Rishi Taparia - Issue #54
This week in a very China focused issue we look at Alibaba’s new grocery concept, the struggles of Alexa and commerce, Ikea’s entry into India, robot waiters, China’s P2P lending struggles, the largest seed round I’ve ever heard of and more. Enjoy!
Commerce
I spent the last week and a half in various parts of Asia, surveying the landscape of fintech and commerce. During the trip I had the opportunity to tour Alibaba’s grocery concept and documented my thoughts in a few tweets.
1/ I just toured the @AlibabaGroup #newretail grocery concept, Hema, and I still can't pick my jaw up off the floor https://t.co/xj8TetF9Ja
6:34 AM - 6 Aug 2018
I (and apparently the Twittersphere…) was stunned with the capabilities built into the store and the customer experience being created. Currently live in over 50 locations, and while I’m sure still a money-losing proposition for Alibaba, they have reached meaningful scale with the deployment. The benefit to Alibaba will ultimately manifest itself through defining the experience and consumer expectations while achieving positive unit economics. They are a formidable player on a global scale and from my vantage point, will be tough to beat.
Ikea Opens First India Store, Tweaking Products but Not the Vibe
We talked previously about Ikea’s rollout in India. The store opened this week to some great fanfare. Ikea’s approach to international expansion should be modeled. Do the research, understand the market, adjust product accordingly. Appreciating cultural nuance is critical, even if rollout will to take longer than expected.
Robots replace waiters in China restaurant, Technology
Robots as waiters are not so far into the future (at least in China) as one would think. Being built by both JD.com and Alibaba are building robot only restaurants which, while largely novelty driven now particularly given the low labor costs showcase how both businesses are thinking about the future.
Surprise, no one buys things via Alexa
One of the things driving Amazon’s recent stock price surge has been the success of their smart speakers. A connected, voice activated speaker in every household is a compelling story for a commerce platform that can presumably drive more in the moment purchases. It makes sense. The only problem is that it hasn’t materialized yet.
Of about 50 million Alexa users, only about 100,000 reportedly bought something via voice interface more than once. It’s not exactly surprising, but it may still harm the narrative of conversational commerce that Amazon and others are trying to advance.
FinTech
Police thwart protest rallies by victims of China’s underground financial system
The Chinese P2P lending space has seen massive growth over the last few years, peaking at over 4,000 companies. Since then over 2,000 have closed, with literal runaway lenders (those that would collect deposits, close up shop and run away) amongst the reason for huge losses in the space. An unknown number of Chinese investors have lost their life savings, and this weak attempted to demonstrate in Beijing’s financial district before the Chinese government stepped in.
Cross-border ecommerce in China soared to USD 220 bln in 2017
The Chinese buyer is the most sought after consumer in the world, and it is easy to understand why. A growing middle class, historically restricted from cross border commerce, now looking to travel and spend money abroad, made even easier via ecommerce. In 2017 67% of Chinese ecommerce consumers spent money from international sites, up from 34% in 2016, according to a study by Westwin. They spend $59 billion dollars in transactions on cross border platforms, with Alipay accounting for 91% of the transaction volume.
Why American credit card companies can't break into China
A good overview on the challenges American card networks have faced with the Chinese market, and how they may have already missed their shot. What it doesn’t talk about: Even China Union pay is struggling due to the advance of QR based payments through Alipay and WeChat Pay.
Facebook to Banks: Give Us Your Data, We’ll Give You Our Users
Facebook has asked large U.S. banks to share detailed financial information about customers, including card transactions and checking account balances, as it seeks to boost user engagement. Let’s see how well that works.
Technology
Jeffrey Katzenberg’s NewTV Closes $1B, Major Studios Among Investors
With all the money sloshing around the Valley, fundraise announcements aren’t as newsworthy. Then comes WndrCo with their “hold my beer” moment. The holding company co-founded by Jeffrey Katzenberg, announced a $1 billion seed round for a mobile-video venture NewTV.
Random Tidbits
How I Read
A great post on the process of reading by Simon Eskildsen. Some tangible things to enact that will help drive selection, processing and recall for the things you read.
Quote I’m thinking about: “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.” Albert Einstein