October 16th, 2023: Holiday deals kick off with Amazon, Walmart and Target, people and processes keep up with eComm technology? eBay sued in a DOJ environmental lawsuit, private equity exits declining
Today’s episode of the Watson Weekly podcast is sponsored by Commercetools.
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It’s October 16, 2023 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Holiday Deals Kick Off With Amazon, Walmart and Target
Are People and Processes Keeping Up With eCommerce Technology?
eBay Sued In a DOJ Environmental Lawsuit
Private Equity Exits Declining
- 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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BUT FIRST in our shopping cart full of news….
Holiday Deals Kickoff with Amazon, Walmart and Target
If you've been waiting to start your holiday shopping, well, now's your chance. Major deals are now happening across Walmart, Target, and Amazon.
From this observer's seat, the deals are quite strong across all the sites now. In particular, most of the deals seem to be on products below $100. This makes sense because people seem to be delaying larger electronics and home purchases. It’s only natural that Amazon Deal Days would reflect this consumer change.
One part of Amazon Deal Days that I often track is Buy With Prime. One of Buy With Prime’s users Wyze has been doing a few things that I haven't seen very often in the wild:
* A Buy With Prime cart whereby you can add multiple Buy With Prime items from the same store.
* Improved branding for the cart and promotional treatment for Buy With Prime items. This includes Big Deal Days branding, which is quite prominent.
If you Checkout with Buy With Prime on a Shopify store today, you are still not getting the promised new promised experience going over Shopify payment rails. Instead, we are still in a transition period where checkout happens off-Shopify,
This experience will likely have to change when the new Shopify app releases from Amazon.
One continued downside for the Buy With Prime implementation (until the new app is released) is the multiple cart scenario, whereby there are now two carts on the Wyze website. One for Amazon Buy With Prime items, and one for regular items. To the average shopper, things can get confusing fast.
Remember, in other stores like BigCommerce (one of the first Buy With Prime partners), and WooCommerce, you can likely even hide the native cart to remove the multiple cart issue if that's how you want to do business. It gets to the friction and differentiation points between the platforms.
From Shopify's point of view, the checkout is the main point of differentiation and is non-negotiable.
From the point of view of other platforms, this kind of decision is one a merchant should be able to make on their own.
Back to these deal kickoff days, I do think you will see this be quite successful this week, as consumers are able to start seeing all the discounts and preparing for holidays. Despite the spending crunch, consumers tend to find money in their budgets in more than one way — similar to how they justifying buying thousand dollar Taylor Swift tickets and flights!
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Our Second Story
Are Your People and Processes Keeping Up with eCommerce Technology?
In the early days of eCommerce, we did not have many great options for building digital experiences.
We were forced to choose huge vendors who could charge us a lot of money. Or tiny vendors for whom eCommerce was largely an experiment.
The next solutions that followed were built using open-source principles, which, while helpful, may not be the best for every type of company. Demandware was really the first company to show the world that eCommerce and SaaS worked at scale.
One (admittedly narrow) way to look at Shopify is that they took up the spiritual torch of Demandware. A simple thought experiment: "What if Demandware hadn't been purchased, but instead would have continued developing?" is interesting and might have produced a different landscape.
Today, Shopify is more or less the only company focused on "all segments." (although admittedly, some a lot more than others) Historically, that kind of positioning is problematic, yet their momentum continues.
BigCommerce is focused on small to mid-sized B2B manufacturers and distributors.
Commercetools planted a flag in the Enterprise.
The MACH Alliance, founded on specific architectural principles to help CTOs innovate without boxing themselves into a corner, has gained traction in the market.
Meanwhile, over a dozen other players are vying for attention and entering the North American eCommerce platform market every year.
We have small, medium, and large vendors. They all have solid eCommerce solutions that can get the job done -- especially well enough to capture the available opportunity. We almost have too much choice.
While we have a lot of technology to choose from, people and processes have definitely not kept up.
On one side, many organizations are still unprepared to deal with the change happening in the economic environment. I even heard a few weeks back a CEO wondering if they needed a Chief Digital Officer at all, and could we put our digital experiences back under our marketing organization again.
Not likely is the answer. The core of great eCommerce is operations.
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Our Third Story
DOJ Sued In a DOJ Environmental Lawsuit
This past week, eBay was sued in an environmental lawsuit by the DOJ, saying they sold unlawful pesticides violating the Clean Air Act, among other federal laws.
Key to the lawsuit is the age-old marketplace question of determining who is responsible for the listings on eBay -- the sellers, or eBay itself.
Back in the early days of eBay, Meg Whitman had a famous phrase. eBay was "just a venue" and not responsible for what went on with its website.
Is it any wonder why I watch what executives say? Saying you are just a venue sets the expectation that listing content is someone else's problem to solve.
Despite the best efforts of their public relations teams, what executives say over time reflects their beliefs. Beliefs guide strategy, and strategy is one of the best indicators of a company's direction.
As in many lawsuits, often both sides have a point. In this DOJ lawsuit, eBay is claiming that it works with the government all the time, and it stops 99.9% of listings which have issues. The Government claims it sold over 300k+ items specifically intended to defeat environmental protection laws.
eBay for its part, of course has already set aside money for lawsuits like this, and employs many people, systems, and AI solve issues like this.
I do have to laugh at eBay for their belief that percentages will help it make a case. It's almost like a murderer saying, I tried to kill him 100 times and failed 99. I shouldn't be thrown in jail because I only succeeded 1% of the time.
Tell it to the judge, eBay. There's gonna be a fine, the only question is how large.
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And Our Last Story
Private Equity Exits Declining
The pandemic and interest rate bullwhip continue as private equity continues to have challenges valuing deals in this environment which has led to a relative pullback in transactions.
The Wall Street Journal last week reported on a few key statistics, as measured on a y/y basis from the first half of the year:
* The number of take-private transactions (the type that happened with companies like Avalara and Zendesk) has dropped by 40%, and the value has reduced by 20%.
* Overall both the deal count and value is down by 30%
* The value of exit deals in the third quarter 2023 was down to the lowest value since 2010, down about 46% year over year.
In its place, growth equity financed by private equity funds has seen a slight uptick. Putting money to work with existing winners, this is one of the only private equity categories experiencing growth. Overall volume is still down, but this is the growth pocket.
What does this mean for you?
Overall, the IPO market is telling us that it is rewarding very high quality listings. The Private Equity market is telling us it is willing to finance winners, but not create exits for challenged players.
There is simply too much downside valuation risk out there. The message for financed SaaS Companies and brands is simple: don't expect the situation to change soon. In fact, the longer interest rates stay elevated, it could keep getting worse before it gets better.
If you have been considering deeper changes to put yourself on a better profitability footing, even all the LAGGING data (which all of this is) is now supporting your decision.
Which means, if you are overdue to make structural profitability changes, what are you still waiting for?
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Hey, Watsonians, did you know that Amazon has added generative AI to its Bedrock service? If you were in our online community, you would! To stay on top of what’s going on in eCommerce and join the conversation, visit community.rmwcommerce.com today.
Now a word from our sponsor Commercetools:
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It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Inventory Platform Centro Launches with $2M In Pre-Seed Funding
Inventory and procurement platform Centro has launched with $2M in Pre-Seed funding. The new funding will be used to develop additional software functionality and marketing initiatives. Do we not already have a gazillion of these in the market?
Second
Slope Raises $30M Venture Round
Enterprise B2B payments solution Slope has raised a $30M venture round that will be used to develop its technology further. They claim to have developed the first payment risk model that is powered by the GPT AI Model; what possibly could go wrong?
Link: https://techcrunch.com/2023/09/27/sam-altman-slope-30m-b2b-payments/
Third
Zerobroker Raises $6.5M In Seed Funding
Zerobroker, which aims to reduce freight brokerage costs and automate logistics tasks has raised $6.5M in Seed funding, The new funding will be invested in its software platform and to grow its customer base.
Link: https://www.freightwaves.com/news/zerobroker-raises-6-5m-to-bring-shippers-closer-to-carriers
Fourth
IYK Raises $16.8M In Seed Funding
IYK develops Near Field Communication (NFC) chips that connect physical items with smartphones and has raised a $16.8M round in Seed funding. Who knew that NFC still exists and now has a Web3 use case?
Link: https://thedefiant.io/a16z-bets-on-phygital-sector-with-iyk
AND FINALLY …
Loop Raises $35M In Series B Funding
Fintech platform Loop - and to be clear this is not Loop Returns you are thinking of, enables auditing and payment for the supply chain, has raised $35M in Series B funding. The new funding will be invested in the company's technology.
Link: https://finance.yahoo.com/news/breakthrough-transportation-logistics-startup-loop-130000371.html
Today’s final word for the week of October 19th is Holidays: It’s that time of the year folks, we are now officially in Q4. It’s the Super Bowl of the eCommerce season, so warm up those promotions and get those deals flowing!
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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 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.
