Today on our show:
- Companies are trading down talent
- Top items from Paypal’s Q2 2024 earnings call
- Designer brand Prada posts revenue gains
- Temu announcements signal a company shift
And finally, The Investor Minute, which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
https://www.rmwcommerce.com/ecommerce-podcast-watsonweekly
It's August 5, 2024, and this is the Watson Weekly, your essential e-commerce digest. Today on our show, companies are trading down talent. Top items from PayPal's Q2 2024 earnings call. Designer brand product posts revenue gains. Team moves an outfit and signal a company's shift, and finally, the investor minute, which contains five items this week from the world of venture capital, acquisitions, and IPOs. But first, in our shopping cart full of news, companies are trading down talent. About five or six years ago, I noticed a trend that the middle of the job pool was being howled out. In other words, it went from leaders to managers and individual contributors to instead removing those middle managers. Now I noticed something different and the trend seems to be moving upstream. A generation of leaders with 10+ years of e-commerce experience seemed to be being phased out due to cost structure. Who wants an employee with $200-$300,000-plus salary seems to be the mantra? We talk a lot in e-commerce about consumers trading down and merchants trading down service providers, but we haven't talked too much about people. In short, people are also being traded down. This is put out a lot of experienced folks on the market looking at the same time. But this can't be everyone, right? Many companies cannot solely rely on junior talent to grow because they're in a complex situation that requires expertise. In other words, only hard work and technology are not enough always. If you're a CEO looking for senior talent, it's plentiful out there right now. And while I'm not a recruiter or pretend to play one on TV, I do know a lot of amazing talent looking from homes. Sadly, the United States has now become almost best practice in e-commerce to use overseas talent, which is often both cheaper, more talented, and more reliable than talent based in the United States. Our second story, top items from PayPal's Q2 2024 earnings call. I know I had a little bit of fun at PayPal's expense in the last time we talked about PayPal's investor meetings, but it seems like PayPal's CEO does seem to recognize the major issues that the companies are having. First is that the CEO again reinforced that the company has to improve its rate of innovation as well as the need to upgrade its talent. And I somewhat have to ask, what was the old CEO Dan Schulman doing? He has now moved into a venture capital firm, I guess, so he can screw up more companies at scale? Two, PayPal CEO is actually very good at spinning. The company says that their desktop share has not moved at all and that their US share is driven by large enterprises. The only problem with this is that current large enterprise market share is that new e-commerce platform players are working to penetrate that market. Hello, Shopify. Also, who still talks about desktop market share now that mobile is default for almost all but the largest transactions? Third point is that guest checkout is a key focus. The company has focused many resources on its PayPal fast lane opportunity, which looks to me like a carbon copy of fast or shop pay. The company is attacking guest checkouts and new credit card entries across the world. Finally, the company is also trying to spin the rise of Apple Pay, which coincidentally just overtook PayPal as the fastest growing and largest digital wallet for physical retail payments. Speaking for myself, I never even bring my credit cards into stores anymore. I almost exclusively use Apple Pay and it seems like the sales representatives expect it too. Internationally, I do think PayPal's prospects are much greater because Shopify and Apple Pay are less prevalent, but many of the largest countries in the world don't need PayPal because they have an incumbent. That's certainly the case in places like China and India. Our third story, designer brand product posts revenue gains. Is it just me or even in the sea of trading down, there are a few standout brands that are not being traded down? I'm looking at you, Abercrombie, ELF Cosmetics, and now products hit new brand Mew Mew. That just reported first six months revenue in 2024 that was up 17% from the prior year from Mew Mew and up over 5% on its namesake Prada brand. Crazy thing about Prada's performance is that other luxury brands are really struggling and primarily due to the decline in spending power of the Chinese consumer. This includes brands like Louis Vuitton, Gucci, Hermes, and even smaller players like Hugo Boss. Fashion is of course a hit business, so these things are difficult to predict, but it goes to show you that if you do have a product hit on your hands, it will defy the current trading down environment. Creating hit product is obviously something you can't just wish into existence, and so the average luxury company out there will continue to rise and fall on the spending power of the Chinese consumer. And our last story, team o announcement signal accompanies shift. The number of reports in the market are increasing that team o is going to be adding a new part to its model to expect sellers to hold inventory and store things locally, which sounds to me a lot like the Amazon marketplace. First, this could work fine for the very top selling items because you have forecast visibility, but it will struggle for newer items that T-Boo is note for. Second, and building on the above point, this is very familiar to anyone who has done business in Chinese marketplaces like T-Mall, etc. For big promotional events, you have to store inventory locally in China to participate. I expect that T-Mall will continue to run that playbook, but now in America, for its Chinese suppliers. There's a lot of discussion about direct competition between T-Moo and Amazon, and I just don't see erosion at this stage. The American e-commerce market is very mature, and I still think it will take more than a cheap foreign entrant to disrupt Amazon. There are literally hundreds and thousands of companies that have tried to compete with Amazon head on and fail. What T-Moo could disrupt, however, is a bunch of underperforming North American retailers that don't have the kind of manufacturer-to-consumer model and deep pockets that T-Moo does. That and the promotional aspect does make sense for T-Moo to add local shipping and fulfillment to its model, but not because I believe it's directly going after Amazon. It's that time, friends, for our investor minute. We have five items on the menu today. First, supply chain visibility startup Altana raises $200 million in series C funding. Supply chain visibility platform Altana has raised $200 million in series C funding, which will be invested in product development. This is a huge hurdle to climb and puts a big bullseye on Altana in a market that is trading down service providers. Will they be able to live up to it? Second, publicist groups to acquire marketing agency influential. Publicist groups to acquire influential and influencer marketing company that has 3.5 million creators at the service of 300 plus global brands for an undisclosed and rumor $500 million cost. Publicist continues to acquire complementary companies to offer brands more opportunities to market to consumers. Influencers have become an important, if expensive, part of any marketing strategy. Third, uptime AI secures $14 million in series A funding. The company, uptime AI and operational excellence platform for heavy manufacturing industries has raised 14 million series A funding round that will be invested into its technology. I guess manufacturing plants also create data that can be used by AI, right? Fourth, eyewear maker Esylor Laxotica to acquire supreme for $1.5 billion. Gold eyewear maker Esylor Laxotica has acquired streetwear brand Supreme from VF Corp for $1.5 billion. Why would Esylor Laxotica acquire supreme? To add collaborations between them and supreme, really? This seems like a highest bidder for a troubled brand supreme and is more than likely something that might be spun out again in another couple of years. And finally, Sandalbrand Birkenstock raises $1.5 billion in IPO. German Sandalmaker Birkenstock has raised $1.5 billion in its IPO, valuing the company at $8.6 billion, which lost 13% in market value on its first trading day. The company was overvalued in private markets and the footwear sector has not had great returns from new public entrants recently. That said, Birkenstock is one of those forever brands, which continues to attract even new young shoppers each generation. And today's final word of the week of August 5th, 2024, is gold. As in the Olympics, baby, it's amazing to see the display of human talent and determination out there. Simone Biles and Katie Ledecky were some of the standouts in my mind from all the entrants. Although it's fun to watch some of the more obscure events like 303 basketball and synchronized diving as well. USA USA Did you know that ARMW Commerce has a brand new podcast? Check out the Watson Weekend for an unfiltered and lively e-commerce chat each week with me, Rick Watson, my co-host, Jess Lasseski, and an array of interesting guests and topics, all focused on e-commerce. You can find the Watson Weekend by searching for it on iTunes, Spotify, or YouTube. That's all for this week. Till next time, Watsonians. Hi, I'm Rick Watson, CEO and founder of RMW Commerce Consulting and host of the Watson Weekly Podcast, your essential e-commerce dodges. Our production partner for the series is Citizen Racecar. The show is produced by Jose Baez, production manager Gabrielle Mantzki. To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts. [music]
