October 28th, 2024: Is 2024 the Generative AI holiday? Amazon's new store concept be called "Off-Prime", is 2025 the year bad eCommerce content officially dies? BigCommerce expands its leadership team
—Today’s episode of The Watson Weekly Podcast is sponsored by Mirakl
It’s Oct 28, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Is 2024 The Generative AI Holiday?
Amazon New Low Cost Store Concept Might As Well Be Called "Off-Prime"
Is 2025 the Year Bad eCommerce Content Officially Dies?
BigCommerce Expands Its Leadership Team
- 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….
Is 2024 The Generative AI Holiday?
Yes say Amazon, Google and Walmart
Amazon, a company who for decades has been more about search and "spear-fishing" than browsing, consideration and discovery directly on-site, is using Generative AI to generate Guided Search to help buyers discover unfamiliar categories. Primarily enabled through the search bar.
Walmart is attempting to ditch the search bar altogether in a different approach, generating a unique homepage for each shopper. Walmart has also made AI additions with Olivia, a seller assistant, and made use of generative AI for catalog attributes.
Google for its part is generating AI briefs for shopping-oriented searches, as well as (finally) personalizing the Google Shopping feed.
History tells us something else: when the big companies move, SaaS providers follow. Personalization, merchandising, and search vendors have been responding and will continue to respond.
All three of these companies refuse to be left behind in the battle for the convenience-oriented consumer. What do you think? For my money, it looks to me like Google is slightly ahead in AI but has a worse shopping experience, followed by Amazon with worse AI but better shopping, followed by Walmart starting their typical (for now) fast-follower journey, racing to catch up.
[References:]
Our Second Story
Amazon New Low Cost Store Concept Might As Well Be Called "Off-Prime"
The industry has been buzzing in the last several months about Amazon introducing its own Temu-type product to respond to the ongoing cheap consumer trend. New details have now emerged on what is being called Amazon's Low Cost Store, though no launch date has been set yet.
But let's not focus on the details for the moment and just assume what's going to happen is what we think: Amazon is looking to match Temu.
What does this say about Amazon? First-party Amazon was always supposed to be about sharp pricing. Third-party Amazon was always supposed to be about assortment.
First-party Amazon is no longer sharp enough because it's manufacturers are too.... principled? expensive? greedy? compliant?.... er... ethical?
Or do you flip it around: is it because consumers are cheap, ignorant, unprincipled, uncaring, or stretched thin?
All of the above? None of the above? Asking for a friend.
According to sources like The Information and Brands Factory, here are the details on what Amazon is offering:
* It's still only open to a limited number of sellers right now.
* Inventory is being shipped to a warehouse in China, and have a consumer delivery time of 9-11 days. Woof.
* Sellers have some price control but categories/items will have limits (some less than $10) and overall can't list anything > $20.
* Shipping incentives appear to be rich, like > 50% discount rich.
* Only 15 days for consumers to make returns.
Temu for its part demands items are 15% less than Amazon as a minimum. I ask simply, how does this not become a death spiral?
To respond to Temu:
Amazon could increase its quality unilaterally. -> It is not.
Amazon could double-down on consumer safety, supplier traceability or sustainability. -> It is not.
Instead, Amazon is doubling down on selection at all costs in a flawed reading of what Amazon's mission should be.
For the past year, Amazon CEO Andy Jassy has been trying to get on the "other side" of the cheap consumer -- meaning instead of consumers fleeing because they can't find the selection they want at the price they want, they come to Amazon to find both.
Eventually the race to the bottom becomes the race to zero? Is Amazon going to introduce a new "Off Prime" service?
What might such a service include:
* Instead of an "A-Z" guarantee, it is more like an "F-U" guarantee.
* Instead of 30 day no hassle returns, it's "keep this crap", it's not worth as much as the packing tape to ship it back.
* Instead of Guaranteed 1-2 Day Shipping, it's "eh, what do you expect?"
I've talked about this program being designed to avoid a reverse flywheel of selection decline, but it could accelerate a reverse flywheel of consumer dissatisfaction.
ATTN Merchants: Stop trying to compete on price. Instead, you must trade on trust. It is the only way forward, the only way out of the trap.
[References:]
Our Third Story
Is 2025 the Year Bad eCommerce Content Officially Dies?
In 2024, RMW Commerce expanded from consulting into media and analysis. In 2025, we look to take it one step further.
Planning your 2025 media budget? We are finalizing our last few slots for partners for the first half of next year and would love to have you in the mix.
We already have the premier analysis and outlets in the space. In 2025 we will add:
- co-production of exclusive in-person events
- even more best-in-class content across more channels
- subscription services for our listeners who can't get enough
In the past 2 years alone, we have worked with companies like Pipe17, ShipBob, The Maze Group, ChannelEngine, Shopware, Feedonomics, VTEX, commercetools and more. And we're just getting started.
There are really two reasons companies work with RMW Commerce.
* Thought Leadership. Co-produce exclusive content that speaks to your market. Reintroduce your company to the market.
* Awareness. People listen because they know they find the best, hardest hitting analysis in the space. We help you reach the influencers.
Consulting, Events, Media and Analysis. All under one roof. Reach out to learn more. Thanks to my partners in crime Vinny O'Brien, Jessica Lesesky, Nick Kaplan, Kaylea Sepulvado and the entire CitizenRacecar team.
Reach out if you want to be a part of the movement! We love new collaborators.
[References:]
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And Our Last Story
BigCommerce Expands Its Leadership Team
First get the right people on the bus. As CEO, Travis is clearly prioritizing known quantities in his leadership team from Thom Armstrong, to now adding 3 trusted former colleagues from LiveArea and BVA/Accenture. All with great resumes in the space, and this type of talent is hard to find.
That said, there are two or three roles who must be seen as up for grabs as the company moves forward: Head of Marketing (critical), Head of Sales (somewhat critical), and possibly either head of Product (super-important) or Technology (super-important) or both.
Marketing and Sales - like the 3 recent partnership-oriented roles above, were under Travis' leadership prior to being named CEO, so likely he already had this in the works. Product and Technology is likely still under review as they were under the leadership of Brent, the former CEO. Not to say that a change IS definitely coming, but it makes sense these areas would be under new scrutiny.
My prediction? It's safer to bet that something needs to change there than something needs to stay the same.
Why? BigCommerce needs to make big bets. Its GTM teams have been fond of pointing out gaps between their solution and Shopify over the years. Gaps that have (mostly) evaporated on the B2C side, yet their B2B solution is powerful but complicated. Is it too complicated? (Witness: BigC viewed by some as the "down-market commercetools" given its MACH ties).
Shopify will be interested in testing that theory as it starts to learn more about the "native B2B" section of the market. A section they probably know the least about, from my read. Certainly less than BigCommerce.
Another theory that is sure to be tested by Shopify going forward?
Where the "Blue Ocean" is.
BigCommerce is surely looking for that clear Blue Ocean lane that it can travel in away from Shopify. It only makes sense. The problem with BigCommerce sailing for blue ocean is simple, however: BigCommerce is only big enough to make one big bet. Shopify can afford to make several very large bets.
So finding open sailing away from Shopify going forward will continue to be a challenge. Still, the industry needs good provider competition. BigCommerce is not unique in wanting to find clear sailing away from Shopify. Shopware, VTEX, Spryker, Kibo, and others are too.
Example: commercetools sailing into healthcare, a regulated space.
Are there other "forgotten" areas of eCommerce? That could be part of the big bet. What about Salesforce?
Sure, they are still in the mix. Big customers, and big contracts aplenty based on their long history. However, at least in the short term, likely their big Commerce question is not one of customer acquisition: instead, it's more about Net Revenue Retention. In other words, fixing that bucket which is getting increasingly leakier as more sharks circle. And no force of agents is going to fix that leaking bucket quickly.
[References:]
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Beyond to invest $40M in The Container Store
Beyond has announced a strategic partnership with The Container Store in which they will invest $40M as part of a preferred equity transaction. Beyond will also integrate The Container Store's Custom Spaces, Elfa, and Preston brands into its e-commerce offerings and future Bed Bath & Beyond stores. Can we all agree that Beyond is now a licensing operation that is looking for retail partners? And a failing licensing operation at that?
Link: https://www.retaildive.com/news/beyond-invest-40m-container-store/729995/
Second
Supply Chain Automation Startup BackOps.ai Secures $2M in Pre-Seed Funding
Supply chain logistics automation platform BackOps.ai has raised $2M, which will be used to invest in its technology. Another AI startup claims to be the central nervous system for a part of e-commerce; what does that mean?
Third
Supply Chain Platform Autone Raises $17M in Series A Funding
UK-based Inventory management platform Autone has raised $17M in Series A funding, which will be used to enter the US market and hire engineers and product talent.
Fourth
Sprouted Buckwheat Snacks Brand Lil Bucks Raises $3M in Series A Funding
Chicago-based sprouted buckwheat better-for-you snacks and toppings manufacturer Buckwheat Snacks has raised $3M in Series A growth funding that will be invested in retail, marketing, talent, and new products. Healthy, better-for-you snacks have been a trend in 2024 for entrepreneurs and incumbents. What happens in 2025? Have we not seen this movie before? Hello, DTC hype.
AND FINALLY …
Avalara Acquires Invoice Platform Hopscotch
Avalara has acquired a B2B invoice and bill payment platform, Hopscotch, for an undisclosed amount. When Vista Equity Partners acquired Avalara in 2022, it put in motion the PE playbook to acquire growth via companies such as Hopscotch to offer more services to the small and medium-sized business sector.
Link: https://gohopscotch.com/blog/hopscotch-joins-avalara/
Today’s final word for the week of October 28, 2024 is Community: In case you haven’t noticed, we are building something a little different here at RMW Commerce. We’re a consulting company, but not only a consulting company. We’re industry analysts, but not your typical analyst. We’re independent, principled, and opinionated. And, we are putting together what you might call an eCommerce Summit as part of NRF and Shoptalk 2025. If you are interested in hearing more about this, reach out. It should be a fun time and you’ll hear more soon. Also did I mention 2025? We’re planning at least 2 more podcasts, an entirely new track of content, a revamped website, and more events. If your company would like our help breaking through in the market, don’t hesitate to reach out.
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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.
