No…not stocks (maybe depending on the stock!)…but if Amazon, Shopify, and Pinterest’s results last week did not make the point painfully obvious enough, e-commerce IS commerce now. Some data providers estimate that e-commerce share of total commerce increased from 15% last year to 40% in Q2. Normally, e-commerce share only grows about 1% per year and has taken 20 years to get to 15%…
The way we buy, buy, buy is changing at an incredible pace. And this transition is not likely to be a binary one-time shift. The way we buy things offline can only be done in a few number of ways because of physical constraints of the physical world. But digitally, commerce can be as diverse as software allows.
No one talks about mobile phones or mobile apps or mobile internet anymore. These were important distinctions 10 years ago. It’s just phones, apps, and internet now. Similarly, years from now, it will likely become clear that 2020 is the year in which e-commerce becomes commerce. And 2020 is also likely the year in which mobile payments and digital payments just becomes payments.
More on all of these below.
Here’s some of the more interesting things that happened recently.
Google Launches Shoploop
We want to help people experience the look and feel of products they’re shopping for in real life without going to a physical store. Shoploop helps you get product reviews from real people who are knowledgeable about the products in a particular area. For example, Alex shows live product usage in her video to get rid of pimples, and Kim includes practical tips and advice on how to use a face roller in her video.Source: Google
E-commerce is not going to just migrate online but will rather lead to a transformation of the online experience. The online experience as exemplified by Amazon is mostly about convenience. No one I know really enjoys browsing Amazon because it’s not an entertaining experience.
This means there will likely be new e-commerce models. One of the most promising areas that have shown to be fairly successful in Asia are video-based commerce models. Google Shoploop is one step in that direction.
Amazon is a place for people to get generic things. For non-generic things, most consumers likely gravitate towards brands that they already have experience with. Amazon still has a lot of work to do in helping consumers engage with new brands and learn about new products and experiences, especially for those categories that doesn’t lend itself nicely to a few bullet points or pictures as currently experienced on Amazon.
What’s interesting is…
Amazon Launches Amazon Live
On Amazon Live shows, hosts talk about and demonstrate products, much like they would do on home shopping networks. Underneath the video, a carousel guides consumers to purchase the items featured. Commissions are paid on products they sell.Source: TechCrunch
Amazon has live-streaming, too! But like all things on Amazon.com good luck figuring out how to access this new shopping channel / feature.
At a fundamental level, Amazon never really evolved beyond being a bookstore. Amazon prioritizes products and all products are organized into an infinite (book) shelf. But e-commerce is likely evolving to prioritize the channel and type of interaction with AI and personal curation as the dominant ways of surfacing products. It’s telling that Amazon’s live-streaming effort is hidden in a drop down list and is ranked exactly the same as any other random item category.
Speaking of new types of interactions, Snapchat continues to experiment in interesting ways.
Snapchat Launches Brand Profiles
Last year we launched “Public Profiles” for Creators and Shows to give key partners a unique identity and home for permanent content that’s differentiated from your real friends on the app. Today, we are excited to extend profiles to businesses with the closed beta launch of Brand Profiles.
Brand Profiles offer a permanent home for brands on Snapchat, built around their unique investments in the app – starting with AR Lenses, native commerce stores, and content highlights.Brand Profiles bring these various brand experiences for Snapchatters together into a single home on our service. With 229 million Snapchatters using the app daily1, this real estate for our partners is especially important in a world where our millennial and Gen Z audiences can be hard to reach and build deep, authentic relationships with on many platforms.Source: Snapchat
Snapchat brings an interesting combination of brand-oriented pages with e-commerce functionality, video (stories), as well as AR. Similar to how video can transform the experience of a product, AR also has interesting potential.
Of course, Amazon has AR, too. I bet you didn’t know that. I wonder how many people have used Amazon AR functionality?
The challenge for Snapchat isn’t finding the right model but rather Facebook and Instagram. Instagram is already very well positioned when it comes to brands and brand engagement with customers, and Facebook historically has not been shy to “borrow” what works from others.
Instagram Shop has Launched…and from what I hear from female shopping-inclined friends, Instagram Shop is dangerous for the wallet.
Today, we’re introducing Instagram Shop, a new destination in Explore that makes it easier to shop from brands and creators. Discover the latest trends, get personalized recommendations, and preview exclusive launches, all in one place, so you can browse and buy the products that you love. Instagram Shop is rolling out in the US today and will expand globally in the coming weeks.Source: Instagram
While video is starting to make a splash in the West, video and social commerce has already been a large part of e-commerce in Asia. Alibaba was the first to explore this model, but Capital Flywheels is actually quite a bit more excited about what Shopee is doing instead. In China, Alibaba is unfortunately up against a very powerful Tencent in the social realm, but Shopee does not face a similar threat in Southeast Asia. While Facebook is the dominant network in the region, Facebook has been quite slow in exploring the potential of commerce.
This is allowing Shopee to evolve into an interesting social experience:
Suntec City is not alone in trying to turn online shopping into an experience. As Shopee’s Zhou said: “e-commerce has evolved into something more than just ‘swipe, tap, spend’. Our platform is increasingly a social space where people come together to interact and connect with others.”
As well as live-streams, live chats and games, users of Shopee’s app were also able to watch K-pop concerts this summer, thanks to a partnership with South Korean entertainment and mass media company CJ ENM. KCON, as the event was known, ran over a week in June. It gave app users access to free concerts from more than 30 K-pop acts, as well as exclusive interviews with their favourite stars. Shopee declined to share sales data from the event, but said the seven-day promotion attracted millions of views.Source: SCMP
As much as the internet will transform offline retail, offline retail is also transforming e-commerce. E-commerce as pioneered by Amazon has only successfully digitized the experience that would most closely equate to offline Walmart. That is, convenience and price driven retail. However, the offline mall, which during the golden days of offline retail represented a place for gathering, entertainment, and shopping, has yet to be created online. That is probably the ultimate promise of social e-commerce and everyone is trying to figure out how to recreate that experience digitally.
Apple Buys Mobeewave to Turn iPhones into POS Terminals
Mobeewave’s technology lets shoppers tap their credit card or smartphone on another phone to process a payment. The system works with an app and doesn’t require hardware beyond a Near Field Communications, or NFC, chip, which iPhones have included since 2014.Source: Bloomberg
While iPhones (and Androids) have been able to make payments using NFC, Mobeewave allows an iPhone to accept payments from NFC-enabled cards. While players like Shopify have democratized e-commerce, this could potentially democratize card acceptance in the same way that the original Square dongle did a decade ago but without the dongle.
We are almost in the future where everyone can be their own business with limited efforts to get started.
Facebook / WhatsApp Pilots Credit, Insurance, and Pension Delivery in India
WhatsApp plans to offer credit, insurance and pension products to lower-income individuals and those in rural areas in India and help digitize local small and medium-sized businesses as the Facebook service looks to make a digital payments push in its biggest market by users.Source: TechCrunch
While digital payments is NOT a new story at this point (Ant Financial / Alipay has been at the forefront of digital payments for a decade), the evolution of digital wallets into a general financial distribution channel is fairly nascent, especially outside of China. What is interesting is how much more important data and identity becomes as we move away from traditional card payments. This is a theme that Capital Flywheels believes will become increasingly important in the evolution of payments going forward.
While banks have spent decades getting merchants to adopt card payment infrastructure, the shifting of digital payments into software and digital wallets is disrupting the value of that infrastructure. This allows digital wallet players to offer financial-like things that have nothing to do with credit cards. Like insurance and government pension payouts. And these areas are increasingly dependent on data and identity. What the world is seeing is that rather than existing value chains evolving to gain capabilities in data and identity sphere, the money and distribution is migrating to the players that already have control of data and identity. Moving money is easier than moving data and identity assets.
🚚 Logistics / Transportation
Uber Accelerates Transformation into Delivery Company
Even amid growing losses, Uber has placed a big bet on Postmates as central to the future of its business. With the addition of Postmates, Uber Eats will control 37% of the food delivery service market but will still trail the market leader, Doordash, which owns 45%, according to Edison Trends. But Uber didn’t buy Postmates just to beef up its food delivery market share, as some have suggested. Postmates’s technology and people will very likely be used to deliver home products such as groceries, pharmacy products, home goods, hardware, and packages (the Postmates brand will live on, at least for now). Khosrowshahi suggested as much in the Postmates deal announcement Monday: “Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery,” he stated.
This flexibility is key to understanding how the coronavirus has expedited Uber’s transformation from a ride-sharing company to a logistics platform that can deliver people, food, and things. “As it relates to food delivery or delivery of all things to home, we’ve hyper-accelerated three years of adoption to three to six months,” Khosrowshahi says.Source: Fast Company
Uber announced an acquisition of Postmates a few weeks ago. What’s most interesting isn’t the actual acquisition but the positioning of the deal as a way to accelerate Uber’s transformation from a ride-hailing network to a general delivery network. Unlike traditional delivery players, Uber doesn’t need to own any of the assets. If Uber is successful, it could fundamentally transform the logistics game and democratize logistics to Amazon’s detriment. As Capital Flywheels has discussed previously, the greatest value in Uber isn’t the actual cars or drivers, it’s the network. The sooner Uber realizes this, the sooner they can do interesting network-y things like logistics and fintech.
Visa is also an interesting company in the midst of realizing this insight and transforming their business. Visa has a credit card network. But why does it only have to be limited to credit cards? Visa is opening up their network to many things beyond credit cards…but that’s a story worth exploring in its own right in a separate occasion.
Perhaps equally as interesting as recognizing the generalizability of the network, Uber is also disaggregating the network from the software.
For example, Uber recently acquired Routematch, which provides software to public transportation agencies:
Uber is reaching deeper into the public transport realm today with the acquisition of Routematch, an Atlanta, Georgia-based company that provides technology services to transit agencies. Terms of the deal were not disclosed.
While Uber has displayed public transit dataand enabled ticket purchases through its app for a while, the ride-hailing giant recently announced its first software-as-service (SaaS) partnership to integrate on-demand public transportation with its app, starting with a bus agency based in Marin County, California.
By bringing Routematch into the fold, Uber is advancing its long-stated mission of making “individual car ownership a thing of the past” and helping cities provide “more accessible public transportation.”Source: Venturebeat
And on the food side, Uber is opening up its software for easy insertion into existing businesses in order to drive digital transformation:
Uber Eats launched a U.S. pilot program Tuesday that will allow partner restaurants to provide online ordering directly on their websites either for pickup or delivery with no commission through the end of the year, Therese Lim, head of restaurant product at Uber Eats, said during a press call on Friday. Using this tool, restaurants will be able to customize their colors and themes and create a branded experience on their website. The company also extended its waiver of all restaurant fees for Uber Eats pickups in the U.S. and Canada for the rest of 2020, she said.
The company also added an Uber Eats Manager mobile app to allow restaurant managers to monitor delivery business on the go, according to a press released shared with Restaurant Dive. The app will track sales volumes, operational statistics, earnings and sales trends in real time, Lim said. It will also alert the manager if something goes wrong in the store, such as if a tablet was accidentally unplugged or if a staff member forgot to accept a delivery order. Restaurant partners have access to the company’s Customer Engagement and Customer Insights Dashboard features, which will be accessible in the Eats Manager and a traditional desktop or browser. Customer Engagement will allow restaurants to respond to customer complaints or compliments, while Customer Insights allows restaurants to view consumer behavior and clicks to gain a better understanding of ordering patterns.Source: Restaurant Dive
These two developments are just two instances of two mega trends consuming the entire world: Networks are getting generalized and any company with a network is drawing everything else into its orbit, and as Marc Andreessen foretold a decade ago, software is eating the world and the internet companies are starting to build out software foundations upon which the world will be built.
All right, that’s all folks.