Monday, December 1, 2014

• Thanksgiving sales shocker: fewer shoppers, lower spend-per-shopper send Thanksgiving weekend sales (online + offline) down 11% Y/Y to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day. And though many retailers offered the same aggressive discounts online as they did in their stores, the web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year, the group said. The average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year. Over all, 133.7 million people shopped or planned to shop at stores or online over the four-day weekend, 5.2 percent fewer than last year, the federation said. And shoppers spent an average of $380.95 over the four days, 6.4 percent less than the $407.02 they spent last year. Executives at the retail federation, which had predicted strong growth in sales this holiday season, appeared at a loss to fully explain the drop-off. Black Friday itself may be waning in importance, as retailers increasingly offer deep discounts days, and even weeks, before the traditional year-end sales period. That means many people may have simply done their shopping earlier and stayed home during the Thanksgiving weekend. But even there, the picture was not clear: Mr. Shay said that people also might be holding out for even better deals as the season progressed. He said that the continuous sales had conditioned consumers to expect better deals the longer they waited. “Holiday sales are now a marathon, not a sprint.”

• Amazon's play in after-sale services - among the highest profit margin revenue streams for retailers: Amazon publicly introduced an early release of Selling Services, which we had previously mentioned the company was working on a few months ago. Amazon is developing a marketplace that offers after-sale services such as car alarm installation, iPhone repair, and computer hardware setup to consumers buying relevant products. Today, the marketplace is available in 15 early rollout cities, including New York City and Lexington, Kentucky. For each product, Amazon will list the available services next to the listing, guaranteeing visibility and even potentially increasing sales among customers who are unsure if they can install or use a product. Geek Squad, which was founded by Robert Stephens in 1994 and sold to Best Buy in 2002, is perhaps the most prominent example of a success in this domain. As the Minneapolis Star Tribune wrote last year about the hometown retailer, “Over the past decade, Geek Squad has been a cash cow for Best Buy. […A]nalysts estimate Geek Squad generates a gross profit margin of 40 to 50 percent based on a minimum annual revenue of $2 billion, or about 4 percent of Best Buy’s total revenue of $50 billion.” Amazon will share with Geek Squad has one critical advantage that many other startups in the domain lack: point-of-sale access.

• How Facebook plans to become one of the most powerful tools in politics: The end goal for the company seems clear: Replace, as much as possible, expensive, blanketed television advertising with much more immediate, much more specific ads appearing in users' feeds -- and then cash a whole lot of checks. Assuming you have a Facebook account, which you do, Facebook knows your email address. It probably knows your name, your birthday, where you work, where you worked, and who you're friends with. It knows far more than that, of course, both directly and indirectly. Facebook's partner in the effort Acxiom, also provides a wide swath of other data to Facebook, beyond what you've entered on the site or "liked." This allows campaigns (as it does other advertisers) to target very, very specific groups of people linked tightly to the campaign's voter file. One of the best practices for campaign communication is to sandwich messages, layering a communication (like a piece of mail or a TV spot) with some other spur (like an email or a Facebook ad) both before and after.

• Lazada raises $250M Led By Temasek; valuation at $1.25B; H1 2014 GMV $91M (+202% Y/Y): The round is lead by Singapore’s Temasek Holdings, which manages a $100-billion-plus portfolio and this year invested in another Amazon rival: Snapdeal in India. Lazada operates in six countries in Southeast Asia — Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam — largely in tandem with Zalora, another well-backed e-commerce service started by Rocket Internet. This new funding round takes Lazada to more than $700 million in money from investors. Its most recent round was also $250 million back in December 2013, which included an interesting strategic investment from UK retail giant Tesco. Together, Zalora and Lazada have probably raised around $1 billion in funding, although the value of some rounds were left undisclosed.  Raw figures about its business did reach the public domain this summer, however, as part of Rocket Internet’s IPO in Germany. According to a filing reported by Tech In Asia, Lazada brought in $91.4 million in the first six months of 2014, generating 1.8 million orders from 1.4 million active users. Those modest returns perhaps explain why it has been placing more emphasis on its marketplace. Lazada says its marketplace now accounts for 70 percent of its revenue.

• An interesting linguistic analysis of online reviews: In general, the length of a review corresponded with an item’s price. The most frequent interjections were “wow,” “yeah,” “yuck,” “yikes,” “sheesh,” “yum” and “yippee.” Slang terms that showed up most often were “meh,” “whatever” and “the bomb.” And adjectives were not always what they seemed. Wherever it appeared, the word “delicious” was always unambiguously positive, but not so with “good.” On all five sites, “good” often appeared very close to the words “but” and “not,” indicating ambivalence. Reviewers often wrote statements like “It’s good, but I’m not in love with it,” or “It’s good but not fall on the floor dance a jig good.” Among the most frequent three-word phrases, or three-grams, were “in the room” and “the front desk.” From these patterns, she surmised that consumers who stayed in hotels were about equally focused on the room’s quality as they were on customer service. Frequent four-grams included “in the middle of,” “the rest of the” and “at the end of.” That fits with Dr. Vásquez’s observation that when people write about hotels, recipes or diaper bags, they like to tell stories. Narratives, she found, are more likely to appear in negative reviews than in positive ones.