Margin of Opportunity

What is the best way to increase your margins as a merchant? Sell your own merchandise. Quartz as an interesting piece on Amazon’s “secret” plans for private merchandise:

Trawling through over 800 trademarks that Amazon has either been awarded or applied for through the US Patent and Trademark Office (USPTO), Quartz identified 19 brands that are owned by Amazon and sell products or have product pages on amazon.com.

The key strategy behind private label brands is this however:

Perhaps what Amazon is trying to do as it rapidly expands into new businesses—especially business areas where it might not have forged partnerships with well-known brands—is to give the impression to customers that there are tons of options to choose from, when in fact, they’re really just choosing between different Amazon brands. “Consumers pay a premium for a brand, that’s why they’re not store-generic,” DiMassimo suggested.

Retailers have long adopted a multifaceted brand approach to retailing – think Zara plus Massimo Dutti, Oyosho, Bershka etc or HM plus COS, Cheap Monday or indeed pretty much any other major retailer these days. As above, it’s about generating margin whilst at the same time, presenting a feeling of choice.

Read the full piece

What China Reveals About the Future of Shopping

China has more e-commerce activity than any country in the world today. According to China’s National Bureau of Statistics, Chinese consumers spent $750 billion online in 2016—more than the US and the UK combined. That is a jaw-dropping number, but even more interesting is how differently China’s digital marketplace, technology platforms, and online behaviors have evolved compared with those in Western markets.

Read More at BCG

Jet.com and Ecommerce Exits

Quartz has put together a nice piece on the Jet.com exit to Walmart. Most interesting is the chart of Ecommerce Exits since 2009:

I’d take a guess that none of these companies were profitable at exit and all of them would have been extremely fast growing. In exiting to the likes of Walmart, Liberty, Alibaba, Unilever, Richemont etc it’s once again underlined how difficult it is to take an ecom company public.

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Yup, Ecommerce is Hard

WSJ reports Walmart is in talks with Jet.com, the barely one year old ecommerce startup:

For Jet, a takeover by an old-line retailer would demonstrate the challenges of attempting to go it alone in the hypercompetitive e-commerce market.

This business is capital intensive, heavily reliant on brand and a massive slice of luck..

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B2W

Clothing Finally Largest Ecommerce Category

The inevitable has happened – clothing is the number one ecommerce category by sales according to ComScore.

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As we all know I’m sure, Consumer Electronics has long been the King among stuff sold online, in part because of the early adopters of the Internet where more inclined to buy this stuff (read: geeks). Nevertheless, what’s perhaps more surprising is how long clothing has taken to surpass electronics.

There are three reasons for this I believe. The first is the aforementioned change in the makeup of consumers aka now everyone buys online, not just those geeks. Secondly, the smartphone has both consumed the entire electronics category – the PC, Laptop, Home Audio, TV, Camera, Camcorder and other devices are now largely mobile devices. Lastly, retailers are finally accepting folks want to buy clothes wherever – at home, in the office and not all in store anymore.

This is profound change and as always there will be winners and losers. Free shipping and returns – a standard for clothes where people often try before they buy – will put further pressure on bricks and mortar retailers. Brands will also begin participating in more direct to consumer stuff i.e why give a retailer margin when you can sell direct?

All in all, the brands stand to win and off course consumers will win. But what about both offline and online merchants?  They have to suck it up.

The Art of Service in Ecommerce

How products and services are being delivered to customers is going through frame-breaking change, according to ex Apple Retail boss and now Enjoy CEO Ron Johnson. Johnson argues the capabilities of new channels to deliver great experiences through service and information is turning traditional retail on its head. Whether or not you agree it’s an interesting thought.

Check out the full interview below.