July 15th, 2024: Saks acquires Neiman Marcus Group speaking about personalization at The Lead Event in NYC, Nike is struggling trying to be a tech company and Amazon previews direct from China program
It’s July 15, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Saks Acquires Neiman Marcus Group
Speaking about Personalization at The Lead Event in NYC
Nike is Struggling Trying To Be a Tech Company
Amazon Previews Direct from China Program
- 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….
Saks Acquires Neiman Marcus Group
In the last week, Saks PE-backed owner HBC decided to acquire the assets of Neiman Marcus Group for $2.65B. This is a rollup strategy if I ever saw one.
If HBC is true to its strategy, the next step is to divest Neiman Marcus real estate assets (hello Macy's) in a similar way to Saks 2021 split into Saks (dot) com and Stores business units, with one servicing the other.
While we are in a period of consumer market share consolidation into bigger players, that doesn't mean these large vertically-integrated behemoths are operating them. Actually, we appear to be in an extended period of licensing and financial engineering brought about by the success of business models like ABG and WHP Global that separate brand, eCommerce, and operator into separate operating companies.
This raises a few questions, I thought I would pose here:
* What is the significance of Amazon and Salesforce in the deal?
I wouldn't read too much into this, but I do have a few interesting theories.
I expect that the new company Saks Global will be a big customer of both AWS and Salesforce. Neiman Marcus as far as I know is a custom website. Saks is a big SFCC customer. It's possible that optionality into Amazon Logistics is built into this deal.
Everyone wants to read Amazon going back into retail into this deal and I simply do not. Amazon's retail forays have been mostly failures. The retail component is not even controlled by Saks Global - which is just the former eCommerce arm.
If I ever see an Amazon Fashion "Shop in Shop" in a Neimans or Saks it will be a huge surprise to me -- although Amazon doesn't mind experimenting, I can't imagine this would be good for the Saks brand.
On the other hand, Amazon eCommerce might weasel its way into getting Neimans and Saks onto Amazon Fashion.
In the eCommerce platform wars: The industry saw what just happened at Overstock. On the eCommerce front, Salesforce is keen to keep a long-term customer (it's exceedingly difficult to get deals this size back) and grow share of wallet of new products like the new Salesforce Data Studio, etc.
* Does this signal that private equity-backed exits are returning to 2021 levels?
After a serious climb in 2021, private equity exits fell off a cliff in 2022, and 2023 was flat to those levels. The industry would be happy with a 2024 that is somewhere in the middle I'm sure.
With IPO levels still not recovering (yet), private equity could still be the savior that investors need.
[References:]
Our Second Story
Speaking about Personalization at The Lead Event
On Wednesday, July 10th, I spoke at The Lead event in New York City about the topic of personalizing the customer journey from awareness through to loyalty.
The session was an interview with industry executive Bennet Fox-Glassman, SVP of Customer Journey at Macy’s. Kind of a wide-ranging topic, but let me cut to the chase for you.
Personalization is not a business goal. Hyper-personalization is not a business strategy, no matter what a tech vendor might want you to believe.
Business goals are things like:
* How do I get 1st purchase customers to make their second purchase?
* How can I increase conversion rate of my top landing pages?
* How can I drive more profit in my repurchase emails?
Tactics are things like:
* A/B testing
* Improved Product placement
* Better messaging
And yes, personalization.
Bennett was quick to point out that despite all the emphasis on digital, the best forms of personalization are actually in-stores, and Macy’s has thousands of stores associates which can remember customers and their preferences. The best digital techniques are really trying to replace that intimacy of the consumer relationship at the end of the day.
A few key takeaways from the talk include:
* If you’re a brand, start small. Understand your high-value customer flows and use personalization as a tool to drive more conversion and ultimately profit dollars through your digital experiences.
Finally, measure the things that are important to your CFO so that you can continue to receive funding to grow your program —
[References:]
Our Third Story
Nike is Struggling Trying To Be a Tech Company
It’s a shame we need to relearn the same lessons over and over. When John Donahoe was selected as CEO Nike it was hard to believe how it could end well.
The latest lawsuit tells you how it’s going.
Bringing in a technology-oriented leader to help modernize a non/tech oriented company is a recipe for boondoggle.
All of the tactics are new adventures. DTC! Apps! Fun drops! Reading about strategy in an HBR article is enough reason for a direction.
The first thing any new CEO needs to do is determine the answers to these questions:
- who are our customers?
- what is our product?
- what is our offer?
- how do we make money?
If your primary innovation is not related to your product or offer, no amount of distractions or side projects will save you.
If you bring in someone from outside your industry, remember they are making mistakes on your time. In this case the DTC whipsaw. But even that is not the #1 mistake.
Nike forgot its customer.
Nike’s pinnacle was Air and Jordan and the simple notion that if you have a body, you are an athlete. Innovative changing product at the core with an aspirational message.
It’s truly sad to hear the Nike - of all companies - missed the surge in running. Literally it should not be possible. But here we are playing catch-up.
The two primary lessons are simple -
It matters who the leader is. And it matters where you apply your innovation dollars. If you’re a shoe company, remember what Spike Lee / Mars Blackmon said:
“THE SHOES. It’s gotta be the shoes.”
[References:]
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And Our Last Story
Amazon Previews Direct From China Program
It's no accident in the last Amazon earnings call, Andy Jassy was speaking about "cost to serve", which was mentioned 11 times. Broadcasting what was coming in the Chinese seller meeting that has been widely reported this week.
In short, Amazon cannot afford to offer ultra-cheap low-cost selection in its current setup. In Supply Chain, math dictates what items are stored where to optimize turn, service, and profit.
Some items you want around the corner. Some items you want in the region. Some items are too heavy to be in the region and you prefer in the middle of the country. And some items you don't want to move until they are ordered.
Finally, some items are not created until demand is generated: custom, hyper-personalized, or build-to-order.
Many still do not realize that Direct from China is a new model which serves a unique set of inventory, but this alone is not the model. It is also a learning model designed to test and predict demand iteratively.
The world's consumers and influencers on social media are quite literally co-creating with thousands of manufacturers in real-time -- mostly without their knowledge, and, yes, often ripped-off designs ;-)
There is no optimization of Amazon's current supply chain setup which can out-compete thousands of cheap items - that consumers crave (the key) - created in small batches each week. It's an order of magnitude problem.
I have seen notes that Amazon is giving up on fast shipping with this new announcement.
Instead, Amazon is doing something different -- not giving up on all the Earth's selection with this announcement. And is working to cut off another rapidly scaled competitor before Amazon gets disrupted in a segment that might be long-term important to its divinely discontent consumers.
Amazon's marketplace journey is complex.
V1: Amazon copied eBay by launching Amazon Auctions in March 1999, seeing third-party sellers as interesting and disruptive to retail.
V2: Amazon launched zShops to allow fixed price items to be sold on its site in September 1999.
Amazon struggled to get traffic to these items when not on its own PDPs. Another lesson.
V3: Amazon launched a 3P marketplace in Books, DVDs in allowing sellers to put products on its own product page.
Marketplace would never have scaled without the next innovation.
V4: Fulfilled by Amazon was announced in 2006 to allow sellers to participate in Prime. Amazon can control 3P service levels.
V5: Seller Fulfilled Prime (SFP) was introduced in 2015, as Amazon realized everything wasn't a fit for FBA.
Amazon struggled with SFP, paused it, and reintroduced it again last year.
I would argue this is V6: Direct from China Marketplace.
The principle is simple: don't move the inventory until you create demand. But not just China. Remember, this is only Day 1.
First China ... next the World Direct to Consumer. All on Amazon. Manufacture anywhere, sell anywhere.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_amazon-direct-from-china-just-means-amazon-activity-7212430818491691008-_NBZ?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
Luxury Goods Marketplace SWER Secures $200K In Seed Funding
Barcelona-based luxury marketplace SWER has raised $200K, which will be used to onboard retailers. The company claims it is the first to offer live video sales calls between shoppers and salespeople. Really?
Second
Hudson's Bay Company to Buy Neiman Marcus Group, With Help From Amazon and Salesforce
Hudson's Bay Company has acquired Neiman Marcus Group, which will merge with Saks Fifth Avenue to form Saks Global. Salesforce and Amazon will hold minority shares in Saks Global. The luxury sector is seeing consolidation for survival.
Third
Above Food Uses SPAC to Become Listed
Above Food. a vertically integrated food company, has merged with Bite Acquisition Corp through a Special Purpose Acquisition Company (SPAC) to become publicly listed. Are SPACs still a thing?
Link: https://finance.yahoo.com/news/above-food-bite-acquisition-corp-200500443.html
Fourth
Commerce Agency eHouse Acquires VL OMNI
Commerce agency and Shopify Plus Partner eHouse has acquired integration platform and services group VL OMNI for an undisclosed amount. This is eHouse's second acquisition after receiving investment from Periscope Equity. Roll-ups and agencies..
AND FINALLY …
E-commerce Enablement Platform Pear Commerce Raises $10M in Series A Funding
E-commerce enablement platform Pear Commerce has raised $10M in Series A funding, which will be used to hire talent and invest in its technology. Does this move the needle for CPG brands?
Today’s final word for the week of July 15, 2024:
Hades. As in, it is hot as Hades in the Lead Conference. But still despite the heat of the New York Summer, it was great to see so many friends there. We held an event on Tuesday night with friends from VTEX and McFadyen Digital, and on Wednesay night with friends of RMW Commerce and BlueCore. My next big event is the BigCommerce Summit in Austin at the end of August where I’ll be the Keynote speaker.
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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.
