Daily Consumer #15 - A Guess As To Why PayPal Is Thinking About Buying Pinterest
Plus Kroger and Ulta launch advertising businesses.
My Work
A Guess As To Why PayPal Is Thinking About Buying Pinterest
PayPal is rumored to be considering an acquisition of Pinterest. I wanted to take a shot at visualizing why I think PayPal is motivated to do this. The short of it is the notion of “integrated commerce”, which I define as an ecommerce transaction occurring in one place end-to-end. This hypothetical commerce experience would encompass everything from discovery, or how a consumer finds something they want to buy, to payment.
In China, this type of integrated commerce experience already exists. TikTok has enabled it, as has Alibaba. To get a sense, check out this milestone that occurred on Taobao, Alibaba’s social commerce platform, a few days ago.
In the US, however, ecommerce is very disjointed. You learn about a product on Facebook, link out to a Shopify store, and pay through a credit card which is processed by Stripe.
This flow will likely change though as TikTok invests aggressively to replicate its integrated commerce experience in the US and potentially as advertising revenue is disrupted by privacy changes. Facebook, Snap, and others are clearly sprinting to keep up.
PayPal’s exploration of Pinterest likely signals concern that they could get cut out of the equation. If Facebook or TikTok owns discovery, and soon the store and checkout, then they could likely block PayPal out of the payment flow. Shopify already proved that being higher up the stack allows you to own the merchant payments opportunity. Is the leverage moving upwards over time?
Note: This piece was written a bit off-the-cuff while I was on a flight. I will be chewing on the framing some more and realize a lot of holes can be poked. As always, I welcome your feedback.
Community
Ecommerce World, an online conference, is taking place Nov 15-19.
News
Advertising.
Google partners with BigCommerce to make it easier for BigCommerce merchants to have their products be discovered on Google.
Pinterest is putting video front and center in its app. Everyone is trying to be like TikTok.
WhatsApp releases Collections to make it easier to shop. Allows businesses to organize items in their catalogs by category so customers won’t have to scroll through long lists of items to find what they’re looking for.
Apple’s privacy changes is benefitting its ad business at the expense of Facebook.
AR Commerce. Snap is launching an AR studio to work more closely with its brand customers to create AR experiences.
B2B Commerce. Shopify is pushing harder into B2B. Will “roll out a completely new B2B offering in the first half of 2022.”
BNPL.
Klarna partners with Wix to make it easy for Wix merchants to offer BNPL.
Jamie Dimon, the CEO of JPMorgan Chase, vows to spend whatever it takes to compete with BNPL fintechs. “For any given thing that's emerging, you can easily convince yourself that it's kind of not a threat. It's funny how layaway is back in the ecommerce checkout lane.”
Affirm partners with clothing brand Theory to power BNPL at checkout.
Klarna is pushing hard to sell ad inventory to brands in its mobile app. BNPL is low margin. Ad revenue can alleviate that. But do the BNPL providers have a strong enough relationship with their users to drive discovery of new products to buy?
BOPIS. Amazon is enabling Local Selling which allows Amazon sellers to offer pickup to buyers in their same zip code. “Our research shows that many customers will opt for local pickup when given the choice. This new capability is an exciting way to help sellers reach and delight more customers with great products and convenience.”
Content + Commerce. Spotify partners with Shopify to add merchandise to artists’ profiles.
Earnings.
Brands
LMVH saw revenue grow 46% YoY for the first 9 months of 2021 to $51.5B. Driven by strong demand in the US and Asia and a fast-growing fashion and leather goods segment. “Dior’s spring 2021 show, for example, was live-streamed on 12 global platforms, with TikTok and Douyin seeing 27M views.”
Unilever saw Q3 revenue grow 4% YoY to $15.7B. “Unilever says its online sales grew by 38% to account for 12% of sales in Q3.”
Marketplaces
Snap saw Q3 2021 revenue grow 57% YoY to $1.1B. Also saw DAU grow 23% YoY to 306M. “While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”
Omni-Channel Retailers
Tractor Supply Co saw Q3 revenue grow 16% to $3.0B. “The company’s ecommerce sales experienced strong double-digit growth for the 37th consecutive quarter.”
Fast Fashion. Alibaba launches AllyLikes, a fast fashion app targeted at shoppers outside of China that is similar to SheIn. “AllyLikes touts the speed with which it can list new styles, and has over 500 new arrivals each week.”
Gift Cards. Blackhawk Networks releases its 2021 Holiday Shopping Forecast. “83% of consumers surveyed want to give a gift card instead of a physical gift this year. Surveyed shoppers plan on purchasing 15 gift cards on average, and expect to spend 41% of their holiday gifting budget, or $272 on average, on gift cards this year. This is a 27% increase from what consumers reported spending on gift cards last year.”
Grocery Delivery. Grocery Outlet is piloting grocery delivery for 6 months via Instacart.
Influencer-Driven Commerce.
Billie Eilish is launching a perfume brand.
Ellen DeGeneres’ skincare brand, Kind Science, launches online.
Adidas signs Indian actress Deepika Padukone as a global ambassador.
Influencer Marketing. Instagram rolls out new tools for creators to earn commissions and form partnerships with brands on its platform. “Creators can now add a digital storefront to showcase products or collections that are already part of their affiliate partnerships within the “view shop” button on their profile and earn a commission on sale.”
Inventory Management. Sephora is deploying software from Relex Solutions to enable AI-based inventory forecasting and replenishment.
Live Shopping.
Two live streamers sold over $3B worth of goods on Taobao, which is China’s largest ecommerce marketplace and is owned by Alibaba.
YouTube will host a week-long live shopping event called “YouTube Holiday Stream and Shop “ starting on November 15.
Luxury.
A look into the rise of Golden Goose shoes. “Casualisation is still at the beginning, and we’ve been great at understanding that trend before all the others.”
Richemont considers selling Yoox Net-a-Porter as it favors a relatipnship with Farfetch.
NFTs. Clinique is releasing a NFT to its rewards members. I'm not sure what to make of this myself.
Payments.
Plaid is planning to build its own payments network that “will use software to facilitate digital payments from consumers' and businesses' bank accounts.” Want to make it easier for ACH payments to get processed.
Mckinsey releases a report on the state of global payments.
BCG also releases a payments report. Believes B2B payments will get digitized.
Private Label. Farfetch launches There Was One, a womenswear label of wardrobe staples that will be exclusively sold on Farfetch.com. “The line was informed by consumer shopping data that showed that since the start of the pandemic, customers have been investing in pieces that would last them possibly a lifetime and preferring items made with some kind of sustainable element.”
Retail Media.
Kroger launches its own ad formats allowing brands to reach consumers. “Is called the Kroger Private Marketplace and will allow both CPG brands and ad agencies to reach shoppers by applying audience data to campaigns in the various ad-buying platforms.”
Ulta launches a new business called UBMedia, a retail media network that allows Ulta’s brand partners to place ads on the retailer's ecommerce site and app. Everyone wants ad revenue.
Social Media. Donald Trump is launching his own social network.
SMS Marketing.
Sona Martirosian, director of ecommerce and digital marketing at Rebecca Minkoff, claims SMS marketing has the highest conversion of any channel. “The brand began experimenting with texting customers via Attentive in March 2020. Since that time, SMS has brought in $8M in revenue, an 80x ROI.”
Walmart is testing a shopping experience called “Walmart Text to Shop”. Will suggest personalized products to shoppers.
Supply Chain. Inventory is stuck at ports, and shippers are paying increasingly higher prices to move their goods. Prices are climbing as a result. “Nestle’s overall pricing rose 2.1% in the third quarter, the fastest in at least five years. P&G expects $2.3B in expenses this fiscal year from elevated commodity and freight costs.”
Sustainability. Rothy’s is piloting a “take back” program in select stores. “Customers can return their old shoes at Rothy’s seven stores in exchange for a $20 same-day discount on a purchase.”
Trust and Safety.
Propublica deep dives into Facebook Marketplace and the trust issues that are emerging. TLDR is a lot of scams are happening.
Amazon is releasing tools to show sellers how they perform in search results as a response to reports that Amazon promotes its own brands in search.
Funding and Exits
Brands
Activewear. Blackstone acquires Spanx for $1.2B. “Blackstone was attracted to Spanx’s digital prowess—the company gets two-thirds of its sales through its website—and to the value of the technology it uses to make its products.”
Coffee. Cometeer raises $35M from D1 Capital, Elephant, and others for its subscription-based coffee capsules that are made in partnership with many roasters.
Collectibles / NFTs. Superplastic raises $20M from Google Ventures and others for its collectibles/NFTs based on their own library of characters.
Fashion. a.k.a. Brands acquires Mnml, a DTC men’s streetwear fashion brand, for $49M. “The brand is a proven performer, and this is another step toward our vision of becoming the global leader in direct-to-consumer fashion for the next generation.”
Fitness. Proteus Motion raises $3M from HBSE Ventures and Bryson DeChambeau for its resistance-based strength training system.
Food and Beverage. Allplants raises $52M from Draper Esprit for its UK-based, plant-based meal kit service. “Allplants credits its growth to a rapidly growing plant-curious consumer market, which it says is now worth £10 billion in the UK alone.”
Wine. Boxt raises $9M from Next Coast Ventures for its DTC subscription-based wine. “Boxt offers on-tap wines that stay fresh for up to 6 weeks once opened, which allows consumers to pour exactly as much or as little as they like, whenever they like.”
Marketplaces
B2B Commerce. BluePallet raises $5M from Vinmar Ventures for its marketplace connecting chemicals manufacturers with buyers.
Cloud Kitchens. Foodology raises $15M from A16Z and Base Partners for its Latam-based network of cloud kitchens which house 6-7 brands per location. Currently operate 20 kitchens in 6 cities across Colombia and 10 in Mexico. Seeing 100K orders per month in Colombia."
Fashion. Saks Fifth Avenue is rumored to be preparing to spin off its ecommerce business, Saks.com, into a public company that could be valued at $6B. The online unit drives over $1B in sales. “The company has said the online unit’s gross merchandise value, a measure of sales, increased 82% from the second quarter in 2019 to the same period this year.”
Food. Locale raises $2M from Decent Capital for its service that enables customers to order from dozens of local businesses, including bakeries and restaurants, and get them delivered in one box for just a $5 delivery fee.
Furniture. Houzz is rumored to be going public.
Grocery. Kitchenful raises $2M from Jabbar Internet Group for its personalized recipes app that allows allows users to order groceries.
Influencer Marketing. OpenSponsorship raises $4M from David Blitzer for its marketplace connecting athletes to sponsorship opportunities. “Is on target to do $5M in top line revenue and $1.5M in net revenue this year, and has facilitated over 10K deals across 400 brands.”
NFTs. Candy Digital, the NFT arm of Fanatics, raises $100M from Insight Partners and Softbank at a $1.5B valuation. “Will offer NFTs across the global sports landscape for both current and emerging partners, such as the MLB.”
Same-Day Delivery.
Gorillas confirms its fundraise. Raises ~$1B from Delivery Hero at a $2.1B valuation. Operates a network of urban dark stores to fulfill orders for speedy grocery deliveries in 55 cities.
Yummy raises $18M from Anthos Capital for its Latam-focused 15-minute delivery service. Already claims to have 200K registered users in Venezuela who are accounting for 340K monthly transactions.
Social Commerce. Meesho is rumored to be raising $50M+ from Google.
Social Media.
Bytedance, the parent company of TikTok, is now valued at $400B based on private secondary sales.
PayPal is rumored to be considering an acquisition of Pinterest at a $45B valuation.
Lokal raises $12M from Tencent for its hyperlocal social media app that enables non-English speaking users to connect and interact with one another. Has amassed over 10M downloads and is popular in several states in South India.
Southeast Asia Commerce. GoTo, the parent company of Gojek, one of Indonesia’s largest ride-hailing apps, and Tokopedia, one of Indonesia’s largest ecommerce marketplaces, raises $400M from Abu Dhabi Investment Authority at a valuation rumored to be between $25-30B.
Software
Grocery. Instacart is acquiring Caper AI, a provider of smart carts and checkout software to groceries stores, for $350M. “Will integrate Caper’s technology into its app and ecommerce sites of its retail partners over time to create unique online and in-store experiences. The acquisition will streamline shopping for consumers, while making it easier for Instacart workers to fulfill orders.”
Inventory Management. Toolio raises $8M from Jump Capital for its cloud-based merchandising and inventory planning software. “Works with retailers like Chubbies, Mack Weldon and Rothy’s, and has managed over $1B in inventory for retailers.”
Page Builder. Builder.io raises $14M from Greylock for its no code page builder software platform. “Is seeing 6x YoY customer growth and now works with over 400 customers, including Everlane, Alo Yoga, Afterpay and Vistaprint.”
Recommendations. Crossing Minds raises $10M from Radical Ventures for its ML-enabled recommendations product. Estimates that the company has helped its customers, like Danone and Inkbox, increase sales on average by 93% and click-through rates by 120%.”
Restaurants.
Retention Marketing. Braze, a customer engagement platform with over 1K customers, files its S-1 ahead of going public. Saw revenue grow 52% over the last 12 months to $186M.
Search and Discovery. Adeptmind raises an undisclosed amount from Ulta for its AI-powered search technology.
Fintech
BNPL. Klarna, the BNPL company, acquires Inspirock, a trip planning platform that serves 25M travelers annually.
Mobile Payments. Citcon raises $30M from Norwest Venture Partners and Cota Capital for its technology that enables mobile payments for merchants by integrating into their existing point of sale. “Citcon’s annualized payment volume is about $1B, representing over 300% YoY growth. It’s deployed at more than 30K merchants’ sites and locations, including L’Oréal, Tumi, Texas Instruments, Macy’s and Panda Express.”
Neobanks. N26 raises $900M from Third Point and Coatue at a $9B valuation for its Europe and US focused digital bank. “Has 7M customers across Europe and the US and is on track to process $90B in transactions this year.”
Payment Orchestration. Primer raises $50M from Iconiq at a $425M valuation for its drag-and-drop framework to help merchants easily build their digital payment stack. “Works across more than 20 countries and has some 45 integrations that its merchant users can add to their payment flows, ranging from payments providers like Stripe, Apple Pay, Adyen and Braintree, through to fraud screening from Riskified, sales tax calculations from TaxJar and more.”
Warranties. Clyde raises $41M of equity and debt from Headline for its warranties product which is integrated into the checkout of 300+ brands and retailers. “Clyde’s extended warranty solution has an average attachment rate of 18%.”
Product of the Week
I spend too much time per week hunched over my computer and recently started to feel some aches and soreness. I did some research and found Upright Trainer. It’s a small adhesive device that can detect you posture and buzzes when you’re slouching. Shock therapy to the smallest degree. Buy it here.
