eBay has been considering selling its classified-ads business for some time, but it appears the company is finally taking steps in that direction.
The company’s classifieds business is estimated to be worth some $10 billion and mainly operates internationally, similar to Craigslist in the U.S. Selling the classifieds division would leave eBay with its core marketplace business.
According to The Wall Street Journal, “Private-equity firms including TPG and Blackstone Group Inc. and strategic bidders including Naspers Ltd. and German publishing company Axel Springer SE have recently expressed interest in the business.” eBay has also been approaching other companies to gauge interest.
Both Naspers and Axel Springer have existing online classifieds businesses, and the addition of eBay’s business would no doubt significantly increase their reach. The WSJ reports that indications of interest are due in March.
We will continue to monitor developments and report updates.
Morgan Stanley has entered into a definitive agreement to purchase E-Trade, the popular electronic trading platform.
The deal is an all-stock transaction, valued at roughly $13 billion, making it the largest such deal since the 2008 financial crisis. The acquisition will help Morgan Stanley’s diversification efforts, bringing in 5.2 million customers and $360 billion in assets.
““E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy. The combination adds an iconic brand in the direct-to-consumer channel to our leading advisor-driven model, while also creating a premier Workplace Wealth provider for corporations and their employees. E*TRADE’s products, innovation in technology, and established brand will help position Morgan Stanley as a top player across all three channels: Financial Advisory, Self-Directed, and Workplace,” said James Gorman, Chairman and CEO of Morgan Stanley. “In addition, this continues the decade-long transition of our Firm to a more balance sheet light business mix, emphasizing more durable sources of revenue.”
The deal is subject to regulatory approval and approval by E-Trade shareholders. Should everything go as planned, it is expected to close in the fourth quarter of 2020.
YouTube TV has scored a win against its streaming TV rivals with a deal to bring HBO and Cinemax to its service.
The TV streaming wars are heating up as companies fight to gain and keep subscribers, not just from traditional TV and cable companies, but also from each other. Hulu, Sling TV, fuboTV, CBS All Access, Disney+ and Apple TV+ are all vying for content, networks, channels and programming.
YouTube TV just inked a deal with WarnerMedia to bring HBO, Cinemax and the upcoming HBO Max to YouTube customers. HBO’s content has been available to Hulu, Amazon Prime and AT&T Now subscribers for some time. The deal rounds out YouTube TV’s lineup and helps the service better compete with its rivals. The deal also ensures YouTube TV continued access to WarnerMedia’s other channels, such as TBS, TNT, truTV, CNN, HLN, Turner Classic Movies, Adult Swim and Cartoon Network.
“As consumers’ media consumption habits continually evolve and the landscape becomes more and more dynamic, our goal remains constant, and that is to make the portfolio of WarnerMedia networks available as widely as possible,” said Rich Warren, president of WarnerMedia Distribution. “YouTube has been a valued partner for a number of years, and we’re pleased to not only extend our existing agreement, but also make HBO and Cinemax – and soon HBO Max – available to YouTube TV customers for the first time.”
When HBO Max debuts, it will not be accessible directly in YouTube TV, but customers will be able to use their YouTube TV credentials to log in.
“Foot traffic has been the secret,” says Tim Lesko of Granite Investment Advisors. “Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. Stores that are able to maintain foot traffic, people that are going for grocery and then buying other goods, really creates a strong backdrop against other retailers.”
Tim Lesko, partner at Granite Investment Advisors, discusses how foot traffic driven by their grocery business is key to Walmart’s continued growth in an otherwise difficult retail sector:
Grocery Foot Traffic is Walmart’s Secret
There are two things that are most important to us. One is that Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. So pretty happy to see that even though same store sales were a little light compared to street estimates, they were still positive.
Second is the online business. They continued to spend a lot of money and have done a really good job of growing that online business. People fail to recognize that they’re the second largest online retailer in the US.
Foot traffic has been the secret. Stores that are able to maintain foot traffic, whether they be stores that are people hunting for bargains in the TJ Max’s of the world or people that are going for grocery and then buying other goods really creates a strong backdrop against companies like Pier 1 which went bankrupt over the weekend. You’re seeing bankruptcies all over the landscape. You have to drive foot traffic.
Multiple Revenue Streams Makes Amazon a Difficult Competitor
Multiple revenue streams is why Amazon is such a difficult competitor. They have businesses outside of their core retail business that really drive the profits and they continue to sell goods at a loss online. But interestingly, you have Amazon that’s moving from being a virtual merchant to now a bricks and mortar merchant, getting into grocery, getting into daily distribution of goods to people.
Walmart’s been doing that for years and has all of the goods in your geography. In the future world of same-day delivery and next day delivery, Walmart’s very well-positioned to provide that service. It’s almost like they’re both heading towards the same way but with Walmart at a much better valuation.
Grocery Foot Traffic is Walmart’s Secret, Says Analyst
Tesla may not have nearly the size or market penetration of its more established rivals, but the company is years ahead of them in electronics technology.
Nikkei Business Publication did a teardown of the Tesla Model 3, giving engineers from competitors the opportunity to examine the electronic components. In particular, the teardown looked at the integrated central control unit, the brains of the car. Tesla created the Full Self-Driving (FSD) Computer, or Hardware 3, after finding there were no existing solutions available.
According to Nikkei, “one stunned engineer from a major Japanese automaker examined the computer and declared, ‘We cannot do it.’”
As electric vehicles and self-driving cars become the standard, FSD-type hardware will be in high demand and be one of the single most critical components of such vehicles. As Nikkei highlights, however, industry experts don’t expect the technology to be widely used until 2025, giving Tesla a six-year head start.
Nikkei’s sources claim companies such as Toyota and VW have the technological ability to roll out similar hardware, but feel indebted to the supply chain they have spent decades building up. That supply chain will be devastated by FSD-style hardware that will greatly simplify the electronic design of vehicles, cutting down the number of components needed.
Tesla has already been credited with a significant advantage in its battery technology, allowing it to spend roughly $50 per kilowatt hour less than competitors. Now with it having an equally significant advantage in its electronics tech, competitors will have to play catchup on multiple fronts—whether for technical reasons or not.
Google may soon join the ranks of Apple and Facebook in paying publishers for news content.
Google and news publishers have been at odds for years, with the latter wanting Google to pay for content. While Google’s search sends an untold number of visitors to news websites, Google doesn’t pay for any of the content that shows up in its News service.
The company is under additional pressure, however, after the passage of a new copyright law in the European Union (EU). Under the new law, search engines must pay a license to display a preview of a news article, something Google has so far refused to do.
According to a report in The Wall Street Journal, that may be about to change. People close to the matter told the WSJ that Google is in talks with news publishers, specifically those outside the U.S., to license content for a news product. Whether that will be the company’s existing News service or an entirely new product is anyone’s guess at this time.
At the recent Social Media Day Jacksonville 2018 conference, Carlos Gil, founder of Gil Media Company, spoke about current social media marketing strategies. In an entertaining and informative talk, Gil spoke about the challenge of getting companies like Win-Dixie to understand that they should be engaging with their customers on the device their customer is always paying attention to, and that’s the cell phone.
It’s not about advertising either, it’s about being part of the conversation, being a brand that matters. Here are selected excerpts from Gil’s talk below that highlight this challenge:
The Only Metric that Matters Is Sales
The only metric that matters today is sales. Most of us, if not all of us, know that the reason why we’re on social media is that we want to drive more revenue for our businesses. You go to any CMO or CEO and for them, social media is just nice to have. The reality is that social media is the lifeline between you and your customers.
Oftentimes, we see metrics being referred to as reach, clicks, impressions, but the only metric that really matters is the sale.
I often get asked by businesses and marketers, should I be on Instagram, Snapchat, or something else? My answer to them is very simple, go where your audience is. Each one of these social networks gives you reach and helps put you in front of people who are potential buyers or existing buyers from your brand or your competition. If you are targeting millennials, Snapchat and Instagram might be good to focus on.
Simply think about your business and go where your audience is.
Revise Strategy from One-To-Many to One-To-One
We’re talking about sales, we’re talking about driving revenue. Since the beginning of time sales has always been one-on-one. I think the biggest mistake that marketers are making is they think I’m going to get on social media and I’m gonna have access to reach all of these people. I have all of these followers, but the reality is that most people are not paying attention to the content that you’re posting. This is why you should revise your strategy from being about one-to-many but more one-to-one, and you should stop focusing on the numbers.
Recently, I was working with a client that said to me, we have 30 million social media followers globally but we’re reaching a very small percentage. I looked at the CMO and said, you don’t have 30 million followers, in reality, you have like 300 or less. Their jaw dropped and they were shocked because the reality is that you can’t touch everyone that’s out there.
Social media operates in real time, and with the way content moves, content is relevant today and it’s irrelevant 15 seconds from now.
Millennials Don’t Want to be Sold, They Want to be Engaged
Millennials don’t want to be sold, they want to be engaged. Millennials are really at the forefront of a lot of what we do. For example, I work a lot with real estate agents and they often say that you have to look at the data of who is your target buyer. In the case of realtors, 30 years old is the average age of a first-time homebuyer. You’re not going to reach that customer sending them direct mail.
However, if you run Facebook Ads, if you have any sort of presence in social meeting, you can find a way to get in front of them then. You have a much higher likelihood of promoting your brand and getting that lead. The same thing applies to most businesses.
Go Where Your Customers Are… the Mobile Phone
I work with both B2B and B2C and you have to go where the current is, you have to go where the customers are. The reality is this is your audience today. People aren’t paying attention to really what’s in front of them besides their cell phone.
I’m sure if you go to any boardroom meeting today and you look around, what do people do when they show up, they put their iPhone first thing in front of them.
When I was working at Winn-Dixie back in 2014, we’re doing this campaign where we’re trying to take market share away from Walmart, Target, Burger King and McDonald’s, I made a comment to our CMO at the time. I said why are we focusing so much on doing direct mail at home marketing and instead, why aren’t we doing SMS and push notification ads? Why aren’t we reaching people on the device that they go to the bathroom with and that they use all the time?
We use cell phones for virtually everything that we do, so guess what, the light bulb has to go off if people are using this device all the time and they live by it your marketing has to now appeal to the device itself.
It was funny because in 2014 that CMO looked at me and says huh, SMS is never gonna take off, mobile marketing is never gonna take off!
Marketing is Like Finding Your Match on Tender
You’ve got this high propensity of customers, Millennials, they’re all using social media. I think the biggest challenge that we all face is how do we reach people at the right time and ensure that our content resonates with them? This is why I say that marketing is like finding your match on Tinder.
Business marketing is very much like dating. You’ve got a lot of people out there in this digital ocean and if your content is not appealing to that audience then they’re gonna keep swiping.
In bad news for Apple’s App Store, YouTube TV has become the latest to turn its back on Apple’s in-app purchasing policies.
Apple charges developers 30% of the price of their app to help run the App Store. For subscriptions things work a little different. Initially, Apple charges the same 30% of the subscription fee, although after a year that drops to 15%. Many developers have balked at the fees, believing Apple is charging too much.
In some cases, companies have argued that paying Apple’s fee makes it nearly impossible to compete with Apple’s own subscription services. Alternatively, if a company does offer in-app subscriptions, the company stands to lose a significant amount of money over their own, non-App Store subscriptions.
It seems Google is no longer willing to pay Apple’s price. In an email the company sent to individuals who had subscribed to YouTube TV via the App Store, Google has informed them that in-app subscriptions are no longer supported and their subscription will terminate March 13. Customers will need to sign up for a subscription on the website to continue watching the TV streaming service.
As more and more developers look for alternatives to Apple’s subscription service and corresponding fees, the iPhone maker will need to address concerns and come up with better ways to incentivize ongoing participation.
Touch an ad on Instagram and instantly play the game.
“5G is going to be a real tailwind for growth in mobile,” says Zynga CEO Frank Gibeau. “It’s going to enable much higher performance games. They’re going to be able to bring more people into a gaming experience. You’ll be able to have games that are zero downloads where you can play them right over the air and never have them installed on your phone. If you’re looking at an ad on Instagram you’ll be able to touch that ad and quickly be able to play the game without having to go to the App Store.”
“It’ll also enable new forms of innovation in terms of distribution, the funnel of how you manage players, will be a lot more efficient and strong,” says Gibeau. “As infrastructure around 5G rolls out globally over these next several years it’s going to be a huge boost for us.”
5G To Enable Much Higher Performance Games, Says Zynga CEO
It’s often difficult to comprehend how to get ahead of the competition – let alone adapt – when your business’ industry is constantly changing. Saying this, utilizing Enterprise AI can boost your business’ performance, quality, and position within the industry. However, if considering AI implementation, you must be serious from the beginning. Fewer than 1 in 3 businesses who pilot AI programs actually proceed to launching the technology; however, this is due to many reasons. Planning for the long-term and simply jumping in despite your lack of clarity can push your enterprise ahead of the game. It just takes a little planning.
If you believe AI isn’t right for your business, it’s time to reconsider. The majority of the top sectors consider AI pivotal to their achievements- including 70% of financial and insurance companies, 65% of retailers and technologists, and 55% of educators and manufacturers. Saying this, AI has been found to be professionally universal, applicable across many sectors: manufacturing, transportation, and even the supply chain and logistics. There are many different ways to utilize AI, making it an important part of technological advancement in any field.
More specifically, AI can enhance a business leader’s decision-making capabilities, help reduce waste, improve product quality, cement a business into their ever-changing market, lower energy costs, and meet rising demands. For example, AI can increase the time it takes for business leaders to come to conclusions on complicated decisions, while also strengthening the decision they make. AI can also increase production results, decrease overhead costs, and eliminate deadhead trips, wasted energy, excess expedites and inventory, and more. With this, 84% of the world’s business leaders consider AI to give them an advantage against their competition, strengthening the power of their business.
Moreover, many successful executives and business leaders have commented on their experiences with Enterprise AI. Paul Daughtery, Chief Technology and Innovation Officer says, “The playing field is poised to become a lot more competitive, and businesses that don’t deploy AI and data to help them innovate in everything they do will be at a disadvantage.”
In similar advice, Lee Blackstone (Founder of Blackstone+Cullen) noted, “You need to understand what you really need to automate and how it’s going to benefit you. How is AI going to change your business so that you can respond faster than your competitors?” Hence the reason getting started is the most important step in implementation.
No matter the industry, there’s a way to incorporate AI into your five-year strategy. It can be used to decrease production costs, reduce waste in shipping, make predictions about changing markets, and more. It can help many industries reduce energy costs and make better predictions about consumer behavior. It can take data and extrapolate the next steps in actionable ways that businesses can act upon.
Data is more important than ever, and Enterprise AI can enhance the way your business’ data is processed. The steps to incorporating and expanding AI into your business are simple. Read more information on Enterprise AI below.
Google is doubling down on its efforts to make inroads in the retail market, with its latest planned acquisition aimed at helping brick and mortar businesses list their inventory online.
Pointy is a Dublin, Ireland-based tech startup that specializes in helping businesses easily list and manage their inventory online. The company works with retailers throughout Ireland, as well as in nearly every town and city in the U.S.
“With Pointy, merchants simply plug a small box into their barcode scanner or install the Pointy app on their point of sale system, which surfaces the products that they sell directly into the ‘See what’s in store’ section of their business profile on Google Search,” according to Google’s announcement. “Since we introduced this functionality a few years ago, Pointy has been one of our key partners, helping thousands of local merchants display this data within Google. We’re looking forward to working with Pointy to help even more local retailers bring their product inventory online.”
Pointy already has close ties with Google, having partnered with the search giant over the years, and sees the deal as the next logical step.
“When we started Pointy, our mission was to make things better for local retailers,” reads a blog post on Pointy’s site. “That remains our mission today. All of our services continue to operate as usual. We look forward to building even better services in the future, with the backing of Google’s resources and reach.”
“Today is a big step forward for Pointy, but there is still a very long way to go. We’re as excited about the future as when we first started.”
The terms of the deal were not disclosed but, pending the standard approval process, the deal is expected to close in the coming weeks.
Just a week after FedEx Ground announced it would offer Sunday deliveries, UPS said it plans to more than double its weekend deliveries in 2020, according to Reuters.
As Reuters points out, UPS “pioneered seven-day delivery in 2013, in partnership with the U.S. Postal Service (USPS), and is now spending billions of dollars to speed up its free shipping.” In recent years, however, it has faced increasing competition from FedEx, as well as from Amazon. Amazon has started using its own drivers for deliveries, and often reserves the most desirable, high-density delivery routes, leaving UPS to handle rural and low volume routes.
One way to offset the challenges is by increasing the delivery volume, and is part of the motivation behind UPS’ announcement. Expanding weekend delivery also ensures UPS stays a viable option in the minds of customers who want items delivered as soon as possible.
“E-commerce spikes on the weekends, and retailers want those orders delivered sooner,” said UPS Chief Marketing Officer Kevin Warren, according to Reuters.
As the delivery market continues to heat up, it will be interesting to see if UPS and FedEx’s weekend options help them better compete with Amazon.
Another day, another company abusing customer privacy. A joint investigation by PCMag and Motherboard has discovered that antivirus maker Avast, who also owns AVG, has been selling extremely detailed information about customer browsing histories to marketers.
The company division responsible is Jumpshot, and it has “been offering access to user traffic from 100 million devices.” In a tweet the company sent last month to attract new clients, it promised to deliver “‘Every search. Every click. Every buy. On every site’ [emphasis Jumpshot’s,]” according to Motherboard.
In fact, the level of detail the data provides is astounding, allowing clients to “view the individual clicks users are making on their browsing sessions, including the time down to the millisecond. And while the collected data is never linked to a person’s name, email or IP address, each user history is nevertheless assigned to an identifier called the device ID, which will persist unless the user uninstalls the Avast antivirus product.”
The data is anonymized so that, in theory, it can’t be tied to an individual user. However, the device ID is where the trouble comes in. For example, all a retailer would need to do is compare the time stamp that correlates to a specific purchase against their records to identify the customer. It would then be a simple matter to use that device ID to build a complete—and completely identifiable—profile of that person. With their entire browsing history, the retailer would know everything about what sites they visit, their habits, what their interests are and who their friends are.
According to PCMag, Jumpstart even offered different products tailored to delivering different subsets of information. For example, one product focused on search results, both the terms searched for and the results visited. Another product focused on tracking what videos people are watching on Facebook, Instagram and YouTube.
The granularity is particularly disturbing in relation to a contract Jumpstart had with marketing provider Omnicom Media Group, to provide them the “All Clicks Feed.” The service provides “the URL string to each site visited, the referring URL, the timestamps down to the millisecond, along with the suspected age and gender of the user, which can inferred based on what sites the person is visiting.” While the device ID was stripped from the data for most companies that signed up for the All Clicks Feed, Omnicom Media Group was the exception, receiving the data with device IDs intact.
Much of the collection occurred through the antivirus software’s browser extensions, and Avast has since stopped sharing the data it collects through those extensions. However, the company has not committed to delete the data it has already collected. The company can also still collect browsing history through its Avast and AVG antivirus software, on both desktop and mobile.
That ambiguity has not gone over well with Senator Ron Wyden, a staunch privacy advocate. According to both PCMag and Motherboard, Wyden said in a statement that “It is encouraging that Avast has ended some of its most troubling practices after engaging constructively with my office. However I’m concerned that Avast has not yet committed to deleting user data that was collected and shared without the opt-in consent of its users, or to end the sale of sensitive internet browsing data. The only responsible course of action is to be fully transparent with customers going forward, and to purge data that was collected under suspect conditions in the past.”
The full read at either PCMag or Motherboard is fascinating and is another good reminder that nothing in life is free. Companies that offer a ‘free service’ are making their money somewhere—often at the expense of the customer.
According to Quartz, and originally reported on by the Financial Times, Amazon and Goldman Sachs may soon team up “to offer small business loans in the U.S.”
Goldman Sachs has already shown itself willing to work with big tech, as it partnered with Apple to launch the Apple Card. If the report is accurate, Goldman Sachs may be “developing technology to provide lending through Amazon’s lending platform, potentially reaching thousands of enterprises that sell through the e-commerce giant.”
As Quartz highlights, Goldman Sachs has a lot to gain by working with big tech. A latecomer to the consumer banking industry, the company has no branch locations and is likely looking at big tech as a good way to gain market share. In fact, according to Quartz, “the Wall Street bank explicitly outlined partnerships (pdf) and co-branded relationships as part of its strategy for Marcus, its fledgling consumer brand.”
Big tech companies have increasingly been looking to expand into the financial industry, seeing it as a way to keep customers involved in their ecosystems. At the same time, regulators are growing more concerned as tech companies expand beyond their traditional realm. If the report is true, a deal between Amazon and Goldman Sachs is likely to draw further scrutiny.
The Wall Street Journal is reporting that Intercontinental Exchange (ICE), the owner of the New York Stock Exchange “has made a takeover offer for eBay Inc.”
ICE has been interested in buying eBay before, and has now approached the e-commerce giant once again, although the WSJ says the talks are not formal. If eBay were interested, ICE would likely have to come up with more than $30 billion to make the deal happen, reflecting eBay’s current valuation of $28 billion, plus a considerable premium.
The WSJ’s sources said ICE is mainly interested in eBay’s marketing business, not the online classified division, which even eBay has considered selling.
We will continue to monitor the story and provide updates as it develops.
Direct to consumer brands are doing incredible numbers on Shopify, says Shopify COO Harley Finkelstein. He says that Kylie Jenner has generated almost a billion dollars in sales on the platform and many other influencers such as Kanye West, Drake, and most recently Tom Brady are also doing very well.
“Even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind,” says Finklestein. “Shopify was built to help anyone that has an idea start a great business and sell to a global audience.”
Harley Finkelstein, COO of Shopify, talks about the incredible numbers DTC brands are doing on Shopify, the huge success of Shopify Capital, and their quick acceptance of cannabis stores in Canada and potentially the rest of the world, in an interview with Jim Cramer on CNBC:
DTC Brands Doing Incredible Numbers on Shopify
We’re really happy with how we ended the year and certainly, the quarter was great and we’re really excited about our future. We’ve been at this now for almost 14 years. We’ve grown to 820,000 merchants up from 600,000 merchants a year ago. We have a big top of funnel with brand new entrepreneurs getting started on Shopify for the very first time. We also have some very large brands like the big CPGs and some big direct to consumer (DTC) companies all using Shopify to scale their businesses. We’ve got a really great business model and we’re having a lot of fun.
It’s amazing. I think the Kylie story ($1 billion in sales) was surprising to a lot of people, not for us because we see so many stories like that all the time. Whether it’s Kanye West launching his Yeezy store on Shopify or Drake’s store or Tom Brady’s new store, we see all of these major brands and huge influencers using Shopify to create authentic products and sell it to the audience. I always sort of think back to if DTC and direct-to-consumer were around when Michael Jordan was creating the Jordan brand with Nike I think Nike would be a supplier and Michael Jordan would be the brand. He would own the entirety of his business as opposed to getting a licensing fee.
We’re really excited about this. But even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind. Shopify was built to help anyone that has an idea start a great business and sell to a global audience. We really do bend the learning curve to make it really easy to get started.
Shopify Helping Democratize the Entire Business Process
The ones that succeed, not all of them do, but the ones that do succeed they grow really large with us and over time we want to provide them with more services and more solutions. For example, we launched Shopify Payments a couple of years ago. We went to the payments companies and negotiated rates on their behalf. We launched Shopify Shipping and went to the shipping company and negotiated shipping costs on their behalf. We always are trying to find economies of scale to help democratize the entire business process for these small businesses.
More recently we realized that a lot of these small businesses also need capital. Because we have so much information on them we’re able to make really quick and very effective underwriting decisions so we were able to go and offer them capital cash advances. We’ve given out hundreds of millions of dollars of cash advances to a lot of these small businesses who if it wasn’t for Shopify would not be able to get this money on their own.
Entrepreneurs Want to Own Their Audience
Etsy fundamentally is a marketplace. Etsy is a place where someone who makes a product can go to find an audience. But our feeling is that you know for an entrepreneur they don’t always want to rent the audience. They want to own the audience. They want to have a direct relationship with their customers. They want to own the entire to profit margin. They want to be able to sell and have long-term relations with the people that are buying their products.
So companies like Etsy do a really good job of curating a bunch of products and renting those customers to those makers. We think the marketplaces are really great but we think ultimately makers and entrepreneurs and merchants want to have a direct relationship with the people buying their products. One of the things that is not well known about Shopify but one way to think about what we do is really this retail operating system. Merchants can start a store with us very easily and they can build a beautiful online store but they can also cross-sell to different marketplaces like eBay or Amazon.
The idea is that it feeds all feeds back in one centralized back office which is Shopify. That’s where they can run the entirety of their business. Really the idea is let’s become the most important piece of software they use on a daily basis. The first thing they open every morning, the last thing they close every night. So obviously marketplace will play a role there but ultimately merchants want to find customers wherever those customers exist and more and more they want to sell direct to those customers.
Shopify Facilitating Cannabis Sales in Canada
The reason we started with Canada was there was clarity in Canada. The Canadian government, the legislature, they were very clear with how they were going to roll out the commercialization and the legalization of cannabis sales on the consumer side. We felt it was really important for us to act quickly and effectively to not only win as much of the Canadian market as we possibly could but also to show the rest of the world as they begin to think about cannabis sales that we are the first phone call that they should be making.
Whether it’s the province of Ontario or British Columbia or most of the largest licensed producers like Canopy in Canada, Shopify is what’s powering those retail sales. We think that we can do a great job helping other countries and other regions do the same thing.
“Amazon is not going to put everyone out of business,” says retail guru Dan Hurwitz of Raider Hill Advisors. ”In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner.”
Dan Hurwitz, CEO of Raider Hill Advisors, discusses how Amazon’s retail success has driven other retailers to improve and some may have found ways to create a retail experience even better than Amazon.
Amazon Is NOT Going To Put Everyone Out of Business
Amazon is not going to put everyone out of business. In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. We’ve all learned never to bet against Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner. Target is doing it right, Walmart’s doing it right, and Best Buy is doing it great.
What’s happening is 70 percent of those people that buy online pick up in-store are also buying something else in the store. The cohesion between bricks and mortar and digital is what’s making people successful. Those that aren’t doing it successfully will ultimately fail. There is (significant) up-sale when you buy online and you still pick up in-store. Don’t forget, people are going to be incentivized to pick up in the store because retailers lose money shipping goods for free. They’re going to have to figure out a better way to get you into the store. When they get you into the store there’s an up-sale and that up-sale is a highly profitable up-sale. We’re going to see more of that as this evolution continues.
The whole concept of an apocalypse of bricks and mortar was really overblown. Best Buy was the best example. People were talking about them disappearing. They’ve done a phenomenal job turning it around as has Target and as has Walmart. That will continue.
Some Department Stores Will Struggle To Survive
Some (department stores) will struggle to survive and some will get it done. I happen to be a fan of Macy’s. I like what Macy’s is doing. I think they have a very strong management team and they have great real estate. They have sophisticated buyers and they’re reinventing their inventory. They’re looking they’re sourcing the right goods just at the right price at the right time. They have to make the experience better obviously. People talk about experience, but the merchandise is the experience. You can have a great experience but if you have lousy merchandise it’s not going to work. Macy’s has a great buying group that I wouldn’t bet against.
There would have been a number of great retailers for Amazon to own (via acquisition) nationally. The question is, if they really have a store, forget about Whole Foods for a minute, just an Amazon store, I’m not so sure what they put in it. They’re great distributors of goods but if you walk into their stores today I don’t know if you would argue that they run a great experience or store with terrific merchandise. I think they have to run a different kind of store. But I do think there’s an opportunity for them to expand their reach dramatically.
Amazon Is NOT Going To Put Everyone Out of Business
“We started the rollout to all of the Walmart retail environments at the end of 2019 and so far so good,” says STRIVR CEO Derek Belch. “We’ve had almost a million Associates go through different training modules. Doug McMillon actually in their earnings report a month ago did reference employee training as being one of the reasons that their earnings are what they are. So it’s definitely something that we’re seeing have a very positive effect as it relates to placing employees in these simulation-based learning environments that virtual reality affords.”
Derek Belch, founder and CEO of STRIVR, discusses the success that enterprise companies such as Walmart, Verizon, and BMW are having with their virtual reality employee training technology in an interview on CNBC:
Walmart VR Training Positively Impacting Earnings
We started the rollout to all of the Walmart retail environments at the end of 2019 and so far so good. We’ve had almost a million Associates go through different training modules. Doug McMillon actually in their earnings report a month ago did reference employee training as being one of the reasons that their earnings are what they are. So it’s definitely something that we’re seeing have a very positive effect as it relates to placing employees in these simulation-based learning environments that virtual reality affords. It’s been really cool.
Walmart VR Training – Oculus x Walmart x STRIVR
We have about 30 customers in the Fortune 500 right now. It’s definitely crossing the chasm. We’re still on our way up here in the early adopters’ phase but we’re seeing this catch on. There’s definitely product-market fit for immersive learning as we call it. This is the real deal. This is very similar to pilots in a flight simulator. Historically, we’ve trained employees or we’ve assessed employees via PowerPoint’s, videos, and lectures. Candidly, we don’t know if people are half asleep or if they’re actually engaged.
Now with virtual reality, we’re able to put people through simulation-based learning, simulation-based training, simulation-based assessment, and it’s catching on. I think by this time next year if you’re not doing something (with VR training) you’re behind in the Fortune 500. We’re seeing that this is the real deal.
VR Technology Finding Its Legs As a Useful Tool In the Enterprise
At this point, we’ve talked to everybody. There isn’t a company in the Fortune 500 that we have not talked to in some way, shape, or form. We are not working with Amazon currently. We have talked to them on and off and we’ll see where that goes. To be honest, I’m not really worried about anyone doing this themselves. This is still the very early days of virtual reality. We work very closely with Oculus, which is owned by Facebook, they’re a great partner of ours.
We take a lot of pride at STRIVR and what we call the end-to-end solution which is basically, hey, in the early days while you’re an early adopter and the technology is certainly viable and ready it’s also really difficult to scale. So we do a lot of heavy lifting for our partners, Walmart being one of them along with Verizon and BMW. We just do a lot of work for them up front while the technology is finding its legs to get to the point where computers, iPads, and cell phones are right now as a useful tool in the enterprise. I’m not worried about anybody in the next 18 months or so doing this on their own but certainly, we’ll see as the ecosystem evolves where it goes from there.
STRIVR VR Technology Being Used by Verizon
As it relates to the viability of using this as a predictive tool, this is how the Walmart use case came about with using this for assessments. Were actually patent pending right now on what we call an engagement algorithm to see how engaged somebody is during a simulation. We tell our partners all the things we’re working on behind the scenes and Walmart said they wanted to test that out to see if this would be a good use case for them.
We Take Pride That Our VR Experiences Won’t Lead To Nausea
This (disorientation) is an issue for sure. That question always comes up in every demo. “Hey, am I going to get sick? Oh, I’m good, I don’t need to put it on. I got sick last time.” This is all about how the brain works and your equilibrium. If you’re sitting or you’re standing and you put on a headset and now you’re on a rollercoaster or you’re running through an active shooter game or something like that, yeah you’re going to get nauseous because your body is static but your brain thinks that it’s doing something else.
We take a lot of pride in making sure that the experiences we build along with some of the subtle things we do in the software aren’t going to lead to nausea.
Walmart, Verizon, BMW Having Success With Virtual Reality Training Technology – STRIVR CEO Derek Belch
“Speed and convenience and really driving consistency of operations are core themes,” says Wendy’s CEO Todd Penegor. “You think about how you can continue to drive speed. The digital journey is a big one. How do we drive folks into mobile ordering? How do we drive awareness on mobile ordering? What we do see is when folks mobile order the check size is about 20 percent higher. Those are just great opportunities to continue to connect to that next generation of consumer and create a better experience and gather even more data to connect with them into the future.”
Todd Penegor, CEO of Wendy’s, discusses how their innovative improvements in the digital journey are improving speed and the customer experience in an interview by Jim Cramer on CNBC:
Wendy’s Innovated the Digital Journey For a Better CX
We are connecting to that next generation of consumer through social media and having a lot of fun doing it. It is driving folks into our restaurant. Chance the Rapper tweeted that he would love to have his spicy nuggets back. We challenged him to see how many likes he could get. We said that if you get two million likes we will bring spicy nuggets back. He did that and we brought spicy nuggets back. Immediately, and you see that in our third-quarter results, from day one, even before we turned on national advertising, people showed up in our restaurants to buy those spicy chicken nuggets. They wanted them back and they learned about it through social.
There’s a ton of good things happening. We’re still working on speed, so speed and convenience and really driving consistency of operations are core themes. You think about how you can continue to drive speed. The digital journey is a big one. How do we drive folks into mobile ordering? How do we drive awareness on mobile ordering? What we do see is when folks mobile order the check size is about 20 percent higher. Those are just great opportunities to continue to connect to that next generation of consumer and create a better experience and gather even more data to connect with them into the future.
Delivery Innovation Continues To Be a Great Growth Engine
Delivery continues to be a great growth engine for us. We’ve got over 85 percent of the system supported by delivery. We announced today that we will have all of our ordering integrated on delivery into our point-of-sale system. That’ll allow us to get the food to the customers even faster. We’re one of the fastest today at 30 minutes from the time you order to the time you get the food. Now that it’s going to be integrated into our POS we can probably shave another three to five minutes. It could also open us up to use other delivery providers beyond just DoorDash which will be another great opportunity to expand access to our brand.
We talked a lot today about our brand and really doing fast food done right. Fast food done right can resonate across the globe and fresh is what a consumer is really looking for. It is a true point of differentiation (with competitors). We talked about making a move into Europe over the next 12 to 18 months and really starting in the UK and really front-running some of that with company restaurants. We talked about up to 20 company restaurants over the next couple of years. We will bring franchisees into to play that out in the UK, but it will create a beachhead for us to really start to drive some growth into all of Europe. It’s a big burger-eating area of the world. The category has been growing and we have the right to play and can be differentiated on fresh.
Wendy’s Reintroducing the Black Bean Veggie Burger
We’ve talked about plant-based probably four years ago. We are way ahead of the curve when we had a black bean burger that we were working on. Unfortunately, at the time it was operationally complex and it took additional equipment in the restaurant. Today, we figured out how to solve for that. We’re looking for that flexitarian customer. We’re trying to do it the Wendy’s way. We’re trying to do it with Wendy’s quality. Whether you’re a flexitarian or a vegetarian the black bean burger can solve for that. We have that in tests in one market now and we’re looking to bring that to market sometime during the course of 2020.
Flexitarian is one of those millennial terms and in folks are looking to have a lot of beef but and traditional proteins but also flip into more vegetable and and other proteins. We’re real fresh never frozen North American beef. We are about having great quality food and we always want to do things the Wendy’s way. We think a black bean burger, something that’s natural in a square to make sure that it follows along the lines of our square hamburgers, is a great fit for our brand will allow folks to continue to come into our restaurant to drive frequency.
We talked a lot about frequency. Our average customer comes to a Wendy’s five and a half times a year. We have a huge opportunity to drive frequency. Whether it’s the offerings like a plant-based burger, whether it’s entering breakfast, or driving our digital journey going forward.
How Wendy’s Innovated the Digital Journey To Improve the Customer Experience – CEO Todd Penegor
“We’re seeing right now continued strength across our business because people are prioritizing digital transformation as a way to gain competitive advantage,” says Equinix CEO Charles Meyers. “The reality is people who are responding well to that are thriving and people that are not are being left behind. What companies (like Walmart) are doing essentially is using a hybrid and multi-cloud strategy. They have private infrastructure that they may house in a significant caged environment at Equinix but they interface it then with the public clouds.”
Charles Meyers, CEO of Equinix, discusses their huge under the radar role in facilitating the massive digital transformation in progress with companies worldwide. Meyers was interviewed by Jim Cramer on CNBC:
There’s A Very Deep Demand Pool For Data Centers
We continue to see a really strong set of underlying secular demand drivers for the business. We’re seeing real strength in the business globally right now. Broadly, we’ve seen the sector respond very well. We think there’s a very deep demand pool for data centers. I do think that Equinix plays a very unique role in the market and our differentiated position is allowing us to even outperform relative to our peers. Public cloud adoption is a major catalyst for our business. As enterprises are adopting public cloud and looking at hybrid and multi-cloud as their architecture of choice we’re seeing really strong demand.
We may not be a household name but I think it’s pretty safe to say we’re probably impacting the lives of millions of consumers on a day to day basis working with (many big-name companies such as Salesforce and Netflix). We play a very important role in terms of interconnecting our customers sometimes to public cloud providers, sometimes to SAAS providers like Salesforce, sometimes to other members of their supply chain, and sometimes to networks. A really big part of our legacy and history has been interconnecting people to networks. The interconnection story is a really central piece of the Equinix story.
Equinix Is The Best Representation Of The Digital Edge
Equinix is in fact the best representation of the digital edge today. That is the point at which people are interconnecting their private infrastructure with public cloud infrastructure, with networks, and with other members of their supply chain. When you hear about edge, oftentimes that edge is in fact within an Equinix facility and being interconnected over private interconnection facilities that are facilitated by Equinix.
Typically, when inside one of our facilities, we’re unlike some wholesalers which might have one or a very small number of customers, we tend to have a larger number of customers in any individual facility. They are distributed across the site typically in private cages or sometimes in shared caged environments or shared rack environments and they have their equipment. They’re all obviously very secured and something that’s available just for them to access. But they’re all across the facility. You typically wouldn’t be able to see who the customer is because they are very sensitive about that from a security standpoint.
Firms Prioritizing Digital Transformation For Competitive Advantage
We’re seeing right now continued strength across our business because people are prioritizing digital transformation as a way to gain competitive advantage. The reality is people who are responding well to that are thriving and people that are not are being left behind. So we’re seeing strong demand. I think the trade tensions, etc. probably affects some level of sentiment but we have not seen that impact the demand profile for our business.
What companies (like Walmart) are doing essentially is using a hybrid and multi-cloud strategy. They have private infrastructure that they may house in a significant caged environment at Equinix but they interface it then with the public clouds. They’re using a variety of public clouds to house some of their workloads. So that hybrid multi-cloud environment is really the architecture of choice for enterprise customers of all sorts. Retail is actually an incredibly strong segment for us. That architecture of choice, hybrid and multi-cloud, is a major driver for Equinix’s business.
Business Prioritizing Digital Transformation For Competitive Advantage – Equinix CEO Charles Meyers
“The market narrative is always it’s a zero-sum game,” says Imran Khan, co-founder and CEO of Verishop, a new Amazon competitor launching soon. “You are coming in and it’s Verishop versus Amazon or Snap versus Facebook. Those are great stories, but ultimately I fundamentally believe that all of us are on the right side of the history in a sense. Not one company will take everything. It’s just impossible for one company to solve every problem.”
Imran Khan, co-founder and CEO of Verishop, discusses how the Verishop shopping platform can compete and win market share from Amazon and others in an interview on Bloomberg Technology:
There’s a Lot of Opportunity to Innovate in Ecommerce
Ecommerce is now only 9 percent of the overall retail market. I believe that over the next decade 30-40 percent of all retail will be online. There are actually not that many consumer choices when you look for buying branded products, having a better experience, or having a better way to discover products. We think there’s a lot of opportunity to innovate. In markets like China, for example, where 25 percent of the market is ecommerce there are many more players in China compared to the US. So I think that’s a better way to bring joy in the consumer mind when they’re trying to buy things.
In my time at Snap I noticed that millennials like to do more research before they buy something. They also care about responsibility in terms of shopping. They care about economy and sustainability. If you as a consumer, for example, want to buy sustainable products where do you really go? So we have a lot of different ways of discovering products. On our platform, we’ll have around 200 different attributes that consumers can use to find products. I’m really excited to bring in a new way of shopping to consumers. The market is very large and I think it can accommodate a lot of players.
As Ecommerce Grows Not One Company Can Solve Everything
I really admire Amazon and I’m a shareholder of Amazon personally through my fund. However, I think as ecommerce goes from 10 percent to 40 percent, not one company can solve everything. Amazon is also a juggernaut. They do software, they do a lot of different things. Again, I really admire the company but there are a lot of parts of ecommerce that are not being addressed by existing players. I think we can bring that. For example, discovery, we know that because ecommerce is still very much intent based I think we can give consumers a lot of different ways to discover new products.
The key thing to keep in mind is the time spent on mobile device is only going to grow. The market narrative is always it’s a zero-sum game. You are coming in and it’s Verishop versus Amazon or Snap versus Facebook. Those are great stories, but ultimately I fundamentally believe that all of us are on the right side of the history in a sense. People are spending more and more time digitally and as people spend more time digitally there will be a lot more new businesses. Not one company will take everything. It’s just impossible for one company to solve every problem. Facebook does a great job with Instagram and Snap has done a great job with camera. I think one will be bigger and the other smaller, but only time will tell. But I think both can co-exist very well.
Verishop to Focus on Trust
We are going to launch in late June or early July. You will see our commitment in four areas. Number one is trust. Most of the ecommerce players are marketplaces. When you’re in a marketplace where anybody can go list something or anybody can post something the platform is prone to counterfeit and fraud. We saw that with eBay we saw that with Facebook with the Russians and we saw that with Talbot in China. What we’re doing is we’re acquiring all the product directly from the brands by guaranteeing that everything you’re buying is real.
Trust is going to become an important topic on the internet. Over the last 25 years, the internet was built on the premise of an open platform and we saw that when everything is open and there are no rules it brings chaos. We solve that at Verishop by sourcing all of the products that we are sourcing directly from the brands to ensure that they are real.
The second key thing (that distinguishes) the Verishop platform is discovering new products. Again, ecommerce is very much intent-based, so we are giving consumers more choices to discover products through a lot of different ways that you will see. Our third focus is we’re going to continue to make a big commitment on convenience. I know Amazon and other companies do this it but we’re going to continue to do so by offering free shipping, free return, all those kind of things. We’re excited and it’s just the beginning. It takes a long time to build a business and hopefully we’ll continue to bring new products and new innovation to the platform.
Verishop CEO Imran Khan On Competing With Amazon: “It’s Not a Zero Sum Game”
