"We want to be bigger than Walmart," said Jack Ma, the founder and CEO of Alibaba Group, in September 2014, when Alibaba began trading in the New York Stock Exchange. It didn't take long. In 2017 fiscal year Walmart's sales were $485.9 billion, while Alibaba's was $547 billion.
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Walmart reported 2017 Q1 results yesterday, and the big story is impressive e-commerce growth. Retailer's online sales jumped 63 percent, and GMV jumped 69 percent. However, we need to point out that Walmart used to report global e-commerce growth which included all of online properties. This means the 63 percent e-commerce sales growth has no base to compare it against.
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The Census Bureau of the Department of Commerce reported results for US E-Commerce 2017 Q1. E-commerce sales were $98.06 billion, up by 14.8 percent from a year before. This means e-commerce accounted for approximately 8.4 percent of total retail sales. However, e-commerce share is likely considerably higher.
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There is a lot of enthusiasm about traditional retail dying. E-commerce is growing at a faster rate, but retail as a whole is growing still. Retailers are now often dismissing any responsibility for their struggles, and are by default blaming Amazon for it. Often from an angle of being unable to do anything about it. The test for business management is to explain their future strategy without mentioning Amazon once.
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MercadoLibre (MercadoLivre in Portuguese) has become the de facto internet retail option for Latin America. While initially MercadoLibre was the eBay of Latin America, drawing inspiration and even design ques early on from the US auctions leader, it is now much more the Amazon of Latin America. It moved on from auctions to products at fixed price, and has focused on the infrastructure the most.
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This week Amazon lowered free shipping threshold to $25. There are two reasons why this is an interesting change - free shipping is putting pressure on competitors, and the fact that Prime is moving beyond being a free shipping offering.
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The fundamental value Etsy marketplace brought to sellers when it launched in 2005 was discoverability. At the time, being an artisan meant having very limited reach to the sea of customers. Today though Etsy found itself in a tough position - it has clearly already maximized opportunities in the handmade and vintage market. Etsy set expectations for sales growth it is now struggling to meet.
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The unique idea powering marketplaces is the hiding of complexity in picking a retailer. Instead of a customer spending time to find the best deal, and the best shipping option, a marketplace like Amazon suggest the best one. But we think this can be taken even further - a marketplace which hides the complexity of picking a product.
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Walmart marketplace launched all the way back in 2009. But the marketplace wasn't resulting in the only thing which mattered - sales growth. So Walmart went out and acquired Jet.com for $3.3b to bring in new talent and have the founder Marc Lore run Walmart's e-commerce. In many ways Jet.com acquisition happened because everything done before that wasn't working, marketplace included.
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Amazon has so far done really well by launching generic products - products which do not depend on a brand. Batteries, cables, other electronics are a good examples of this. But Amazon hasn't yet figured out how to build brands. Sales of Lark & Ro apparel products are growing, but likely a lot of this is driven by search optimization and Amazon prioritizing own products.
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