Think Goods Plus Services

eBay has bought Ticketbis, an online tickets marketplace. Whilst this alone is relatively unremarkable – eBay has been doing lots of ‘bolt-on’ acquisitions for years, a particular quote in the release caught my attention

“In a world where the richest moments in life are becoming less about the things people have and more about the experiences they have to share, the acquisition of Ticketbis will allow us to connect millions more people with inspiring events,” said Scott Cutler, President of StubHub

Whether you buy into the ‘sharing-economy’ or not, what is not up for debate is the fact that more and more services are moving online. And this market is essentially orders of magnitudes larger than physical goods we typically associate with ecommerce.

What we’re seeing with Airbnb, Uber etc is probably the tip of the iceberg. The future of ecommerce is physical goods plus services.

What does the Paypal Spin-off Mean for Merchants?

As Reuters notes:

“We believe the pending spin-off of PayPal will help to unlock shareholder value as investors are able to value each business,” BMO Capital Markets analysts wrote in a note.

Ok, so analysts (and investors such as Carl Icahn) like EBay’s plan to spin-off Paypal into a separate business. But what does it mean for merchants? A better Paypal?

It’s clear that the split can free up PayPal to build partnerships with other e-commerce platforms. This could be a boon for merchants as for so long Paypal has been locked in step with it’s parent company to the detriment of consumers.

I think also, Paypal has for too long relied on it’s original technology platform. The argument that “if it ain’t broke dont fix it” has held true; Paypal is the key driver of the Ebay business and they’ve been reticent to mess with it.

Nevertheless, Paypal needs to evolve to beat the likes of Square, Apple Payments etc in the mobile space. They opportunity is obvious; become the defacto mobile payment system and potentially, the coveted credit card replacement app. Off course, their own merchant partners Visa and so-on will have something to say about this.

So, when will we know? As Ebay state themselves, it looks like we’ll have to wait until 2015 to find out.

Inside the World’s Largest Ecommerce Company

Alibaba Ecosystem
Alibaba Group released their SEC F-1 filing this week and in it we learn a lot more about the world’s largest ecommerce company. There’s plenty of amazing numbers to be amazed at – 231 million active buyers and 20% of GMV (Gross Merchandise Volume) attributable to mobile are two stunning statistics alone.

Some other things I found interesting in the F-1. First of, they’re clearly just getting started:

Our business benefits from the rising spending power of Chinese consumers. China’s real consumption in 2013 was 36.5% of total GDP, which is a rate that is significantly lower than that of other countries, such as the United States, which had a consumption penetration rate of 66.8% in 2013, according to Euromonitor International. We believe that growth in consumption will drive higher levels of online and mobile commerce.

The ecommerce (read ‘commerce’) market in China is massive. If Alibaba can continue to maintain and grow share, it will be one of the world’s great technology and commerce companies alongside Walmart, Amazon etc if it isn’t already.

Another interesting anecdote from the F-1:

China’s offline retail market faces significant challenges due to few nationwide brick and mortar retailers, an underdeveloped physical retail infrastructure, limited product selection and inconsistent product quality. These challenges in China’s retail infrastructure, which we believe are particularly acute outside of tier 1 and 2 cities, are causing consumers to leapfrog the offline retail market in favor of online and mobile commerce.

This is less concrete but nevertheless extremely plausible. In essence, Alibaba believes that China and more or less emerging economies in general will skip much of what we know in Retail. This is globalization taking effect but with a twist. Specifically, why bother with fixed cost – or bricks and mortar – when you can substitute it with the Internet, software and logistics?

This is part of the broader economic question; is globalization a case of copying what’s already out there or does Alibaba represent a much more dramatic leap about to be achieved by emerging companies and economies?

As many speculate whether Alibaba can top Walmart’s total retail sales or beat Amazon in global ecommerce, it’s worth remembering it’s a different company to the aforementioned:

We are the largest online and mobile commerce company in the world in terms of gross merchandise volume in 2013, according to industry sources. We operate our ecosystem as a platform for third parties, and we do not engage in direct sales, compete with our merchants or hold inventory.

This is not to say they won’t enter the world of true retail and maintain inventory but they’re a technology outfit. It could be argued Alibaba is different to anything we’ve seen in technology or commerce, it’s a truly unique company.

Indeed, it will be fascinating to hear forthcoming commentary on future plans now they’re public and secondly how they plan to take on the world now that the domestic Chinese market has been won.

Source: Alibaba Group SEC F-1