July 22nd, 2024: Amazon Prime Day expected to hit records in 2024, Commercetools announces CEO transition, the importance of reputation in eCommerce, and eCommerce sales will hit $1T this year
It’s July 22, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Amazon Prime Day Expected to Hit Records in 2024
commercetools Announces CEO Transition
The Importance of Reputation in eCommerce
eCommerce Sales Will Hit $1T this year
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
==
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
==
[PAUSE]
BUT FIRST in our shopping cart full of news….
Amazon Prime Day Expected to Hit Records in 2024
Amazon's Made-Up Prime Day Holiday Has Worked Out Just Fine
Perhaps this should give other retailers courage to make up their own holidays. The very middle of summer is usually a slow online retail time. After Father's Day & Graduations, and before Back to School.
There is absolutely no particular reason to buy, other than the stuff is there. And (kind of) on sale.
10 Prime Days ago, as part of Amazon's 20th anniversary, Jeff Bezos was looking for something to reward Prime Members, and attract new subscribers.
And attract it has. In 2015, Amazon had 50 million members. Now?
Something closer to 170 million members. Quite a run.
Speaking of, what was your first Amazon purchase ever? Mine was July 21, 1999 - a technical book XML IE5. My how the world has changed! Amazon has not. In fact, Amazon seems more consistently run over the years than many things in life....
Speaking of consistency -- It's funny how people can say eBay's user interface has not changed in 25 years as a bad thing, and say the same thing about Amazon as a good thing.
Of course Amazon's user interface has evolved signfiicantly and seems to add new widgets each month sometimes, but that is different than real change. The basic function has remained largely the same.
Long live consistency of purpose in customer experiences.
[References:]
Our Second Story
Commercetools Announces CEO Transition
This week, Dirk Hoerig and commercetools announced that Dirk would be stepping down from the CEO role and into an Innovation Officer role. This is the second major eCommerce platform (the first was BigCommerce) to make major leadership changes in the last year.
Now, Andrew Burton is the new CEO of commercetools. But who is Andrew Burton?
* He is a first-time CEO, so this is an expansion/step-up role.
* Interesting to note he has a Product Management background, for the PMs in the room.
* Served as President and COO of Rapid7 in a significant growth period from 2015 to 2024.
* Andrew is based in Boston, MA -- not in Europe like previous CEO.
What does this mean to me?
* Rapid7 completed and integrated several acquistions during Andrew’s time there, and I expect this was a gap in commercetool's skillset, despite its acquisition of frontastic a couple years back.
* While commercetools can continue growing organically, inorganic growth is likely a key part of the strategy going forward. And having another set of product-oriented eyes in the room, combined with the operational experience to integrate those acquisitions was considered important.
* Rapid7 has a reasonable history as a public company - not fantastic (it is no Amazon or Shopify), not terrible (BigC started at an $6-8B market cap and is now ~560m). It's current market cap of $2.4B is above its IPO market cap of ~$900M in July 2015, but clearly off its COVID high (like many) of ~$7B.
* The United States is the clear priority market for the company.
* Given that commercetools has been expanding into other verticals like Telco, Automotive, Healthcare, I would expect this kind of expansion to continue given the choice of a non-retail eCommerce oriented leader.
This continues to be a smart and comparatively blue ocean direction for commercetools, in comparison to the other 10 (and growing it seems) eCommerce platforms chasing the same deals at a perceived up-market position of Shopify.
But the risks, always the risks.
* Changing a CEO is fraught with challenges. You can just as easily pick a Steve Ballmer or John Sculley as a Satya Nadella (or dare I say too early - Andy Jassy?). It's hard.
Usually you know within 60 days if it's going to work out. (hello Flexport, Dave Clark's education tour)
* Blending European and American cultures is famously difficult (while moving swifly in the American direction), but commercetools is not new to this and has been navigating this transition for several years.
* Acquiring the right company is hard, integrating any company is harder, and delivering value from any acquisition is nigh impossible. The company needs to place significant needle-moving bets to move from $150M ARR today to the next major milestone of $500M ARR. I do expect commercetools to use its investors to place some bets.
I wish commercetools the best on the next journey chapter!
[References:]
Our Third Story
The Importance of Reputation in eCommerce
How Did You Get Into eCommerce? And Why Reputation Travels
Last week on LinkedIN I wrote a post which went crazy in terms of the comments it received, and so I wanted to be able to bring this content to the podcast as well.
It's interesting to me that this is one of the most common questions I hear bandied about as an intro, but I don't here it much talked about here.
My background is in software development, I happened to finish college around the time the Internet was starting to be commercialized, and the search engine wars were still in effect, and eBay and Meg Whitman were king of the world. I joined AuctionRover.com in 1999 - amazingly at a time there were hundreds of auction sites to choose from when buying merchandise as everyone was trying to copy eBay.
It didn't have to be eCommerce. I just wanted to be in an industry that was growing, changes regularly, and had complex problems to solve. Check, check, check. I almost joined Microsoft, instead -- but I'm glad I chose 🐧 Scot Wingo Aris Buinevicius and an eCommerce company.
If you're new to eCommerce, here are a few facts:
* You aren't at conferences for the leads, you are there for the relationships.
* The important referral you get may not be now, it could be 10 or (as in one my cases) 20 years from now. Sorry marketing spend allocators -- figure out the last touch of that attribution strategy!
* If you don't like the software vendors out there right now, wait 5 years. There will be another batch soon enough. Incumbents beware -- you rely on reputation, but those paying attention know the deal.
Especially if you are new to eCommerce in the last 5-6 years, you may not yet fully appreciate this fact.
* If you don't think people will reference-check you literally WHILE you are in the middle of your sales pitch, you haven't been in the industry long enough.
Everybody knows everyone else -- the eCommerce industry is an echo chamber.
Reputation travels.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_how-did-you-get-into-ecommerce-and-why-activity-7218596369735839746-Xeyf/?utm_source=share&utm_medium=member_desktop
[PAUSE]
And Our Last Story
eCommerce Sales To Hit $1T This Year
Is This What Recession Looks Like? FTI Consulting Report claims eCommerce will grow ~9.8% this year, but a few other elements were in the report also:
* eCommerce captured 46% of total US retail sales growth in 2023, and 57% in Q1 of 2024.
Not bad for only being 22% of total retail sales, right? Hardly a time to bet against eCommerce.
* Temu, Shein, and TikTok Shop (TST) are mentioned as outsized winners. In fact, this jibes with another recent report I've read: Jungle Scout Q2 2024 report which stated that Amazon's share of "first search" declined for the first time in my memory: from 61% in 2022 to 52% today.
Time for Amazon to pull the panic button?
What's This Mean?
There are plenty of businesses that are growing just fine, thank you. At the same time, despite sales growth, consumers are trading down and the outsized victories are going to those who help consumers do so.
The report mentions value-based apparel and store-based home retailers are under attack from the TST triple threat. Hello Macy's? If you can get a better value from your real estate, may not be a terrible time to add to your balance sheet. If your sales erode, you might wish you had that buffer.
In a recent note, Howard Marks from Oaktree Capital gave a brilliant quote from John Kenneth Galbraith, that I hadn't heard before: "There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”"
WTF Economy indeed. Although in this case, WTF does not only stand for "what the fuck". Instead, in terms of 2025 it stands for something far more complicated:
"What's The Forecast"?
cue shrug emoji.
[References:]
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Procurement Negotiation Platform Pactum Raises $20M Series B
Procurement negotiation platform Pactum raised a $20M Series B funding round, which will be invested in marketing and its technology. Autonomous robot to robot negotiation - what could possibly go wrong?
Second
Cotton-based Disposable Diaper Brand Kudos Raises $3M In Seed Extension Funding
The cotton-based disposable diaper brand Kudos has raised $3M in seed extension funding, which will be invested in marketing to grow its customer base. Will more consumables be redesigned without plastics?
Third
Freightmate Raises $650k in Pre-Seed Funding
Freight document automation platform Freightmate has raised $650k in pre-seed funding. Seattle, logistics startup. Freight-oriented. Have we not seen this movie before - asking for a friend?
Fourth
CEOs Depart Aggregator SellerX – After Taking $14M
European Amazon aggregator SellerX has a new CEO, Jeremy Bell, from July 1, 2024. Bell is a co-founder of Elevate, an aggregator it acquired in 2023. Seller X's previous co-CEOs departed after taking $7.1M each in November 2021, months before layoffs. OUCH.
Link: https://sifted.eu/articles/sellerx-ceos-depart-share-sale-news/
AND FINALLY …
BoxedUp, E-commerce SaaS for Equipment Rental Companies Raises $2.8M in Seed Funding
BoxedUp, an online reservation SaaS solution for equipment rental companies, has raised $2.8M, which will be used to hire talent. This is definitely an interesting company and business, founded by former Amazonians.
Today’s final word for the week of July 22, 2024 is Spreadsheet.
What do you mean spreadsheet Rick? Well, here we go. Does it seem to anyone one else like over the last 10 years that anything every single person in the universe ever did with a spreadsheet one time was turned into a venture-capital-investable software as a service startup.
Because if I’m using a spreadsheet for this, maybe other people have this problem and this can be automated! Hot damn, now I am a software platform.
Survey SAYS! XXXXXXX
Sometime long ago in a land far away, venture capital was for true moonshots - things that could shake up the world. Somewhere along the way we turned VC into a way for old Stanford grads to live a lifestyle they could brag about to their friends without doing any actual work.
Sometimes a spreadsheet is good enough people. It really is. Please do better.
[PAUSE]
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.....
[PAUSE]
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.
