Rishi Taparia - Issue #35
This week looks at grocery’s battle with the internet, Meituan getting into autonomous delivery, Walmart betting big on Tencent, student loans being used to by crypto, Alipay’s lessons on open banking, Tim Ferriss in conversation with Daniel Pink and more. Enjoy!
Commerce
Grocery Wars Turn Small Chains Into Battlefield Casualties
Retail is not the only casualty in the consumer demand for new commerce experience. Grocery stores around the country are shutting down after surging in development between 2010 and 2015, having been laden with debt from private equity and losing on price to online players.
“You don’t even need a grocery store, frankly, if you can find a better way to shop,” Mr. Colpas said. “It’s a relic.”
Mall developers Brookfield and GGP to merge in $9.25B deal
Two mega-mall developers are merging in a deal that creates one of the world’s largest public property companies. Given the retail turmoil with mall anchor reducing the number of stores they have or shutting their doors entirely the move is not entirely surprising - consolidation should create more longevity in the business that allows for greater experimentation with the newly available space left behind by retailers.
Meituan-Dianping to test autonomous delivery this year for service launch in 2019
Meituan is a combo Yelp / OpenTable / Grubhub in China. Like a lot of companies in China however, they are operating at a much larger scale. Meituan serves six million of China’s seven million businesses in categories as broad as ride hailing, movie tickets, hotels, karaoke television…over 200 too be exact. Oh, and they also do processes 18 million food orders a day! A company to keep on your radar.
Self-storage: How warehouses for personal junk became a $38 billion industry
A great primer on an incredibly unsexy, yet profitable industry in self storage. One in 11 Americans pays for space to store the material overflow of the American dream. Growth is at 7.7% per year going back to 2012. The combination of boomers retiring and downsizing, as well as a pull toward cities away from suburbs make it an interesting candidate for something shuttering retail stores can transform into. However, as generational shifts are moving younger people away from an ownership mentality to a rental one, could this $38bn a year industry be nearing its peak?
FinTech
In China payment war, Walmart places bet on Tencent
The battle for digital payments acceptance in China rages on, only this time with an unlikely player. In a surprising move, Walmart has placed a bet on Tencent’s WeChat Pay, dropping competitor Ant Financial’s Alipay payment method in stores located in the western region of China. Typically merchants are looking to increase payment acceptance, not reduce them - conventional wisdom suggests the more customers that can pay in store the better. Dropping Alipay acceptance likely means Chinese New Year gift giving extended beyond February in a big way for Walmart.
Over One Fifth of Student Borrowers Used Loans to Gamble on Cryptocurrencies
Well then…I can’t say I’m altogether surprised but this could get painful very quickly, particularly given the precipitous drop that has taken place in the crypto market of late. She student loan news and information website found that 21.2% of the 1,000 students they surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, Student Loan Report indicates that there are currently no rules against it. College students are able to use loans for “living expenses,” a flexible category that covers a wide range of potential necessities. Expect regulatory reform here, and quickly.
Visa Gets Set for the Next Big EMV Phase—Making Contactless Transactions Routine
Contactless transactions in the US amount to less than 1% of all transaction volume, relative to a near 50% in the UK and Canada. Visa wants to change that, first by getting contactless acceptance terminals further into the market, and second by pushing contactless into more cards. NFC is inarguably a better payment experience than the chip and Visa desperately needs to compete against QR code payments taking hold in markets like China, India and Southeast Asia.
10 years after Visa's IPO, we celebrate our customers, partners, and employees
Speaking of Visa, it is 10 years since the company’s IPO (at the time, the largest public offering ever). For all their flaws, Visa is truly an amazing company and arguably the best and most widely used platform ever built. A quick video by them that celebrates their journey as a company, 10 years on from their IPO.
Alipay offers some lessons on open banking
China is going cashless and cardless fast, with hundreds of millions of wealthy consumers leaping ahead to mobile wallets and providing some valuable insights for the possible future of open banking in Europe and around the world. Alipay and Ant Financial more generally understands that customer trust is key to growth and being able to successfully expand product offerings.
The key lesson in open banking is that trust is fundamental. You have to explain fully to customers in very simple language exactly what you intend to do with their data and what they can expect in return. Customers need to see a tangible benefit to them. - Tao Tao, Business Development Director, Alipay
Technology
Uber sells Southeast Asia business to rival Grab
Uber finally completed the sale of its Southeast Asian business to Grab in exchange for a 27.5% stake in the company, with CEO Dara Khosrowshahi joining Grab’s board of directors as part of the deal. Uber now has a stake in one of the largest Southeast Asian players as well as one of the largest Chinese and Russian players (Didi and Yandex). Softbank also happens to be an investor in all but Yandex. An incestuous web indeed.
¯\_(ツ)_/¯
China’s Face-Scanning Craze
In China facial-recognition technologies are proliferating, from crosswalks capturing pictures of jaywalkers to bathrooms, limiting the amount of toilet paper any individual can use. While the discussions around Facebook and appropriate uses of data in the West to influence consumers over the last few weeks have come fast and furious, as discussed here before the Chinese government is using data at a national level for purposes of social engineering that goes beyond Orwelian. The below paragraph illustrates the magnitude of the exercise:
Quietly and very rapidly, facial recognition has enabled China to become the world’s most advanced surveillance state. A hugely ambitious new government program called the “social credit system” aims to compile unprecedented data sets, including everything from bank-account numbers to court records to internet-search histories, for all Chinese citizens.
As made ever more clear over the previous weeks, we consumers are fine giving up data in exchange for a fast and convenient experience, turning a blind eye to what the data is being used for until it that usage comes back and hits us in the face. The question in China is given “most people think they can say what they want and live freely without being monitored, but that’s largely an illusion”, do recent happenings change the trajectory for the nation or has the course already been set? Or do Chinese citizens just have a better understanding of the notion that nothing we say online is truly private.
Random Tidbits
The Tim Ferriss Show: Daniel Pink — How to Make Better Decisions and Be More Creative
A terrific podcast between Tim Ferris and author Daniel Pink that covers a broad range of subjects including motivational interviewing, the science behind time management and how Daniel formulates his book proposals. On book proposals specifically, what struck me were the similarities between book proposals and startup pitches (understandable since they both are ‘selling’ a product). One point Pink made which did stand out, which I think is often missing from traditional pitches or product design processes, is the idea of clearly identifying who the book / product / feature is not for. Writers, just like startups, believe their book/product is for everyone. The reality is that’s not true and by focusing on the target audience and building for them there is a greater chance to achieve success. Well worth a listen (given the length, while at the gym or stuck in traffic)!
Quote I’m thinking about: “A man must master his circumstances or otherwise be mastered by them.” - Amor Towles