Daily Consumer #7 - Ecommerce Companies Want Advertising Revenue
Plus large retailers see their ecommerce investments drive strong earnings results.
My Work
Nothing This Week
I took some time off this week to get some sun. Will be back with featured content next week.
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News
Activewear. A profile of Anta, a China-based activewear brand quickly taking domestic mindshare away from Nike and Adidas.
Advertising.
Large retailers are launching their own ad networks or joining prominent ones. “Best Buy is enabling advertisers to use Criteo’s cross-retailer, self-service platform to reach BestBuy.com and BestBuy.ca shoppers in the U.S. and Canada".”
Walmart is rolling out its proprietary ad network. Walmart DSP is a “first-of-its kind” demand-side platform that, unlike other DSP products in the market, serves as a standalone platform combining the technology and performance of The Trade Desk with the scale of Walmart’s first-party omnichannel data. As a result, Walmart says the offering will allow advertisers to be more effective with their overall media spend.
Target hires Google’s managing director of retail, Sarah Travis. Will run Roundel, Target’s proprietary ad network. “Roundel helps advertisers connect directly with Target's customers through personalized, relevant marketing messages across Target's owned platforms and hundreds of brand-safe, off-platform channels.”
MercadoLibre, the Amazon of Brazil, invests $25M in Aleph, a global ad agency. Will partner closely to monetize advertising space on MercadoLibre's digital properties in countries where MercadoLibre does not have local sales operations.
Afterpay introduce ads to its app for the first time with a new option that lets retailers buy featured placements for promotions and products through a pay-per-click model. Afterpay claims to generate about 1M referrals per day for shops in its directory, with 55% of those originating in its app. Afterpay has about 20M customers in the United States and 100K merchants worldwide.
Youtube announces that it shares advertising sales with over 2M video producers. YouTube also said it has paid out more than $30B to creators in the past three years from ads, merchandising and other service features.
AR Commerce. A deep dive into Snapchat’s Scan capabilities. “Scan’s prominent placement in Snapchat means that the company is slowly becoming not just a messaging app, but a visual search engine.”
B2B Commerce.
Retail. Walmart launches GoLocal, a service that allows other businesses to use Walmart’s delivery infrastructure. “This white-label delivery as a service offering empowers businesses to grow using Walmart’s delivery capabilities and nationwide coverage at competitive pricing.”
Used Cars. Cox rolls out an ecommerce platform to used car dealers that allows car buyers to more precisely see what they would pay for a specific vehicle. Cox said it developed the platform with advice from Penske Automotive Group.
BNPL.
Earnings.
Brands
Coty saw their fiscal Q4 revenue grow 90% YoY. “Attributed the strong quarter to robust performance in the Chinese and American markets, as well as double-digit and in some cases, triple-digit growth for its prestige brands.” “The company is moving fast to boost its offerings in the still-booming skin care market, where Kardashian and Jenner will play an outsized role. The US market is more and more becoming a celebrity-driven makeup market.”
Gap saw Q2 revenue grow 29% to $4.2B. “Even clothing chains that had stocked up generously are running out of tops and dresses as schools and colleges reopen, and people celebrate weddings, graduations and group events again.” “Gap is also benefiting from tie-ups with celebrities including rapper Kanye West and Olympian Simon Biles, while sharpening its focus on inclusivity.”
Omni-Channel Retailers
Best Buy saw Q2 revenue grow 19% YoY to $11.8B. “Best Buy credited continued strong consumer demand for technology to support activities such as working from home and streaming entertainment content as helping to drive its impressive performance.”
Dick’s Sporting Goods saw Q2 revenue grow 21% YoY to $3.3B. “Ecommerce sales increased 111% over last year and, as planned, fell 28% compared to the second quarter of fiscal 2020, a period during which some of its stores were temporarily closed. Ecommerce penetration of total net sales was approximately 18%, compared to 30% last year and 12% in the second quarter of 2019.”
Foot Locker saw Q2 revenue grow 9% YoY to $2.3B. “Foot Locker CEO said the company saw strong results in its women's and kids' footwear business along with broad demand for apparel and accessories”
Macy’s saw Q2 revenue grow 58% YoY to $5.6B. “Ecommerce sales fell 6% from the same quarter last year, a time when Macy’s stores were not fully open and when shoppers were largely still buying online. Online sales rose 45% on a two-year basis and accounted for 32% of net sales. The retailer said it brought about 5 million new customers into the Macy’s brand, a 30% increase compared to second quarter 2019.”
Nordstrom saw Q2 revenue grow 97% YoY to $3.7B. “The company said its online sales rose 30% from a year earlier, representing 40% of Nordstrom’s total business.”
Ulta Beauty saw Q2 revenue grow 64% YoY to $2B. “As expected, ecommerce sales fell from a year ago, as coronavirus restrictions eased and vaccinated customers became more comfortable shopping in person. On a two-year basis, online sales during the period more than doubled.”
Marketplaces
JD.com saw Q2 revenue grow 26% to $39B. “In the quarter, JD added 32M new users, a company record, following a strong showing at its annual shopping festival in June.”
Pinduoduo saw Q2 revenue grow 89% YoY to $3.6B. Saw 738M average MAU in the quarter, an increase of 30% YoY. Posted its first quarterly operating profit of $309M.
Fintech
Klarna saw Q2 GMV grow 66% YoY to $20B. “Much of this growth was led by rising popularity in the US, where GMV in the first half of 2021 rose 311% YoY. As of June, 20M Americans were using Klarna, up from 17M just two months prior.”
Gaming. Ralph Lauren will launch a 50-piece digital clothing collection available to purchase in Zepeto, a 3D game.
Influencer-Driven Commerce.
An exploration for Roger Federer’s partnership with On Running, a shoe brand that filed to go public recently.
Nike introduces a fashion line designed by Serena Williams.
A look into Alex Rodriguez’s investment activity and how he gets involved with companies he decides to back.
Luxury.
Designer collaborations are happening more often as younger shoppers view these limited-edition goods as assets and are actively searching for such goods (ex.“Bape x Coach” searches are up 1,680% YoY). “A recent Harris Poll survey shows that 23% of US adults have bought or plan to buy limited-edition sneakers this year. 37% of them view the shoes as an investment opportunity.”
Farfetch launches a preorder capability for shoppers to allow them to secure products before they start selling. Has 10 launch partners including Balenciaga, Khaite, Nanushka, Palm Angels, Oscar de la Renta, and Off-White.
Omni-Channel. Target is rolling out a new method of fulfilling online orders that is quite similar to how Instacart fulfills its orders.
Petcare. An interview with Bark CEO Manish Joneja suggests that Bark is following a very Stitch Fix-inspired approach focused on subscriptions and personalization.
Resale. Urban Outfitters is introducing Nuuly Thrift, a resale marketplace launching in fall 2021 for consumers to buy or sell women's, men's and kids' apparel and accessories. “When customers sell an item on Nuuly Thrift, they will have two options: transfer their earnings directly into their bank account, or redeem them for Nuuly Cash, which is worth 10% more at Nuuly Thrift and other Urban Outfitters brands.”
Reviews. The Forerunner Ventures team shares some views on why reviews are becoming increasingly important. I feel similarly which is why I invested in Okendo.
Same-Day Delivery. Boots starts a pilot partnership with Deliveroo to enable same-day delivery in the UK.
Social Commerce. TikTok expands its partnership with Shopify to make commerce more native in its social app. “Shopify merchants with a TikTok For Business account will be able to add a new “Shopping” tab to their TikTok profiles and sync their product catalogs to create mini-storefronts on their profile.”
Funding and Exits
Brands
Apparel. A.K.A. Brands files for go public. Is a holding company that owns brands like Princess Polly. “In 2020, net sales increased 111% to $216M.”
Beauty. Advent acquires the Laura Mercier, BUXOM and bareMinerals brands from Shiseido. “We are strong believers in the bareMinerals, BUXOM, and Laura Mercier brands. They are clear leaders in prestige beauty and are widely recognized for their quality, authenticity, and innovation.”
Eyewear. Warby Parker files to go public. Good summary of their financials here.
Footwear. On Running files to go public. “On has grown net sales at a compound annual growth rate of 85% from its founding in 2010 through 2020, which it claims makes the brand ‘one of the fastest-growing scaled athletic sports companies in the world’. In 2020, the brand recorded net sales of $465M.”
Sanitation. Shimmy raises $3M from Wayfund for its hand sanitizer hardware and cartridges.
Marketplaces
B2B Commerce.
Auto Parts. Odiggo raises $2.2M from YC, 500 Startups, and others for its Egypt-based marketplace connecting car owners with dealerships selling used car parts.
Grocery. MaxAB raises $15M from RMBV, Flourish Ventures, and others for its Egypt-based marketplace that allows grocers to purchase goods and request delivery. Also announces that they are acquiring Morocco-based B2B ecommerce and distribution platform WaystoCap.
Industrial Equipment. Zetwerk raises $150M from D1 Capital Partners at a $1.3B valuation for its India-based marketplace connecting custom equipment makers with manufacturers.
Industrial Equipment. Caddi raises $73M from Globis and WiL at a $450M valuation for its Zetwerk-like marketplace in Japan. “Using an automatic quotation system based on a proprietary cost calculation algorithm, we select the processing company that best matches the quality, delivery date and price of the order and build an optimal supply chain”
Wholesale. Bazaar raises $30M from Defy Partners and Wavemaker for its Pakistan-based B2B marketplace allowing 75K+ small retailers to procure inventories at a standard price and choose from a much larger catalog. “At stake is a booming $170B retail market in the world’s fifth-most populous nation that is yet to see much deployment of technology.”
Logistics. Coco raises $36M from Sam Altman, Silicon Valley Bank and Founders Fund for its network of semi-autonomous delivery robots that take humans out of doing last-mile deliveries.
NFTs. Makersplace raises $30M from Bessemer Venture Partners and Pantera Capital for its digital art marketplace for NFTs which “has generated more than $100M in sales in the past year and seen a 10x increase in unique collectors”.
Watches. Chrono24 raises $118M from General Atlantic and Aglaé Ventures at a >$1B valuation for its marketplace that facilitates the sale of both new and pre-owned watches. Currently carries approximately 500K watches and works alongside over 3K retailers and 30K private sellers, with an average reach of 9M unique visitors per month.
Software
Avatars. Gap acquires Drapr, an application that enables customers to quickly create 3D avatars and virtually try on clothing. “Fit is the number one point of friction for customers and, through their advanced 3D technology, Drapr has shown it can help shoppers efficiently find the size and fit they need”
Cannabis Ecommerce. Jane raises $100M from Honor Ventures. “Is building the backend for dispensaries that are quickly taking their cannabis offerings online and accounts for 20% of all legal cannabis sales in the United States”.
CPG Analytics.
AI Palette raises $4.4M from Pi Ventures and Exfinity Venture Partners for its analytics platform that uses machine learning to help CPG companies spot product trends in real time.
Stonehenge raises $2M from Irish Angels for its software that centralizes sales data for CPG brands.
Customer Support.
Zendesk acquires Cleverly, which offers an AI-powered tagging capabilities for customer support tickets allowing customers to more easily categorize workflow.
Level AI raises $13M from Battery Ventures for its platform that provides conversation intelligence, as opposed to just speech analytics or insights based solely on keywords or phrases, which can sometimes be taken out of context. Level AI instantly analyzes, automates and provides feedback to customer service agents so that they can deliver efficient, targeted assistance.
Ecommerce Platform. Elopage raises $38M from Target Global. Is the platform and payment provider of choice for more than 40K digital businesses offering digital products, courses, memberships, and subscriptions.
Grocery Delivery. Point Pickup Technologies, a last-mile delivery service, has acquires white-label ecommerce GrocerKey for $42M. Allows retailers to offer same-day delivery, from purchase to fulfillment to delivery, under their own brand name, rather than under third parties like Instacart
Omni-Channel. Khatabook raises $100M from Tribe Capital and Moore Strategic Ventures at a $600M valuation. Allows small offline merchants in India to digitize their bookkeeping and to accept online orders.
Resale. Trove raises $77M from G2 Venture Partners to enable brands to have their own resale capabilities. “Brands are all coming to the same realisation: They see massive amounts of their products on peer-to-peer websites and have no control. Trove’s current customers expect secondhand items to become 10-30% of sales.”
Restaurants. Toast files for IPO and expects a $20B+ valuation. Offers software to digitize all workflows within restaurants including enabling online ordering.
Fintech
B2B Payments. Balance raises $25M from Ribbit Capital for its B2B checkout platform that provides flexibility and control for all parties involved Buyers enjoy the choice of payment methods including ACH, wire, and checks as well as real-time net terms at checkout; merchants get immediate payout which is always reconciled like with credit cards; and marketplaces are enabled with automated vendor disbursement, a full compliance umbrella, and reconciliation management.
Neobanks.
Payments. Tuna raises $3M from Canary and Atlantico for its payment product that enables merchants to use A/B testing of credit card processors and anti-fraud providers to optimize their payments processing with one integration and a no-code interface.
Product of the Week
Bite Toothpaste is a brand started by two friends of mine. Their D2C, subscription-driven brand is anchored around sustainability and has led to them totally reinvented how you would experience toothpaste (unique tablet form, no plastic tubes, no waste). Buy it here.