Daily Tech Snippet: Wednesday, July 27

• Apple sells more iPhones than expected, shares jump after hours despite revenue drop: Apple Inc (AAPL.O) sold more iPhones than Wall Street expected in the third quarter and estimated its revenue in the current period would top many analysts' targets, soothing fears that demand for the company's most important product had hit a wall. Its shares rose 7 percent in after-hours trading. The world's most valuable publicly traded company said it sold 40.4 million iPhones in the third quarter, down 15 percent from the year-ago quarter but slightly more than the average analyst forecast of 40.02 million, according to research firm FactSet StreetAccount. IPhone sales dropped for the second straight quarter, pushing down Apple's total revenue 14.6 percent in the fiscal third quarter, ended June 25. Demand for Apple's phones has waned in China, partly because of economic uncertainty there, and has also slowed in more mature markets as people tend to hold on to their phones for longer. The sales slump has stoked concerns about whether the tech leader can continue to deliver profits at the level Wall Street has come to expect. "China was a major letdown," said Patrick Moorhead, an analyst at Moor Insights & Strategy. "Samsung and Huawei are much more competitive now than a year ago and the Chinese economy is not doing well at all." Apple's services business, which includes the App Store, Apple Pay, iCloud and other services, generated nearly $6 billion in revenue, up 18.9 percent from the previous year. As iPhone sales level off, Apple is attempting to use such services to wring more revenue out of its existing base of users. The business emerged as Apple’s second largest after the iPhone for the first time in the second quarter, eclipsing gadgets such as the iPad and the Mac. That shift bodes well for Apple because gross margins on services are better than the average for the rest of the company, Maestri said.

• Twitter still has revenue problems, and its stock is down big: Twitter reported Q2 earnings on Tuesday and investors aren’t happy. The key issue is likely Twitter’s Q3 guidance. The company says it is targeting $590 million to $610 million in revenue next quarter. Early analyst estimates pegged that number at $678 million, according to Yahoo Finance. So that’s a big discrepancy.The stock was immediately down more than 10 percent on the news and seems to be hovering there.So here’s Twitter’s dilemma: CEO Jack Dorsey has effectively been in charge of Twitter for the past year, and it’s clear that the company’s growth problem is still a problem. On top of that, Twitter has now missed revenue estimates two quarters in a row, and significantly cut its Q3 guidance. So there’s a clear revenue problem to go along with the growth problem. Not good. To state the obvious, this kind of production (or lack thereof) doesn’t help Dorsey’s case for running two companies (remember, he also runs Square). It also puts pressure on the board to consider broader options for the company, namely selling. Twitter is in the very beginning stages of trying to transition its business to look more like TV, but it doesn’t have a lot of runway left.

• $1 Billion for Dollar Shave Club: Why Every Company Should Worry: Unilever is paying $1 billion for Dollar Shave Club, a five-year-old start-up that sells razors and other personal products for men. Every other company should be afraid, very afraid. The deal anecdotally shows that no company is safe from the creative destruction brought by technological change. The very nature of a company is fundamentally changing, becoming smaller and leaner with far fewer employees. Dollar Shave Club was a phenom in the men’s grooming industry. The online business was founded in 2011 by Mark Levine and Michael Dubin to combat the high cost of razors. The idea was rather simple. Instead of paying $10 or $20 a month at a store for disposable razors, a Dollar Shave Club subscriber could go online and set up a regular order to be shipped to his home monthly at a fraction of the retail cost. The experiment was a brave one. Until that time, Gillette dominated the razor business and was in an arms race with itself to add yet more blades and other features to its razors. Gillette was so dominant in advertising and shelf space that Procter & Gamble paid $57 billion for the company in 2005. Everything changed in 2012, when Mr. Dubin’s comedic free ad posted on YouTube. Within 24 hours, the new business had more than 12,000 orders, more than it could handle. The ad went on to get over 20 million views and rocket Dollar Shave Club to over $240 million in revenue. The wealth will be spread among a few. Dollar Shave Club has over three million subscribers but only about 190 employees. Its razors were made in South Korea by Dorco. Distribution was initially handled in-house but eventually was contracted to a third-party company in Kentucky. What remained was a terrific design, marketing and customer service shop; and a business that was easily expandable to meet demand and that had a good niche with men who do not like to shop. These super-successful companies with few employees should worry an America struggling with inequality. That is the way things roll these days. It used to be that if you wanted to sell razors, you needed a factory, a distribution center, a sales force, a research and development team and a marketing budget. Keeping all of these functions under one roof lowered transaction costs and made operations more efficient. In part this was because of communication structures — having telephone and mail together was a necessity. But the internet, mass transportation and globalization destroy everything. If you do not believe this change is about brand, experience and disruption, know that you can buy razors directly from Dorco, presumably the same brands sold by Dollar Shave Club.

• Flipkart-owned Myntra acquires Jabong for $70 mn in all-cash deal: Flipkart-owned Myntra today said it has acquired Jabong from Global Fashion Group for USD 70 million. Myntra, which itself was acquired by Flipkart in 2014 in an estimated Rs 2,000 crore deal, will have access to a combined base of 15 million monthly active users.Jabong has been in the market for a sell-off and was in discussion with companies including Future Group, Snapdeal and Aditya Birla-owned Abof among others. Jabong was founded in 2012. In September 2014, its investor, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create Global Fashion Group (GFG). Swedish investment firm Kinnevik also owns a large stake in Jabong's parent Global Fashion Group. While Jabong has managed to reduce losses by reducing discounts, both Kinnevik and Rocket Internet seem unwilling to infuse fresh capital and are believed to be keen to exit.

Daily Tech Snippet: Thursday, June 30

• Facebook to Change News Feed to Focus on Friends and Family: For years, Facebook has courted publishers of all sizes, asking them to depend more and more on the social media giant to expand their audiences. Now, Facebook has a new message for publishers: Tamp down your expectations. Facebook said on Wednesday that it planned to make a series of changes to its news feed algorithm so that it will more favorably promote content posted by the friends and family of users. The side effect of those changes, the company said, is that content posted by publishers will show up less prominently in news feeds, resulting in significantly less traffic to the hundreds of news media sites that have come to rely on Facebook. The move underscores the never-ending algorithm-tweaking that Facebook undertakes to maintain interest in its news feed, the company’s marquee feature that is seen by more than 1.65 billion users every month. It is also a reminder that while Facebook is vastly important to the long-term growth of news media companies, from older outlets like The New York Times and The Washington Post to upstarts like BuzzFeed, Vice and Vox Media, publishers rank lower on Facebook’s list of priorities.

• Landing with a bump? Germany's Rocket falls back to earth: When German e-commerce investor Rocket Internet launched Jumia in 2012 as a would-be African Amazon, it was optimistic that a rapidly expanding middle class would quickly shift from street markets to shopping online. Four years on, falling sales for sites like Jumia and slower growth from Nigeria to Russia and Brazil is casting doubt on Rocket Internet's ambition to become the world's biggest Internet company outside the United States and China. Jumia made a loss of 17 million euros ($18.8 million) in the first three months of 2016 on sales that fell more than a third. The devaluation of Nigeria's naira last week is a new blow for Jumia, which now operates in more than 20 countries in Africa. Revenue growth has also slowed at most of Rocket Internet's other 11 leading start-ups, ranging from furniture e-commerce and food delivery in Europe to online fashion in markets from India to Latin America and the Middle East. That is the consequence of Rocket's shift to rein in spending on marketing and logistics as it seeks to stem losses which it said peaked at 1 billion euros in 2015. As a result, shareholders have cast doubt on the valuation Rocket has put on its portfolio and questioned the strategy of sending business school graduates to set up 150 start-ups in more than 110 countries in just a few years. Exclusive interviews with shareholders reveal growing scepticism about Rocket's sprawling empire as emerging markets sour and technology stocks cool. Its share price has fallen 39 percent this year.

• Google Capital Makes First Public Company Investment in Care.com. Shares in Care.com Inc soared 18 percent in extended trading, after the home care provider announced a $46.35 million investment from Google Capital, the growth equity arm of Alphabet Inc. Google Capital’s investment makes it the largest shareholder in Care.com, and Laela Sturdy, a partner at the fund, will join the company’s board, Care.com said Wednesday in a statement. The company provides child, adult, senior, pet and home-care services and had a market capitalization of $276 million as of Wednesday. Google Capital was founded in 2013 and has invested in numerous private companies. It pairs its companies with advisers spread across Alphabet, and in the last six months has tapped 300 different people to give advice to its companies, Sturdy said. This deal marks its first investment in a public company.Care.com said it used a portion of the Google Capital investment to repurchase 3.7 million shares of its common stock from Matrix Partners at a price of $8.25 per share, a 5 percent discount to the 30-day volume-weighted average price. It also issued a new series of convertible preferred stock to Google Capital at an initial conversion price of $10.50 per share. Dividends on the stock will accrue at 5.5 percent annually, the company said. Matrix had been an investor since 2006 and wanted to make some divestments, so it was a good time to do a buyback, said Sheila Marcelo, Care.com chairwoman and chief executive officer. “It helps us reduce pressure on our stock,” she said.

• It’s official: Kleiner just pulled off a $1.4 billion fundraise: So much for losing its mojo. Despite twists and turns in recent years that have sometimes rivaled those of a telenovela, and even with its most famous member, John Doerr, no longer a general partner, Kleiner Perkins has raised two new funds totaling $1.4 billion, show newly processed SEC filings. The firm’s digital growth fund — its third — has secured $1 billion in commitments. The capital will be managed by Mary Meeker, Ted Schlein, Mood Rowghani and Noah Knauf, who very recently joined Kleiner from Warburg Pincus. Kleiner’s newest (17th!) early-stage fund, meanwhile, has closed with $400 million in commitments. As you’ve read here recently, Kleiner’s early-stage team now features five general partners: Schlein, Mike Abbott, Eric Feng, Beth Seidenberg and Wen Hsieh.

Daily Tech Snippet: Friday, April 15

• Lyft Is Gaining on Uber as It Spends Big for Growth: In January, Lyft said it raised $1 billion, which is helping fuel the spending spree and steal market share from Uber Technologies Inc. To keep costs in check, Lyft has promised investors to cap its losses at no more than $50 million a month, according to a person familiar with the matter who asked not to be identified because the plans are private.Meanwhile, Uber has been working to fulfill its own promise to shareholders and employees that it would achieve profitability in North America by the second quarter of 2016, a milestone it says it has now reached in the U.S. and Canada. In February, Uber earned an average of 19¢ per ride in the U.S., according to previously undisclosed financial documents. Uber takes about a 25 percent cut of a typical fare, most of which goes to antifraud efforts, credit-card processing, customer support, marketing, and software development, the documents show. Not included in Uber’s profitability calculations are interest, taxes, or equity-based compensation for employees. Uber Chief Executive Officer Travis Kalanick’s commitment to profitability has left an opening for Lyft, and the smaller upstart’s free-spending strategy is starting to pay off.  Lyft says it has captured 45 percent of trips in Austin, Texas, and Los Angeles and 43 percent in San Francisco, where both companies are based. Uber says it had 55 percent of ride-hailing sales in Austin, 75 percent in Los Angeles, and 66 percent in San Francisco, citing third-party credit card data from the first two weeks of March. Uber says Lyft has shaken loose only a few percentage points. “From everything I’m looking at, we’re gaining share in all top 20 markets, which is where 80 percent to 90 percent of rides happen,” says Lyft President John Zimmer. “This continues to prove what we said all along, which is once you hit a certain level of scale, it’s a natural duopoly.” Outside of big cities, though, it’s still Uber country. Of 169 million trips booked through Uber worldwide in March, the company says 50 million of those were in the U.S. Lyft says it did 11 million U.S. rides that month, up from 7 million in October. Lyft continues to devise new—and often expensive—ways to expand in the U.S., the only country in which it operates. When a Lyft driver refers someone to sign up as a new driver, both get a $750 bonus in some cities. And Lyft has the capacity to keep spending. Zimmer says the company still has “by far the majority” of the $2 billion it’s raised from investors. “This allows us to control our own destiny. We do not need to raise any additional capital, and it’s just a fantastic position to be in.” Whether Lyft’s gains will stick remains to be seen. Uber says customers lured away by subsidies are the most likely to return if Lyft’s prices go up. “It’s easy enough to buy trips with heavy subsidies for drivers and discounts for riders,” Jill Hazelbaker, a spokeswoman for Uber, wrote in an e-mail. “But to build a successful, long-term business, you need a path to profitability—which Uber has always had.”

• Rocket Internet Drops in Frankfurt Amid $222 Million Loss: Rocket Internet SE, Europe’s biggest startup factory, fell the most in more than two months in Frankfurt trading after reporting a loss of 197.8 million euros ($222 million) for last year. While Rocket-backed companies continued to increase sales, operating losses widened at several of them, including at food delivery startup HelloFresh and e-commerce site Lazada, which drew an investment from Alibaba Group Holding Ltd. this week. Rocket had net income of about 429 million euros the previous year, according to the Berlin-based company’s statement Thursday. The shares fell 10 percent to 26.09 euros at 11:42 a.m. local time after dropping as much as 12 percent, the biggest intraday decline since Jan. 15.

• Whatever Happened to Facebook’s Slack Competitor Facebook at Work? Do you remember Facebook at Work? The version of Facebook specifically built for your office? The one that would send Slack and Yammer and email running for the hills? We almost forgot, too. But hidden among the Internet-beaming drones and 360-degree video cameras Facebook showed off this week at its annual developer conference in San Francisco was a Facebook at Work booth, a small, unheralded reminder that the future of workplace communications is also on Facebook’s radar. Add it to the list. When we last spoke to Facebook about Work, the company was gearing up to launch a freemium version of the software to the masses before the end of 2015. It’s now mid-April 2016, and Facebook at Work is still in a closed beta. So what happened? Is Facebook at Work still part of the game plan? So things are still moving. Just slowly. And that matters because Facebook’s top competition, tech startup Slack, is growing quickly in the interim. Facebook said it has 450 companies using the pilot, up from 100 in August, including some big companies like the Royal Bank of Scotland, which has more than 100,000 employees. More importantly, though, Facebook says it has 60,000 businesses that have signed up for its waiting list. That’s a lot of interested customers, but it’s unclear how many of them would actually pay for Work or use the free model. Slack, for comparison, has more than two million users and more than 675,000 users who pay (or have employers who pay for them). That’s more than 100,000 new paid users since December, the same time we thought Facebook would be out on the open market. Facebook has a tendency to turn small numbers into big numbers very quickly, so it’s not as though a few months’ delay means Facebook at Work can’t ultimately be a hit. But at a conference dedicated to Facebook’s future, Facebook at Work was a side note. And side notes can be hard to remember.

• GoPro’s developer program aims to connect its cameras to cars, toys and apps: GoPro on Thursday very quietly took the wraps off its new developer program, by which it hopes to get its action cameras hooked into as many third-party devices, vehicles and services as possible. The program was announced at a private event in San Francisco, where it showed off the fruits of various partnerships. The Periscope integration announced earlier this year is an example of what the company is hoping to achieve. There was also a snap-on time-code system that you can use to sync your footage (announced last week, but still new), a mount for kids’ toys from Fisher-Price and add-ons for tracking your route and vital statistics when parasailing, skiing and other extreme activities — you get the general idea. Partnerships with BMW and Toyota also suggest more automotive applications in the future. Perhaps the coolest item, shown off at the end of this highlight video, was a gesture-based camera control system for when your motorcycle gloves or [insert extreme garment here] prevent you from operating the app.

Daily Tech Snippet: Wednesday, January 13

• Uber Invites Developers to Build Apps for Customized Passenger Distractions: Uber, the huge ride-hailing service, delivers millions of rides to passengers. Now the company wants to give people something to do while they’re in the car. On Tuesday, Uber introduced a way for smartphone app developers to create “trip experiences” for riders. The idea, the company says, is to give riders tailored information and entertainment during their time in an Uber vehicle. Uber gave a few examples of how it might look. Upon entering the vehicle, riders could receive a quick news briefing or perhaps be served with a music playlist built to last the length of their ride. “What if developers could also offer users of their apps new ways to enjoy themselves — or get stuff done — while they’re on the road?” Chris Saad, head of product on Uber’s developer platform, wrote in a company blog post. “These integrations help make life simpler and easier for people to get around.” Uber has long been selective about how it works with partner apps and companies. It has struck deals with Facebook, Foursquare and OpenTable to allow users to hail rides from inside the companies’ apps. Uber is also working with a handful of retailers in some cities for its delivery service, UberRush. For Uber, the goal is to make the user experience more pleasant than a usual ride, which may in turn drum up repeat business and affinity for the company’s brand. The company has struck similar partnerships in the past, such as one with Spotify, in which users can select the songs being played during their Uber rides. This approach invites developers to work directly with Uber to submit and test their ideas, but Uber will have final say over whether a developer’s trip experience will be allowed. It is a different, more cautious approach than that taken by companies like Facebook and Twitter, both of which have had strained relationships with third-party developers in the past. The announcement coincided with Uber’s first hackathon in Bangalore, India, where the company is soliciting developers for new integration ideas.

• Tech Funding Slowdown Hits Venture Capital Firms: Venture capital firms raised less money and closed fewer U.S. funds last year, according to data from the National Venture Capital Association, a trade association. With less capital to invest, the decline from 2014 could signal an even tighter funding environment for technology startups this year. Venture capital decreased to $28.2 billion last year, from $31.1 billion in 2014, according to the report from the NVCA and Thomson Reuters. The 235 venture capital funds that closed in 2015 represent a 13 percent decline from 2014. While venture capitalists invested more money into private tech companies in 2015, the number of investments declined, according to research firm according to research firm CB Insights. This suggests that venture investors are chasing fewer but larger deals. Tiger Global closed a $2.5 billion venture fund in November. If the firm's recent investments in Flipkart, Ola, and Airbnb are any indication, Tiger's new fund will continue to make large bets in late-stage private companies. Some startups, facing a tougher fundraising environment, have decided to reduce spending, cut staff, and focus on turning a profit.

• PC shipments fall a record 10.6 percent in fourth quarter: IDC: Global personal computer shipments fell 10.6 percent in the quarter ended in December compared to a year earlier, research firm IDC said on Tuesday, the largest decline since IDC started tracking PC shipments. Longer lifecycles for PCs, along with competition from mobile phones and tablets, have continued to hobble demand, IDC said.

• Rocket Internet faces new setback with loss of senior managers: Germany's Rocket Internet is losing two senior managers, sources told Reuters, in the latest setback for a company that a year ago was considered one of Europe's best hopes for competing with global tech giants. Europe's largest internet firm, which has helped create a buzzing tech scene in Berlin, seeks to be a launch pad for stock market listings of start-ups ranging from online fashion to food delivery, but has seen its stock slide as plans to float its bigger investments have stalled. Rocket's strategy of rapidly expanding into scores of emerging markets raised the possibility that it could outflank the likes of Amazon and Alibaba as well as powerful venture capital firms. But planned flotations of Rocket start-ups have been put on ice in the past year due to a cooling market for tech initial public offerings (IPO) with investors increasingly unwilling to meet high valuations. Now it faces further upheaval with Franziska Leonhardt, head of its legal department, and Uwe Gleitz, senior vice president of corporate finance, both departing soon, according to sources close to the company, both for personal reasons. Leonhardt and Gleitz were members of the team that steered Rocket through its own IPO in October 2014, since which its share price has fallen by almost half from the 42.50 offer price. Since it started out in 2007, Rocket has set up dozens of e-commerce firms around the world, but all of its current crop are still loss-making - meaning it needs to keep eating into its cash reserves to keep them afloat, and making corporate finance a crucial department.

Daily Tech Snippet: Tuesday, August 25

• A Plunge in China Rattles Markets Across the Globe: Concerns about China’s ability to be a powerful engine of global economic growth have added to worries about the potential impact of higher interest rates in the United States, driving stocks sharply lower in Asia and Europe on Monday. When trading opened in New York, the major market measures went into what was essentially a free fall. While the steepest losses ended within minutes, share prices spent the rest of the day sharply rising and reversing course multiple times. When the day’s roller-coaster ride ended, the benchmark for stocks, the Standard & Poor’s 500-stock index, was down 3.9 percent. That left the index off 11 percent from its May high, in what in market parlance is called a “correction,” its first since 2011. On Monday, the Shanghai composite index closed down 8.7 percent. In Europe, benchmark indexes in Germany, Britain and France fell nearly 5 percent or more. A number of emerging markets were also lower, with leading indexes in Brazil and Indonesia both down around 4 percent. In the United States, the Dow Jones industrial average plummeted 1,000 points before regaining ground. Major US indices recovered some ground but still ended the day down over 3.5% each. The Treasury market was a beneficiary of the fear in stocks. The demand for bonds pushed the yield on the benchmark 10-year Treasury note to as low as 1.90 percent before it settled at 2.01 percent. The recent market tumult began two weeks ago when the Chinese government unexpectedly allowed the value of its currency to drop, partly in response to indications that the country’s economy is weakening. The Chinese moves played into the continuing drop in the price of oil, which has taken the price of a barrel of crude oil down 65 percent over the last year. On Monday, the price of oil, as measured by a benchmark New York contract, dropped below $40. The selling in China has accelerated despite extraordinary government intervention in the last two months aimed at propping up share prices. On Sunday, the Chinese government said that the country’s pension funds would be allowed to invest in stocks for the first time. But the slide on Monday highlighted that the new policy, and several similar recent moves, have not been successful. Many investors are now hoping that the central bank, the People’s Bank of China, will cut the ratio of deposits that banks are required to keep on reserve in a bid to encourage lending and spur economic growth.


• How the stock selloff could kill off some tech unicorns: With so much uncertainty and market volatility, Silicon Valley firms could postpone initial public offerings, cooling a white-hot market for venture funding that has fueled the most lucrative environment for startups in history. Already, executives at RainDance Technologies, a firm that makes genomic tools to detect cancer and other diseases, announced Monday they have pulled their plan to go public, according to Reuters. And the big question is what will happen to the hundreds of startups -- a record 131 are valued at more than $1 billion -- that are now all dressed up for IPOs but with no place to go. "Tech stocks have been getting crushed the past 6 weeks. Many names are down 25-50% from their highs. Today was very tough," Gurley wrote in a tweet last week. "One might reasonably assume that this would have an adverse impact on late stage private market liquidity and valuation. I certainly do. If so, we may be nearing the end of a cycle where growth is valued more than profitability. It could be at an inflection point." Known as "unicorns," the venture-funded firms with valuations of more than $1 billion have exploded in number to 131 companies valued at a total of $485 billion, according to venture capital research firm CB Insights. The sheer quantity of unicorns has for months caused concern of a startup-bubble, with investors racing to put money into bleeding edge innovators and their many imitators, when logically not all will thrive or even survive.


• Visa says its users more likely to complete online purchases than those using PayPal: Visa said on Monday online shoppers using its payment service are 17 percentage points more likely to complete their purchases than those using PayPal. Visa Checkout, which allows shoppers to store their payment information without having to re-enter it every time they make a purchase online, said 66 percent of its enrolled customers completed their transactions after putting items in their shopping cart compared to 49 percent of PayPal's Express Checkout customers. The data was collated for Visa by retail analytics firm ComScore. PayPal's online payment service offers a similar convenience by allowing customers to log into their accounts on a merchant's website. Paypal has not seen this report yet, said Anuj Nayar, senior director of platform, merchant and next gen commerce engagement. Nayar said in addition to PayPal Express Checkout the company has launched a new online payment service called PayPal One Touch, which makes using PayPal faster on any device with a single touch. "Initial reports indicate that One Touch radically improves checkout conversion for merchants and time to checkout for consumers beyond anything else available in the market today," he said. Retailers and payment industry experts have often blamed the high rates of unfinished online transactions, after shoppers add items to their shopping carts, on the tiring process of re-entering payment information every time one makes a purchase. "What has become more and more pronounced is as the size of the screen gets smaller, whether it's a tablet, mobile or a watch, the less likely it becomes a consumer will finish his purchase," Sam Shrauger, senior vice president of Visa's digital solutions, told Reuters.


• Jabong biggest loss-maker among top Rocket Internet ventures: Rocket Internet-incubated Indian fashion and lifestyle venture Jabong has become the top money losing initiative for the German emerging markets and Europe focused internet company. Jabong’s operating loss margin rose far ahead of Southeast Asian lifestyle e-commerce firm Lazada and Latin American e-commerce marketplace Linio in the first quarter of 2015, making it the most operating loss making property among Rocket Internet’s top ventures. Jabong had EBITDA loss margin of (-) 56 per cent last year, an improvement from 2013 when it posted (-) 68.5 per cent. This possibly signals how the firm is trying to push its sales faster with more discounting. This could also possibly reflect net revenues are failing to keep pace with operating expenses. Last year, in the same quarter Lazada sported the biggest EBITDA (earnings before interest tax and depreciation and amortisation) loss margin with Jabong and Linio being neck to neck, as per data shared by Rocket Internet. Also the average selling price of third-party vendors appears to be around 15 per cent higher than that of what Jabong direct e-tails to the customers. The average transaction value (including what it sells directly and products sold by other merchants) in Q1 stood at Rs 1,690 compared with a tad over Rs 1,500 in Q1 2014 and for full calendar year 2014. In the same period, average basket value of products sold directly by Jabong has risen marginally to around Rs 1,423. Third party vendors now represent around one in three transactions on Jabong every day. Meanwhile, Jabong was valued at around $480 million as of last December in its last funding round, according to Rocket Internet’s annual report. This means the firm was valued at around Rs 3,050 crore or 2.3 times its GMV for the year.

Daily Tech Snippet: Monday February 9

• Alibaba, Xiaomi have reason to worry: Apple has disrupted the Chinese smartphone market: When Apple reported a record-shattering profit of $18 billion last month, the company said its growth came largely from sales in greater China. This week, some research firms gave a clearer picture of just how big Apple has become in China. Both Kantar Worldpanel and Canalys, firms that track global smartphone sales, said Apple’s iOS mobile operating system gained market share in China at the expense of Google’s Android. Chris Jones, an analyst for Canalys, said that in the fourth quarter of last year, iOS was in 12.3 percent of the smartphones sold in China, a sharp increase from 5 percent in the previous quarter. Android was in 86.3 percent of smartphones in the fourth quarter, compared with 93.7 percent in the third quarter, according to Mr. Jones. Canalys estimates that Apple is now the top smartphone vendor in China. But Mr. Jones said Canalys would explain how it reached this conclusion only to clients, not with the news media or competitors. Kantar Worldpanel found slightly different results. It focused its research on so-called urban China — a portion of mainland China where smartphones are more commonplace. Kantar also found that Apple’s iOS gained at the expense of Android. But the firm found that Apple was the No. 2 vendor in the region, with about 21.5 percent of the market, behind the Chinese smartphone maker Xiaomi (29.2 percent) and ahead of Huawei and Samsung (about 12 percent each). Whether Apple is No. 1 or No. 2, its growth in China has been remarkable. Just last October, the company was the No. 6 smartphone maker in China, behind Huawei, Lenovo, Samsung, Xiaomi and Yulong, according to Canalys. Kantar Worldpanel also noted that about a quarter of the Chinese consumers who bought iPhones in the last three months were buying smartphones for the first time. Carolina Milanesi, a Kantar analyst, said Apple’s introduction of the iPhone 6 and iPhone 6 Plus, which both have larger screens than previous iPhones, clearly drove the growth. “The success that Apple is seeing is certainly coming from the larger screen,” she said. She added that sales there of the larger iPhone 6 Plus surpassed sales of the iPhone 6 in December. Timothy D. Cook, Apple’s chief executive, said recently that it was only a matter of time until the majority of the company’s sales would come from China. The company plans to open 25 retail stores in greater China over the next two years, adding to the 15 stores it now operates in the area.

• ..Against that backdrop, Alibaba will buy a minority stake in little-known domestic smartphone maker Meizu Technology Co for $590 million, as the e-commerce giant extends its hardware growth strategy into mobile devices. Alibaba, now worth $213 billion by market value, didn't disclose how big its holding will be in a privately owned handset maker that is a distant rival to much bigger smartphone firms like Xiaomi Inc [XTC.UL]. Based in Zhuhai, Guangdong, Meizu employs more than 1,000 people, according to its website. The deal will help Alibaba push its mobile operating system within China through Meizu's handsets, while giving Meizu access to Alibaba's e-commerce sales channels and other resources, the companies said in a joint statement. Alibaba has in the past concentrated on software and services, including its core e-commerce business. Now, in a move reminiscent of U.S. rival Amazon.com Inc's own foray into smartphones with the Fire Phone, the Meizu investment builds on Alibaba's more recent efforts to develop in hardware, like internet TV via set-top boxes. "The investment in Meizu represents...an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences," said Wang Jian, Alibaba's chief technology officer, in Monday's statement. China is the world's largest smartphone market, with 557 million people accessing the internet via mobile devices, according to government data. But smartphone sales are flagging. Shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry and Information Technology. Meizu also doesn't feature among China's top smartphone brands. The top four in the fourth quarter of 2014 were Apple Inc, Xiaomi, Samsung Electronics Co Ltd and Huawei Technologies Co Ltd [HWT.UL], according to data research firm Canalys.

• The move is seen as Alibaba's effort to kickstart its struggling mobile phone division: Alibaba is stumping up more than half a billion dollars to kick its lacklustre mobile phone business into gear. The NYSE-listed e-commerce giant today announced a $590 million investment in Chinese phone-maker Meizu. The deal grants Alibaba an undisclosed “minority” share in the Guangdong-based company, which sold 1.5 million of its Android-based smartphones in January, but it is particularly notable for the strategic alliance between the two. Meizu, which operates a Xiaomi-like online sales model but is yet to break into China’s top five smartphone companies based on sales, will integrate its hardware with Alibaba’s struggling operating system. Aliyun, which is based around Android, is used for smartphones and smart TV sets. The move is an interesting one when you consider that Xiaomi, the smartphone success story of 2014, is rapidly moving into e-commerce after starting out in mobile hardware and software.

• India's efforts to attract electronics manufacturing are finally gaining some traction: General Electric Co. and Nidec Corp. are among companies looking to take advantage of a subsidy India is offering for electronics manufacturing amid Prime Minister Narendra Modi’s push to boost economic growth. The government has received at least 60 applications, with about half of them approved, for a subsidy of as much as 25 percent on capital investment, Ajay Kumar, joint secretary in the Department of Electronics & Information Technology, said in an interview in New Delhi. More than 40 submissions were made after Modi took office in May, he said. “The subsidy is a very good investment scheme that existed before Modi, but it wasn’t marketed very well,” Sunil Kumar, compliance officer at Nidec’s Indian unit, said by phone. “The government machinery is functioning better than before.” India introduced incentives in July 2012 for new projects and for expansion in electronics manufacturing in industries such as telecommunications, automobiles, medical and semiconductors. It started accepting applications for subsidies from August 2013, said Kumar at the Department of Electronics. “Suddenly with the emphasis on Digital India, electronics makers know there’ll be more demand for their products,” said Kumar. “Now, practically on a weekly basis applications come in.” Jabil Circuit Inc., the maker of electronics for Apple Inc. that got approval for its investment proposal in June, plans to double its revenue from a factory in the western city of Pune making products including television set-top boxes, Sunil Naik, operations manager at the India unit, said by phone. The St. Petersburg, Florida-based company, which plans to invest as much as $20 million, has already spent $6 million.

• Recent product updates from Facebook showcase the firm's sophistication in location targeting and audience targeting: Local Awareness Ads: Overview: Businesses now have the option of targeting their Facebook ads to individuals located near one of their brick-and-mortar stores. Details: Driving foot traffic that leads to sales is now a reality via Facebook. Advertisers can set a radius as small as a mile, and the Facebook ads will show up on the phones or web browsers of anyone who lives or was recently within that distance of a store. Businesses can even include directions in their ad, via a button that launches a map app on a consumer’s phone. Retailer Opportunities: Instead of broadly targeting your ads to an entire city, you can now reach people within a mile of your store. What You Should Know: This new geotargeting feature is really only beneficial to those online retailers that also have a brick-and-mortar presence. Also, these ads aren’t served in real-time, meaning that someone walking past your business won’t immediately see your store’s ad. Local awareness ads are available only for US business owners. Facebook Combines Atlas, Audience Network and LiveRail: Overview: The past two years of Facebook launches and acquisitions have now come together to show ads across the internet and track purchases they inspire both online and offline. Details: In February 2013, Facebook acquired Microsoft’s Atlas, a suite of tools for online ad measurement. Facebook is using Atlas as part of its push to measure across devices and platforms, and to leverage display targeting capabilities. In July 2014, Facebook acquired LiveRail, a video platform. Meanwhile, Facebook had built and launched Audience Network, a mobile ad network that lets advertisers easily extend their Facebook ad campaigns to appear in other mobile apps. The combo of Atlas, LiveRail and Audience Network now gives Facebook the connectivity to tie each of these pieces together. Retailer Opportunities: Advertisers on Atlas can buy ads on Facebook or use Audience Network to extend their campaigns to LiveRail and mobile apps. What You Should Know: Facebook understands its users’ identities in a way most platforms don’t. And the company’s wealth of user data means it can target ads more accurately.

• Google is making a serious telecom play, and US telcos are nervous: First it conquered search. Then it was online video and advertising. Now Google is turning its attention toward telecom — and it’s no experiment. In recent months, Google has said it’s bringing ultra-fast Internet to at least 18 cities, including Atlanta and Nashville. It announced pilot tests of a low-cost, modular smartphone. The company’s joined an influential lobbying group for upstart telecom firms. And now Google is considering an entry into wireless service, as first reported by The Information, a technology news site founded by former Wall Street Journal reporter Jessica Lessin. All this adds up to what appears to be a serious play in the communications space, with broad implications for what consumers will pay for service, how businesses will compete and even the regulations that affect how Americans experience their technology. Google would reportedly offer wireless service by piggybacking off of Sprint and T-Mobile’s networks — essentially paying those companies so that Google can resell their services under its own brand. In addition, it would blend the two networks and allow its customers to hop between them depending on which carrier’s signal is strongest. Phones on the Google service would also be able to make calls over WiFi hotspots, meaning that at all times, devices would be hunting for the best of three options. Combine that with its forthcoming smartphone, the Android operating system and the Google-owned apps that ride on top of it all, and you’d get a formidable silo of hardware, software and services.

• Rocket's Foodpanda.com has bought Indian rival Just Eat India, financials not disclosed: Foodpanda.com, a Rocket Internet-backed global, multi-location online food ordering marketplace (which operates under Hellofood brand in some markets) has acquired its Indian rival Just Eat India. The transaction details are not disclosed. Founded in April 2012, Foodpanda features location-specific listing of restaurants on its site. Users can check out menus, along with special offers, post that they can order and get food delivered to their homes. One can also search for restaurants according to cuisine, and/or by other parameters such as vegetarian/non-veg, healthy food, etc. The company helps restaurants increase sales through online and mobile platforms and also provides them with technology and analytics. Last year, the firm had raised $20 million in funding from Phenomen Ventures, a Russia-based venture capital firm and a group of unnamed investors. Globally, the company is present in over 40 countries in Europe, Asia, the Middle East, Africa and Latin America. Just Eat Plc was launched in Denmark in 2001 and was traded publicly on the London Stock Exchange. The company’s Indian business was launched as ‘Hungry Bangalore’ back in 2006, but was renamed (in 2011) when Just Eat acquired a majority stake in the business. In this space, Mumbai-based hybrid startup incubation platform Antfarm Business Incubator Pvt Ltd (Ant Farm) had acquired city-based food delivery venture Meals on Wheels, run by Meal O Wheel Pvt Ltd, in a stock-and-cash deal worth Rs 11-15 crore ($1.7-2.4 million) in November 2014.

Daily Tech Snippet: Tuesday January 20

Hi,

Here are some interesting topical snippets culled from various sources. Archived snippets are here, and a large database of links is here.

• How can Xiaomi be so aggressive with its pricing? A small portfolio and longer average selling time. Many theories have been put forward, including claims that Xiaomi sells at cost and makes money from other services. Hugo Barra, the company’s VP of International, lifted the lid on some of the company’s secret sauce in an interview with TechCrunch in Beijing last week. Barra explained that Xiaomi is able to make price concessions thanks to the combination of a small portfolio and longer average selling time per device. Importantly, Xiaomi continues to sell older devices (and tweaked versions of them) at reduced prices even after it releases newer models. “A product that stays on the shelf for 18-24 months — which is most of our products — goes through three or four price cuts. The Mi2 and Mi2s are essentially the same device, for example,” Barra explained. “The Mi2/Mi2s were on sale for 26 months. The Redmi 1 was first launched in September 2013, and we just announced the Redmi 2 this month, that’s 16 months later.” That’s important because the longer runway for devices gives Xiaomi leverage to secure better component deals with its suppliers. “The reason we do these price cuts is because we’ve managed to negotiate component cost decreases [with our suppliers] over time, which ends up leaving us with a bigger margin than we’d like to have, so we do a price cut,” Barra added. “The vast majority of the components [in our devices] are still the same, so in terms of supply chain and component sourcing, we’re on the same supply contracts as Redmi 1, which means we’re still getting the same discounts on components,” he explained. “We can continue to ride the cost curve, so the importance of having a very small portfolio is significant — the fact that we only launch a few products each year, and (the fact that) we only have two product families.” There are other factors that contribute to the cost structure, including Xiaomi’s lean, online-only marketing focus and its location close to manufacturing plants in China , but the management of components and supply chain partnerships is a crucial element. The company sells its phone using an online-only model in most markets, but it has recently begun testing operator partnerships outside of China. It is running a limited trial with Airtel in India, and has found partners in Taiwan, Malaysia and Singapore. Barra explained that operator partnerships are difficult in markets where the majority of consumers are on pre-paid tariffs — such as India — but it seems clear that Xiaomi is looking into ways to expand its retail footprint. It sold one million devices in its first five months in India using its flash sales model. If it can move beyond that and better meet demand for its phones in India and other emerging markets, it could vastly increase its sales figures in 2015.

• Indian e-com marketplace ShopClues raises $100M in Series D led by Tiger Global; despite turbulent history,ShopClues is now valued $450-500M: Clues Network Inc, the US-based parent of Clues Network Pvt Ltd that runs the horizontal e-commerce marketplace ShopClues, has raised $100 million (Rs 620 crore) in Series D funding led by Tiger Global besides two of its existing investors, the firm said on Monday. This values the company at around $450-500 million, a company executive privy to the development said on the condition of anonymity. The money will be used in product development and roping in more merchants on board, the firm said. The company had previously raised money from Helion Venture Partners, Nexus Partners and Beenos (formerly Netprice, a Japanese incubation cum investment group). It scooped $10 million in Series B round in March 2013. Prior to that it had raised around $5 million in Series A. It also raised an undisclosed amount—which is believed to be around $15-20 million— in Series C in April-May 2014 from Nexus and Helion. “So far we have brought 100,000 sellers and 10 million products online and the next three years will be focused on bringing 10 million sellers and 1 billion products to the online domain. We will continue to build technologies and services to enable and empower retailers to participate in the e-commerce revolution that is happening in India,” said Sanjay Sethi, CEO and co-founder, ShopClues. Lee Fixel from Tiger Global said, “Shopclues has emerged as the leading marketplace of choice for the millions of small and local businesses seeking to reach mass consumers in India’s tier 2 and tier 3 cities. Sanjay, Radhika and the team have done a great job aggregating the country’s largest online catalogue of regional and local brands and we are excited to partner with ShopClues as it expands its offerings.” The Gurgaon-based startup was founded by former Wall Street tech analyst Sandeep Aggarwal and a former eBay executive Sanjay Sethi in July 2011. The company went through a tumultuous period over the last two years after Aggarwal (then CEO) was found to have indulged in insider trading in the US in his past job and he later pleaded guilty to the charges. He has disassociated himself with his executive role at ShopClues. His wife Radhika Ghai Aggarwal has taken over more a direct role and is handling marketing at the firm and listed as a co-founder now. Meanwhile, Sethi became CEO after Sandeep Aggarwal was arrested in the US. A few months back ShopClues was again in news when one of the merchants selling through its platform was found to be allegedly selling counterfeit products under the L’Oreal brand. The Delhi High Court had restrained it from using the name of L’Oreal to sell or supply any goods. Currently, ShopClues claims to be doing 1.5 million transactions per month with 70 per cent of it coming from tier II & III cities. It claims to have 40 million monthly visitors. The firm had clocked net revenues of around Rs 30 crore with net loss of Rs 38 crore for the year ended March 31, 2014.

• Amazon is going into the film production business: After winning acclaim for one of its original television productions, Amazon announced on Monday that it would produce and acquire films for theatrical release and early distribution on its Prime Instant Video service. Amazon original movies will be available for streaming in the United States four to eight weeks after they make their debut in theaters, a significant reduction of the window of 39 to 52 weeks that films normally play in theaters before becoming available for streaming. The development is another step in Amazon’s ambitious plan to increase its entertainment offering to consumers, and an escalation in Amazon’s rivalry with Netflix. It also signals both companies’ broader ambitions to revolutionize the so-called windowing system for television and movies in the traditional entertainment industry. Amazon said it was seeking to create 12 movies a year that “focus on unique stories, voices and characters from top and up-and-coming creators.” Production will start this year. In an email, Roy Price, vice president of Amazon Studios, described the projects as “indie” movies, with budgets between $5 million and $25 million. Analysts cautioned that if the films were low-budget and of low quality, it would be difficult for them to profoundly alter the conventional system for theatrical releases.

• Online insurance sales are squeezing agents in the US as Google, other tech firms find the insurance sector ripe for disruption: Technology start-ups, and companies from the insurance industry, are introducing websites that sell or promote a range of insurance including auto, homeowners and small commercial policies. These portals, which promise savings by showing consumers many price quotes so they do not have to shop site by site, are putting pressure on insurance agents, who collect 10 percent or more of their policyholders’ payments.Online insurance comparison is still a nascent business, and it has yet to make a dent in the armies of intermediaries that are the backbone of the trade. But people in the industry and Silicon Valley say it is only a matter of time. Even Google is getting involved.“There are 40,000 agencies in the U.S., and you could absolutely imagine them shrinking by a quarter, and the ones that are left will deal with more complicated needs and more affluent customers,” said Ellen Carney, an analyst who covers insurance for Forrester Research.The idea of selling insurance online is not new. Lately, though, the boring but lucrative trade has been attracting big names. The most recent is Google.Its Google Compare auto insurance site (basically a search engine for auto insurance prices) has been operating in Britain for two years, and Google is working on something similar for the United States. Google is licensed to sell insurance in about half of the states, according to research by Ms. Carney.Google has formed a partnership with Comparenow, an American auto insurance comparison site owned by Admiral Group, a British car insurance company that has operated a European price-comparison site for more than a decade. The venture will give Google access to insurers in Comparenow’s network.Admiral Group introduced Comparenow about a year ago. Not long after, Overstock.com, a retailer, started selling auto and other forms of insurance.Then there is Walmart, which does not sell insurance but recently formed a partnership with AutoInsurance.com. The insurer leases space in Walmarts, giving it access to the 140 million people who shop there each week. “A lot of people are waking up to the fact that it’s a massive industry, it’s old-fashioned, they still use human agents and the commissions are pretty big,” said Jennifer Fitzgerald, the founder and chief executive of PolicyGenius. “It’s ripe for — I hate to use the word — disruption.” Insurance is a fat target. In 2013, insurers wrote $481 billion in premiums for property and casualty insurance, which consists of mostly auto, home and commercial insurance, according to the Insurance Information Institute, an industry group. That would place a rough estimate of agents’ commissions — including commissions to small-time agents as well as to brokers who sell large commercial policies — at $50 billion. And while it might seem like an odd match for Google, whose projects include driverless cars, delivery drones and a pill to detect cancer, the key to insurance is having lots of data about people’s backgrounds and habits, which is perhaps the company’s greatest strength. “They have a ton of data on where people drive, how people drive,” said Jon McNeill, chief executive of Enservio, a Needham, Mass., company that makes claims-processing software. “It’s the holy grail of being able to price auto insurance correctly.”

• What's the deal? Softbank (and Alibaba) are heavily investing taxi apps that rival Uber the world over: SoftBank had no business in taxi-hailing apps until October 2014 when it led a $210 million investment in India’s Ola. That deal was announced as the first investment in SoftBank’s program to put $10 billion into startups in India. At the time, Ola appeared to be just one of a number of deals in India — while that is true, it also turned out to be the first of an expensive set of investments in companies rivals that rival Uber. SoftBank went on to invest $250 million in GrabTaxi in Southeast Asia, and last week it closed a third deal, leading a $600 million financing round for China’s Kuadi Dache. The operator, it seems is going all out for taxi apps but it may not stop in Asia. Alibaba led Lyft’s $250 million funding round in April 2014, which the U.S. company had earmarked for “international expansion”. At the time, the investment was a curious deal for Alibaba but, with the e-commerce giant backing range of other U.S. startups — including chat app Tango — it looked like an exploratory move to get some skin in promising companies in North America. However, SoftBank and Alibaba have a long history of collaboration — SoftBank is famously an early investor in Alibaba, and both companies put money into Kuadi Dache — and it could just be that Lyft forms a part of SoftBank’s taxi app focus. Perhaps the Japanese firm will put its own money in at a later date, or it will use its relationship with Alibaba to form a loose alliance to share information and tactics.

• A Korean urban logistics startup that aims to be "Uber for last-mile deliveries" is in the news and gaining traction: Seoul-based urban logistics startup Naldo is gaining some serious momentum in its home country. The company, which works sort of like an Uber for last-mile deliveries, now boasts over 500 corporate customers, tripling its client base in the last year. "We all buy more stuff online, but we are not aware that more online purchasing requires more offline delivery. That’s why this is an overseen goldrush for us," Ebner-Chung says. Among its clients are steel giant Posco, social commerce site Coupang, and investment bank Kyobo Securities. Naldo founder and CEO Ludolf Ebner-Chung says the company saw revenues grow 1,000 percent in 2014, with consistent double-digit growth every month since launching two years ago. Naldo works similar to other logistics-on-demand startups, like Gogovan and Easyvan in Hong Kong. With its mostly two-wheeled fleet, it promises delivery within 90 minutes in Seoul. The site connects clients directly to available nearby drivers with no middlemen involved. Next, Ebner-Chung says the startup will soon launch a native app and an open API, which has already been tested by popular ecommerce sites like Ticketmonster, WeMakePrice, and Ridibooks. He says this will be of significant value to online SMEs as it gives them delivery options to gain an edge on their competition. It also reduces dependency on the old call center-based logistics companies. Chung says South Korea’s B2B real-time delivery market is worth US$5 billion.

• Rocket Internet CEO: We build real companies; work for Google if you like sushi and comfy chairs: Silicon Valley hasn’t found much to love about Rocket Internet, the Berlin-based company that is often derided for simply copying everyone else’s ideas. Turns out, the disdain is mutual. Press-shy Oliver Samwer, chief executive and cofounder of Rocket, appeared on stage today at the Digital Life Design conference in Munich, Germany, for a rare interview. While he didn’t say much new about Rocket’s business, and seemed clearly uncomfortable with having to field questions, he did manage to get in a few shots at the folks in Silicon Valley. For instance, Samwer was asked about the idea that Rocket is an incubator, like the ones in a certain other high-tech regions. At first glance, that might appear reasonable. Rocket works with entrepreneurs to build Internet companies from scratch in areas like e-commerce and travel, scales them up, and then spins them out into stand-alone companies. Like an incubator, right? No, said Samwer. He said Rocket’s approach is a methodical process, repeated over and over. In what may be the greatest definition of incubators in history, Samwer explained why he thought Rocket was not an incubator. “I don’t like this word incubator. We are a platform,” he said. “An incubator sounds like you have some crazy chairs, and then there are fancy drinks and you eat free corn flakes.” Asked about the challenge of attracting talent and competing for hires against the likes of Google, Samwer sung a similar tune. He said someone could take a low-level job at Google, or they could come to Rocket where they could eventually build their own company. “The chairs might be more comfortable at Google,” he said. “And the drinks. I hear they have sushi. We are for the real people who want to build companies.”

• ZTE revenue up only 8% Y/Y in 2014, but profits up 94% Y/Y to $424M: Chinese telecom hardware company ZTE has had a banner year, according to a press release the company has issued prior to the release of its 2014 yearly report. While revenues have reportedly experienced only modest growth over 2014 (up just eight percent compared to the previous year) net profits year-on-year have grown 94.2 percent, from RMB 1.35 billion (US$217 million) in 2013 to RMB 2.64 billion (US$424 million) in 2014. ZTE’s profit growth over the past year is due to the fast growth in China’s 4G sector; ZTE has a hand in both TD-LTE and FDD-LTE hardware, so 4G growth has benefited the company. ZTE’s global 3G and 4G business, including hardware and handset sales, was also a contributor.

Daily Tech Snippet: Friday December 26

Its a slow day, with not a lot going on, so here are 2 shallow-dives, one into Alibaba's M&A in 2014, and the other on Indonesia's eCommerce market, both courtesy of TechInAsia. 

• Indonesian ecommerce: 
• Online share of retail: This year, of the nation’s US$411.29 billion in retail spending, Indonesia saw an uptick to US$2.6 billion spent in ecommerce. 
• eCommerce Leaders: Lazada Indonesia, Rocket Internet’s answer to Amazon, made the jump to the top spot in 2014. SingPost reasons that Lazada took the lead because it made a shift away from consumer electronics and focused more on lifestyle goods. Lazada’s marketing campaigns in Bahasa Indonesia were also key wins for Rocket. 
• Market Potential: Last year, Indonesia clocked in at 74.8 million internet users. Last year, Indonesia had 4.6 million online shoppers. This year, it has 5.9 million. 20 percent of Indonesian online shoppers prefer conventional shopping sites like Lazada or Zalora, while 26.4 percent prefer social media like Facebook or Instagram. 26.6 percent prefer online forums or classified sites like Kaskus or OLX. 
• User Habits - social media: SingPost says that between January and March 2014, Twitter users in Jakarta posted 2.4 percent of the global total of 10.6 billion tweets during that time period, maintaining the city’s reign as the Twitter capital of the world. However, the nation’s most popular social media channel continues to be Facebook, with 69 million active users. As of September, Indonesia has 30 million Line users. Remarkably, nearly 27 percent of all the country’s ecommerce transactions occurred via social media in 2014. 
• User Habits - messaging: Surprisingly, the highest percentage of online shoppers in Indonesia would rather buy from messaging apps like Blackberry Messenger or Line. 
• Category Preferences: While Indonesians shop across multiple categories, the most popular one is by far clothing and apparel, with 61.7 percent of the nation’s online shoppers making a purchase in that category last year. Females reign supreme in the archipelago’s ecommerce space, with women having higher purchase rates, and the highest spending amount on clothing, mobile devices, travel items, laptops, and accessories. 
• Means of Payment: Bank transfers are the most popular way to pay for online transactions, followed by cash on delivery, and finally credit cards. Less than five percent of Indonesia’s population own credit cards, and credit card payments still account for less than 10 percent of all online transactions in the archipelago.

• Alibaba’s 2014 investments and acquisitions: List below - 33 transactions, known investments of about $5.3B (could be a lot higher, since about half these transactions are of unknown sizes)

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.

Tuesday, November 18, 2014

• Rural consumers accounted for ~10% of Alibaba’s US$9.3B Singles Day haul, washing machines, wool and down coats in top 10 items: Alibaba VP Wang Yulei said at the event that the top ten products China’s rural residents bought via Alibaba’s online marketplaces this Singles Day were, in order of popularity: Mobile phones Flatscreen TVs Boots Wool coats Women’s down coats Men’s down coats Low-top shoes Bedsheets/sets Facial skin products Washing machines According to Wang, there are some significant differences between that and the urban top ten list, on which flatscreen TVs rated lower and washing machines didn’t rate at all, among other differences.

• Snapchat is getting into p2p payments; linking audience identity information to (currently anonymous) Snapchat might be the rationale: Snapchat doesn’t ask for your real name, but its on the debit card you use for its new peer-to-peer payments feature Snapcash. That could prove very lucrative for the ephemeral messaging service. To use the feature for sending friends money that launched today, users connect their debit card to their Snapchat accounts through a partnership with Square Cash. The real names, addresses, and account information associated with those debit cards could potentially be cross-referenced with databases of personal information to give Snapchat a much better idea of who users are and what ads they might want to see.

• Rocket Internet in Asia: Jabong H1 GMV $81M (195% Y/Y), Lazada H1 GMV $91M (202% Y/Y): Rocket Internet’s first earnings report since its October IPO on the Frankfurt Stock Exchange revealed: Jabong H1 GMV up 195% Y/Y to US$81 million;  Orders grew 171% to 3.2 million, no data for active users. EBITDA loss US$0.129K slightly worse than the loss in H1 2013. Lazada H1 GMV (US$91.4 million), up 202% Y/Y. 1.8 million orders from its 1.4 million active users. Rocket Internet explains that Lazada is shifting from a direct sales model (shipping from its own warehouses) to a marketplace model for third-party merchants. As a result, revenue may suffer. But for now, revenues are stronger than last year, with H1 2014 already amounting to EUR 47.3 million (US$59.2 million), which is 83% of the total 2013 net revenues. EBITDA was negative EUR 40 million (US$50 million). Zalora, which sells clothing in 10 Asian nations: H1 GMV US$70.1 million (44% Y/Y), 1.5 million orders, 1.2 million active users during H1. Revenues US$55 million. EBITDA loss US$41.9 million (more than halved since the whole of 2013).