June 3rd, 2024: Paypal is building an ads platform, TJMaxx not afraid of Temu and Shein, BigCommerce getting serious about its partner ecosystem, and Amazon growing its share of retail
Today’s episode of the Watson Weekly podcast is sponsored by Commercetools.
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It’s June 3, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Paypal is Building an Ads Platform
TJMaxx Not Afraid of Temu and Shein
BigCommerce Getting Serious About Its Partner Ecosystem
Amazon Growing Its Share of Retail
- and finally, The Investor Minute which contains 5 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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[PAUSE]
BUT FIRST in our shopping cart full of news….
Paypal Is Building an Ads Platform
In no universe should Klarna be exploring a $20B IPO, worth about one-third of Paypal. The only reason is criminal neglect of the Paypal enterprise in the past 20 years. The new CEO of Paypal seems to be trying to correct some old mistakes.
We actually can't know right now which items are checkbox buzzwords, and which items are here for the long term, and have legs.
Similar to Microsoft making Google dance on AI, Shopify and the broader payments market is making Paypal dance on innovation, or continue to a slow march to irrelevance.
As far as the Paypal advertising network announcement. Here are a few things mentioned in the release:
* Millions of consumer and merchant relationships.
* New leadership, Mark Grether does have a tremendous history in the advertising/media space. Amazon, Sizmek, Uber Ads, etc.
Paypal ads "will use customer insights to build a dynamic, truly personalized platform that will drive better advertising spend performance for merchants while delighting consumers with compelling offers. "
So, yeah, we know almost nothing right now. It's just as likely to get in the way of a transaction as it is to be helpful, until we learn more about the ad surfaces involved.
Paypal has wide reach, so it makes sense for them to explore. Right now, this is more of a wait and see proposition than anything else.
It sounds like the Paypal CEO feels they can transform their payment experience at the same time they add big new initiatives. We will find out soon if they are correct.
>> closer
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_paypal-is-building-an-ads-platform-klarna-activity-7201568753640165377-LxHJ/
Our Second Story
TJMaxx Not Afraid of Temu and Shein
In the last earnings call, one of the analyst’s questions at the end caught my attention. It was, how much do you guys think about Temu and Shein, and are they a factor?
The response was interesting. You would think that this Temu online bargain shopper would have the potential to take from a store-based bargain shopper but at this point, you might be wrong in that assumption.
TJMaxx CEO responded that the brands offered by TJMaxx do not overlap much with the Temu shopper who is after mostly just cheap private-label goods.
There was a discussion on a slack thread and the group had a few more thoughts on this topic:
First, is the Temu shopper even valuable at all? In other words, if this shopper was on Wish, and now is on Temu, they will just go to the next thing and so this consumer is scraping the bottom of the barrel anyway, why would you want them?
Second, TJMaxx shopper tends to want to treasure hunt and find the brand gems hidden in the store. This does not match the behavior of the Temu shopper who just wants absolutely anything for $3.
Either way, it’s clear to me. Every online retailer must have a Temu strategy. It’s either that you don’t care about their shopper at all, or you are lowering your cost to serve like Amazon, or you are finding some other strategy. The growth is too large to simply stick your head in the sand, especially if your own retail private label brands are nothing to write home about — I’m looking at you Macy’s.
[References:]
Our Third Story
BigCommerce Getting Serious About the Partner Ecosystem
I’m not even sure that incoming Bigcommerce President Travis Hess has even had his first day on the job yet, and it’s clear where some of his priorities are. In short, Travis just sent a love letter to agencies and partners of BigCommerce. The gist of the note is as follows:
* I have spent many years in the business, and in particular the last few years building Shopify’s ecosystem.
* He joined Bigcommerce because they have a MACH-based approach which allows multi-storefront and multi-geographies, complex catalogs and promotions, and a great open sourced B2B buyer portal.
At this time, there is not much to communicate on a go-forward basis, including no news for partners on the elephant in the room right now - whether BigCommerce will be a public company and for how long?
From my own travels, most brands and retailers want to understand the long-term stability of the company housing one of their most important platforms before they can have any kind of serious conversation about features and functions.
Here’s hoping all this gets resolved soon, or it will continue to hang like a dark cloud over everything.
[PAUSE]
And Our Last Story
Amazon is Growing Its Share of Retail
This one from the desk of Scot Wingo, but the data comes from Morgan Stanley as reported by CNBC. Analysts estimate that Amazon is taking 28% of every incremental growth dollar in retail right now. To be clear, this is not saying that Amazon is 28% of all retail, but that it is capturing the lion’s share of growth not just in eCommerce but across all retail dollars. This is not hard to understand because many retailers and categories are experiencing declines. Amazon is experiencing growth, and analysts estimates that its total GMV grew by 14% from a very large base.
This is some of the strongest performance that Amazon has ever delivered, unless you consider the COVID period. It sure looks to me that Amazon is not under threat from anyone else at the moment, and their profitability and growth levers are executing on all cylinders.
If you ask me, I think Amazon can take share from Sam’s Club and Costco as well with their continued investments in same day services.
The only one to watch that might be an exception to Amazon’s growth plans at the moment is Walmart. In no universe does Amazon want any more new Walmart+ subscribers.
[References:]
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It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Elon Musk’s xAI Raises $6B In Series B Funding
Elon Musk's artificial intelligence startup xAI has raised $6B in Series B funding that will be invested in infrastructure, go to market and additional research and development initiatives. A six billion series B funding round - are we at peak AI hype or what?
Link: https://www.theverge.com/2024/5/27/24165485/elon-musks-xai-raises-6-billion
Second
Frontend Development Startup Vercel Raises $250M In Series E Funding
Frontend cloud platform Vercel has raised $250M in Series E funding, enabling the company to offer its frontend solution, artificial intelligence, and enterprise-grade security to customers. It is interesting that they mention enterprise-grade security in the funding announcement.
Third
Delivery Startup UniUni Raises $50M Series C
Last mile logistics platform UniUni has raised $50M in Series C funding, which will be invested in its proprietary technology and new sortation centers. I asked last week, and I will ask again - is venture investment in supply chain cool again? One shuts down and another starts up.
Fourth
National 3PL WSI Acquires ShippingTree
National third-party logistics platform WSI has acquired ShippingTree for an undisclosed amount. ShippingTree's team and direct-to-customer customers will benefit from WSI's scale and size. It’s clear we are in a time of supply chain consolidation.
AND FINALLY …
Sanzo Adds $5M In New Investment Round
Asian-inspired sparkling water brand Sanzo has raised $5M in a new venture funding round. Water has become popular among venture investors in the last 18 months. As Adam Sandler says That’s some high quality H20.
Link: https://www.bevnet.com/news/2024/sanzo-adds-5m-and-counting-in-new-investment-round
Today’s final word for the week of June 3rd 2024 is “Einstein”: At last week’s Salesforce Connections event in Chicago, Salesforce revealed its strategy for keeping customers on its platform, and surprise surprise it’s AI. As in, Salesforce is hoping that cute Einstein mascot is enough to get you to renew your contract for another few years. Sales and Marketing clouds got AI copilot features. It does seem to me the belle of the ball right now is Salesforce’s Data Cloud, but even this will run into stiff and more dedicated competition in the form of Snowflake and Azure. It almost seems to me like Salesforce sum of parts strategy has over-stayed its welcome and each constituent part is being picked apart by more nimble competition.
[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.....
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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.
