Rishi Taparia - Issue #59
This week we look at Walmart’s push deeper into logistics, Zara’s growth online, China and a cashless society, DARPA’s investment into AI and more. Enjoy!
Commerce
To bolster e-commerce push, Walmart increases investment in logistics
Walmart is slowly building up their own infrastructure (and beefing up their pharmacy). The company will reportedly will double its spending on attracting new truck drivers, a move to ensure quick movement of items from distribution centers to physical stores that serve in-person as well as e-commerce customers. Having increased online sales by 40% in Q2 this year, Walmart will need to keep improving on both in store and online to keep their customers (and shareholders) happy.
Zara's Parent Co. Prepares For Online Expansion
Inditex (read: Zara’s parent company) announced big earnings this week, as well as plans to expand their online offerings, following other retailers with the move, looking to move their entire catalog online by 2020, a good (albeit seemingly obvious) move given other retailers typically only offer partial inventory online.
So far, its move to digitization has shown some early signs of strength. Online sales were up 41 percent in 2017 and represented 10 percent of Zara’s net sales.
Amazon Makes Good on Business-to-Business Threat
Amazon’s been a threat for companies who count businesses as customers, distributors of items like industrial parts, medical supplies, and IT parts when it announced it would enter the space back in 2015. This week Amazon showed just how big a threat. “On Tuesday, it said that platform, Amazon Business, had hit an annualized rate of $10 billion in global sales. That compares with $1 billion in U.S. sales in its first year of existence before Amazon expanded the platform into other countries including the U.K., Germany and Japan.”
FinTech
China Can’t Afford a Cashless Society
China has led the world in migrating to digital payments, Alipay and WeChat having blown up over the last 5 years to the tune of almost $18tn (trillion with a T, and yes, in US dollars…) a year in volume. Naturally this makes regulators and banks nervous, a group that has come out and said a move away from cash will have a negative impact on the country. This piece in Foreign Policy argues they have a right to be concerned, as “growing “cashlessness” of Chinese cities threatens to expose underlying issues of economic instability. Mobile payments are carving out lines between young and old, and between the prosperous urban middle class and those left behind by the boom times. Mismanaged moves to mobile payments by municipalities could also lock the elderly and the poor out of the consumption economy—just when the Chinese government needs as many spenders as possible to drive forward the country’s economic transformation.”
‘Fintech Charter’ Has No Early Takers as Lawsuit Looms
We talked previously about the Trump administration’s embrace of fintech companies with the new approach to charters. Well, apparently no one is really biting. Seemingly obvious potential takers like LendingClub, Square, SoFi and others haven’t yet applied, largely due to the uncertainty around the regulatory requirements that will be imposed (and are yet still undefined). Further, you’ve got the “Conference of State Bank Supervisors, a group of state regulators, [saying] it intends to file a lawsuit challenging the OCC’s authority, renewing a previously unsuccessfully legal challenge.”
Technology
DARPA announces $2B investment in AI
The US government is finally investing (publicly) in AI. This week DARPA announced a plan to invest $2bn in what they are calling the AI Next program. With countries like China having stating publicly they want to lead the world in technology by 2030, hopefully this is the first of many investments from the US.
The Human Promise of the AI Revolution
Former head of Google China who has a new book out called “AI Superpowers: China, Silicon Valley, and the New World Order” has an op-ed in the WSJ on AI discussing his views on the current state of AI and where he believes the technology can go. Given the advances taking place, particularly in China, this piece is a worthwhile read (I’ll let you know on the book!)
Random Tidbits
Quote I’m thinking about: “Making the decision to have a child - it’s momentous. It is to decide forever to have your heart go walking outside your body.” - Elizabeth Stone