Narrative: Amazon Dominates E-Commerce
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Narrative: Amazon Dominates E-Commerce (Dec 27, 2016)
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Amazon Isn’t the Only Reason US Retail is Suffering (Apr 18, 2017)
Amazon’s Third-Party Sellers Hit By Hackers – WSJ (Apr 10, 2017)
The bigger you get in almost any technology business, the more hackers will try to find ways to infiltrate that business and skim off some of the money. That now appears to be happening at substantial scale with Amazon’s third party sellers, many of which are likely relatively unsophisticated from a computer security perspective. The hackers are engaging in at least two separate behaviors, in some cases merely redirecting sellers’ proceeds into different bank accounts, and in others taking over dormant seller accounts and posting fraudulent products. Though it sounds like Amazon is making both buyers and sellers whole, it could be doing more to prevent the issues from occurring in the first, place, not least by requiring two-factor authentication for seller accounts. Though there’s often reluctance to force 2FA on users in the consumer space, these aren’t consumers, and the amounts of money involved make that an entirely sensible precaution. Given how much of Amazon’s total sales goes through third party sellers at this point, this could become a massive issue if it doesn’t do more to lock things down.
Flipkart raises $1.4Bn from Tencent, eBay & Microsoft at $11.6Bn valuation, acquires eBay India – Economic Times (Apr 10, 2017)
There were recent rumors that Japan’s SoftBank might want to combine its investment in Snapdeal with an acquisition of Flipkart, but this funding news suggests that’s going to come later if it comes at all. The trio of companies investing here is intriguing. Tencent is perhaps the least surprising, as a company that invests heavily overseas including the US in minority stakes. eBay is apparently using this investment as a vehicle to buy into a bigger e-commerce business in India, as it’s transferring its own Indian operations to Flipkart as part of the process. Microsoft is the most interesting of all – though Flipkart recently switched to Azure for cloud services, Microsoft has no significant direct stake in an e-commerce anywhere else, so this is something of a departure for them, though of course major competitor Amazon already combines cloud and retail. Flipkart had in the past seemed to be the leader in the Indian e-commerce market, but has fallen from that role in the last couple of years as two overseas companies – Amazon and Alibaba – have made inroads there. This is a down round over the company’s previous valuation, but it and its new investors will be hoping the infusion of cash helps it get back into contention.
via Economic Times
In some ways, it’s very easy to predict what Amazon will do next in its e-commerce business, by simply identifying the biggest barriers to its continued growth. Which categories is it under-represented in? Clothing and groceries, and so you get private label clothing lines and various takes on combining online and other technologies with brick and mortar pickup. In the case of this item, we’re answering the question: what are the biggest remaining barriers to people buying stuff from Amazon online, to which at least part of the answer is that lots of people (around 7% of households in 2015) don’t have bank accounts or credit cards. Several times that number also regularly use check cashing, payday loan, and other related services, which expands the addressable market for something like Amazon Cash, which is intended to allow people to put money into an Amazon account by paying cash at a retailer. This is a logical next step in enabling more people to buy things from Amazon.com, and I expect we’ll see more efforts at this kind of thing going forward.
Amazon and Walmart are in an all-out price war that is terrifying America’s biggest brands – Recode (Mar 30, 2017)
This is a fascinating article that looks at the competitive dynamics between two of the most powerful companies in retail: Amazon and Walmart. Walmart is legendary for the pressure it puts on its suppliers to conform to price expectations, but it appears that it’s going even further in demanding that those suppliers get their costs and prices down so as to allow it to compete with Amazon more effectively. Meanwhile, Amazon is pricing in a way that’s not necessarily rational or consistent with generating profits, which means that the competition between the two, while great for customers in the short term, is likely unsustainable for both the retailers and their suppliers, and something will eventually have to give. No surprise, then, that some of the CPG companies are starting to look to alternative channels, though realistically no big brand can afford to be off either of these companies shelves – in warehouses or stores – for long. This is likely to get a lot uglier before it gets any better. Meanwhile, that means that we may see more slowing of growth at Amazon along the lines for what we saw a little of in Q4 last year, while Walmart and its ilk will continue to pursue stronger growth at lower margins.
To be honest, I’m surprised we haven’t seen more cynical takes on the idea that Amazon would shut down a business for not being profitable enough, given how razor-thin Amazon’s own margins on its core e-commerce business have been for years. It’s also surprising that Amazon hasn’t been able to do to this Quidsi business what it’s done for its own business and for other acquisitions like Zappos over the last few years. Diapers.com feels like very much the same core value proposition as some of Amazon’s other properties – great selection, good curation and other features, and so on – and yet it hasn’t been successful despite having Amazon’s backing and presumably access to its logistics and other operations. It sounds like the team will be wrapped into Amazon’s other operations at this point and of course Amazon already sells all the same items through its own site, so there’s probably no big net loss here for Amazon, because much of the business will just be redirected there. But it’s an unusual failure for Amazon in the e-commerce space.