Tag: amazon

  • Amazon Payments goes global

    Amazon Payments goes global

    Amazon has launched a new global program designed to allow merchants worldwide to offer Amazon Payments to their customers.

    The Amazon Payments Partner Program offers tools and services to help retail partners grow their merchant business by offering easy integration with Amazon Payments.

    The program includes solution pre-integration and best practices to help ensure that merchants receive the most effective solutions. Merchants will be eligible to receive benefits and services from the program such as knowledge-sharing and ‘white glove integration services’. The program is free to participate in and available by invitation in the US, Germany, the UK and Japan.

    Patrick Gauthier, VP, Amazon Payments, said the company is working across geographies and industries to help merchants adopt its system.

    Members of the Amazon Payments Partner Program are eligible to receive account management, planning support, technical resources and training, a partner directory listing, partner designation with exclusive logos, and some partners may also be eligible for co-marketing activities.

    “The convenience and trust that Amazon Payments provides customers already attracts lots of our merchants. We are honored to participate in the Amazon Payments Partner Program,” said Yuko Hoshino, President of Future Shop.

    “Together, we will support the growth of our merchant business and contribute to the revitalisation of the eCommerce industry in Japan by combining the capabilities of FutureShop2 with the convenience of Amazon Payments.”

    “Amazon Payments extends the trusted and familiar experience of Amazon to our merchants across Europe and the US,” said Corinne Lejbowicz, CEO PrestaShop SA.

    “Our merchants want to offer their customers a payment solution that is trusted, easy and familiar,” added Brennan Loh, director of business development at Shopify.

  • K-beauty spreads worldwide

    K-beauty spreads worldwide

    The ‘K-beauty’ market is expanding its sphere of influence beyond Asia, and reaching out to other global markets.

    According to Aju News, a Korean newspaper, Korean cosmetics brands are exploring new markets worldwide. As the global interest in K-pop and K-dramas is rising, women all over the world are now looking at K-cosmetics.

    Amore Pacific has been eyeing the international market since the 1990s. After establishing factories in France and China, the company continued to expand its influence worldwide, with products now being sold in the U.S., Malaysia, Indonesia, Vietnam, Canada, Thailand, the Philippines, Singapore, Myanmar, and Japan, generating global sales of 1.26 trillion won.

    Able C&C’s cosmetics brand Missha is following the lead, spreading K-beauty all over the world. Missha stores can now be found in Brazil, Germany, Mexico, Venezuela, Turkey and Spain. The Brazilian market in particular is expected to generate strong sales growth, as reports show that the local cosmetics market is the fourth largest in the world.

    LG Household & Health Care’s The Face Shop is focusing on the Middle Eastern market, opening 55 stores in five countries – Jordan, Saudi Arabia, UAE, Oman and Armenia.

    Cosmetics brands are using a number of different marketing strategies to aggressively target overseas markets.

    In areas where natural ingredients and safety are important, such as Europe and the US, businesses are attracting customers with their ‘natural’ brands. Some brands promote elements of Korean tradition to attract western consumers. Many are ‘blending in’ with the locals through collaboration with local businesses.

    To boost overseas expansion, the Korea Trade Promotion Corporation (Kotra) is taking steps to boost sales of Korean cosmetics through American and Chinese online shopping sites.

    Kotra will host a ‘K-beauty summit’ to help Korean cosmetics brands export their products. The agency’s ‘online export incubating program’ will be introduced, and is expected to help businesses sell their products through Amazon.

    Kotra is also seeking to secure new trading opportunities in China in collaboration with the online shopping site TaoBao, operated by Chinese eCommerce behemoth Alibaba. The two parties plan to host a K-beauty expo in China during the first half of the year.

    Innisfree store in Shanghi

    The cooperation with TaoBao is only the start, as Kotra is also planning to work with other online shopping portals such as JD.com.

    Officials at Kotra emphasise the importance of making inroads in the American and Chinese markets to prolong the popularity of the K-beauty trend. They expect to draw the attention of young consumers who are sensitive to fashion and style trends and familiar with online shopping.

  • New Balance India return

    New Balance India return

    New Balance India is to make a comeback – and says it aims to open about 50 stores within the next few years.

    The US sports shoes brand’s first foray into India was in the early 2000s, but it shut its shops after a few years. Now its VP for Asia Pacific Darren Tucker says it plans outlets across shopping malls and high streets in Delhi, National Capital Region (NCR), Mumbai and Bengaluru.

    “We were ahead of time,” says Tucker. “We did not have such a wide brand presence globally then, and the retailing experience was poor. Now, the market looks more mature.”

    Its first store this time around opened yesterday – an 1100 sqft (102 sqm) New Balance Athletic Shoes standalone outlet at DLF Mall of India in Noida, near New Delhi. The company has a distribution agreement with The Major Brands Group in Mumbai for retailing New Balance products in India.

    “It’s not about the number of stores,” says Tucker. “We would prefer to have a profitable retail presence and grow at a relatively slower pace this time.

    “All our global competitors are here. The market is built. We know our competitors, and that’s an advantage.”

    With an average selling price of Rs.7000 (US$105) for shoes, New Balance will be a premium offering. Tucker says apparel is a promising segment, so lifestyle will be a focus area. The company has also tied up with online retailer Jabong for e-etailing, and is negotiating with global partner Amazon for the Indian market.

    “Considering the growth of eCommerce in India, that’s a must,” says Tucker. The company will continue to leverage its global marketing properties across sports and athletics, and plans to develop local properties. “For India, it’s going to be cricket first.”

    At the moment, the sports shoe and apparel market in India is dominated by Adidas, Nike, Puma and Reebok. Japan’s Asics Corp. opened its first standalone store in Delhi last July.

    A report by Images F&R Research estimates India’s active sportswear market at Rs.6000 crore, growing at 13 per cent a year.

    New Balance, which reported $3.3 billion in sales worldwide in 2014, was founded in 1906 by British immigrant William J. Riley to sell arch supports to police officers and waiters. The company was bought by Jim Davis, the son of a Greek immigrant, in 1972 and from its base in Boston now sells athletic shoes, apparel and accessories for men, women and children across 5000 outlets worldwide under brands such as Aravon, Brine, Dunham, PF Flyers and Warrior Sports.

  • JD.com Dominating The Rapidly Growing Chinese Online Retail Market

    JD.com Dominating The Rapidly Growing Chinese Online Retail Market

    Rapidly Growing Online Retail Market

    There are multiple dimensions through which the Chinese online retail market is growing such as growing Internet users and expanding middle class. Unlike developed countries with largest online retail markets such as the UK, the US, and Germany, the penetration of online retail is fairly low at a meager 12.9% (2015) of the country’s overall retail sector. Despite that, China is the largest e-commerce market in the world, which is also growing rapidly. Chinese consumers spent 33.3% more on online shopping last year. And the expanding middle class is making the market lucrative for e-commerce players in the B2C segment, which was an unprofitable prospect a few years ago due to unscalability. This is where the two fiercest competitors JD and Alibaba’s Tmall are fighting to capture a larger chunk of the growing pie.

    JD.com or Jingdong is the second-largest e-commerce player in China, only behind Alibaba. BABA provides marketplaces for businesses (Alibaba.com), consumers (Taobao), and brands (Tmall), along with technological support and services; it generates revenues primarily through advertising and commissions. On the other hand, JD is more of an online retail pure-play with a lion’s share of revenues generated from direct sales; however, it also hosts third-party sellers. JD operates in the B2C segment and directly competes with BABA’s Tmall.

    Why Invest In JD.com?

    Largest logistics infrastructure

    This is the key differentiator between the two. JD operates its own logistics network while BABA provides these services to its merchants through a group of logistics service providers called Cainiao. JD has been aggressively investing to expand the largest fulfilment network operated by an e-commerce company in China. Its last mile delivery distinguishes it even from Amazon, resulting in the fastest and reliable delivery as evident from the nearly 80% orders fulfilled on the same day. While BABA has stepped up its efforts in building several large-scale logistics centre, it would still rely on third-party delivery personnel. Even though the strategy is better in terms of its less labour-intensive nature, it lacks control on the quality of service.

    Rising revenues in non-core areas

    One of the reasons JD started building its logistics network in 2007 was to attract third-party sellers. Its strategy has been successful as evident from the y-o-y jump of 101% in revenues from marketplace fees, ads, and logistics services. Third-party sellers find JD more attractive as the company doesn’t ask for exclusivity, unlike Tmall. Additionally, the company has seen strong growth in the apparels and shoes segment. JD was a consumer electronics and home appliances focused retailer, but the segment’s 66% growth was outpaced by the 92% y-o-y growth in general merchandise/other segment during Q4 2015.

    Increasing market share

    JD’s revenue growth of 57.6% (in US dollars) during 2015 was well above the industry’s growth rate (33.3%). It indicates that the company increased its market share which accounted for the incremental growth. During early 2015, analysts at William Blair highlighted that during Q4 2014, JD gained 5% market share in GMV compared to a 2% decline experienced by Tmall. During the first three quarters of 2015, JD’s market share increased to 23.2% from 18.6% at the start of the year compared to Tmall’s contraction to 54% from 61.4%.

    Improving gross margin

    Source: Simply Wall St

    JD was unprofitable last year. More than 85% of the loss was related to impairment charges (Paipai platform) and acquisitions; however, the company is expected to deliver positive earnings in 2016 and sizable earnings growth thereafter. JD’s improved utilization of infrastructure – growth in marketplace, ads, logistic services revenues – and increase in higher-margin product mix – general merchandise/other segment – will start reflecting in improved gross margin. Its loss doesn’t come as a surprise, as the management clearly stated in early 2015 that it is in investment mode, and this year’s target was to grow its market share and expand infrastructure.

    Source: Simply Wall St

    Smart money and the strategic partnership

    As per Bloomberg, the hedge fund holdings in the company increased from less than 4% at the start of 2015 to over 18% at the end of Q2. Q3 saw a decline, but the smart money increased its stake by nearly 7% during Q4. One of the key reasons behind hedge funds’ interest was JD’s strategic partnership with Tencent, the operator of China’s largest messaging service: WeChat. This has allowed JD to tap into the fastest-growing customer network as evident from the 61.4% sales coming from mobile devices during 2015 compared to nearly 36% in Q4 2014.

    Source: Simply Wall St

    Source: SEC 13-F filings, National Bureau of Statistics China, company fillings, S&P Capital IQ, WSJ.com, Simply Wall St

  • Coupang losses mount

    Coupang losses mount

    Coupang, the leading South Korean eCommerce operator, is expected to reveal mounting operating losses for 2015 as big investments in logistics capacity weighed on the financials of the startup company, industry sources said Thursday.

    Coupang is expected to log over 400 billion won (US$326.9 million) in  losses when it files its 2015 audit report in mid-April due to rising costs in building new logistics centres and hiring new staff, they say.

    The online retailer’s sales were estimated to have jumped more than four-fold last year from 348.5 billion won in 2014 after its same-day delivery service helped attract more customers in online marketplaces.

    While market watchers questioned the sustainability of its business model, Coupang said the deficit is an inevitable result of aggressive investment to get ahead in the highly competitive market.

    “The operating deficit was already being expected because we are making big investments to establish a nationwide logistics network and hire more staff,” a spokesperson said.

    “The investment is aimed at the long-term goal of making a strong foothold in the market. It is expected to take some time to make a turnaround as several projects are currently underway.”

    In November, Coupang said it will invest 1.5 trillion won in expanding logistics capacity by 2017 to step up its same-day delivery service, just months after it won a US$1 billion investment from Japanese telecommunications giant  Corp. Coupang launched an ultra-fast delivery service called “Rocket Delivery” in March 2014 by establishing its own logistics system and employing couriers, joining the global wave of delivery wars led by online retail behemoth Amazon.

    Coupang said it will hire 4000 more staff in the delivery and logistics sector by next year, in addition to 3500 full-time delivery staff, and have 21 logistics centres across the nation. In addition to the same-day delivery competition, Coupang has recently launched a cut-throat price war, advertising that its diapers and powdered milk are the cheapest in South Korea.

    As a result of aggressive marketing, Coupang’s market share in the local online market has steadily risen from 2.3 per cent in 2013 to 5.6 per cent in 2015. Mobile devices also accounted for 9.8 per cent of its transactions last year, according to industry data.

  • Virtual reality in retail stores

    Virtual reality in retail stores

    Virtual Reality, as a concept, has been around for over 50 years.

    In the beginning, it was literally the stuff of science fiction.  Then in the early 90’s it actually became reality, when physical prototypes were developed, using the modern technology of the era.  The results were underwhelming – imagine pixelated graphics and heavy, nausea inducing headsets. The concept lay dormant for 20 years before anyone thought to revisit its feasibility.

    That person was Palmer Luckey, the young inventor and founder of Oculus VR. What he discovered is that without anyone realising it, technology had quietly caught up with the requirements of VR. There were now low-latency head orientation sensors and small, high-refresh rate OLED displays which didn’t exist just five years ago.

    Using these off the shelf parts, he constructed a rudimentary hardware proof-of-concept which delivered an immersive experience far beyond what had been seen before.

    From this initial prototype, Oculus was founded, bringing on board many high profile experts in the field of computer graphics, alongside millions of dollars in funding. Their inaugural consumer VR product is about to be released to the public, and many smart people consider this to be a watershed moment.

    Will this be the event that introduces practical VR to the masses?

    Oculus (now owned by Facebook) is leading the way, but Apple, Google, Microsoft and Sony are all working on their own implementations of VR. There’s a full-on VR technology arms race happening, with the usual suspects involved.  They recognise the huge potential of the medium, and the unique ways it can complement their existing product offerings.

    VR 2.0

    This new generation of VR technology is in its infancy, and as with any nascent platform, pundits try to predict the types of experiences it will enable. Stereotypically, new mediums are often projected (interpreted) through the lens of the incumbent platforms which precede it.

    The first automobile was considered a “horseless carriage”. The first motion picture content was essentially just televised theatre. Simply re-imagining the experience of an old medium through a new one may be the path of least of resistance, but it ignores the unique elements of the new.

    So the theory goes, in order to fulfill its true potential, a new medium needs to abandon previous biases and embrace the characteristics and constraints which are unique to it.

    But does this calculus apply to VR? Perhaps not. Unlike all previous mediums, it is has no baked-in constraints. It is not simply a proxy for storytelling or communication. Its ambition is to replicate the reality we natively experience. It is, by design, the last medium.

    The obvious question becomes, what are the scenarios for which diving into an alternate reality becomes preferable to the “real” reality someone is experiencing. As mature as the underlying technology becomes, VR, for the foreseeable future, will forever be chasing the tail of “real life”.

    So what is the individual incentive to temporarily replace what we already (if we’re so lucky) get for free? Understanding the motivations that drive these virtual experiences can uncover the opportunities and jobs to be done of the medium.

    Applications

    In the context of VR, the virtual “reality” is simply “content”. As with all previous mediums, the success of this one will be intrinsically tied to the abundance and quality of content created for it. In this respect, authors and the tools they use to create with will be just as important as the technology that audiences use to consume with.

    These creation tools are also nascent, and consist of both hardware and software solutions.  Let’s explore a potential use-case for this technology within the realm of current domains.

    Virtual reality in retail: eCommerce and virtual stores

    A common current trend in the eCommerce space is the realisation that an online presence alone is not enough to deliver the ideal consumer experience. Even Amazon, the largest pure-play online commerce company has recently opened a “bricks and mortar” physical presence near its headquarters in Seattle.

    What is the impetus for taking this step “backwards” into the 20th century? Well, these companies have discovered that even with an (essentially) limitless online catalogue, the experience of browsing their catalogues online doesn’t compare to the act of literally walking down the aisles of a physical store. It is no substitute for the physical discovery process we take for granted.

    This applies not only to the type of merchandise that Amazon became famous for, like books, but especially so for more visual products like clothing and fashion. There is no substitute for the tactile experience of wandering through a curated store.

    But providing a physical presence requires sacrificing one of the key advantages of online commerce; having an effectively infinite reach, with the ability to target any consumer, wherever they are, independent of their physical location. Reaching global penetration at this physical scale is beyond the reach of all but the largest retailers.

    Imagine consumers using VR to browse a virtual physical store, representing the catalogue (or a subset of) the online inventory. Even brands that have an existing physical retail footprint would benefit from the ability to amplify this bricks-and-mortar experience across markets they don’t have the scale or reach to address.

    Sizing has been an eternal struggle for online clothing retailers and consumers alike. How to know if the shirt you’re purchasing online will actually fit properly when it arrives?  Sizing charts are not standardised, and even if they were, there is no single reference body type to target a perfect fit.

    So how do you try before you buy? A virtual fitting room could come very close to replicating the experience of trying on clothes in a real physical fitting room. Imagine associating detailed physical dimensions of your body with your online shopping persona.

    Using this information, alongside similarly detailed sizing information for the individual clothing items could let you try on pieces of clothing in a virtual mirror. As you raise your arms or tilt your hips, you could see the fabric as it contours and hangs off your virtual body.

    Future opportunities

    This is just one creative application of VR hardware and virtual environments. The potential is almost limitless, and there isn’t a field or industry that won’t be touched in some way by this technology.

    While the incumbent hardware/software companies have all planted their stakes in the ground, there will be massive opportunities for all players in the ecosystem, especially content creators who understand how to create experiences on this new canvas.

    Once again, this illustrates the competitive advantage which exists for companies who can master the intersection of design and technology. Organisations who successfully combine these two disciplines will be in a unique position to benefit from the enormous future demand for virtual experiences.

    written by Marc Lamothe, Technical Director at Start Hong Kong

  • Amazon shores up logistics in China as its global delivery business

    Amazon shores up logistics in China as its global delivery business

    Amazon is expanding its logistics services into mainland China and other major shipping hubs to reduce logistics costs as it seeks to expand into the cross-border e-commerce market.

    This would see it take on domestic market leader Alibaba Group in the global cross-border e-commerce market, which is projected to reach US$1 trillion by 2020, according to data supplied by Accenture and AliResearch.

    However, its ambitions may be grander yet. One rumour doing the rounds this month maintains that Amazon has even begun leasing planes – under the radar, so to speak – to further its ambitions that may extend to taking on its current delivery partners like FedEx and the United Parcel Service.

    Seattle-based e-commerce juggernaut Amazon filed an application with the Shanghai Shipping Exchange last year that would allow its Chinese subsidiary, Beijing Century Joyo Courier Service, to serve as a shipping broker to countries in Europe, Japan and the United States.

    A broker takes care of cargo and customs issues on behalf of merchants so make sure goods reach their final destination.

    Amazon submitted a similar application to the US Federal Maritime Commission in November, allowing it to serve as a middleman for ocean freight services to other US-based companies that wish to export to other countries.

    These moves suggest the company is one step closer to becoming a transnational logistics and fulfilment hub, as outlined in a 2013 proposal to senior executives at the company, Bloomberg reported.

    Although Amazon deals with e-commerce, it does not hold its own inventory, similar to Chinese online retailer JD.com. Amazon largely taps merchants who wish to sell their products on its own platform.

    Merchants can choose to list their products and sell to customers directly from the site, or ship their goods to Amazon, which then fulfils orders on their behalf.

    By serving as a middleman in ocean freight, Amazon can tap the growing e-commerce cross-border market in China and the US by consolidating large volumes of cargo from merchants there.

    “The licenses that Amazon have received not only strengthens its own position as a fulfilment channel for its own cross border trade, but also allows it to act as a potential competitor to the likes of DHL, Fedex and UPS in delivery services,” said Michael Yeo, analyst at market research firm IDC.

    Amazon’s strategy in logistics is similar to that of its cloud computing business unit, Amazon Web Services. AWS was launched with the aim of fulfilling Amazon’s cloud computing needs but has since expanded into providing cloud services for other companies.

    “Much like how Amazon Web Services now provides cloud services to others, we can assume that Amazon has larger plans for its logistics services than simply for goods that are purchased directly on Amazon,” said Yeo.

    Amazon’s logistics strategy puts it head-to-head with Alibaba Group, which has also been aggressively expanding its logistics subsidiary Cainiao.

    Cainiao has struck partnerships with domestic and international logistics partners such as Singapore’s SingPost and the United States Postal Service for its cross-border logistics solutions.

    Meanwhile, Alibaba’s Tmall leads the retail e-commerce sector in China, wielding 58.6 per cent market share in the first quarter of 2015, according to data by iResearch.

    In contrast, Amazon China only held 1.1 per cent of the market, despite having its hand in the game since 2004, four years ahead of Alibaba’s Tmall launch.

    Doug Gurr, president of Amazon China, said the company was chasing areas where it has “unique competitive advantages” in satisfying local appetites for imported products.

    “We want to help Chinese customers gain easy access to high quality and authentic international products at fair prices around the world … and help sellers from China to grow their business globally,” he said.

  • Criteo notes eCommerce spike

    Criteo notes eCommerce spike

    In the two weeks leading up to the Chinese New Year, eCommerce sales in Asia grew by 40 per cent with 25 per cent more consumers shopping online.

    Three in 10 transactions were completed on a mobile device, according to performance marketing technology company Criteo in Hong Kong. Its findings are based on an analysis of 174 million online transactions in Hong Kong, Malaysia, Singapore, Taiwan and Vietnam.

    “Because of the traditional practice of wearing new clothes to symbolise a new beginning, consumers are doing a tremendous amount of online shopping two weeks before Chinese New Year,” says Criteo South-east Asia/Hong Kong/India/Taiwan MD Yuko Saito. “Based on 2015 data, sales on mobile devices in particular have hit record numbers.”

    In its eCommerce Industry Outlook 2016, Criteo cites three trends impacting Asian shoppers during the Chinese New Year season…

    Smartphone shopping will keep gaining ground: Smartphones are the first point of internet access or brand interaction for many consumers. In South-east Asia, Hong Kong, India and Taiwan, on aggregate, more than 45 per cent of online transactions are happening on mobile devices, compared to 29 per cent in the second quarter of last year. Indonesia was the highest at 56 per cent, followed by Singapore at 45 per cent.

    Retailers will see a high web influence on their in-store sales: Most consumers are researching online before or while visiting a store. According to Google, 80 per cent of 10 shoppers use a smartphone inside the store to help them with product research and price comparisons. Criteo says retailers can acquire a better view of customer behaviour by connecting with them via branded apps or beacon technology, before matching each customer’s email ID with loyalty programs at in-store POS terminals.

    Instant delivery services will become common: Order fulfilment will be a big focus for retailers this year, with many offering delivery options to match Amazon’s Prime Now service. Both online and “click-and-brick” retailers will be trying this strategy through specialised third-party eCommerce logistics providers. Faster delivery at lower charges will also drive growth of cross-border shopping.

    “During special occasions like Chinese New Year, we observe instances of intensive, last-minute shopping, where consumers take less time to consider a purchase and require products to be delivered on short notice for personal use or gift-giving,” says Saito. “Taking a three pronged approach – engaging consumers on the mobile web or on mobile apps, leveraging consumers’ web-browsing data to deliver personalised in-store and mobile shopping experiences, and investing in instant delivery services will be crucial to increasing sales conversions.”

  • Amazon sales hits $100 billion

    Amazon sales hits $100 billion

    With total revenue growth of 22 per cent during its final quarter, Amazon has emerged as one of the clear winners in the battle for holiday spend.

    Even in its more mature home market, Amazon sales rose by 24 per cent, making it responsible for 22.6 per cent of all online retail spend in the US over the final quarter of the year.

    These impressive figures are accompanied by another achievement: Amazon has now comfortably passed the $100 billion annual sales mark. Taking some $107 billion in its latest fiscal year confirms Amazon’s status as an online behemoth.

    Fortunately for Amazon, this stellar topline performance has been joined by a continued improvement in profitability – something that has previously eluded the group. Across the year as a whole operating income was up by an impressive 1154 per cent, which helped turn a net loss of $241 million in the prior year into a net profit of $596 million this time around.

    That noted, by comparative retail standards Amazon’s level of profitability is still painfully weak. For every dollar the company takes, it makes just 0.75 of a cent in profit. However, this is a conscious decision by a company that uses a large chunk of its revenues to invest back into generating future growth. Clearly this is a strategy that is working, and it is one that is accepted by the market. That it is, makes life much more challenging for traditional players like Walmart which are much more constrained in terms of the degree to which they can erode profitability in order to boost their own online operations.

    Once again, one of the standout areas for Amazon has been Prime, where membership continues to grow strongly. In addition to the direct revenue it brings via the associated membership fees, Prime has also proved to be an important way of locking in customer loyalty. This is important because while Amazon is still a destination of choice for many online shoppers, it faces increasing levels of competition from both traditional retailers moving more aggressively into eCommerce and from new online startups. This is something underlined by the fact that despite its strong growth, Amazon’s share of all eCommerce sales in the US has fallen over the past five years.

    Creating an ecosystem of services and benefits, which include free delivery and access to special discounts and promotions, keeps Amazon top of mind by making it an integrated part of consumers lives. Arguably it also gives the company a whole host of ways in which it can increase its share of wallet from consumers, including via the sale of digital content and services.

    Despite its high share of online across many of the geographies in which it is established, Amazon’s actual share of many individual categories remains fairly low. This is especially so for areas such as grocery where, in share terms, Amazon remains an extremely small player. This demonstrates the extent to which Amazon has significant future headroom for growth, especially as it deepens its expertise and offer across key products.

    The warning for other retailers is that even as it passes the $100 billion milestone, Amazon is still only getting started.

  • The guy who built the Kindle is leading Amazon’s retail plans

    The guy who built the Kindle is leading Amazon’s retail plans

    Amazon’s long-time executive Steve Kessel is in charge of running the company’s new retail business, according to a report by Re/code’s Jason Del Ray.

    Kessel joined Amazon in 1999 and was part of the team that built the original Kindle. He’s known to be close with Amazon CEO Jeff Bezos, as he was one of the 10 people who directly reported to him before leaving for a sabbatical in 2012.

    In early 2015, Kessel returned to Amazon, but his role has been unclear until now. Re/code says he’s been working on this project secretly for a long time.

    Amazon’s retail ambitions were first revealed in November 2015 when it opened its first brick-and-mortar bookstore in downtown Seattle.

    Aside from the bookstore, Kessel’s team is also planning to open physical stores that sell things other than books, although it’s unclear what they will be. Another idea it’s testing is a store without a payments gateway, allowing the customer to pay with a smartphone app instead.

    Amazon is planning to open a new bookstore in Southern California, based on the job listings spotted by Re/code. One of the jobs says it’ll be in La Jolla or San Diego, the report said.

    The news comes on the heels of a report that said Amazon could soon open 300 to 400 additional bookstores. Although the mall CEO who made those statements backpedaled Wednesday, saying his comments were “not intended to represent Amazon’s plan,” it’s seems clear that Amazon is getting serious about the retail space.

  • Alibaba and Amazon China gear up for the Chinese New Year

    Alibaba and Amazon China gear up for the Chinese New Year

    Feb. 8 will be the most important holiday this year in China, as it marks the Chinese New Year. Family members will come together to celebrate with holiday feasts and most workers will enjoy a one-week vacation, many returning to their rural homes from big cities for the festivities. A lack of delivery personnel during this period is leading many sellers on China’s biggest e-commerce marketplaces to shut down, but Amazon China says it will keep delivering in big cities.

    Many merchants on Alibaba Group Holding Ltd.’s marketplaces Taobao and Tmall have announced that they will stop taking orders Feb. 4-Feb. 14 because shipping companies are unable to deliver orders.

    But Alibaba, whose online marketplaces account for more than three-quarter of online retail purchases in China, organized a major promotion in advance of the New Year’s vacation, the Ali Chinese New Year Shopping Festival, which lasted from Jan. 17-23.

    Alibaba reports consumers purchased 2.1 billion holiday items from its websites during the sale, mostly food and gifts. 15% of the orders came from rural residents, a focus of the promotion, and sales at the 12,000 Taobao service centers in rural areas were 331% higher than average, the company says.

    “By hosting this online shopping event, we enabled rural customers to access an extensive range of New Year goods from home and abroad, while making agriculture products from rural China more available among urban customers.” Alibaba Group CEO Daniel Zhang said at the event kickoff meeting.

    Meanwhile, Amazon China, No. 5 in the Internet Retailer 2015 China 500, says it will continue to fulfill orders during the holiday period in 20 big Chinese cities, including Beijing, Tianjin and Shanghai. In fact, the largest overseas e-retailer operating in China says it will extend delivery hours to midnight during the holiday in order to allow Chinese online shoppers to get their orders on time.

    Amazon China operates 13 fulfillment centers in China and employs its own fulfillment staff. The subsidiary of Amazon.com Inc. offers same-day delivery in 123 Chinese cities and second-day delivery in over 1,400 Chinese cities and towns.

    For a fuller report on the openings for foreign companies to sell online in China, see “Open Door Policy” in the November 2015 issue of Internet Retailer magazine.

  • Retail in India, The opportunities and challenges retailers can expect

    Retail in India, The opportunities and challenges retailers can expect

    The country presents retailers with growth opportunities, including some advantages that can’t be found in China

    Lately there’s been much talk and worry about China’s long-term growth prospects and what that means for retailers counting on expanding in the country. Certainly, China seems to be in a time of transition, in which consumption seems destined to fall after years of strong and steady surges.

    Meanwhile, India also presents retailers with growth opportunities, including some advantages that can’t be found in China.

    Already, American brands constitute a large 35% of all foreign brands in India, followed by U.K. brands, at 12%, Italian and French brands at 8% each, and Japanese, Swiss, and German brands at 5% each, according to a 2015 Indian retail report from London-based real estate consultancy Knight Frank.

    In fact, Apple Inc. just last week confirmed that it has applied to India’s Department of Industrial Policy and Promotion to open and run its own stores there, a sign that it sees potential in the country.

    “I expect to see a lot of action in the next 10 years in India,” Venkat Viswanathan, founder-CEO of LatentView Analytics Corporation, told Retail Dive. “I believe we are still at a very early stage of realizing the potential of a market the size of India, and that it’s only a matter of time that India becomes an equally big part of the [business] ecosystem.”

    Language, just the beginning

    English is an official language in India, and serves as a common language for many of the sub-populations there. Therefore, language isn’t the barrier for businesses doing business there, including retailers selling to Indian consumers.

    Furthermore, while in China there’s a Chinese equivalent to Facebook, Twitter, and other social media platforms, the most widely used ones in India are the very ones that are widely used in the U.S. India gives Facebook its second-largest membership base, after the U.S. That means brands have one less barrier to bust through when reaching Indian consumers.

    And, while the Indian government’s official statistics aren’t quite as credible as those released by U.S. government agencies, says Viswanathan, they’re deemed by most as more solid than numbers released by the Chinese government, which are widely seen as untrustworthy and even confusing. (Something that has only served to increase the level of uncertainty and worry about China’s future.) India’s equivalent of the Federal Reserve is considered highly credible, says Viswanathan, and what he calls the “reasonably strong English press,” a strong judiciary, and the open and democratic parliamentary system that supports questioning and debate—plus the strength of the private sector—all help give companies doing business in India some solid ground to build on.

    Growth potential

    But above all, our experts say, India, with a population that includes a large young, mobile-first generation and a growing middle class, presents a lot of growth potential for retailers.

    A study from the Internet and Mobile Association of India last year found that there were 52 million new internet users there in the first six months of 2015, bringing the country’s total user base to 352 million as of June. And of those, 213 million, more than 60% accessed the web through their mobile devices.

    As internet and mobile use has exploded, not surprisingly, so has e-commerce. India’s top 25 retail websites took some 62% of all traffic there, according to digital market intelligence company SimilarWeb. While e-commerce is still a small fraction of retail in India—some 4% to 6%—it’s growing rapidly and expected to scale up exponentially in coming years.

    How Amazon is changing the game

    Amazon, as it has done here, is giving retailers in India fits. India’s best known online marketplace, Flipkart, looks like it’s being overtaken by Amazon, even though Amazon India wasn’t established there until two years ago. In December, for example, Amazon India registered 163.1 million monthly web visits (mobile plus desktop) compared to Flipkart’s 122.8 million, according to SimilarWeb. However, Flipkart still dominates via its mobile app, which is installed on 35% of mobile devices in India, according to SimilarWeb, at least for now.

    “Amazon is giving all the India players a run for their money,” says Viswanathan. “Step by step they’ve introduced all the new concepts have in the U.S., including Prime, which this year is expected to change the way all these marketplaces operate.”

    Challenges in India

    While many startups in India have garnered attention and money, Viswanathan says that some of that will ease up as investors get pickier about where they put their money (a smaller version of the tech bubble that many expect will burst before long, or at least deflate).

    But a more concrete challenge for retailers is the reality that, while mobile is well established and e-commerce is growing, the physical infrastructure needed to get goods from point A to point B is in need of further development, says Viswanathan.

    While retailers are used to being able to offer two-day shipping to just about anywhere in the U.S. or Europe, he says, that’s just not possible in many parts of India.

    “Many retailers assume such things exist in India and then have to completely reinvent their logistics,” he says. “Anyone with physical goods will encounter the real India, and have to adapt to the logistics realities in India.”

    However, that could also mean that state-of-the-art fulfillment capabilities like drones could do well there, especially as demand for such goods heats up.

  • Amazon China Registers As Ocean Freight Forwarder

    Amazon China Registers As Ocean Freight Forwarder

    Online retail giant Amazon has registered its China arm as an ocean freight forwarder, the US Federal Maritime Commission has announced.

    The move will give the retailer more control over shipping goods from its factories in China to customers.

    By expanding its logistics operations in this way, the retailer can cut costs with the possibility of being in a position to offer third-party logistics services at a later stage.

    In response to the news, Sian Hopwood, senior vice president for B2B operations at supply chain software supplier Kewill, commented, “Delivering products direct from manufacturers to consumers is not a new concept, but this is the first time we have seen this ‘drop shipping’ model on a global scale.”

    Retailers wanting to regain market share will have to step up their efforts to ensure they are able to respond more flexibly and responsively to demand – “importing stock as it is ordered rather than having to predict stockpiling requirements and risk warehousing unwanted items”, added Hopwood.

    “By removing the middleman, retailers can reduce costs and provide customers with an always-on, always-available shopping experience which traditional models can’t sustain.”

    With the retail environment still being in a state of flux with the rise of digital and mobile shopping, a key part of making this system work is visibility.

    “If companies are to retain customer trust, they will need to have supply chain management solutions in place to ensure shoppers know exactly what’s happening to their shipment.”

  • Is Amazon moving into the ocean freight business?

    Is Amazon moving into the ocean freight business?

    Amazon has garnered a lot of attention recently for its moves to muscle into nearly all miles of delivery, and this development shows it’s apparently willing to log nautical miles as well.

    An ocean freight forwarder organizes shipments from suppliers to far-flung receivers, which Flexport calls a $350 billion market. An entry into the ocean freight forwarding market could be significant because it could allow Chinese factories a more direct path to American consumers, Flexport CEO Ryan Petersen noted.

    In fact, while Amazon could smooth logistics or make them cheaper for its Marketplace sellers, those sellers aren’t likely to take Amazon up on that. That’s because they’re unlikely to be willing to give Amazon, a rival retailer, the kind of information that an ocean freight company would be privy to, Petersen said. And it’s likely that any full-blown development of Amazon’s ocean freight forwarding capabilities is still months, if not years, away.

    Still, the move could be a boon to Chinese sellers interested in reaching the American market as well as Amazon’s other markets globally, especially considering the expectation that Amazon would keep costs down.

    “I don’t think people realize how threatening this is for their U.S.-based merchants, who are making money selling goods from Chinese factories,” Petersen told Retail Dive. “It makes sense for Amazon, for a company so focused on driving down costs. But considering that 40% of their business comes from their Marketplace, it would have to be a graceful transition and managed really well.”

    The registration means that Amazon China can provide freight forwarding services to Chinese companies looking to move products directly into Fulfillment by Amazon warehouses, or “even cross-docking the goods for direct injection into Amazon’s courier network,” according to Petersen.

    While some may think that Amazon has Alibaba in its sights with such a move, Petersen believes it may, if anything, be an answer to Wish, a mobile e-commerce platform that has built much of its fortunes so far on bringing Chinese sellers to customers in the U.S. and elsewhere.

    “We think we’re going to be the second or third trillion-dollar-a-year marketplace,” Wish CEO Peter Szulczewsk. “We think Alibaba will be first and then it’s either us or potentially Amazon depending on how quickly, or if, they win in India.”

    Taking on the ocean freight market “to create a streamlined, vertically-integrated system for Chinese factories to sell directly through Amazon would be a classic Bezos response to Wish’s threat,” Petersen said, predicting that “Amazon’s ocean freight offering could be a huge hit for Chinese merchants.

  • Amazon opens web services in Korea

    Amazon opens web services in Korea

    Amazon Web Services has reported the opening of its twelfth geographic locale in Korea bringing the number of accessibility zones to 32. There are two new accessibility zones accessible in Seoul giving Korean clients the power alternative that they have been asking for quite a while.  The new zones bolsters Amazon EC2 , T2, M4, C4, I2, D2, and R3 occurrences . Other services incorporate Amazon Elastic Block Store (EBS), Amazon Virtual Private Cloud, Auto Scaling, and Elastic Load Balancing. A full posting is accessible in a site by Jeff Barr, Chief Evangelist at Amazon Web Services.

    The service is accessible now and developers can get to the zone details from https://aws.amazon.com. Itemized data relating to the zones was not made accessible but rather every zone comprises of one or more server farms. For Korean clients these will convey low dormancy arrangements anyplace in Korea, conveying under 10 millisecond service the nation over, something that was not accessible before to Amazon clients.

    The Act on the Development of Cloud Computing and Protection of Users (Korean Cloud Act) came into action on 28th September 2015 and was the first Cloud processing law to be passed in the world. With two zones accessible, adaptation to internal failure and failover between the two zones inside of the single national fringe is additionally ensured. The accessibility zones have been produced to be profoundly adaptable so that if request develops AWS will have the capacity to meet it.

    Andy Jassy, Senior Vice President, Amazon Web Services remarked: “Customers continue to choose AWS as their infrastructure technology platform because we have a lot more functionality than any other cloud provider, a significantly larger partner and customer ecosystem built around AWS, and unmatched maturity, security, and performance.”