January 16th, 2023: Target’s stock, Bed Bath and Beyond, Fanatics and Candy Digital, and Amazon launches Buy with Prime
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It’s January 16, 2022 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Target Stock Downgraded by Wells Fargo
Bed Bath and Beyond Could Go Out of Business Soon
Fanatics Divesting its 60% Stake in NFT Firm Candy Digital
Amazon Launches Buy with Prime This Month
- and finally, The Investor Minute, which contains 8 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….
Target Stock Downgraded by Wells Fargo
In a reminder to all business owners to keep their focus on the fundamentals, Wells Fargo downgraded Target's stock in the last couple of days as it thinks the retailer is entering a period when traffic and comparables will be challenged.
What's Target to do? Everyone knows that Target is not a value retailer, and its store-based fulfillment model has a more “just-in-time” nature than other retailers like Amazon and Walmart which don’t ship as much from their stores. Shipping almost 100% of eCommerce orders from stores means there is not much inventory to buffer supply chain disruptions.
What this is saying to me is that there are certain times that tend to favor certain types of companies over others. Not to mention, if you are a public company, there is a huge downside at times because focus on stock price can be distracting.
I learned this early in my career.
When AuctionRover (the company that would become ChannelAdvisor) got acquired by Goto.com in early 2000, it was the peak of the bubble. Of course in the next month that bubble burst, right at the start of a 6-month lockup period.
If you think watching the stock price on the way up is distracting, imagine watching it fall 90% during your lockup period.
Here’s my advice if you are a public company or a formerly highly valued startup and worried about your strike price:
First, it's all theoretical anyway until you have to sell. Don't be a "Robin Hood trader" for your own company. Remind yourself how long you are in this for.
Second, recognize you didn't get smarter the day before the stock went up, and you didn't get dumber the day after the stock went down. Focus on the things you can control, period."
A great long-term business takes care of itself. Spend 80% of your time ensuring that you are aligned with long-term customer needs -- the stuff that is not changing over time.
Amazon has always been great at this kind of focus.
If you have a positive net operating margin, you can afford to think about the long term, even during a recession.
All others must make immediate adjustments before they can begin to focus on the long-term needs of the customers. With a 12+ year relative boom-time, many startups have not seen the inside of a recession.
[References:]
Our Second Story
Bed Bath and Beyond May Go Out of Business Soon
The death watch for Bed Bath and Beyond kicked into overdrive last week when it published a report saying that bankruptcy is on the table as it restructures its balance sheet.
This definitely means that suppliers are running for the hills. Seriously, if you are a vendor of Bed Bath at this point, it’s pencils down. Do not send them any inventory because you are just making a charitable donation to the retailer’s most important creditors, most likely the banks!
If you ask me, which of course no one did, the entire experiment of the past few years has been a fool’s errand. Bed Bath and Beyond is only able to get shoppers in stores with huge unprofitable discounts. This is not a business model, and the company desperately needed to pick a new segment for its consumers.
Instead of using its Buy Buy Baby assets to help both firms, and jettisoning Bed Bath and Beyond, it’s entirely possible both assets could go down with the ship.
My friend Brandon Rael from CapGemini and I did an entire podcast episode about this topic with Rethink Retail, which you can find in the show notes.
[References:]
https://news.yahoo.com/bed-bath-beyond-warns-out-of-business-bankruptcy-stock-150232072.html
https://www.rmwcommerce.com/press-clippings/rethink-retail-retail-therapy-bed-bath-beyond
Our Third Story
Fanatics is divesting its 60% stake in NFT company Candy Digital.
CNBC reported that Michael Rubin’s sports platform company Fanatics is divesting its 60% stake in NFT company Candy Digital.
I know you don’t really care about this, but humor me for just 30 seconds.
Candy is a next generation digital collectible company offering unique NFTs for fans and collectors, giving them the ability to purchase and sell NFTs to deepen their love of sports, culture, and entertainment.
So it was a scam, right? Kudos to Michael Rubin for cutting his losses. Another reason Michael Rubin is the king.
[References:]
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And Our Last Story
Amazon Launches Buy With Prime This Month
Amazon has recently announced that after a beta period in Q4, Amazon will officially launch its Buy With Prime program on January 31.
So what Is Buy With Prime?
One way to think about it is a mashup of a few concepts:
* Your D2C website
* Fulfillment by Amazon
* Amazon Pay
* and Prime benefits like free shipping and easy returns.
Simply put, Prime members who shop your website will be able to purchase and shop like they are browsing a Prime item on Amazon. Checkout happens like an "Amazon Pay" type order.
* This is best suited for merchants that meet two criteria:
1 - They have used or are considering using Fulfillment by Amazon. If you weren’t using FBA before, Buy With Prime is a heavy lift.
This isn't just D2C brands. B2B distributors and others could use FBA if they don't want to develop a dropship capability.
2 - They have much more Amazon Marketplace revenue than Direct to Consumer revenue.
The reason is, many of these merchants understand Amazon and want to improve their D2C website conversion and engagement. Amazon Buy With Prime could be a "bridge" for these brands.
BigCommerce has released a plugin, so it's easiest on this platform at the moment. Other platforms require a longer implementation time by an agency.
This could change as Amazon gets more adoption with the service.
* A big question is who owns that data?
From everything I've read, the data is shared. Prime buyers are told that only "limited" information is being shared with the merchant.
Brands are also told they can use this data but within limits.
* Can Buy With Prime buyers be converted to youry email lists?
There is no opt-in at checkout, but that may not matter. I suggest using your transactional emails (order confirmation, shipping updates, warranty, reviews) to create engagement and sign up these Prime shoppers. Plus, they have already visited your website!
* Should Buy With Prime Be on every product page?
Technically, it does not need to be -- and should not be during the ramp-up period.
But practically, it would likely work better in the long run.
The reason is simple: buyer cognitive load. There's a reason almost every website prefers a flat shipping rate strategy rather than a per-product calculated rate. If some products have Buy With Prime and others do not, your website becomes harder to shop.
* What are the downsides?
- You don't have the payment token; Amazon does.
- There is no tie-in to your loyalty program, points, private label credit cards, warranty, gift cards, etc. (Promos are supported.)
- The order confirmation page is not yours. This can be a high-converting upsell page if the payment token is yours.
- And the number one downside is pretty simple. Now you have Amazon on your website!
Seriously, folks, this is something to check out and experiment with, especially if you are in the situation I talked about earlier where Amazon is a large percentage of your business. You have much lower downside risk than other direct to consumer brands.
[References:]
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It’s that time, friends, for our Investor Minute. We have 8 items on the menu today.
First
Shopper engagement firm Relationshop acquired grocery e-commerce provider Stor.ai.
Stor.ai is an Israeli-based firm that provides regional groers with eCommerce fulfillment services and the deal is said to be in excess of $50 million.
Link: https://www.grocerydive.com/news/relationshop-acquires-storai-grocery-ecommerce/639612/
Second
Archive Resale raised a $15 million Series A to allow brands to own their resale platforms.
Archive’s software combines a front-end buyer experience, a warehouse management system, and an app for in-store associates. Archive Resale works with brands like MM Lafleur and Marimekko.
Third
Third-Party logistics firm GoBolt secured $75 million in a Series C.
The company has a sustainability-based message and handles fulfillment and last-mile for brands like Ikea.
In other news, GoBolt has also laid off 55 people. If you’re wondering how a company can raise money and layoff people at the same time, it’s simple. Usually the new cash was required for survival and demands a burn rate less than the previous one.
Link: https://www.prnewswire.com/news-releases/gobolt-secures-75m-in-series-c-financing-301696618.html
https://www.linkedin.com/posts/mark-ang_changes-at-gobolt-activity-7018651961470173184-LcsA/
Fourth
Furniture channel management provider CommereBear announced $14 million in funding.
The company provides software and services that helps furniture manufacturers sell on channels like Overstock, Wayfair and Amazon. It’s an interesting segment because most of this category still operates offline.
Link: https://www.commercebear.com/post/funding-round
Fifth
Elastic Path raised an additional $30 million to add to the $60 million it raised earlier In 2022.
While the company has always been more developer friendly than the average eCommerce platform, the company has really jumped head-first into the Composable Commerce space with a Product Experiment Management solution, payments, and an integration management solution.
Link: https://www.elasticpath.com/resources/press-releases/elastic-path-raises-90-million-2022
Sixth
Pack Digital raised $3 million to provide a composable front-end for headless eCommerce.
Buzzword bingo! I can’t believe I just used “headless” and “composable” in the same sentence!
On a more serious note, I know the CEO of Pack Digital, Cory Cummings, is a huge Watsonian fan andI’m glad to see the company doing so well. Many of Pack Digital’s customers actually use Shopify Plus as their backend and Pack Digital on the front-end.
Seventh
Pactum raised $20 million to help automate retail supplier negotiations.
Many people already think that Amazon’s vendor managers are robots. Well, this fantastic experience is coming to the rest of the retail industry, and soon. Maersk has invested $20 million in Pactum to help automate routine supplier negotiations. I guess it’s not hard to program ChatGPT to tell you to give a lower price and fill your purchase orders faster.
AND FINALLY …
Low calorie cocktail mix brand Craftmix raised $1.2 million in seed funding.
The company plans to use this capital to grow its US retail presence with products in over 1,300 stores. Drink up, Watsonians! It’s 5 o’clock somewhere!
Link: https://www.yahoo.com/now/modern-cocktail-mixer-craftmix-closes-043000232.html
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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.