Daily Consumer #1 - Focusing on Ecommerce
It's been a while since you've heard from me. I've been getting a lot of packages.
I got Daily Consumer off of the ground earlier this year but have been a bit quiet since. Part of this was due to a lack of direction. I wasn’t sure what was most interesting to write about. Consumer companies span a number of industries - entertainment, fitness, financial services, food, gaming, retail, social media, travel, transportation, etc. Covering them all in a way that is interesting to readers is non-trivial.
I have decided to narrow in my focus to writing about ecommerce. The reason is simple - it’s the area that I spend 80%+ of my time exploring in my day job at Index Ventures. I continue to believe that the shift from retail to ecommerce is one of the mega-trends of our generation. As digital and physical infrastructure continues to be built out, I believe consumer wallet share will continue to shift online from 10% today to >50% eventually. For me personally, that’s already the case. I see an Amazon or UPS delivery-person at my doorstep daily.
With the direction now set, I also want to touch on format:
Cadence: Weekly, sent on Fridays
Template:
My Work: Covering a specific trend or company or market.
News: Curated content about the ecommerce world.
Funding and Exits: Highlighting emerging brands, marketplaces, software companies, and fintech companies related to ecommerce.
Product of the Week: A suggested product that I find interesting.
Now, on to newsletter #1 with this new approach! If you like where this is going, please subscribe and/or share with a friend.
My Work
Market Map for Ecommerce Infrastructure
Exploring ecommerce broadly has been an interest of mine since I joined Index. Over the years, I’ve stitched together a bit of a market map to visualize the space. It’s crude and imperfect, but I thought I’d start things off in newsletter #1 by open-sourcing this to the readers. I’d love to expand this over time and would welcome your contributions.
To be able to zoom in/out and explore, please access the Miro board here.
To explain the structure a bit:
D2C vs Not D2C. D2C means a brand owns its customer and all the touch points with them outright. You know who they are, what their contact info is, process the payment, handle the support, etc. Not D2C means you sell your product via a channel where the customer relationship is obfuscated from you. The marketplace owns the customer, not you.
Customer Journey: This is meant to be a flow of how the customer journey works, from discovery, to purchase, to post-purchase and re-marketing.
Backend Operations: This is meant to depict the other categories of work that exist for a brand - merchandising, customer support, logistics, etc.
News
Advertising. Ad spend on Amazon during Prime Day was up 53% YoY. Amazon’s ad business continues to grow quickly. Does pay-to-play erode consumer trust however?
Advertising. TikTok now has >100M monthly active users in the US, up from 11M in 2018. The ad dollars are not far behind - TikTok is charging $1.5M for “top view” which is the first content that users see when they open the app on a given day.
Advertising. Facebook announces a $1B budget to reward creators who hit certain milestones. Included in this is a one-time bonus to US creators who sign up for ads on the live-streaming product IGTV (found within Instagram). The battle against TikTok is on.
Customer Support. Shopify launches Inbox, allowing merchants to have 2-way conversations with customers. Shots fired at the customer support tools that merchants use today like Gorgias, Zendesk, and Front. More views from the head of this product at Shopify.
Customer Support. Facebook profiles BlendJet’s success with their chat plugin that is running on BlendJet’s store. Users who engaged with it saw a 17% higher AOV than users who didn’t.
Headless Commerce. Gartner pioneers the term “composable commerce”. Ecommerce storefronts are beginning to shift off of one-stop shop platforms like Shopify towards an architecture composed of many intertwined API-based services.
Live Shopping. Washington Post unpacks the live shopping trend. The race is on to win over influencers and get them to live stream about their favorite products.
Live Shopping. More on live shopping from Eric Feng who ran Facebook’s initiatives around this.
Membership-Based Commerce. Italic founder Jeremy Cai explains why his brand went all-in on a membership model.
Mobile Apps. Nike reiterates that it is on track to generate >50% of revenue via D2C channels by 2025. Mobile apps drove 40% of D2C revenue in Q4 2020.
Payments. Shopify expands Shop Pay to FB, IG, and Google. Shopify is increasingly a payments company with discovery and soon, the transaction itself, occurring on other platforms.
Payments. Apple plans to enter the buy-now-pay-later (BNPL) space. Shots fired at Affirm and Afterpay.
Resale. ThredUp shares their 2021 Resale Report. Resale is a $36B industry today expected to grow to $77B by 2025. We believe strongly in this market at Index and have backed marketplaces like Curtsy, GOAT, and Grailed.
Shopify Apps. Shopify cuts their app store fees for third-party developers. Shopify aims to attract an increasing amount of developers to its platform to extend its capabilities.
Subscriptions. Awesome podcast with Oisin O’Connor, the founder of Recharge. Learn about how he discovered an opportunity around enabling subscriptions for brands and how he thinks about running his company.
Funding and Exits
Brands
Apparel. Fabletics prepares to go public. Will potentially trade at ~$5B market cap. A unique activewear brand operating with a membership-based business model.
Apparel. Figs goes public. Currently trading at $6.2B market cap. A great example of a strong brand built in an overlooked category. Nurses want to look good too.
Food & Beverage. Oatly goes public. Currently trading at a $11.4B market cap.
Food & Beverage. Simulate raised $50M from Seven Seven Six. Consumer preferences in food and beverage are evolving quickly. Will meat be a thing of the past?
Personal Care. Faculty raises $3M from Estee Lauder for its men’s nail polish line.
Personal Care. Maude raises $5.8M from True Beauty Ventures. Bringing innovation to a taboo category (sex toys).
Marketplaces
Amazon Rollup. Acquco raises $160M of equity and debt from CoVenture, Singh Capital Partners, and others. An entrant in the new and trendy space of roll-up plays for Amazon brands.
Amazon Rollup. Elevate Brands raises $250M of equity and debt from FJ Labs, Novel TMT, and others. Yet another entrant in the Amazon brand rollup space.
Amazon Rollup. Forum Brands raises $27M from Norwest. Continuing the trendline…
Amazon Rollup. OpenStore raises $30M from Khosla Ventures. Another rollup play, notably founded by Keith Rabois. Keith also co-founded real estate acquirer/seller OpenDoor (now a $8.3B publicly traded company).
International Retail. Flipkart raises $3.6B from GIC and Softbank to build the Amazon of India. Values the company at $37.6B.
Live Shopping. Loupe raises $12M from Forerunner to scale its live shopping marketplace focused on collectibles.
Live Shopping. Popshop raises $20M from Benchmark to scale its live shipping marketplace, also focused on collectibles.
Off Price. **Otrium raises $120M from BOND and us (Index Ventures). Index also led the Series A here. Bringing outlet shopping online globally.
Wholesale. **Ankorstore raises $102M from Tiger Global and Bain Capital Ventures for its European marketplace that matches independent retailers with brands looking for offline distribution. Index Ventures led the previous round.
Software
Customer Acquisition. Co-op Commerce raises $5.8M from Sugar Capital. Building a product that lets brands showcase other relevant brands on post-purchase pages which then gets reciprocated. Essentially brands banding together to find away around Facebook and Google.
Headless Commerce. Shogun raises $67.5M from Insight Partners valuing the company at $575M. Their product enables brands to easily build landing pages with a no-code product called Page Builder. Also scaling up a product called Frontend to build more custom storefront experiences.
Logistics. Bringg raises $100M from Insight Partners valuing the company at $1B. They provide large retailers with software to enable last-mile delivery.
Mobile Apps. Tapcart raises $50M from Left Lane Capital to scale up its platform which allows brands to easily and visually create native mobile apps.
Resale. Treet raises $2.8M from Bling Capital and others to allows brands to easily facilitate resale on their storefronts. If you had a customer buy a new product from you, can you also get them to resell it?
Retention Marketing. Attentive, a leader in SMS marketing, acquires Privy a leader in customer list growth and email marketing.
Retention Marketing. Attentive also acquires Tone, a smaller SMS marketing company.
Retention Marketing. Klaviyo raises $320M from Sands Capital valuing the company at $9.5B. The de facto leader in email marketing for brands on Shopify. It will be interesting to watch how they invest the capital.
Retention Marketing. Via raises $15M from Footwork for its SMS marketing platform. Also building out capabilities for brands to build their own native apps.
Subscription. Repeat raises $6M from Battery Ventures to simplify how brands get their customers to re-order products.
Wholesale. Candid raises $2M from Amplify, TenOneTen, and others for its software product to help brands manage their wholesale relationships.
Fintech
Checkout. Bolt is raising $300M to scale up its one-click checkout offering.
Payments. Stripe raises $350M from Shopify. Notable as Shopify is one of Stripe’s largest customers.
Working Capital. Settle raises $15M from Kleiner Perkins to enable ecommerce businesses to sell their inventory before they have to pay for it. Walmart and Amazon built their businesses by pushing back when they have to pay suppliers, now the small guys can too.
Product of the Week
Olipop’s healthy cola is incredible. I bought a 12 pack this week. Buy it here.