Daily Consumer #32 - TikTok's Influence On Ecommerce is Growing
Plus details on an updated format for the newsletter going forward.
Author’s Note
Hello Daily Consumer readers! Wishing you a great start to the new year.
A quick update from my side. I last published Daily Consumer on August 1st, 2022. This coincided with my move to New York City where I’m helping Index Ventures open a new office. I apologize for the many months of silence and am excited to resume my canvasing of ecommerce and retail trends. As always, I appreciate your readership and support.
Going forward, I plan to shorten Daily Consumer to the 10 most noteworthy happenings in the commerce world every week (from my perspective of course). I hope it makes this a faster and more enjoyable read for you and also allows me to improve my consistency as an author.
Any feedback is welcome and if you enjoy reading Daily Consumer, please share it with others!
Unpacking the Industry
🤳🏻 TikTok plans to launch warehouses to better enable shopping in-app.
TikTok continues to push forward to enable shopping in-app. But enabling commerce is complex on the backend given the multitude of integrations needed to successfully onboard sellers, import product data, inventory count, and more. To streamline some of this complexity, it seems TikTok is now exploring a buildout of its own warehouse network. One way or another, it feels inevitable that commerce will soon be connected to the point of discovery. YouTube is also a player to watch here and Amazon wants in too.
🏓 Pickleball is America’s latest craze.
36M Americans, or 14% of adults in the US, played pickleball between August 2021 and August 2022. This is a 630% increase over the prior period. What makes pickleball so compelling is that it’s easy to learn and easy for anyone of any age to play. Will we see a Nike or Rogue-like brand specific to pickleball emerge?
🐶 Petcare is also booming.
23M US households purchased a pet during the pandemic. This is spurring a boom in petcare-related products and services. Dog buttons that teach a dog to communicate verbally with their owns are particularly in demand. I also saw a dog walking around in a Fendi sweater in NYC recently. “If you look at 100 years ago, pets were in the wild. 40 years ago, they’re in our yard, and 20 years ago in the house. Now they’re in the bed.”
🤨 Beauty innovation is unrelenting and increasingly technology-driven.
L’Oreal launched an eyebrow printer at CES 2023 called Brow Magic. The portable device prints perfectly arched eyebrows right on top of your real brows in seconds. The beauty salon may shrink into a device that lives in your home.
⌚ Rolex launches a certified pre-owned program for its watches.
Rolex, the world’s largest luxury watch company, is finally entering the resale space after allowing a large secondhand market (and unfortunately counterfeit market as well) to develop for its watches without any involvement. With its new program, Rolex will certify authenticity of watches and enable its network of 1.8K watch dealers to sell pre-owned Rolexes. “Rolex has historically certified its products with a guarantee card and green seal. Now, certified pre-owned watches will be minted with the brand's official insignia as well. Certified pre-owned watches will also receive a two-year warranty.”
🚁 Walmart continues to push forward on drone delivery.
Walmart has completed >6K deliveries via drone in 2022 from its 36 drone delivery hubs across 7 states. Walmart seems best suited to own this method of delivery given it’s the largest retailer in rural areas (already has the goods stocked near customers) which are the best suited for drone delivery (it will be a while before regulators are comfortable with drones buzzing around NYC). While unfortunate, the war in Ukraine has proven that drones can be very effective for real world applications. Perhaps commerce will become a use case for good.
🚴 Rapid same-day delivery is consolidating.
I previously profiled the emergence of delivery companies like Gorillas, Getir, GoPuff, and others who were building services to get goods to consumers in 15 minutes or less. The growth of these businesses was predicated on large fundraises from investors. That capital is now drying up and these players are being forced to consolidate, such as the acquisition of Gorillas by Getir for $1.2B. My view is that we will see continued consolidation in this space as players aim to reduce competition and improve the viability of their services. To enable these services, these companies have to build out thousands of micro-warehouses in hundreds of cities globally and pre-fill them with goods for purchase, recruit delivery drivers in each market, and market to customers to use the service. This business is inherently low margin and capital intensive. I strongly believe that this business will ultimately be dominated by leading food delivery businesses around the world (think Doordash and Delivery Hero) who already have large driver networks and millions of customers placing orders on their apps. The missing pillar from them is the warehouse network, such as DashMarts, which Doordash is building out now. 7-Eleven meanwhile has “warehouses” and customers and is investing in its delivery capabilities.
🖥️ Shopify launches Commerce Components as it focuses on serving larger merchants.
Commerce Components is a set of tools, such as Shopify’s checkout technology, that non-Shopify merchants can incorporate into their own non-Shopify ecommerce storefronts. Mattel, Glossier, Coty, Steve Madden, and Staples are already using the new service and are emblematic of the larger merchants that Shopify aims to work with.
📈 Holiday ecommerce sales showed some growth but demand was driven by discounting.
Online sales during the holiday season rose 3.5% YoY to $212B. Ecommerce drove 21.6% of total retail sales over the holidays in 2022, up from 20.9% in 2021, 20.6% in 202, and 14.6% in 2019. “Online retailers have gotten price-sensitive customers to press the ‘buy’ button with steep promotions. Deep discounts likely helped retailers sell off the glut of merchandise that had piled up in warehouses and store backrooms.”
📜 A reminder that brands existed 5,000 years ago.
Evidence is emerging that humans were branding goods as far back as 5,000 years ago. A powerful reminder that brands solve important needs for consumers such as establishing trust in a good and being able to more easily communicate the virtues of a good to others. “Bottle stops used 5,000 years ago in ancient Mesopotamia, the birthplace of cities and writing, were stamped with symbols that marked them out as the earliest evidence of branded goods.”
Notable Earnings / Financings / M&A
Disclaimer: The below will be longer than usual as I’m catching up on announcements from August - December 2022.
💰 Earnings: Nike, Chewy, Doordash, MercadoLibre, Lululemon, Farfetch, Yeti, On Running, Target, Walmart, Vtex, Global-e, Amazon, Bytedance, Shopify, Mastercard, Visa, Alphabet, LVMH, Meta, Figs, Wayfair, PayPal, TJX, Gap
🤝 Financings: Fanatics, Klaviyo, Celsius Energy, Rokt, Yoox Net-a-Porter, Huel, Afresh, Yassir, Ordergroove, OpenStore, Gorgias, Swiftly Systems, Therabody, Mr. Beast, Locus Robotics, Elastic Path, Trigo, Vetted, Joy Weddings, Ernesta Rugs, Vivrelle, Castore, Attabotics, Liquid Death, Modern Milkman, Archive Resale, Gadget, DropIt, Xiao Chi Jie, Trendsi, The Rounds, Caraway, Path Bottles, Lily AI, Forage, Northbeam, Vividly, Take App
🤗 M&A: Albertson’s, Tom Ford, iRobot, Poshmark, Adore Me, ChannelAdvisor, Ted Baker, Hero Mighty Patch, Grailed, Blue Nile, TCGplayer, Orscheln, Imperfect Foods, Mr. Black, Instabox, Cloostermans, Gallinée, Rosie, Skipcart, Alert Innovation
Welcome back. This Substack was missed. 🤝