Today on our show:
- UPS reports Q2 earnings
- Google not ending cookies after all
- Amazon Prime Day roundup
- New marketplace whitepaper released
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 July 29, 2024, and this is the Watson Weekly, your essential e-commerce digest. Today on our show, UPS reports Q2 earnings, Google not ending cookies after all, Amazon Prime Day Roundup, and a new marketplace white paper released, 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, UPS reports Q2 earnings. Here are five key takeaways from you from the UPS latest earning reports for Q2 2024. I listened in on the report and came in with five big impressions. First, in Timu TikTok shop and Xi and growth exploded. Previously, the euphemism of note for UPS was "our largest customer," which was UPS code word for Amazon. Now the euphemism has shifted. The new quote is "new e-commerce entrance," which is the new UPS euphemism for TikTok shop, Timu, and Xi and, and the growth is exceptional. The UPS CEO used the words "growth has exploded" and noted that these new entrants are running an entirely different model than its traditional shippers and greatly relying on Shurpost. In response, UPS has invested a lot in redirecting Shurpost volume back into its ground network to the tune of 40% success with the redirect so far and expect this number to rise. My second impression is that businesses are trading down not just consumers. One of the first mentions on a carrier call I've seen about shippers trading down in service level. For the same parcel that used to ship air, those are now going ground. Ground parcels are now trading down to Shurpost. UPS is claiming they are trying to maintain ground network volume by matching loads, but all that does is reduce per-parcel asset utilization of their ground network, which is somewhat a good news bad news story. It does not fundamentally solve the trade-down problem. Back TTS or Timu, TikTok Shop, and Shian to continue to spread in the lexicon. Three, Teamsters agreement is good for robots, bad for humans. Combined with pressure on UPS average daily volume, the rising cost of the Teamsters agreement is bad news for humans. UPS would have continued its RFID initiatives anyway, but the combination of UPS volume challenges has promoted UPS to eliminate 11,500 positions, which has delivered 350 million in savings. They expected triple that savings number by end of year. As I said, good for robots, not so good for humans. Four, Holiday Peak will be condensed. If you haven't studied the Holiday Calendar this year, now may be the time to do so. There are only 17 days between Thanksgiving and Christmas, and UPS is calling this the most condensed peak since 2019. December 18th, they expect to be the peak. Given the volume declines, I still don't expect many supply chain issues, but those not prepared for the condensed peak could be caught flat-footed. Five, Amazon is stable at 11.5% of UPS revenue. The fact that Amazon revenue is flat to a year ago is somewhat surprising, but also indicative of the growth of Amazon relative to other shippers. When Amazon tells you for years that they're going to be reducing reliance on UPS, but their share of revenue stays consistently flat, I take this as a clear indication that Amazon is still gaining market share. Our second story. Google's not ending cookies after all. And you thought you were living in a post-cookie world? Clearly we're not. After pushing back the cookie deprecation date in Chrome several times in the last few years, Google has decided the cookie either cannot or will not be killed. The company has given an alternative in its privacy sandbox APIs, but ultimately this decision may not end up meaning as much as we might think. With regards to cookies, users will at some point be given a choice whether or not they want to use them. And new and growing mediums like mobile and connected TV, the cookie is simply less relevant. As a result, we are already living in a cookless world and advertising because we're trying to triangulate user identity and information in a much more privacy-safe way with data clean rooms and retail media networks. Still, back on the desktop internet, it strikes me like the cockroach and twinkies the HTTP cookie may always be with us. Our third story. Amazon Prime Day Roundup. Well, we have another Prime Day in the books and while Prime Day is now in the rear view mirror, I thought I would encapsulate a few of the roundups from notable sources like Amazon, Adobe, Jungle Scout, Numerator, and Acadia, an Amazon marketing agency. What follows is a synopsis of some of my key takeaways from these sources. Prime was a record-breaking event for Amazon, but otherwise, they don't report too many metrics that allow you to see what's going on. Consumer shop deals across 35 categories. Adobe reports Prime Day being up 11% year over year, which is slightly above the e-commerce growth rate of 8 to 10% being widely reported at the moment. Partners were reported to have spent $11.4 billion in two days. By one thought, this would seem like a slight disappointment given the amount of promotion involved, but this is partially explainable if you keep listening. Of the agency's reporting about their clients, Acadia reported that 80% of their clients ran deals. Consistent with consumers trading down, the number of orders was much higher than average order value. Numerator report that AOV was around $58 and the average price for item was about $28. Acadia reported a 15% drop in average selling price compared to last Prime Day. And also reported that ad sales on Amazon were up 63% year over year, and that 63% growth is on 11% growth in gross merchandise volume. This is going to be great for Amazon's Q2 margins, but is this a sustainable trend? Paging Lina Khan, please pick up the orange phone. Paging Lina Khan, please pick up the orange phone. Prime Day continues to be an electronics-focused event with televisions, fitness trackers, computers, smartphones, and cameras benefiting most. What's next? Get ready for Amazon's fall Prime Day event, which is the past of any guide will begin in October. And our last story, new marketplace white paper release. This last week at RMW Commerce, we released an interesting new white paper called Your Customer Is Hiding in Plain Sight to draw attention to the fact that marketplaces are still a great way to win customers, and in fact your brand's customers are already there. This report builds on other research we've done at RMW Commerce on delivering the modern brand promise, which indicated that consumers use an average of six digital touch points before they purchase something. The challenge is, you can't just show up on any random channel and expect to win. If you're looking to succeed on marketplaces, you must solve these five key challenges. Identify which channels are a fit for your customers, to connect to those channels, understand the best assortment for that particular channel compared to your own website, optimize your feed and business on that channel, and finally, figure out how to be profitable. A big thank you to Sharon Gee and the entire feedanomics team for commissioning this report and video Brian who helped author it. Check out the resource section of the RMW Commerce website for our latest white papers and to download it. We'll have a webinar coming up on this soon, so look for that from the email as well. It's that time friends for our investor a minute. We have five items on the menu today. First, UPS to require a Mexican delivery company Estefeda. UPS requires Mexican Express parcel delivery company Estefeda for an undisclosed amount aligning with its better and bolder strategy to become a global leader in premium international small package and logistics services. With section 321 and other near-shoring happening, Mexico is a key staging ground for the North American market from overseas factories for brands now. Second, El Catterton buys outlet mall stake in $1.9 billion deal. El Catterton has agreed to buy Hammerson's stake in Outland Mall Landlord value retail in a deal representing an enterprise value of $1.9 billion. Who said luxury is not interested in real estate? Third, Shopify to acquire Channel Ape. Shopify has acquired the inventory management platform Channel Ape for an undisclosed amount. Is this Shopify a toning for its logistics fiasco in enhancing its inventory management software? With apologies to Channel Ape, any software with Ape is not enterprise software. From looking at their website, this could add better EDI, purchase order, and inventory management and analytics to Shopify. Fourth, the Boox Company raises over $23 million in funding. The Boox Company, a DTC floral retailer, has raised over $23 million in a mix of debt and equity that will be used to fund retail growth and new initiatives. I'm seriously curious how a 12-year-old forest company raises funding. And finally, Cart.com has secured $150 million short-term loan facility from BlackRock to refinance its previous loans. Content and startups don't often work well together, and the current interest rate environment is not fantastic. And today's final word of the week for July 29, 2024 is simplicity. I bring this up because many businesses grew up in an era where technology was an asset. It could help your valuation, and you could think it would be a competitive advantage for you by building your own tech. For most brands and retailers in the audience, that era is long past. There's so much software on the market, but I find there is not enough good people to understand how and when to use it. In any event, don't over-complicate your technology. Get the right people and help them learn every day about the customer. Then add technology would help you on this journey. But notice, it's the people you should worry about first. Did you know that RMWCommerce has a brand new podcast? Let's hop 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 RMWCommerce Consulting and host of the Watson Weekly Podcast, your essential e-commerce digest. Our production partner for the series is Citizen Race Car. The show is produced by Jose Baez, production manager Gabrielle Montakey. To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts. [Music]
