Staples Opens Marketplace, takes aim at Amazon

The second largest online retailer, Staples, announced the launch of its inhouse developed marketplace, Staples Exchange.

staples-store

Previously, the company used Commercehub’s marketplace technology to connect its vendors to its Ecommerce sales channels. With this new development there are two big things happening:

The number of products available on Staples has increased dramatically

The number of products available on Staples has increased dramatically

The first and most important, Staples moves technology development in house. This is a clear sign the company is shifting from a brick-and-mortar centric strategy to a technology centric strategy.

Staples has also reduced store space in the previous year on one hand and has invested in technology services its offering to its partners.

With its legacy store network already in place, growing online sales and the new marketplace, Staples can compete with Amazon on an omnichannel level. Its vendors can now access its online sales channels but with future improvements, their products will be probably ordered offline as well.

The second biggest change is in Staples’ logistics strategy. So far the company relied heavily on its own fulfillment centers. Now orders are increasingly shipped by vendors through drop shipping. This is the most efficient way for Staples to increase its product count and it seems to be working: Staples increased its product count from 30 000 in 2012 to 200 000 in 2013 to a whooping 1.5 million SKUs in 2014, according to Internet Retailer.

As Internet Retailer reports, Staples is still curating the vendors’ offers but it will soon switch to a fully integrated platform in 2015. Even now the new tool allows vendors to receive orders, see real-time alerts, access analytics data and manage inventory, without the cost Commercehub’s technology implied.

Twitter launches “Twitter Offers”, A Way to Drive Social Media Traffic Offline

Twitter seems bullish about its place in the omnichannel retail arena. After hiring Nathan Hubbard, former Ticketmaster president, the company started seriously developing ecommerce features for its users.

It all started with rumors leaked online about Twitter dipping its toes in ecommerce. The news were soon followed by a “buy now” button tested for a while and a few months back the “#AmazonCart” partnership was announced. The Amazon Cart project allowed customers to add Amazon products to their carts by linking their accounts and adding them to their carts via Twitter.

Twitter now launched Twitter Offers, a way for advertisers to drive social media traffic directly to brick and mortar stores. The process is pretty straight forward or Twitter users: they link their credit cards to Twitter, claim rewards from advertisers and then redeem said offers in store.

Twitter offers

Twitter offers

As it seems Twitter sees commerce not just online but offline as well. The vision includes online and offline shopping, social media, Amazon accounts linked to Twitter and … payments.

Long story short: everything Twitter has done so far is outlining a strategy where the company targets more than social media. It’s targeting omnichannel retail as a way to increase its revenue. It has the user base and it’s building the payment infrastructure. Its focus and drive may lead it where Facebook failed – setting foot in commerce land.

 

Andreessen Horowitz is Betting on Digital Commerce

You might know Andreessen Horowitz as … oh, just one of the most successful investors in the history of tech. They have invested in 231 companies,  and managed to exit their investments through 36 acquisitions and 4 IPOs according to Crunchbase. The venture capital company has no less than $2.7 billion under management.

Founders Marc Andreessen and Ben Horowitz

Founders Marc Andreessen and Ben Horowitz

Basically when a16z goes after something – you know the market will soon follow. And guess what’s the latest news?

Why … if it isn’t ecommerce.

Their latest monthly newsletter is dedicated to ecommerce. The venture capital company has mashed together a list of brilliant posts and podcasts on what it considers to be the the future of commerce.

The topics range from holiday shopping to logistics to competing with Amazon. My personal favorite, however, is “The End of Ownership“, an eye opening piece on what happens when people stop wanting to own stuff:

The sudden interest is actually not that sudden. In the past two years investors have increased investments in digital retail and connected areas. For example investments in logistics tech have increased by 1370% in 2014 compared to 2012. Andreessen Horowitz’s investments in ecommerce startups have also picked up. Some may still be working on reaching success (ex. Fab.com) and some may never find it (ex. Groupon). But others are growing by the day. Belly, Julep and Fanatics are doing just great.

4 Companies That are Disrupting Logistics

There is no shortage of logistics needs in the world. As the world gets smaller, more products have to be moved. Recent changes in consumer behavior helped increase the volume of moved goods. Almost $19 trillion worth of goods were imported and exported in 2013, 5 times as much as in 1990.

This 19 trillion market is stuck for the moment with two very big problems leading to ineffectiveness. The first one is technology infrastructure. As goods move to and from very different countries and cultures, there is no unified backbone for making shipments happen. As such, logistics are somewhat slow, compared to other areas in the commerce landscape.

The second big problem is the last-mile delivery. The likes of FedEx and UPS are great at moving goods from New York to Shanghai and the other way around. They’re not really that great at building local delivery networks, able to ship goods fast and cheap. As you might notice, this is a bit of a problem for ambitious retail companies such as Amazon, Walmart or Alibaba, aiming for global dominance.

But worry not.

Investors have picked up on the opportunity to disrupt the $19 trillion market and have turned their investments to logistics companies. According to Crunchbase, investments in logistics startups went from 0.1% of total investments in 2012, to 1.37% in 2014. The total amount invested in 2014 in logistics startups ($1.8 billions) means an increase of 1370%. That is a sure sign that something big is really just around the corner.

As the market is ripe for disruption and investors are generously tapping into logistics, a lot of companies will be showing up on the logistics radar.

Among all these, here are 5 companies that might be the model these investors are looking for:

No.4: Amazon is trying to ship goods with drones

Amazon Fresh, one of the companies logistics challenges.

Amazon Fresh, one of the companies logistics challenges.

After Jeff Bezos announced Amazon is building a drone-delivery service, a lot of people (me included) were questioning whether this could be real or just a PR stunt. It seems that not only is Amazon serious about the drones, but it is also very focused on building the model for the next generation of logistics operations. It has invested more than $14 billions since 2010 in its warehouses.

It has invested in robotic fulfillment operations, purchasing and integrating Kiva Systems. Becoming one of the most automated fulfillment and shipping company, it leads the way in large scale ecommerce logistics. As a result, the company is improved its operations vastly. In 2012 it managed to ship 10 million products per day, leading to 1.05 billion products shipped in the last quarter of 2012.

No. 3: Freightos takes a shot at a trillion dollar market: the cargo industry

The Freightos network

The Freightos network

It may come a shock to those reading this but the cargo industry is really in need of some technology updating. A lot of work in the freight (cargo) industry is done with the help of emails, spreadsheets and … fax machines.

Freightos aims to change all that with a SaaS product that connects those in need and those offering freight services. Unlike the previous way of managing shipping costs, Freightos provides a cloud application that can allow for real-time responses.

No.2: GoGoVan connects vans, delivers the last mile

gogovan

Remember the thing about the last mile the likes of FedEx just can’t handle? It turns out they really don’t want to handle that last mile. Large logistics companies in Hong Kong outsource 70% of their local operations, estimates Gabriel Fong, CEO of Hong Kong GoGoVan.

The company employs Uber’s taxi-hailing model to connect van drivers and those in need of moving goods. They basically replace the old and ineffective call center with a mobile app.

GoGoVan estimated that 35 000 of Hong Kong’s vans are owned by freelancers. These freelancers usually subscribe to a call center which can forward requests and lease radio communication equipment. It’s usually ineffective for both the van-driver and the customer so GoGoVan decided there is a market there.

Right now GoGoVan has 18 000 vans registered with their service so things are going great.

No.1: Uber has transformed the cab industry, it can go further

uber

Uber started as a car-sharing service but soon turned into a multi-billion company, available in 45 countries and 200 cities. It has done that by allowing those with an acceptable vehicle play cab-driver for anyone willing to pay.

The company so far successfully dodged cab regulations and managed to change the way people move in the urban environment.

Lately they have figured out that if they can move people from point A to point B they can also do that with merchandise. After experimenting with a fast delivery service called UberRUSH, trying on a Corner Store service and shipping Christmas Trees, Uber got it: It can do logistics.

Specifically – urban logistics. After all – it really is not that hard to adapt the model to minivans (see GoGoVan above).

I can’t wait to get my online orders delivered in a black luxury sedan. Hear that, Uber?

 

 

 

The Fascinating World of Amazon Logistics

Jeff Bezos

Jeff Bezos

Word’s out that Amazon is planning on opening its first brick and mortar shop. With such news the retail world is now buzzing with questions:

Is Amazon really going head to head with mainly brick-and-mortar retailers? Should the likes of Walmart be paying attention to such tactics? Could this mean a new way of doing business for Amazon?

The answer is no.

First of all Amazon is not opening actual stores. It’s opening pop-up stores. The big difference is pop-up stores are available for just a limited amount of time. They pop-up and then they pop-off. For example the two stores Amazon is now opening will be in San Francisco and Sacramento and will be open just for the holidays.

Amazon will use these stores to showcase its proprietary mobile devices (tablets, ebook readers, the smartphone). Once the holidays are over – puff – they disappear.

There is, however, one report from the Wall Street Journal, not yet confirmed by Amazon, saying the company would actually be looking for more. This report points to a New York location in Midtown Manhattan that would serve as a permanent physical presence. Again, this won’t be your typical store but rather a location designed to respond to specific Amazon needs.

Such needs would include testing Amazon products, order pick-up, returns and local delivery. Maybe even a drone helipad. Who knows?

Seriously now – with the store working as a mini-warehouse, the company could easily offer same-day delivery to near-by customers. That’s a great way to compete with Google’s same day delivery. These type of operations (pop-up shops and drop-shops) could become mainstream in the future as retailers need to bridge the gap in omnichannel retail AND provide faster shipping.

However, Amazon’s offline presence should be scanned from a different perspective:

Amazon is not moving offline. It is already there.

There are no Amazon stores just yet. Except for a few Amazon lockers and the occasional pop-up stores, the largest online retailer remains a pretty digital presence.

Except for its logistics.

Beneath the magic of Amazon’s online retail presence lays an well-oiled logistics machine. Amazon combines advanced IT systems, human operations, robots, huge warehouses and a complex shipping operation to fulfill its daily orders. And some underpaid workers but that’s another thing.

Inside one of Amazon's Warehouses. Source: Wired

Inside one of Amazon’s Warehouses. Source: Wired

How many products does Amazon ship? Billions.

In 2012 Amazon sold and shipped more than 10 million products each day. The total number of products shipped in the last quarter of 2012 was 1.05 billion. Yes, that is a Billion with a B and it is reportedly the first time in the company’s history when it sold more than 1 billion products in just one quarter.

The number of listed products is also huge. Its top 5 markets all list more than 100 million products, with the US totaling a whooping 253 millions, as reported by Export-X:

The total number of products listed on Amazon's top markets. See more here.

The total number of products listed on Amazon’s top markets. See more here.

Amazon Fulfillment: 83 million square feet of storage and fulfillment centers

You’ve probably guessed that shipping 1 billion products per quarter to more than 200 million customers worldwide requires a bit of work. What you probably don’t know is that such a large-scale operation uses 50 million square feet of storage in the US and 33 million square feet of storage outside US (source).

There is no other ecommerce competitor with such storage and fulfillment potential. Its dominant position allowed for two interesting business models to evolve: The Amazon Marketplace and Fulfillment by Amazon.

To reach sales as those shown above, Amazon lists and sells both its own products and those from 3P (Third Party) merchants. Merchants can join its Fulfillment By Amazon program, ship the product to Amazon’s Fulfillment centers and than leverage Amazon’s Logistics.

This means the company can count on its sales AND influence to shape the future of retail. Its logistics are probably the most useful and under rated tool in expanding globally. While everyone wonders if Amazon will set foot in the offline world, the company has already laid the foundations to what will probably be the future of retail.

Of course, the numbers listed above can only show a small bit of what is required to keep Amazon moving and growing. The operational tools Amazon employs and the processes behind this amazing machine will be uncovered in an upcoming ebook. Until then – check out “Understanding Omnichannel Retail” – a comprehensive report on how online and offline sales are now connecting.

Amazon vs AliBaba – Comparison Infographic

Amazon – the biggest online retailer in the world has recently turned 20, and my, has it grown. In these short 20 years, the American wonder has managed to reach more than $70 billion in revenue. In its path to world dominance it began selling everything from books, to ebooks, to apps and recently even groceries.

Under Jeff Bezos’ leadership, Amazon went from a small start-up in 1994 to a company challenging the biggest retail companies and even conventional retail itself.

From across the globe, Amazon’s hegemony itself has been challenged by AliBaba, a company founded in 1999 by former English teacher Jack Ma. Just like China’s economy and ecommerce spending, AliBaba has grown to match its mightiest competitor.

The Chinese company is the product of a splendid growth in China’s eCommerce, a market that is expected to reach $655 billion by 2020. Encouraged by these developments and pushed forward by global ambitions, AliBaba will take its IPO to the US, later this year.

Now how would these two companies look side-by-side? The good folks at SmartIntern decided the world was ready for a comparison between the two behemoths. Have a look at the infographic below. The full version opens in a new window.

infographic-see-more

 

 

 

Online Grocery Market is about explode. Uber wants in.

Top 5 groceries markets in the world. Source.

Top 5 groceries markets in the world. Source.

Quickly – think of one market you know is a sure bet for growth. If you guessed the groceries market, awesome! You’ve spotted the subtle hint in the title. The groceries market in the US is expected to reach $1.1 trillion in 2016. China, the largest groceries market, is expected to peak at almost $1.6 trillion in 2016. India, Brazil and Russia are growing at a fast pace and are expected to overtake Japan within the same threshold.

All in all – the US and BRIC states groceries market is expected to total $4.2 trillion within the next two years.

That’s a big market. Obviously, some of those groceries will be purchased online. For the online groceries market to take off, some disruption has to happen. Although not yet mainstream, we can see signs that consumers will be purchasing at least some of their groceries online.

Amazon is going Fresh

If there is one thing that online retailers need to get right in the groceries market – that is the logistics. From a consumer point of view, a reliable fulfillment and a guaranteed product freshness is a must. To do that, online and omnichannel retailers need to set new logistics policies to allow for a quick order delivery, without loss in product quality. Do we know a company that is really good at online retailing logistics? Of course we do:

Amazon is clearly the leader in online retailing so it was expected to move into this market. It did so 5 years ago. Its Amazon Fresh grocery service was first tested in Seattle. Now the company unleashed the grocery service in San Diego. Customers in Northern and Southern California can pick from 500.000 products, ranging from vegetables and milk to batteries and hair care products.

Jeff Bezos previously mentioned that in order to become a $200 billion company, Amazon has to learn to sell food and clothes. The obvious target was Walmart, a company with revenue north of $475 billion.

To do so, the company will continue to improve its service and increase the number of cities Amazon Fresh is available in. “We’ll continue our methodical approach – measuring and refining AmazonFresh – with the goal of bringing this incredible service to more cities over time” mentioned Bezos, addressing Amazon’s shareholders.

The methodical approach Jeff Bezos is talking about might reach New York soon enough. Re/Code mentioned the company has already prepared an warehouse in the area, instructed suppliers to ship frozen products to it and is hiring workforce for the service.

In New York, Amazon will have to face competition from online groceries retailers such as FreshDirect or popular startup Instacart.

Online Groceries in Europe are growing fast

It’s not just the US, though. Online supermarket Ocado now covers 73% of UK’s population, more than any other supermarket chain. It’s plans are outrageously ambitious: take the world by storm through a global marketplace, similar to Amazon’s. Only for groceries.

Whatever it is they’re doing – it must be right because the company jumped from being evaluated at less than £300 million to a £2.3bn valuation in less than 13 months.

Uber rides into ecommerce, brings groceries

Uber's Groceries Order interface

Uber’s Groceries Order interface

You’ve probably heard a bit about Uber. It’s that company that’s turning the cab industry on its head, enraging french cab drivers and linking riders with drivers.

Now it’s testing a new service, called Corner Store, in Washington. Customers can order from a limited inventory right now, 100 products only, ranging from “drinks” to “feminine care” to “first aid”. Not in that particular order.

And it’s not just Uber. Just like with omnichannel payments, it seems all the big boys want in. Google carefully nurtures Shopping Express, Ebay promises 1-2 hours delivery from local shops with Ebay Now and Walmart has Walmart ToGo ready for orders.

Now if anyone can actually make online groceries profitable …