Three years after acquiring Jet for $3 billion, Walmart announced today that it is now more fully integrating Jet’s teams into Walmart. Jet will continue to operate as a standalone brand, mainly in large cities.
Jet president Simon Belsham will support the transition through early August. After that, Jet will be managed by Kiernan Shanahan, Walmart senior vice president of food, consumables and health and wellness and the lead of Walmart Ecommerce’s Everyday Living category. Jeff Saunders, Jet’s vice president of operations and tech lead, will lead the integration of Jet into the Everyday Living team.
In a blog post announcing the transition, Walmart Ecommerce president and CEO Marc Lore explained that the company decided to fold the rest of Jet’s teams into Walmart because “Across most of the country, we saw we could get a much higher return on our marketing investments with Walmart.com, so we’ve dialed up our marketing spend there. However, in specific large cities where Walmart has few or no stores, Jet has become hyper focused on those urban customers.”
“While this has made Jet smaller from a sales perspective, it has helped us create a smart portfolio approach where our businesses complement each other,” he added.
After Walmart acquired Jet in 2016, it merged a few of its teams, including supply chain. Combining fulfillment centers and mirroring inventory helped Walmart build its delivery logistics , enabling two-day free shipping and free next-day delivery without a membership fee, making it more competitive with Amazon, which charges a fee for its Prime program.
Jet.com relaunched last year to focus on customers in big cities, like New York, with a product assortment tailored to their shopping preferences and three-hour grocery delivery to compete with Amazon Prime Now. Jet also introduced a concierge shopping service called JetBlack last year as a standalone e-commerce business aimed at busy parents living in cities who don’t have a lot of time to shop in brick and mortar stores or browse online. Last week, JetBlack announced that its customers spend an average of $1,500 per month on purchases, on top of the $50 monthly fee they pay for the service.
In his post, Lore wrote “Jet continues to be a very valuable brand to us, and it is playing a specific role in helping Walmart reach urban customers. The focus has largely been on NY so far, and we’re looking at other cities where we might bring together Jet’s expertise and the scale and operating model of Walmart. More to come on that.”
Amazon this morning announced the launch of Amazon Credit Builder, a new secured credit card offered in partnership with Synchrony Bank. As the name implies, the card is aimed at those who are looking to build their credit history — either to recover from bad credit or to establish new credit. Like othercredit products Amazon has launched, the card’s big perk is cash back on Amazon.com purchases — in this case, 5% back on purchases if the cardholder is a Prime member.
The Credit Builder card also has no annual fee, offers special financing on purchases, and includes protection from unauthorized charges. As a secured card, Amazon Credit Builder requires that cardholders submit a refundable security deposit in order to get a line of credit from the bank. This funding isn’t available for purchases made with the card, but rather serves as a way to establish a credit limit.
The deposit can range from $100 to $1,000, says Amazon, and is submitted either by electronic transfer (ACH transfer on Amazon) or via mail.
To pay off purchases, the card is unique in that it allows customers to either choose to make 12 months of equal payments or 6/12/24-month 0% periods for select purchases.
Also a part of the product is the ability for cardholders to track their credit improvement over time as they use the card to make purchases on Amazon.com.
The cardholders receive access to their own personal TransUnion CreditView Dashboard, where they can view their VantageScore credit score for free, use a simulator to understand how different activities will impact that score, get fraud alerts, and access credit education to help them further improve their credit score.
Amazon says that Credit Builder customers may become eligible for an upgrade to the Amazon Store Card after as little as seven months after opening the Credit Builder account, at which time their initial security deposit would be refunded.
Typically, secured credit cards are offered to people looking to improve their credit — but it’s unusual for a retailer to provide their own secured card. For Amazon, however, offering credit to the under-banked or unbanked is another way of expanding its business to a broader market.
Like many online retailers today, Amazon believes that shopping online shouldn’t be a privilege only for the middle class and up. After all, e-commerce sites may often have better deals than brick-and-mortar stores, and the convenience of shopping online can help customers save both gas money and time — the latter a particular issue for those working multiple jobs to make ends meet.
While Amazon’s new card may make sense for those on a path to building better credit, it may be better for those who are looking to upgrade to the Amazon Store Card in the future, rather than simply repair their poor credit history.
The card, consumers should note, carries a high APR of 28.24% — higher than the average median APR for retail cards (25.64%).
“This is a solid option for people who are new to credit or rebuilding their credit after prior missteps, but there are some risks to be aware of,” notes Ted Rossman, Industry Analyst for CreditCards.com.
“It’s always important to pay your credit card bills in full, and that’s especially true with this card. The interest rate is very high – 28.24% – and if you fail to pay a 0% promotional offer in full by the time the term expires, you’ll be charged retroactive interest on the average daily balance going back all the way to the original purchase date,” he says.
However, Rossman concludes that when the card is used properly, the card could be useful in improving credit while receiving the cash back perk.
Alongside today’s news that Walmart will soon introduce in-home grocery delivery in select markets, the company today announced another new effort similarly aimed at saving customers’ time. But this time, the focus was on Sam’s Club members, and specifically addressed the long process involved with buying car tires. To address that challenge, the company is rolling out a new “Sam’s Garage” app across the U.S. in July that will turn what used to take half an hour into a five-minute process, the company claims.
Walmart CEO Doug McMillon recounted a fun anecdote about his tire-buying experience at a Sam’s Club, which prompted the creation of the new app.
“A few months ago, I ran over a nail and ruined a tire, so I went to Sam’s Club for help. It was a Saturday, and we were busy. At one point, I’m third in line with two members behind me. Our associates are working hard, but the process is time-consuming,” McMillon said. “As we’re all waiting there in the Bentonville club, I can tell that one of the members has recognized me. He doesn’t say anything – but he doesn’t have to. His facial expression says it all: ‘How does it feel to wait in line, dude? Surely you can do something about this,’ ” he recalled.
He later suggested to Sam’s Club CEO John Furner to re-evaluate the tire buying experience, and the new Sam’s Garage app is the result.
Typically, tire buying can be a longer process, and one that can even involve archaic systems like paper catalogs. The same was true at Sam’s Club, which McMillon said relied on “multiple systems, paper catalogs and a large desk” to service its tire buying customers.
Nine months after the CEO waited in line, there’s a new app for tire shopping aimed at helping Sam’s Club members. The app, Sam’s Garage, will run on mobile tablets and can do things like scan the customer’s membership card to pull up their associated vehicles. It then helps the Sam’s Club associate filter possible tire options based on their conversation with the customer about their tire needs.
For example, there are buttons to tap for things like “responsiveness,” “winter traction,” “wet road handling,” “offroad,” “ride comfort” and more.
As they continue, more filters appear, allowing the associate to narrow down the tire options based on other factors like in-store availability, special offers, brand, load index, speed rating, mileage warranty and many more options. They can even do side-by-side comparisons of different factors.
They can then tap a button to get an estimate, email estimates or place an order.
“This is what it looks like to be a digital company. Sam’s Garage will be rolled out nationwide in July. From concept to design to rollout in fewer than nine months from that Saturday when I was buying tires,” McMillon said.
Amazon on its latest earnings call announced it was working towards making one-day shipping the new standard for Prime members. This morning, the retailer touted a milestone related to those efforts with news that now over 10 million items are now available for one-day shipping to Prime members.
But Walmart’s offering is much smaller — only 200,000 of its most popular items are available for next-day, which puts it more in competition with Target Restock, a similar offering with 35,000 items available — largely focused on household replenishment.
Meanwhile, Amazon this morning took the time to clarify some of its plans around one-day, reminding everyone that one-day isn’t just a switch that it’s planning to flip at some point — it’s already available across a large range of products and continuing to grow.
In Q4, Amazon had said one-day and same-day were available to over 10,000 cities and towns in the U.S. Today, Prime Free One Day is offered coast to coast, the company says. Alaska, Hawaii, and Puerto Rico have access to Prime, but speeds vary from one-day to five days.
In early April, Amazon says it “significantly expanded” its one-day selection and delivery areas for one-day shipping, and is continuing to add more products and expand its delivery areas.
While Prime speeds also vary by country, U.K. Prime members have access to one-day and customers in Japan often see same-day.
Amazon added that Prime Free One Day shipping is already 10 times larger than Prime two-day shipping was when launched back in 2005.
It’s supported today by Amazon’s network in the U.S. that includes 110 fulfillment centers, 40 package sortation centers, 100 delivery stations, and 20 air gateways.
What Amazon didn’t shed any light on today on how close it is to making one-day a default for its over 100 million Prime members.
Internet shopping has been blamed for boarding up high streets across the UK. So it looks politically judicious for the original ecommerce behemoth to now be attaching its brand name to a pilot project aimed at sparking a little commercial life in denuded UK towns and cities by parachuting online SMEs into pop-up shops around the country.
The year-long Amazon pop-up pilot program — which is couched as an exploration of “a new model to help up-and-coming online brands grow their high street presence” — will see more than 100 small online businesses selling on the UK high street for the first time via time-slots in ten pop-up shops which will each be open for between six and eight weeks.
The first pop-up opens today on St Mary’s Gate in central Manchester. Others will appear in high streets in Wales, which will get the second pop up in Cardiff; Scotland, the Midlands, Yorkshire and across the South East over the course of the pilot — before winking out of existence again.
We understand the project is being funded by Amazon and its partner organization for the program: Enterprise Nation — a local small business support network. Direct Line for Business and Square are also listed as partners for the pilot.
It is not clear how much they are spending to sustain the ten pop-ups for up to two months apiece.
Last year the UK government called for proposals for reinvigorating high streets, announcing a £675M Future High Streets Fund to help modernise high streets.
And while the pop-up pilot is not receiving any of this public funding, Amazon’s PR states that they have commissioned an external research consultant to produce “a detailed analysis of the impact of the pilot” — saying they plan to submit the findings to the government following its call for new ideas to inform the Future High Streets strategy.
“The Clicks and Mortar pop-up shops will provide customers with the opportunity to discover and buy directly from over 100 small businesses – everything from homeware and health and beauty products to food and drink and electronics,” Amazon writes. “The up-and-coming brands have all built successful online businesses and now want to explore physical retail for the first time.”
Among the online brands that will have their wares showcased on UK high streets via the pilot are a foldable kick-scooter brand for adults (Swifty Scooters); a maker of leather cases for electronics devices (Torro Cases); and a men’s skincare range (Altr for Men).
Participating small businesses will be selling directly to customers, with all payments made straight to them — and Amazon confirming it is not taking any sales commission for the pop-up shops.
Last year the UK chancellor announced a digital services tax that will be applied to tech giants operating search engines, social media platforms and online marketplaces from April 2020 — after floating the idea of a platform tax to help level the playing field with traditional retailers and support high street regeneration.
The digital services tax will put a levy of 2% on revenues of tech giants that can be attributed to UK users.
Amazon’s UK corporation paid just £4.5M in tax in 2017, with revenues from its UK retail sales reported through a separate company in Luxembourg — meaning rising growth in online shopping on Amazon.co.uk has not translated into increased tax contributions to the UK.
This has meant a double whammy for the public purse because Internet shopping competitively squeezes high street businesses that do pay into public coffers. To the point of no return in the case of many traditional bricks and mortar sellers. Hence boarded up high streets are a visual reminder of the wider societal costs of Internet-enabled profit shifting.
Also today, Amazon has announced a £1M SME Apprenticeship Fund — which it is fully funding.
It says this will help create more than 150 full-time apprenticeships in roles including digital marketing, business administration and customer service practitioner at small online businesses.
The fund is open to apprentice applications from any brand-owning SME registered in England that currently sells on Amazon and has a turnover of less than £1M. Each apprenticeship will last between 15-18 months, with apprentices receiving a mix of in-work, online and classroom training.
“Amazon will also provide specialist training on how to build a successful e-commerce business, how participating SMEs can market and advertise their products to customers and how to sell their products to a global customer base,” it writes.
It also says it will be providing free digital training at Amazon Academy events held across the UK to offer additional support to small businesses to sell online — with a special focus on boosting export sales.
DHL’s move to offer Africa eShop to 20 of the continent’s 54 countries comes a month after Africa’s most visible (and well funded) e-tailer, Jumia, went public. Jumia—which operates consumer retail and online service verticals in 14 African countries—raised over $200 million in an NYSE IPO.
There’s a competitive e-commerce scenario brewing between the two platforms. DHL Africa e-Shop touts itself as “Africa’s Largest Online Shopping Platform.” Jumia said “We believe that our platform is the largest e-commerce marketplace in Africa,” in its SEC S1 filing.
It’ll take a little more time to shake out the stats behind each company’s branding claims.
DHL didn’t respond directly to the question of Africa eShop’s new market moves and competition with Jumia. “DHL’s growth expansion has always been centered around satisfying our customer’s wants…Africa e-Shop will be no different,” DHL spokesperson Megan Roper told TechCrunch.
DHL’s app takes advantage of the shipping giant’s existing delivery structure on the continent, able to get goods to doorsteps through its DHL Express courier service.
DHL’s partner for the new app, MallforAfrica, brings experience collaborating with a number of big-name retailers, including Macy’s and Best Buy. MFA’s payment and delivery system serves as a digital broker and logistics manager for big-name retailers to sell goods in Africa.
E-commerce ventures have captured the attention of VC investors looking to tap Africa’s growing consumer markets. McKinsey & Company projects consumer spending on the continent to reach $2.1 trillion by 2025, with e-commerce accounting for up to 10 percent.
Africa’s e-commerce startup landscape has already seen some ups and downs. Jumia’s recent IPO filing on the NYSE is a first for any startup operating in Africa. Despite continuing losses, Jumia’s post-IPO results earned the confidence of Wall Street analysts.
DHL’s Africa e-Shop expansion also demonstrates momentum for digital sales on the continent.
On the flip side, the distressed acquisition of Nigerian e-commerce hopeful Konga.com, backed by roughly $100 million in VC, created losses for investors. And in late 2018, Nigerian online sales platform DealDey shut down.
As for the big global names, Alibaba has talked about Africa expansion, but for the moment has not entered in full.
To watch is how DHL’s Africa eShop expansion factors into the continent’s online-sales market, particularly vis-a-vis Jumia.
On a B2C level, Africa eShop brings distinct advantages on a transaction cost basis (i.e. the cost of delivery) given it’s connected to one of the world’s logistics masters.
Another component of DHL and MallforAfrica’s partnership is the market for offering e-commerce fulfillment services. MallforAfrica CEO Chris Folayan acknowledged Jumia as a competitor to his company’s logistics offering, but said, “I’m not building Link Commerce to go after Jumia…I’m building Link Commerce to become the powerhouse e-commerce platform to help emerging markets gain access to U.S. and UK products.” On a call with TechCrunch, Folayan also confirmed Link Commerce would open up to vendors from Asia in the next 12 months.
On its recent earnings call, Jumia CEO Sacha Poignonnec flagged carving out the “Jumia logistics services as a standalone entity” as a future company priority.
These developments could put DHL’s Africa eShop, MallforAfrica, and Jumia on a footing to compete with (or work with) big e-commerce names entering Africa. They certainly add another layer of competition to online retail and fulfillment services on the continent.
For the moment, the DHL Africa eShop expansion creates additional choice on overlapping product categories with Jumia, such as phones, tablets, fashion, health, beauty, and gaming.
Africa eShop will also offer African consumers more price competition in the operating countries it shares with Jumia—currently 10: South Africa, Kenya, Nigeria, Tanzania, Cameroon, Uganda, Ivory Coast, Rwanda, Senegal, and Ghana.
At just 26, Waiz Rahim is supposed to be involved in the family business, having returned home in 2016 with an engineering degree from the University of Southern California. Instead, the young entrepreneur is plotting to build the Amazon of Bangladesh.
Deligram, Rahim’s vision of what e-commerce looks like in Bangladesh, a country of nearly 180 million, is making progress, having taken inspiration from a range of established tech giants worldwide, including Amazon, Alibaba and Go-Jek in Indonesia.
It’s a far cry from the family business. That’s Rahimafrooz, a 55-year-old conglomerate that is one of the largest companies in Bangladesh. It started out focused on garment retail, but over the years its businesses have branched out to span power and energy and automotive products while it operates a retail superstore called Agora.
During his time at school in the U.S., Rahim worked for the company as a tech consultant whilst figuring out what he wanted to do after graduation. Little could he have imagined that, fast-forward to 2019, he’d be in charge of his own startup that has scaled to two cities and raised $3 million from investors, one of which is Rahimafrooz.
Deligram CEO Waiz Rahim [Image via Deligram]
“My options after college were to stay in U.S. and do product management or analyst roles,” Rahim told TechCrunch in a recent interview. “But I visited rural areas while back in Bangladesh and realized that when you live in a city, it’s easy to exist in a bubble.”
So rather than stay in America or go to the family business, Rahim decided to pursue his vision to build “a technology company on the wave of rising economic growth, digitization and a vibrant young population.”
The youngster’s ambition was shaped by a stint working for Amazon at its Carlsbad warehouse in California as part of the final year of his degree. That proved to be eye-opening, but it was actually a Kickstarter project with a friend that truly opened his mind to the potential of building a new venture.
Rahim assisted fellow USC classmate Sam Mazumdar with Y Athletics, which raised more than $600,000 from the crowdsourcing site to develop “odor-resistant” sports attire that used silver within the fabric to repel the smell of sweat. The business has since expanded to cover underwear and socks, and it put Rahim’s mind to work on what he could do by himself.
“It blew my mind that you can build a brand from scratch,” he said. “If you are good at product design and branding, you could connect to a manufacturer, raise money from backers and get it to market.”
On his return to Bangladesh, he got Deligram off the ground in January 2017, although it didn’t open its doors to retailers and consumers until March 2018.
E-commerce through local stores
Deligram is an effort to emulate the achievements of Amazon in the U.S. and Alibaba in China. Both companies pioneered online commerce and turned the internet into a major channel for sales, but the young Bangladeshi startup’s early approach is very different from the way those now hundred-billion-dollar companies got started.
Offline retail is the norm in Bangladesh and, with that, it’s the long chain of mom and pop stores that account for the majority of spending.
That’s particularly true outside of urban areas, where such local stores almost become community gathering points, where neighbors, friends and families run into each other and socialize.
Instead of disruption, working with what is part of the social fabric is more logical. Thus, Deligram has taken a hybrid approach that marries its regular e-commerce website and app with offline retail through mom and pop stores, which are known as “mudir dokan” in Bangladesh’s Bengali language.
A customer can order their product through the Deligram app on their phone and have it delivered to their home or office, but a more popular — and oftentimes logical — option is to have it sent to the local mudir dokan store, where it can be collected at any time. But beyond simply taking deliveries, mudir dokans can also operate as Deligram retailers by selling through an agent model.
That’s to say that they enable their customers to order products through Deligram even if they don’t have the app, or even a smartphone — although the latter is increasingly unlikely with smartphone ownership booming. Deligram is proactively recruiting mudir dokan partners to act as agents. It provides them with a tablet and a physical catalog that their customers can use to order via the e-commerce service. Delivery is then taken at the store, making it easy to pick up, and maintaining the local network.
“We’ll tell them: ‘Right now, you offer a few hundred products, now you have access to 15,000,’ ” the Deligram CEO said.
Indeed, Rahim sees this new digital storefront as a key driver of revenue for mudir dokan owners. For Deligram, it is potentially also a major customer acquisition channel, particularly among those who are new to the internet and the world of smartphone apps.
This offline-online model — known by the often-buzzy industry term “omnichannel” — isn’t new, but in a world where apps and messaging is prevalent, reaching and retaining users is challenging, particularly in emerging markets.
“It’s not easy to direct people to a website today, and the app-first approach has made it hard,” Rahim said. “We looked at how companies in Indonesia and India overcame these challenges.”
In particular, he studied the work of Go-Jek in Indonesia, which uses an agent model to push its services to nascent internet users, and Amazon India, which leans heavily on India’s local “kirana” stores for orders and deliveries.
In Deligram’s case, the mudir dokan picks up sales commission as well as money for every delivery that is sent to their store. Home deliveries are possible, but the lack of local infrastructure — “turn right at the blue house, left at the white one, and my place is third from the left,” is a common type of direction — makes finding exact locations difficult and inefficient, so an additional cost is charged for such requests.
E-commerce startups often struggle with last-mile because they rely on a clutch of logistics companies to fulfill orders. In a rare move for an early-stage company, Deligram has opted to run its entire logistics process in-house. That obviously necessitates cost and likely provides significant growing pains and stress, but, in the long term, Rahim is betting that a focus on quality control will pay out through higher customer service and repeat buyers.
A prospective Deligram customer flips through a hard copy of the company’s product brochure in a local store [Image via Deligram]
Startups on the rise in Bangladesh
Rahim’s timing is impeccable. He returned to Bangladesh just as technology was beginning to show the potential to impact daily life. Bangladesh has posted a 7% rise in GDP annually every year since 2016, and with an estimated 80 million internet users, it has the fifth-largest online population on the planet.
“We are riding on a lot of macro trends; we’re among the top five based on GDP growth and have the world’s eighth-largest population,” Rahim told TechCrunch. “There are 11 million people in middle income — that’s growing — and our country has 90 million people aged under 30.”
“An index to track the growth of young people would be [capital city] Dhaka… you can just see the vibrancy with young people using smartphones,” he added.
That’s an ideal storm for startups, and the country has seen a mix of overseas entrants and local ventures pick up speed. Alibaba last year acquired Daraz, the Rocket Internet-founded e-commerce service that covers Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal, while the Chinese giant also snapped up 20% of bKash, a fintech venture started from Brac Bank as part of the regional expansion of its Ant Financial affiliate.
Uber, too, is present, but it is up against tough local opposition, as is the norm in Asian markets.
Pathao is one of two local companies that competes alongside Uber in Bangladesh [Image via Pathao]
Its chief rival is Shohoz, a startup that began in ticketing but expanded to rides and services on-demand. Shohoz raised $15 million in a round led by Singapore’s Golden Gate Ventures, which was announced last year.
Deligram has also pulled in impressive funding numbers, too.
The startup announced a $2.5 million Series A raise at the end of March, which Rahim wrote came from “a network of institutional and angel investors;” such is the challenge of finding a large check for a tech play in Bangladesh. The investors involved included Skycatcher, Everblue Management and Microsoft executive Sonia Bashir Kabir. A delighted Rahim also won a check from Rahimafrooz, the family business.
That’s not a given, he said, admitting that his family did initially want him to go to work with their business rather than pursuing his own startup. In that context, contributing to the round is a major endorsement, he said.
Rahimafrooz could be a crucial ally in future fundraising, too. Despite an improving climate for tech companies, Bangladesh’s top startups are still finding it tough to raise money, especially with overseas investors that can write the larger checks that are required to scale.
“I think the biggest challenge is branding. Every time I speak with new investors, I have to start by explaining where Bangladesh is, or the national metrics, not even our business,” Pathao CEO Hussain Elius told TechCrunch.
“There’s a legacy issue. Bangladesh seems like a country which floods all the time and the garment sector going down — that’s a part of the story but not the full story. It’s also an incredible country that’s growing despite those challenges,” he added.
Pathao is reportedly on track to raise a $50 million Series B this year, according to Deal Street Asia. Elius didn’t address that directly, but he did admit that raising growth funding is a bigger challenge than seed-based financing, where the Bangladesh government helps with its own fund and entrepreneurial programs.
“It’s hard for us as we’re the first ones out there, but it’ll be easier for the ones who’ll follow on,” he explained.
Still, there are some optimistic overseas watchers.
“We remain enthusiastic about the rapidly expanding set of opportunities in Bangladesh,” said Hian Goh, founding partner of Singapore-based VC firm Openspace — which invested in Pathao.
“The country continues to be one of the fastest-growing economies in the world, underpinned by additional growth in its garments manufacturing sector. This has blossomed into an expanding middle class with very active consumption behavior,” Goh added.
With the pain of fundraising put to the side for now, the new money is being put to work growing the Deligram business and its network into more parts of Bangladesh, and the more challenging urban areas.
Geographically, the service is expanding its agent reach into five more cities to give it a total of seven locations nationwide. That necessitates an increase in logistics and operations to keep up with, and prepare for, that new demand.
Deligram workers in one of the company’s warehouses [Image via Deligram]
Rahim said the company had handled 12,000 orders to date as of the end of March, but that has now grown past 20,000 indicating that order volumes are rising. He declined to provide financial figures, but said that the company is on track to increase its monthly GMV volume by six-fold by the end of this year. Electronics, phones and accessories are among its most popular items, but Deligram also sells apparel, daily items and more.
Interestingly, and perhaps counter to assumptions, Deligram started in rural areas, where Rahim saw there was less competition but also potentially more to learn through a more early-adopter customer base. That’s obviously one major challenge when it comes to growth, and now the company is looking at urban expansion points.
On the product side, Deligram is in the early stages of piloting consumer financing using its local store agents as the interface, while Rahim teased “exciting IOT R&D projects” that he said are in the planning stage.
Ultimately, however, he concedes that the road is likely to be a long one.
“Over the last 18-20 years, modern retail hasn’t made much progress here,” Rahim said. “It accounts for around 2.5% of total retail, e-commerce is below 1% and the long tail local stores are the rest.”
“People will eventually shift, but I think it’ll take five to eight years, which is why we provide the convenience via mom and pop shops,” he added.
Another brick-and-mortar retailer is turning to Amazon to help save its struggling business. Today, discount chain operator Stein Mart announced it will install Amazon Hub lockers in nearly 200 stores as soon as next month. The lockers are self-serve kiosks that allow Amazon shoppers to take advantage of in-store pickup and returns.
The deal will bring increased foot traffic to Stein Mart stores, potentially increasing its sales.
Meanwhile, Amazon gains the advantage of a brick-and-mortar presence for delivery and returns without having to invest in more real estate or making an acquisition, as it did with Whole Foods. The move also benefits Amazon’s battle with Walmart — the latter which has been quick to leverage its brick-and-mortar locations to aid its online shoppers.
Over the past couple of years, Kohl’s had been working with the e-commerce giant by allowing Amazon shoppers to bring their returns to one hundred Kohl’s stores across the U.S. The deal resulted in increased foot traffic and revenues — and some would say it even saved Kohl’s.
In April, Kohl’s said the Amazon returns program would expand to all 1,150 of its U.S. locations.
Stein Mart, which last year made Retail Dive’s list of 12 retailers at risk of bankruptcy, has been fighting across multiple fronts to survive. It has improved its merchandise, cleaned out inventory, cut costs, and tested services like ship-to-store. More recently, it began testing “endless aisles” (kiosks to connect store shoppers to broader online inventory), added mobile checkout and introduced a smarter fulfillment logic system to help fill web orders.
The company had also hinted last year it was open to almost anything, saying it planned to “explore strategic alternatives” to help improve its declining sales.
Despite its improvements, the chain still ended up with a disappointing 2018 holiday sales season, and remains in need a bigger boost to its bottom line. That’s where the Amazon Hub lockers come in.
The program allows Amazon shoppers to choose a Locker location at their nearest Stein Mart as their shipping address for their online orders at checkout. When their item arrives, they’ll receive an email along with a barcode that’s used to pick up their package during store hours.
This immediately should increase foot traffic to Stein Mart stores, as it has at Kohl’s, Whole Foods, and other Amazon Locker locations. Over time, the hope is that Stein Mart sales will improve as well, if it’s able to successfully market its own in-store merchandise to the Amazon shoppers who drop by.
“We are thrilled to offer this innovative delivery experience to Amazon customers while introducing new shoppers to Stein Mart,” said Hunt Hawkins, Stein Mart’s CEO, in a statement. “Customer service and convenience are top priorities at Stein Mart, and the ability to give both to Amazon customers was a big factor in our decision to introduce this program.”
Stein Mart says the lockers will be available by early June.
Spending on artificial intelligence systems in the Asia-Pacific region is expected to reach $5.5 billion this year, an almost 80 percent increase over 2018, driven by businesses in China and the retail industry, according to IDC. In a new report, the research firm also said it expects AI spending to climb at a compound annual growth rate of 50 percent from 2018 to 2022, reaching a total of $15.06 billion in 2022.
Most of the growth will happen in China, which IDC says will account for nearly two-thirds of AI spending in the region, excluding Japan, in all forecast years. Spending on AI systems will be driven by retail, professional services and government industries.
Retail demand for AI-based tools will also lead growth in the rest of the region, as companies begin to rely on it more for merchandising, product recommendations, automated customer service and supply and logistics. While the banking industry’s AI spending trails behind retail, it will also begin adopting the tech for fraud analysis, program advisors, recommendations and customer service. IDC forecasts that this year, companies will invest almost $700 million in automated service agents. The next largest area for investment is sales process recommendations and automation, with $450 million expected, and intelligent process automation at more than $350 million.
The fastest-growing industries for AI spending are expected to be healthcare (growing at 60.2 percent CAGR) and process manufacturing (60.1 percent CAGR). In terms of infrastructure, IDC says spending on hardware, including servers and storage, will reach almost $7 billion in 2019, while spending on software is expected to grow at a five-year CAGR of 80 percent.
Fresh from raising $70 million last year via big names including Goldman Sachs and TPG Growth, Livspace, an India-based startup that offers a one-stop-shop for interior design, has lured yet another marquee investor: Ikea.
The startup said today it has taken an undisclosed investment from Ingka Investments, the VC arm of Ikea parent Ingka Group, which operates 90 percent of Ikea’s retail footprint. Livspace CEO and co-founder Anuj Srivastava declined to provide a figure for the deal, but he told TechCrunch that the stake involved is a minor one while there is no plan to bolt a larger round on to this investment. Deal Street Asia first reported news of the deal.
“There is strong strategic and commercial potential,” Srivastava, a former Googler who started Livspace in 2015, said of the new investor. “This is an opportunity to create the best possible omnichannel experience for consumers.”
India is a tough place for international retail companies but Ikea has made progress in recent times.
Livspace, for those unaware of it, runs a service that is aimed at taking the hassle out of interior design. The company’s platform connects homeowners with designers and the supply chain to go through ideas, chose a plan and implement it. That includes, among other things, 3D virtual renders of a renovation, offline meetings at a Livspace design center and, in some cases, customized furnishings. By bringing all parties together, Livspace claims to offer cost savings to consumers as well as higher rates and more efficient use of time for designers.
That model resonates with Ikea (Ingka), according to Srivastava, who said the company sides began talking following the announcement of Livspace’s Series C round last September.
“We’ve felt the natural synergy always existed,” he said. “This is an extremely strong endorsement of our vision.”
Synergies, indeed, although somewhat frustratingly neither party is saying how they will work together going forward. The obvious suggestion would be that Ikea products become available through Livspace, but Srivastava said the specifics are still to be agreed.
Further down the line, though, he admitted that Ikea’s involvement could fuel an international expansion beyond India. Going overseas is something that the company is openly talked up in the past and, with Ikea’s global footprint of 367 stores across 30 markets, the investment from Ingka could give Livspace a running start in new markets.
That, like the details of the alliance, is something that will come later, however.
“The India business is keeping us really, really busy at this time,” said Srivastava on that possibility.
“We’re engaged in exploratory activities but there’s no immediate plan or timeline,” he added as a tease. A new market launch isn’t likely until something like 12-18 months down the line, the Livspace CEO said.
As for whether this deal might be a precursor to an eventual acquisition, such are the synergies, Srivastava said that possibility isn’t being entertained.
“There is no such intention as of now,” he explained. “We continue to have strong interest from financial investors and continue to operate with the intention to stay independent, there’s now even more belief in our platform approach.”
“There is distinctly an investment outlay involved [with] no long term indication of an M&A opportunity,” he added.