Exciting Commerce // Unlimited

Groupon As A Product Mover

Take the fastest growing e-commerce company in the world which sells services, and start using their 130 million strong mail list to also sell products. What do you get?

Groupon CEO Andrew Mason already commented on the initial success of “Groupon Product” in their infamously “leaked” internal email.

"Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day!"

By extending into this market area, Groupon could very quickly invade the traditional territory of other online retailers who maintain a price sensitive customer base.

Scot Wingo has recently summarized his thoughts on the possibilities in his eBay Strategies blog:

"Groupon's identity and messaging which is: "save half off with us" is one that clearly appeals to the value consumer. The value consumer is 100% in both eBay and Walmart's wheel house, so I think they are most at risk from Groupon's metamorphosis from a local deal site to a full-on national marketplace."

"It's also interesting that eBay hasn't really caught on to this and is continuing to send eBay users over to Groupon through the eBay bucks program.

Amazon is somewhat insulated from this situation by a couple of factors:

• Amazon doesn't hang their hat on the value consumer. Sure they have some exposure, but primarily Amazon focuses on a combination of selection, value, convenience, ease of use.
• Amazon has a hedge in the form of their ownership of LivingSocial. This could be leveraged in a number of ways.
• Amazon could acquire the rest of LivingSocial and have a complete counter-offer to Groupon
• Amazon could keep LivingSocial separate, but perhaps have a counter to Groupon Products by leveraging Amazon's huge user base and access to products and merchants."

If you set aside any of the popular allergic reactions which have been built up against Groupon nowadays, it’s pretty clear that the claims are not too far-fetched. Groupon can use its email reach to turn over an impressive load of attractive product deals.

In the Groupon dominated buzz in recent days, the potential of live shopping in areas outside of services has been overshadowed. Amazon believes concretely in this potential as shown by their acquisition of Woot!, one of the foremost pioneers of this business concept. The singular difference between Groupon and Woot! in the product segment is that Groupon sells the deals but does not handle any of the warehousing or shipping logistics.

The question remains open as to how Groupon can fit all of the different market directions under their single email umbrella. A daily email with a long list of deals, each of which struggles for some reader attention is not something easily digestible.

Interestingly, there is not much talk about Groupon Stores, the self-service platform which could be a solution for this mid-term problem.

Related posts:

• Groupon Bashing and the Internal Response
• Groupon IPO: The Best Analyses of the Public Offering
• Groupon IPO: Groupon Reveals Financial Performance Figures
• Groupon Now! and the Mobile Future
• Is Groupon Developing in the Right Direction for the Long Term?

Originally posted in German by Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.

Rakuten: Japanese E-commerce Giant Continues Expansion with Play.com of the UK

The Japanese e-commerce giant Rakuten/Buy.com is continuing their international expansion by means of acquisition. Rakuten has picked up UK’s Play.com for a relatively modest sum of £25 Million. With over $660 million in annual revenues, Play.com is one of Britain’s biggest game and electronics internet retailers.

It could be speculated that Play.com is not running very profitably at the moment, but according to the press release they have 14 million members. Plus with their marketplace concept they also fit well into Rakuten’s acquisition pattern.

Two weeks ago it was announced that Rakuten took part in a $100 million investment round for Ozon, a Russian online retailer often compared to Amazon.

The end of July saw Rakuten take over Tradoria of Germany. In France, Rakuten is represented by Priceminister and in the USA with Buy.com.

Related posts:

• Rakuten/Buy.com Using Tradoria To Spearhead Into Germany
• Rakuten On Their Expansion Plans with Buy.com and Priceminister
• Extras: Groupon vs. LivingSocial, Wag.com, Rakuten, AmazonLocal
• Buy.com Goes for $250 Million to Rakuten

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Grocery Run: A Different Take on Your Weekly Grocery Shopping

An alternative to your regular weekly grocery trip is now available in Australia. Live shopping provider CatchoftheDay has extended their popular bi-weekly Grocery Run promotions now to every week and has spun off a new website to channel the sales:

"You will not find everything that is available at your local supermarket, but what you will find is a glorious mish-mash of 200+ branded household goods at Australia's best prices.

Make sure you visit us weekly: the site will only be open 48 hours per week—every week from midday Wednesday to midday Friday."

On the dedicated website there is an obvious difference in design from the CatchoftheDay format, for example, with the shopping cart logic.

The launch was accompanied by a very friendly report in the Australian news.

CatchoftheDay had recently received a large financing round.

Related posts:

• US Investors Value Catch of the Day At $200 Million
• Catch of the Day Plans to Grow from $60 Million to $100 Million
• Scoopon: Catch of the Day Not Resting On Their Laurels
• Catch of the Day on its Live Shopping Year in Australia

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Google Offers: DailyDeal Goes to Google Instead of LivingSocial

“…we’re excited to announce that we’ve been acquired by Google” is the proud announcement from the DailyDeal founders on their homepage (“Our best deal yet”).

The far better deal, which would have been an exit to LivingSocial, seems not to have materialized. Instead, Google has jumped in to grab DailyDeal and will sooner or later combine it into Google Offers.

TheNextWeb goes straight to the point:

“With reports that Google’s Groupon competitor Google Offers has gotten off to a slow start, the company has announced another acquisition in the Daily Deals space, snapping up German deal site DailyDeal.

The Berlin-based deals website was founded in September 2009 by brothers Fabian and Ferry Heilemann, with reported sales of 252,000 vouchers in the first three months of 2011. The company has already expanded outside of Germany to Austria and Switzerland, with the Austrian website already surpassing Groupon in the country – according to Fabian Heilemann.

The company has announced plans to expand to a wider European audience, with Scandinavia, Belgium, the Netherlands, and Luxembourg the next possible markets. As a result, the company expects to record around €40 million in 2011 alone."

Following the failed attempts from Twitter and Facebook to get into the daily deal space, it can’t be taken as a given that Google will find long term success in this market.

In this regard, we might assume that Groupon could be celebrating along with the DailyDeal founders and investors – see the direct traffic comparison.

For Rebate Networks, who were invested in both DailyDeal and LivingSocial (German post), this exit solves a conflict of interest. The sale also brings additional cash for the ongoing ambitions for Dealgecco.

Bottom line is that the DailyDeal exit could be seen as similar to the exits from Amiando (to Xing, German post) and Brands4Friends (to eBay). At a minimum, it’s a great boost to the CVs of the founders.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Wayfair: CSN Stores Building on Brands Instead of Google

Search portals such as Google are useful, but not for building regular customers. This is one of the bitter revelations of many online retailers who at first relied on Google for (new) customer acquisition and then discovered that almost none of the random customers coming from search stayed long enough to become regulars (case from Tom Tailor, German post).

In the US, CSN Stores has proved that you can indeed go far with SEO/SEM, where they have relied on the concept to build $380 million of revenue with hundreds of no-name sites. With their strategy, CSN Stores reached 51^st place amongst the strongest e-commerce players in the US.

All the more notable that even an established online player such as CSN has re-thought their strategy and will be remarketing themselves as Wayfair and will put more focus on branding instead of Google:

"We have been able to grow at a very fast pace because we know what customers want when shopping online for their home," said CSN's Chairman and Co-Founder Steven Conine.

"We knew it was now time to create a name that our customers can remember and to put our full selection together in a single, online destination that offers everything imaginable for nearly any type of home – meeting all style preferences and budgets."

"CSN Stores will focus its brand family on three distinct brands: Wayfair.com, AllModern.com and JossandMain.com. AllModern (www.allmodern.com) is an established brand catering to consumers who enjoy the upper-end modern design aesthetic. Joss & Main (www.jossandmain.com) is CSN's new flash sale site offering high-end items for the home at up to 70 percent off."

No surprise that CSN will be treating themselves to a members-only shopping club, which is one of the only vehicles in recent times which can be a real booster for building up regular customers.

CSN Stores, which recently completed its first financing round at $165 million, addresses three main themes which are also the focus of the upcoming K5 Conference in Munich:

• Which strategies are the strongest e-commerce players using to squeeze out additional growth?
• The new brand-awareness in e-commerce, or: How to convert new customers to loyal regulars?
• What relevance do members-only shopping clubs have for the future of e-commerce?

In principle, companies such as Zalando have shown the difference that a recognizable brand can make to public awareness. And Zalando Lounge is also an effort to follow Amazon (with BuyVIP/MyHabit), eBay (with Brand4Friends) and other established players who are jumping to the members-only sales model for customer retention.

Notable is also the new openness with which Wayfair/CSN Stores is dealing with their growth numbers.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

mydeco.com Gets Investment From eVenture Capital Partners

As reported by the British media on the weekend, the home furnishings website mydeco.com received capital investment from eVenture Capital Partners in a third financing round. Burda had already invested in a previous round:

"Brent Hoberman has attracted investment from the German backer of Groupon and Angie's List for his online home furnishings website in a move which values the business at more than £35m.

The investment is the third fundraising by mydeco's parent company, By Design (UK). Investors supporting previous fundraisings include Burda of Germany and the Rothschild family.

Mydeco is an aggregation site which allows users to browse items, such as furniture or wallpaper, being sold by other retailers and provides 3D imaging software to enable users to see how they would look in their homes."

With its advanced and somewhat complex feature set, mydeco was for a long while for Exciting Commerce something like a Boo.com reloaded. In other words, a well thought out concept which although very slick, was too far ahead of its time.

This all changed with the iPad. mydeco is arguably the ideal type of website for the tablet user interface. Now the question has become whether or not mydeco can hold out long enough until a critical mass of tablet-toting home furnishing fans is achieved.

eVenture Capital Partners had already invested in another home furnishing site myfab (operating in Germany and France) prior to their financing of mydeco. And mydeco has already been using the marketplace technology provider from Ixtens for a while now, which is also financed by eVC Partners.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Books for 2011: ‘What I Wish I Knew When I Was 20’

Tina Seelig asserts that your approach to life determines whether or not problems will drive you to look for new rather than already known solutions. This she describes in her book, “What I Wish I Knew When I Was 20: A Crash Course on Making Your Place in the World”.

Tina Seelig leads the Technology Venture program at Stanford University and is involved there with partners such as Hasso Plattner Institute of Design to train the next generation of innovators.

Amongst the experiences which she describes in her book, she also brushes a bit on the copycat debate. Copycats are often defended based on pure commercial considerations, such as the assertion from Oded Shenkar in his book “Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge”. But how fulfilling is it to start up a copycat business for an entrepreneur?

“What I Wish I Knew When I Was 20” contains several good thought provoking stories and is a recommendation received by one of our Exciting Commerce readers.

This and other book recommendations are to be found in our books column.

Related posts:

• Books Tips for 2011 – From January to March
• Books for 2011: The Thank You Economy
• Advanced Business Models: The Library for Pioneering Entrepreneurs

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

CSN Stores Raised $165 Million for Acquisitions and Brand Launch

CSN Stores, with $380 million in revenues, is #51 in the Internetretailer Top 500 and a role model for the online home and garden stores from FP Commerce and Worldstores (see “WorldStores Raises £8.5 Million Growth Capital”). In June they raised $165 million growth capital for acquisitions and a marketing campaign to launch their new Wayfair brand. In the mid term they have an IPO on the radar:

"CSN Stores, one of the largest online retailers of housewares and home furnishings in the U.S., announced today that it has raised $165 million in funding from four investment firms to increase its ongoing expansion both internationally and in the U.S., target appropriate acquisitions, and drive extensive marketing around a new brand launching later this summer, Wayfair.com.

This is the first time that CSN Stores has raised institutional funding in its nine-year history and this funding amount is one of the largest investment rounds reported for any online company so far in 2011.

"We've grown profitably every year since 2002 and have continued to aggressively reinvest in the business, but with our new group of advisors and this infusion of funding, we have plans to grow even more quickly," said Niraj Shah, CSN's CEO and co-founder.

"Our emerging international businesses will see more resources, and we'll be investing in a major consumer brand launch. Looking ahead four or five years, we think with the help of our investors, we are on the path to becoming a much-larger, publicly-traded company."

CSN Stores, which jumped 50 percent in sales from 2009 to 2010, and which is growing again at over 50 percent in 2011, expects to well surpass the $500 million dollar mark this year."

CSN Stores / Wayfair is much more open than before about their revenue growth and other business figures.

The furniture and décor retailer boasts having beat out Crate & Barrel in the US online home goods market. It is also one of the few online high performers that Amazon hasn’t picked up yet.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Zalando On The Unique Challenges in France

In an interview with the Journal du Net, Jérôme Cochet, President at Zalando.fr., spoke on the unique challenges for Zalando in France (English translation).

The challenge goes beyond the fact that French women have different tastes than the women of Zalando’s home market in Germany. They also have different preferences in the site navigation.

The interview reveals details on Zalando’s European strategy and illustrates their self-awareness. Besides France, Zalando is also represented in Holland, Italy and the UK.

Zalando launched in Austria this week with a local website. Switzerland is planned to have an own website available before the end of the month.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Why Facebook’s “Groupon Killer” Deemed a Failure

Following Twitter, Facebook is now the second internet platform provider who has withdrawn their attempt to integrate live shopping into their service offering. As reported by Reuters:

"After testing Deals for four months, we've decided to end our Deals product in the coming weeks," the company said on Friday in a statement emailed to Reuters.

"We think there is a lot of power in a social approach to driving people into local businesses," Facebook added in the statement. "We've learned a lot from our test and we'll continue to evaluate how to best serve local businesses."

With this decision, one of the most potentially dangerous competitors to Groupon has been taken out of the game. In April, Exciting Commerce reported on how Facebook was well positioned in this arena with their combination of newsfeed, fanpage and email (“What Facebook is Doing Right With Social Deals”).

Apparently in the same boat as Twitter, Facebook underestimated the effort required to build the model and did not put enough manpower into the deals program:

"Facebook never put its full might behind Deals. It initially injected stories into the news feed asking users to sign up for the service, and later promoted the pre-paid offers with emails and real estate in the sidebar."

"In past reviews of the product, we criticized Deals regarding the quality of the experiences offered , the sometimes shallow discounts, and the way the experiences were ptiched to users.

Had Facebook subsidized businesses to provide deeper discounts on attractive experiences, and came up with a more compelling design for the Deals-browsing app, the results of the tests might have been different."

Marshall Kirkpatrick was one of the many who saw a “Groupon Killer” in Facebook Deals, and he summarizes on ReadWriteWeb:

"That's a lesson that any business should remember in a time of rapid change: the fundamentals and execution still matter, a lot."

Related posts:

• What Facebook is Doing Right With Social Deals
• Live Shopping: Twitter Ends Their @earlybird Campaign
• Facebook As Social Commerce Engine?

Originally posted in German by Jochen Krisch and Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.