Story
Fanatics is Buying Topps Trading Cards Business in a Nod to the Digital Future
In a continuation of its deals last year with Topps, Michael Rubin’s Retailer and service provider Fanatics just paid $500 million for Topps’ trading card business. Here are the facts:
* Fanatics recently signed deals with the NFL, NBA and MLB.
* Previously its MLB deal was set to begin in 2025, but the acquisition expedites that partnership.
* This deal also includes assets related to Formula One and European soccer.
* This is final move in a series of moves that surprised Topps, which was previously set to go public via SPAC before Fanatics negotiated its own deal with MLB.
Here’s why I am most excited about this deal.
1 - It gives all these sporting goods and celebrity assets to a company with a digital mindset.
2 - We should all look to innovation in the space particularly with regards to digital assets, especially digital memorabilia, goods and services related to sports of all kinds.
3 - The timing is impeccable given the year that NFTs had in 2021, which is just the beginning. It’s Michael Rubin – his timing is always impeccable.
4 - This is a great category for cryptocurrency.
47% of sports fans said they are familiar with cryptocurrency; 27% said they currently own some. 66% of self-proclaimed “avid” sports fans and 72% of sports bettors said they’re familiar with cryptocurrency.
5 - One thing which is not well known is that Michael Rubin, along with partner Gary Vaynerchuk, launched a business called Candy Digital, an NFT company. This means that Michael Rubin has not only the rights to the likenesses of all these major sports assets, but also a digital agency with its finger on the pulse of the future through his collaboration with GaryVee.
My view is that it won’t be long before Candy Digital becomes one of the biggest agencies in the sports world, but also one of the biggest marketplaces online.
It’s hard not to get excited about this combination of assets and eCommerce visionaries.
And for those who love physical trading cards, don’t worry. Think about it like Netflix. For a while it ran a DVD business while launching a streaming business. But it took a few years to transition to a time when you completely forgot about the old DVD service.
Expect that kind of transition here in this industry.
[References:]
https://www.wsj.com/articles/fanatics-baseball-cards-topps-11641261997?mod=flipboard
https://www.sportico.com/business/sales/2022/fanatics-topps-trading-cards-1234657556/amp/
https://morningconsult.com/2021/09/22/sports-fans-cryptocurrency-poll/
And Our Last Story
Mastercard Report Shows US Retail Sales Grew 8.5% in November and December
Mastercard recently released a research report outlining what happened between November 1st and December 24th last year. Here are a few of the findings, which excludes automotive sales:
During this roughly eight-week period, online sales grew 11% year-over-year, which beat retail year-over-year sales growth of 8.1% in that same timeframe.
As has been widely reported, holiday shoppers started earlier last year to avoid availability issues and Christmas disappointments.
Jewelry was one of the largest gainers this holiday period, experiencing approximately 32% year-over-year growth, which even exceeds the 26% year-over-year growth last year.
This is great news for the ongoing rise of eCommerce while at the same time positive for retail, which made a huge pandemic rebound in 2021.
Here’s my theory on jewelry. It’s a fantastic gift product that is almost always in stock and doesn’t generally ship in ocean containers. I mentioned on other podcasts during the season that I thought jewelry would be a big winner last holiday and now we have the data to prove it. Is it possible to say “I told you so” without sounding smug?
The big question for brands is what trends will continue into the future and which were the result of a huge supply chain crisis and therefore temporary?
My bet is that most consumers will revert to normal buying behavior if there is no external crisis to motivate early buying this year. Call it consumers reverting to the mean, which is to say back to normal last-minute shopping.
Regarding the supply chain crisis in general, while I expect it to ease up, this doesn’t mean brands are off the hook. Most retailers and brands were burned badly in the past year by how brittle and concentrated their supply chains are. If you put off diversifying supplier and distribution capabilities in 2021, 2022 is the year to make some serious changes.
While no one can predict the monthly COVID swings, in a global pandemic one thing is clear — no country is safe until we are all safe, which means that even if COVID peaks decrease, you need the ability to pivot quickly to ensure your stock availability and customer experience remains strong as we move from the crisis phase of the pandemic into a “new normal.”
[References:]
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It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
CPG company Proctor & Gamble bought beauty company Tula Skincare in its third deal in two months. While the deal terms were not disclosed, the company was reportedly on track for $150 million in sales for 2021.
Investors in direct-to-onsumer brands should continue to cheer acquisitions by major CPG companies.
https://wwd.com/beauty-industry-news/beauty-features/pg-snaps-up-tula-skincare-1235025387/
Second
Subscription software provider Skio raised $3.7 million to tackle the Shopify subscription market starting with the smallest brands and working its way up-market.
I tend to agree that ReCharge may have gotten a little comfortable in its position and more competition is good here.
https://techcrunch.com/2021/12/23/skio-raises-3-7m-to-help-brands-sell-subscriptions/
Third
eCommerce personalization company Nosto acquired Searchnode to add search capabilities in its fight to compete with companies like Algolia. Congrats to my friend and CEO Jim Lofgren on the acquisition.
I say all the time that the most difficult eCommerce software category to evaluate is personalization. Why? Because every vendor, no matter its position in the front-end, can easily say it’s in the personalization space. This makes it very hard to differentiate.
Fourth
Waitlist and preorder platform Purple Dot raised $4 million in order to help fashion and other brands pre-sell products in order to better estimate demand prior to launch.
Preordering is a big opportunity for many brands, and so custom platforms for this functionality make sense.
AND FINALLY …
Zebra Technologies led a $25 million dollar investment round in logistics platform Optoro.
Sometimes investments like this kind of serve as a pre-acquisition for a service provider while providing liquidity for its founders, so it will be interesting to see if that’s what happens here.
The match makes sense as their customer bases are extremely similar.
https://www.pymnts.com/news/retail/2021/zebra-technologies-invests-in-returns-tech-company-optoro/
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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 show is produced by Citizen Racecar. Alex Brower is the producer and also wrote our theme music. The Executive Producer is David Hoffman.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
