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What can you read from Nordstrom's dropship partnership with Fanatics?
In Edge Froum
TRL Insights
Nov 21, 2021
The online Dropship collaboration between Nordstrom and Fanatics, Inc. marked a nice innovation attempt. You can quickly complement the Sports category through quick trial and error, especially for high-value brand supply or exclusive supply rights, such as NIKE, Adidas, Mitchell & Ness.. of course, there is also a full range of Fanatics' Private Label products at low prices and good quality. Besides, the common headaches of inventory handling for Sports retailers are well handled through Fanatics decently in the win-win partnership. Nordstrom's innovation has always been one of the lighthouses in the US as well as to the global #departmentstores retailers. In 2020, the proportion of digital-related sales of this veteran exquisite department store has been close to 60%, and compared to other legacy department stores, this proportion is often only 10%-25%. (The relative ratio of Macy's and digital sales may be the highest in the legacy department store, and it has not yet exceeded 30%. Of course, this ratio is still rising in the legacy department store retailer group the decade year after year). Nordstrom has been also the North American department store that interacts most closely with the top retailers in the UK market. Compared with Hudson's Bay Company's focus on North America only (particularly after the European department store Galeria Kaufhof GmbH merger and acquisition failure), Macy's is still recovering from the serious impacts left by 2020, Target has been working on to make itself a heavier, better-service, full omni-channel business closer to every community around its almost 1900 store (fascinating but only in North America like most of its counterparts), Nordstrom has formed a strategic partnership with ASOS.com earlier in 2021 and continues to strengthen its fast fashion strength and market reputation with more choices, especially after the former's merger of TOPSHOP TOPMAN, etc. In addition to strengthening digital investment, digital revenue ratio, and deepening of the head categories across the border (such as the bespoke partnership from London, designer's brands incubator introduction from Paris, etc.), this time Nordstrom launched the one-stop expansion of the Sports category through the most efficient way with Fanatics. Our editors also believe it would be one of the mainstream activities (categories level partnership between department stores and vertical retailers on the top, etc.) just like Nordstrom's embracing of #dtcbrands for long that deserve attention in the follow-up. Reference What can you read from NORDSTROM's recent minority investment on TOPSHOP of ASOS from the UK? Why NORDSTROM is actually NOT a department store business? Why do we consider NORDSTROM is a "bigger size" ULTA Beauty / SEPHORA? How Nordstrom is turning itself to a one-stop Omni-Service retailer at 54% sales from digital? What are some of the latest trends to watch in fashion industry so far now?
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Why Global Brands Group, once the pearl of Li & Fung family business' crown was down?
In Edge Froum
TRL Insights
Nov 09, 2021
Global Brands Group (GBG), born out of Li & Fung’s global supply chain business back to the 2000s, once was also the jewel in Li & Fung’s crown for years; based on the relentless efforts of three generations of Li & Fung families since the 1970s, the overlord of the previous generation of fashion & accessories industry has finally lost its total share in the past ten years - Continuous strategic mistakes, market changes, the rise of #ecommerce, #socialmedia and #socialcommerce, the unprecedented impact of the epidemic but few protection, and the slow process of digitization across dozens of comples independent brands businesses are gradually pointing towards the same end. GBG, headquartered in the Empire State Building New York for a long time, was once a mecca for a generation of big-box retailers in the United States, especially for private brands like a lighthouse of what, how in volume but with premium quality. There used to be countless mails, orders, faxes, bargains, conferences, joys and sorrows between the United States and even the world and the manufacturing industry in Asia and Mainland China. It has witnessed the prosperity and glory of the legacy retail industry in the United States in the 1980s-2000s, and it has also despised the digital giants today when they were small and vulnerable in their early days back to the 1990s. It used to be a place where dozens of well-known global fashion & accessories brands gathered. It once represented the mainstream consumer population’s understanding and follow-up of fashion in the United States. It was also the place most frequently visited by private equity funds from Wall Street in the retail industry and witnessed the rise of countless retail brands' ups and downs. In fact, the fate of GBG may have doomed its fate since its spun off from Li & Fung’s huge business ship since day one: On the surface, GBG represents the most valuable piece of business under Li & Fung and has the highest market evaluation. It is worth a premium, but in fact all brands need a complete supply chain infrastructure, but independent marketing, retailing channels and other unique but core operations, and they need long-term continuous investment and maintenance of the brand’s minds to users. In the case of insufficient digitization, relying only on the performance of limited top brands will inevitably fall into the fate of insufficient waist brand power and the tail brand being gradually eliminated by the market; and the huge supply chain system of Li & Fung may be also a mixed bag to GBG. It surely can secure the best conditions in terms of cost and massive production efficiency, but relying on the only platform itself may not be the most efficient operating flywheel to too many brands. Reference Why did Global Brands Group (or GBG) of FUNG Group file for bankruptcy recently? Who are the possible competition forces to ABG' plausibly invincible model? How do you find ABG's business model and its value before the upcoming IPO? Is Private Brand business experiencing a new historical cycle of renaissance? What are the trends ongoing of DTC brands vs. Private brands and National brands? How Nordstrom is turning itself to a one-stop Omni-Service retailer at 54% sales from digital?
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Why THG's market value can be underestimated after its IPO for 14 months?
In Edge Froum
TRL Insights
Nov 08, 2021
THG's recent market value seemed have continued to be in sluggish, and the management has begun to be a little annoyed. It’s no wonder that since launched in the London Stock Exchange in September 2020, THG has become the technology company with the highest market capitalization at that time - however, in just one year, the stock price has been cut in half (under the macro background that 2020-2021 has been a peak window for many #ecommerce companies), which makes it a bit stumbled for THG to obtain the support of more external institutional investors to develop more but longer-term targets. THG has been a very distinctive and independent existence of the global e-commerce industry in the U.S., U.K., and Western Europe markets where there are many giants of marketplaces and legacy retailer's online arms. From the surface, THG is a series of #beauty and #sportsnutrition vertical e-tailing business and brands conglomerate, but in reality THG is a highly rare cross-ecosystem integrator in the vertical ecommerce field according to our editors. THG’s business strategy is very sophisticated and ambitious, ranging from the beauty ecommerce troika (UK: LOOKFANTASTIC.COM, the US: Dermastore®, Europe: GLOSSYBOX) to the Sport Nutrition DTC brand Myprotein (perhaps the earliest and most successful sports nutrition DTC brand so far since the beginning of 2010s), its own spa and hotel real estates properties, to various brands such as beauty and nutrition that THG continues to acquire in the last decade, and the production factories in the US and the UK that continue to bag in after listing, have been very impressive. This is not enough. In fact, THG Ingenuity, a new but not small business incubated by THG from its common #ecommerce platform and global infrastructures, seems has become the sea of ​​stars for the next 10 years, and it has initiated independent fund raising since May 2021 under the US$1.6 billion blessing from SoftBank Group Corp. Vision Fund II (no wonder London Stock exchange may be not happy with the spinoff of THG Ingenuity). If you look at several businesses together, Matthew Moulding is a genius and born for THG in the fields of global #ecommerce, #omnichannel retailing, and fantastic but imaginative SaaS platform services since 2004. Reference Why did THG's stock price suddenly drop about 20%? Why did SoftBank was happy to pour into THG for 1.6 billion sterling pounds at a shot? Why does ASOS, THG, Zalando, and maybe more potential buyers look at the same bids to acquire? Who is THG and why it has bought DERMASTORE of TARGET US after SKINSTORE? Why did LVMH's SEPHORA to purchase UK's FEELUNIQUE?
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How do you see Bed Bath & Beyond's initiative of launching its own marketplace?
In Edge Froum
TRL Insights
Nov 07, 2021
However, this time, Bed Bath & Beyond’s new marketplace and Kroger’s partnership is a very unique feature. Through the combination of advantageous categories and selected stores, BBB’s marketplace has already conceived a follow-up traffic strategy from day one in a "B2B" way, especially in combination with Kroger’s traffic - anyway, #groceries itself is a high-frequency, rigid-demand traffic. Instead, #home is relevantly a low-frequency, unrigid-demand traffic category. To Kroger, when it is unlikely to have direct cooperation with Walmart and Target in a presumable long time to come (or never), BBB, which is relatively smaller in scale but very strong in its core categories, has presumably become Kroger's top choice aimed also for rapid horizontal expansion of categories and vertical expansion of digital business. The combination of Kroger x BBB is three-dimensional, all-category available, and one-stop innovation practice to meet the needs of shopping consumers in groceries, home, mom & baby, etc., especially the two private label leaders in their respective core categories, which will also become BBB’s new USP of the marketplace as well as to Kroger's selected stores. Perhaps it can be compared like this: Kroger x BBB's private brands + omnichannel offerings are getting similar to a certain forms of Walmart and Target's as-it-is categories operations. Reference Why did Marks & Spencer put the third-party brands introduction as its top digital merchandise strategy? What can be the Pros & Cons upon John Lewis' recent campaign? Why John Lewis is about to transform its business to a "National Platform" marketplace? What can you read from NORDSTROM's recent minority investment on TOPSHOP of ASOS from the UK? Why NORDSTROM is actually NOT a department store business?
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How do you see Bed Bath & Beyond's initiative of launching its own marketplace?
In Edge Froum
TRL Insights
Nov 07, 2021
Bed Bath & Beyond (BBB) has been trying to find new growth points in the past two years and even longer - from a series of private labels launch (which also continues the current CEO’s retail core logic at Target brought to BBB known for both Private Labels' popularity), to the upgrade of over 70 stores nationwide including its flagship store in New York, and then BBB has spared innovative efforts to cooperate with the omni-channel and shop-in-shop practice with the mattress DTC leader Casper, etc. This time the new Marketplace initiative looks like a little surprise, but it’s not that much surprising, and it can even be said to be a bit late - yes, it would be fantastic if the Marketplace were launched earlier in 2020Q1 before the unprecedented wave of online shopping at home for home stuff. But at present, almost all legacy big-box retailers have launched their own marketplaces in 2021 since the impact of epidemic, especially those leading retailers across the US, UK and Europe with fashion and home, and the main categories with a wealth of private labels. This also shows from another angle that today’s marketplace is already a capital-risky but still rigid-demand business model. After all, this model has been more than 20 years from the early eBay and Amazon to the present, and it has supported the core of many world-class high-tech giants till now such as Alibaba Group and Rakuten and today's Walmart as well. The fatal logic of the conventional #ecommerce model has been about traffic and effective contents to effective traffic. In the case that the new marketplace has begun to be standardized, industrialized, and has only become a classic shopping portal tool to almost every serious retailer in the US, in fact, BBB’s new marketplace traffic, product types, omni-channel capabilities and operational capabilities - especially the activation of early customers and the acquisition of new users will would be still a challenge to get over. Reference Is Private Brand business experiencing a new historical cycle of renaissance? Who is the hero behind the scene of Target's successful transformation since 2017? What is the core of Target's transformation strategy since 2017, why does it work out? What PRIMARK may have ignored before its closed stores of GBP 650 million sales? What are the trends ongoing of DTC brands vs. Private brands and National brands?
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Why does IKEA become more ambitious in its urban expansion mission?
In Edge Froum
TRL Insights
Oct 31, 2021
Beginning in 2019, IKEA and IKEA US began to gradually try to get out of the public's impression of its legacy image as a big-box suburban private brand furniture retailer, and began to open smaller boutique furniture collection stores in core urban areas such as New York and now expanding to Los Angeles, etc. that are closer to wider urban folks. This also means that the furniture industry itself has actually begun some trend changes before 2020 (before the epidemic): 1. Furniture products that have traditionally been consumed slowly for decades have gradually become fast-moving attributes, such a trend starts from certain head categories 2. New and classic products can start to increase sales through home furnishing products, provided that stores begin to gradually move closer to consumers’ daily life and work space in urban 3. The almost completely offline shopping experience began to gradually integrate with the shopping habits of consumers in the core areas of big cities, becoming fashionable and convenient to quick access of browsing to shopping online 4. Digital products and customer digital experience have been greatly accelerated, giving consumers in core urban areas a new layer of more fashionable choice. The conversion rate of stores in core urban areas has been greatly improved, and conventional classic big-box stores in suburban areas can be used as a perfect backup as natural warehousing, which can support more and larger SKU selection for volume through the easier customer acquisition approach via its urban smaller stores 5. Outdoor and furniture e-commerce began to rise, especially the faster furniture retail model that can integrate the industrial chain from the upstream and downstream in the target country and region and leverage the regional inventories across different distributors and retailers through #ecommerce, which leads to new-generation niche leaders (particularly from digital) to appear, such as MADE.COM, Outer, etc. 6. The continuous growth of home furnishing e-commerce, home furnishing categories of top department stores, and home furnishing chain stores has been injecting new growth power of the entire furniture market. Home x Furniture carries a new and youthful lifestyle to urban customers In fact, 2020 and the epidemic has just accelerated the trends happened before that. Reference Why did Home Depot choose Walmart logistics instead of others? What you can read from TESCO's first "Just-Walk-Out" store in London? Why will Amazon to launch its own "collections stores" soon near to existing department stores? Why NORDSTROM is actually NOT a department store business? What PRIMARK may have ignored before its closed stores of GBP 650 million sales?
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What can you read from the recent Stripe & Klarna's strategic partnership?
In Edge Froum
TRL Insights
Oct 28, 2021
The collaboration between Stripe and Klarna seems a bit unexpected somehow, but it makes sense. Stripe is a new generation of B2B digital transfer infrastructure platform, which is almost a new inter-bank international private transfer network over the original traditional bank node and SWIFT protocol. Klarna is currently the hottest #BNPL (buy-now-pay-later) super unicorn in the FinTech field the last decade. In essence, Klarna is a new generation of digital credit cards, but it was just rose from the B2C business initially. Since its establishment in 2005, several subsequent players in the BNPL industry, such as Afterpay, Affirm, etc., have set off a digital credit card revolution in the western economy particularly along the rise of #ecommerce. For many B2C users who rely heavily on online transactions and shopping, Klarna’s BNPL function has been a (virtual) credit card account. Well, if you still have something to understand about the Stripe x Klarna cooperation, think about the enterprise business of VISA or MASTER credit card. Jack Dorsey's Square has also seen this very clearly. The recent US$29 billion acquisition of AfterPay is probably aimed for the purpose of empowering more online B2B - especially inter-SME transfers. In this way, it is not difficult to understand why Affirm wants to form a strategic cooperation with Amazon in the past a couple of months, and is willing to make up for the "missing corner" of the giant and their global ambition to both. Reference What can be those possible challenges before Klarna goes public not too far? Why did a buy-now-after-pay FinTech company Klarna to acquire a social platform named HERO? What can be foreseen from the new partnership between Macy's' Bluemercury and global FinTech leader Klarna? Why is PayPal eager to acquire Paidy, a Japanese BNPL company after AfterPay's sale to Square? What can you see from the recent $29 billion deal of Square to bag in Afterpay?
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What are the three lanes of the "death triangle" to a DTC brand's founder?
In Edge Froum
TRL Insights
Oct 26, 2021
In 2020, more than 114 #DTC brands were acquired, and in 2019, more than 131 DTC brands were acquired. #VentureCapital’s fast-moving in and out of emerging DTC brands seems to have become a sort of fast food package you can often see in the private equity markets in the past 5 years: those bids (DTC brands options to invest) seems not that delicious, but it’s not unpalatable, it’s always satisfying appetite for hungry, but not necessarily healthy or that easy to digest. From the past, there are not many DTC brands that can be public listed. For example, #Casper, #Allbirds, #WarbyParker and other iconic DTC brands in the past a couple of years that can achieve IPOs were still losing money or close to the red line when they were just listed, but their volume is already large enough. Some financial investors could be a little worried about their future growth rate and the timing of profitability not to mention the sustainability of profit earnings. A DTC brand normally took off from a hero SKU, but following rapid SKUs expansion, self-built OMS and e-commerce systems (expensive to maintain and iterate), self-built e-commerce centralized warehousing and sorting facilities, and shrewdly buying traffic (but to maintain its ROAS higher than the market average Level), this makes most DTC brands always remained in the "death triangle" under the ardent expectations of financial investors for growth: how long the cash from fund raising can be burned, how fast is the growth rate to estimate at fund raising, whether It can continue to maintain the positive of the gross profit per customer order. It is inevitable to step on the mud when walking by the river. If there is a big buyer willing to buy a entire DTC brand business at the right time, for financial investors, this fast-food lunch can be considered a nice comfort to a hungry stomach. More importantly, if you still don't think about it tomorrow or don't find anything delicious, it would be still nice to have a quick different combo in the same fast food spot or another one nearby. Reference What are the differences vs. shared similarities of a DTC beauty brand leader vs. a non-DTC one in the past 7 years? What is the core to DTC brands comparing with instant messaging boom two decades ago in Telecoms in a "DTC" way? Why DTC brands holdings have been in rise and rise in the past 3 years? What can be the similar challenges and resolutions of leading DTC brands like Casper and Glossier in 2021? What are the key factors driving a new relationship between a big-box retailer and a DTC brand?
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Are we witnessing a historic cycle of high-street retail?
In Edge Froum
TRL Insights
Oct 25, 2021
A copy of research by estate agent Savills made us feel a bit astonished: in 2021, there may be more than 40% of the retail offline physical store space in the UK that is idle. Due to the unexpected burst of the epidemic to lockdowns and the closure of large department stores such as Debenhams, Topshop, etc. overnight unprecedently, many "empty holes" appeared on highstreets across major cities in the UK, and these empty holes tended to gather in places that were originally crowded with people. Although these legacy high street retailers have been trying to climbing up further in the online market, many of them ended up because of their transformation or not growing fast enough - only very few retailers born offline may have developed faster than the average lifeline of online and omnichannel revolution in the past decade - for example, Nordstrom and Target in the United States are probably among the best in the world. But most other legacy retailers are not so lucky. Online ventures have been invading from various categories and dimensions to various operations in traditional retail formats. Whether it is an intruder of groceries such as Amazon Groceries, Instacart or Walmart (self-disruptive innovation), or an intruder of fashion and beauty such as Amazon Fashion, Shein, Zalando, etc. In addition to office and residential apartment renovation, is there a better way? It should be a big yes - this reminds us of the long-history industrial cities such as Manchester, Liverpool and Birmingham, etc. Although the industrial revolution was prosperous there more than 200 years, these cities have experienced prosperity and decline again and again, but they are still the most active spots in the UK today. Where there is business prosperity, there is retail. Perhaps we are just experiencing the same in our era about those disappeared high-street highlight labels. Reference Why does all leading labels of department stores equipped themselves with digital marketplaces? Why did Boohoo acquire Debenhams' most potent sector for £55m? What Debenhams can do to save itself if time can turn back to 2014? Why did British Telecom Group just appoint its new Chairman from ASOS.com? What can you read from NORDSTROM's recent minority investment on TOPSHOP of ASOS from the UK? What are the key trends in reshaping fast fashion behind the ASOS/TOPSHOP deal?
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Why would PayPal merge Pinterest?
In Edge Froum
TRL Insights
Oct 24, 2021
Indeed, this super merger of PayPal once again refreshed the highest bar of merge and acquisition in the global technology sector in 2020-2021, from the last year Salesforce swallowed Slack (US$27.7 billion) to the recent Square acquisition of the second largest Buy Now Pay Later (BNPL) company Afterpay (US$29 billion). PayPal is about to mark the biggest bet in the field of connecting third-party Social Media traffic and payment channels. Compared with TikTok and Instagram from its own traffic to its own Commerce and the foreseeable in-house digital payment facilities as a full ecosystem closure, it is obvious that Pinterest itself has considerable difficulty in completing all closed loops on its own. This also makes the combination of Pinterest x PayPal worth looking forward to in the coming years to watch. But just as Morgan Stanley analysts said, Pinterest has very good traffic monetization potential, but it does not have a strong #commerce gene. It is somehow like Tencent on the other side of the Pacific, it has been in the #ecommerce field for more than 15 years, but it has never been able to achieve as the top player on its own - however it has been still successfully relying on strategic investments such as JD.COM, Meituan, #Pinduoduo etc. to make up for the shortcomings of commerce's capabilities. On the other hand, PayPal does not directly possess ecommerce DNA as well. Although with its ex-parenting company eBay has been operating jointly for years, whether Pinterest can quickly complement the #socialcommerce capabilities of both parties with the back and empowering of PayPal, from technology to a full well-serviced supply chain, is not an easy task obviously. After all, when several major competitors headed by TikTok are running like in the wild wild west, there is not much time left for Pinterest and PayPal, and the changes in the next three years will be crucial. Reference What can you read from JD.com's more aggressive traffic partnership model with growing luxury brands than Alibaba's Tmall? What does that mean when JD, the No.1 Retailer of China has been directing its search keywords traffic to Louis Vuitton in WeChat? Why Instagram has been rushing on its way of social commerce since 2020? What can you see from Instagram's recent "Culture Commerce" initiative to come? Will Instagram become the next-generation "sourcing" platform to global retailers?
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Why would PayPal merge Pinterest?
In Edge Froum
TRL Insights
Oct 24, 2021
PayPal is about to use $45 billion in cash to bag in Pinterest and bind it to its digital payment tank. This top-tier Internet giant with 459 million monthly active users and 2/3 female users has been under fiercer competition regarding #socialmedia and rising #shortvideos content platform offerings, especially from TikTok, Instagram, Snap Inc., and of course Facebook still, so it has to choose a suitable opportunity to monetize its huge traffic and potential commerce growth opportunities as soon as possible beyond digital advertising revenues only. Comparing with TikTok, Instagram and Facebook's commerce efforts since 2019, 2020 so far, obviously the previous one of the most popular social media platforms worldwide has become just a bit lagged behind. In this view, PayPal, which has continued to rise in stock prices and has more than $19 billion in cash reserves, should be one of Pinterest's most ideal buyers. This not only allows Pinterest to have more sufficient funds and ammunition to cope with the huge amount of technology investment and content and AdTech advertising technology platform innovations from emerging and old opponents, but also to respond to user behavior and #socialcommerce with a longer-term strategy mindset possible for this decade. Just as Snap Inc. has changed in the past three years regarding its innovations and consequent stock price back to rise - to Pinterest, as long as it does not leave the top #socialmedia battlefield, there is always a chance to rise again if with a solid back from somewhere. Did PayPal's acquisition move recently remind you something similar before worldwide? Yes, this is exactly the strategy that Alipay, a subsidiary of Alibaba Group, launched its large-scale merger and acquisition executions around 2014-2019 head in head with Tencent. The common steps to an established digital payment leader to get more influential from its super App: traffic in. Reference Why is PayPal eager to acquire Paidy, a Japanese BNPL company after AfterPay's sale to Square? How would PayPal as a lead may be able to change the default mobile payment behavior in the western world? What can you see from the recent $29 billion deal of Square to bag in Afterpay? Why did a buy-now-after-pay FinTech company Klarna to acquire a social platform named HERO? What can be those possible challenges before Klarna goes public not too far?
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Why would Amazon invest more on the marketplace business than its own retail operations?
In Edge Froum
TRL Insights
Oct 21, 2021
Indeed, if it is not possible for every registered brand to be able to understand all the relevant data traces of each product from launch on shelf to customer reviews when operating on the super third-party marketplace platform, it would be difficult for brands to use Amazon's platform business as a indispensable function like legacy channels and its official #ecommerce business - this is exactly what Amazon hopes to be able to do in the future and become indispensable to more influential national brands. In other words, if a national brand can be able to improve its own product design, production, packaging, supply chain, advertising, etc. through Amazon after entering Amazon’s third-party marketplace business, this will not only enable brands that are good at using these data analysis tools provided by Amazon to gain more platform sales revenue, but also can deeply bundle the brand's loyalty to Amazon traffic. After all, Amazon's customers are different from the brand's other types of channel customers. However, third-party businesses sometimes get into disputes. From Amazon’s point of view, it does not want to be a platform referee to rule on some disputes within the platform, because any tendentious commercial rulings will lead the platform’s fairness and neutrality to a period of balance, not to mention this is a huge balance with hundreds of billions of dollars in sales per year but still growing - this means that any micro policy changes on the platform will have a fatal macro impact on tens of thousands of brands and even more products to customers. Therefore, Amazon needs to continuously improve the data and algorithm capabilities of the platform itself, especially the algorithm self-adaptive capabilities triggered by external factors as comprehensive as possible, while continuously reducing its reliance on human-based operators and platform managers. Reference Why will Amazon to launch its own "collections stores" soon near to existing department stores? Why did Whole Foods Market just start to charge delivery fee to Amazon Prime members? Why Amazon's pharmacy initiatives and the US/UK pharmacy landscape can influence the world? What can you see from Amazon's big-size supermarket initiative in Seattle and impacts ? Why is the year 2021 will be critical to Amazon's future the next 5-10 years?
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Why would Amazon invest more on the marketplace business than its own retail operations?
In Edge Froum
TRL Insights
Oct 21, 2021
In the past second quarter, Amazon's third-party marketplace business grew by 38% YoY, with sales revenue reaching $25.1 billion, which has surpassed the growth of its own retail operation business. In other words, since 2020 Amazon has more than ever needed third-party sellers to support the growth of its own retail business. This also means that Amazon has been sparing no effort to enter third-party sellers on the service platform, especially the direct onboard of brands that Amazon hopes (Amazon Brand Registry), as well as deep empowerment for the daily operation of the brand's own official stores. Different from the Asian marketplace business logic such as Alibaba Group, Amazon prefers to highlight products rather than store-level operations (this is the most important traffic operation unit for the former). Due to the continuous compression of the existence of middle-tier concepts such as "stores", non-branded store-type sellers and other middle existence, even if it has a huge third-party seller business, Amazon is more like a super online department store than Taobao Marketplace and Tmall under Alibaba. The former is more like a giant online shopping mall. However, Amazon cannot completely operate everything in a legacy department store operation model surely (although its self-operated business still accounts for about 35%-40% of the overall retail scale worldwide), but the focus of its infra technology platform is on how to serve brands with digital envisage in an E2E funnel as independently operated by brands or their appointed operation partners. Reference Why did the Amazon 4-Star, which was born in 2018, not be popular? When would be Amazon's revenues structure watershed point to come? What would Amazon's soaring advertising business mean to the global advertisers and agencies? Why don't you see a scaled Amazon brick-and-mortar store business yet? Why does Amazon take Audio business as a new growth force from a general view?
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Why the Morrisons bidding war has attracted so much attention across the US, UK to Europe retail industry?
In Edge Froum
TRL Insights
Oct 20, 2021
In fact, Morrisons has accelerated its differentiated business model and operational innovation since its growth slowed down back to about 2015. In addition to extensively developing B2B business and covering more B2B clients legacy procurement scenarios, Morrisons has also successfully seized opportunities since 2016 in terms of the ambitious expansion of Amazon UK in the field of grocery and fresh in the UK market (although Amazon's acquisition of Whole Foods Market in 2017 also added a small piece of its supply chain power in the market). It can be said that without Morrisons' huge merchandise pool, a firmed B2B strategy since the mid of 2010s, and more than a century of local fresh and daily miscellaneous products operational accumulation, Amazon groceries business can be unlikely to expand its market influence in the UK so fast, especially like Amazon Fresh and other disruptive business models relevant to groceries and fresh categories. But on the other hand, it is precisely because of the emergence of huge competitors that have helped the entire incumbent #supermarket and fresh food market, other mainstream British supermarket businesses have been increasing their Capex investments in #ecommerce, store services upgrades, omni-channel retail technology solutions, logistics and supply chain efficiency (think about Ocado Group's change brought to the UK retail market), investment in chain infrastructure has made the competition between British major supermarkets and niche leaders intensified further in the past 5 years. The fierce market competition has caused Morrisons’ legacy B2C retail to further slow down to decline. In addition, the revenue and profit growth brought by B2B growth cannot bring more capital market recognition and new Capex investment headroom, which has made Morrisons in the investment & innovation competition among the head supermarket groups in the UK gradually appears to be old-fashioned, but it affects the organic health of its business itself. It can also be said that just because Morrisons has fully embraced B2B and Amazon since 2016, which is destined to be sold to private equity funds by now. Reference What PRIMARK may have ignored before its closed stores of GBP 650 million sales? Why did Boots just relaunch its own media business as an "internal agency" to suppliers? How UK's Ocado robots & automation perform in their fulfilment centers? Why did Whole Foods Market just start to charge delivery fee to Amazon Prime members? Why did Amazon open its tech-empowered Amazon Fresh stores nearby to Amazon's Whole Foods stores?
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Why the Morrisons bidding war has attracted so much attention across the US, UK to Europe retail industry?
In Edge Froum
TRL Insights
Oct 20, 2021
The 7 billion pound Morrisons M&A war finally came to an end on the 20th Oct, 2021: as one of the largest supermarket M&A case in the UK market in the past two decades, it has finally approved the offer from the private equity fund led by CD&R and Sir Terry Leahy, while another private equity fund backed by SoftBank Group Corp., Fortress, has an 6.7 billion sterling pounds offer was finally abandoned. As the fourth largest supermarket in the UK, Morrisons has been growing slowly in the past 7 years, but it is still feeding the stable needs of many ordinary British people in their daily lives. This also means that Morrisons can provide a core value that is the favorite of typical large private equity firms or strategic holdings - cash flow. Besides, the UK grocery and fresh retail market is perhaps the most fierce place in Europe and one of the top in the western world (except Japan). There are many large #supermarkets, multi-format, multi-category retailers, the highest #ecommerce business penetration rate and ecommerce market scale in Europe, always as Amazon’s first innovation fortress that expanding into whole Europe, numerous retail and Internet technology startups and software leaders, highly developed financial markets, and extreme pickiness in fresh food supply (think about Marks and Spencer) - all of these factors make the UK supermarket retail industry unique in Europe and the world. That is why if one can operate and survive stably in the market is already competitive enough to many other countries, not to mention to a company originated since 1899 feeding the UK over 120 years. Reference Why did Morrisons start to expand the B2B supply market for bars, restaurants, and hotels via new partnerships? Would ALDI's checkout-free stores rollout to be a serious competitor to Amazon Go? What can be seen from ALDI's GBP 1.3 billion investments for its 20 countries E-com "global transformation"? What you can read from TESCO's first "Just-Walk-Out" store in London? What happened to the UK market leading retailers and pure-player E-commerce landscape this summer?
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What you can read from TESCO's first "Just-Walk-Out" store in London?
In Edge Froum
TRL Insights
Oct 19, 2021
Indeed, as we have seen in the USA, the UK, China and other places that third-party technology companies offering similar technologies such as Amazon Go have begun to empower traditional retail offline store virtualization management capabilities and " Just-Walk-Out" (JWO) technology - After all, it is impossible for Tesco to use Amazon's JWO technology to open up its first "GetGo" concept store, though it could be possible in the long future. On the other hand, JWO store virtualization management technology may be the most dazzling integrated new technologies sets in the offline retail field except for legacy but basic backbone software systems such as ERP and CRM. Due to the combination of software and hardware, some basic algorithms of JWO technologies requirements are very high and in-depth tech expertise and long iterations necessity. On the other hand, since any leading legacy retailer beyond Tesco may need such JWO technology, say, Carrefour, Walmart, etc. it means that startups like Trigo would have a promising future to watch, and there are more traditional offline retail applications and software that may be gradually migrated to the emerging platforms of brick-and-mortar store virtualization management + JWO technology. We are witnessing a new wave of retail revolution since the birth of e-commerce in 1993 - actually we are just on the eve of this revolution. Reference What has been making Walmart's Fashion innovations different but still challenging? Why do off-price retailers not prioritize their E-commerce like other retailers? What prompted the rise of a beauty membership discount retail store? How would the UK high street retail outlook be reshaped in the decade? Why did Morrisons start to expand the B2B supply market for bars, restaurants, and hotels via new partnerships?
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What you can read from TESCO's first "Just-Walk-Out" store in London?
In Edge Froum
TRL Insights
Oct 19, 2021
Tesco's "Just-Walk-Out" (JWO) store is finally launched. Although it is only 6 months behind the launch of Amazon UK's first JWO store (Amazon Go), it has been almost 4 years since Amazon Go's first commercial service in Seattle back to 2017. Tesco's "GetGo" new store is almost exactly the same as Amazon Go's JWO experience, but the core technology comes from a third party startup Trigo - after all, high-intensity, high-risk investment relevant to a specific domain of AI applications, machine vision, machine learning, and sensor technology could be a tough one-time investment decision to Tesco, the established retail giant and leader in the UK. Since emerging technology companies with venture capital support in the market specialize in this type of technology, it is better to leverage their technologies directly - why not. Similar situations are also happening in China, Japan, and South Korea - as Amazon Go's technology looks amazing, once it came out, a large number of technology startups entered the JWO field. More importantly, our editorial team believes that JWO technology may be a possible mainstream next-generation infrastructure and platform level technology solution to subvert existing retail brick-and-mortar stores management instead of only providing checkout-free novel experiences. Except for the technology itself mentioned above, the possibility of large-scale deployment of this business model should not be underestimated. It reminds us of base stations management scenario in the #mobiletelecom industry - sitting in the OMS center of a #Telco to remotely manage thousands of unmanned base stations virtually vs. sitting in the OMS center of a #Retailer like Tesco with remote management of thousands of unmanned retail stores seems to be the future that has already happened. Welcome to the virtualized offline retail management world! ;-) Reference What could have been done to save TESCO Bank today in the past 7 years? What can you read from the recent partnership of Walmart + Netflix? Why did Home Depot choose Walmart logistics instead of others? Why GAP has been continuously acquisiting fashion tech startups parallel to Walmart and SNAP in 2021? What can you read from Walmart to ink with Adobe for a strategic commerce platform partnership?
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