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Top 5 Marketplace Takeaways of the Week #12

Estimated reading time: 7 minutes

Welcome to this week’s round-up where we take a look at Alibaba’s exploration into a joint venture with Reliance Retail, Amazon considering setting up an insurance comparison site, Amazons ad business secret weapon and more!

Alibaba…the world’s fastest growing economy?

China’s e-commerce giant, Alibaba Group, has initiated talks with Reliance Retail Ltd to form a joint venture with an investment of $5 billion to challenge their rivals, Amazon and Flipkart for dominance of the ‘world’s fastest-growing economy’. Alibaba is looking into obtaining a large stake in Reliance Retail to create a ‘behemoth’ in the digital marketplace and to expand it’s reach over physical retail businesses in India. From these talks, India’s booming e-commerce market will have battles intensify over dominance of this market. Jack Ma, Alibaba’s executive chairman, recently met with Mukesh Ambani, Reliance Industries Ltd chairman, to discuss the proposal that has been put forward along with a number of other things. One of the subjects of discussion was a plan to create a ‘large omnichannel’ retail entity utilising this joint venture. During this discussion, one of the two stated: “Alibaba is willing to pick up a significant stake in Reliance Retail, preferably 50%, which will require Alibaba to invest $5-6 billion.” This deal will be highly beneficial to both parties if it goes through as it is considered a ‘strategic JV between Alibaba and Reliance Retail’. This will be Alibaba’s largest investment into an Indian company if the joint venture goes through; all we can do now is just wait to see what will happen.

The next big name in insurance comparison

amazon logo

Amazon is considering setting up an insurance comparison site in the UK after several talks with some of Europe’s top insurance firms. This would be Amazon’s gateway into the UK’s financial services, foreign territory for the US online retail giant. They have already been having several discussions in regards to this topic with multiple different insurers. From these discussions, it has been said that there are currently no imminent launch plans for this service, especially as this is still just a consideration. Morningstar analyst, RJ Hottovoy, has made a statement on this foray by Amazon: “As Amazon becomes a larger part of the home, whether it’s products delivered to the home, security monitoring, home services like wifi installation, you can make the case that insurance is the next logical step for this company.” If Amazon does go through with creating this comparison site, this would cause trouble for the current comparison sites as they do not have as much reach, as big a loyal customer base or as much cutting edge technology as Amazon. A consumer benefit from this possible move, could be that Amazon would be able to offer extensions to manufacturer warranties; this service is already in the US and is called ‘Amazon Protect’. Amazon’s broader reach could be attractive to some insurers however, potential premiums which would be in place could deter other insurers from using Amazon for this purpose. This price comparison site would also be good to drive traffic to other sites. Comparison site use is more commonplace in the UK for motor and home insurance, compared to the rest of Europe and the US. Multiple insurers rely heavily on comparison websites to make sales, which could see benefits from Amazon’s reach.

Amazon are looking to take on the world of cinema

Amazon has been looking into making a purchase on the movie theatre chain, Landmark Theatres. This is a small movie theatre chain, with only 56 locations around the country, however, it focuses on a niche of independent and foreign films, along with a few others. The chain has a good reputation and is self-described as ‘upscale’. By having movie theatres, Amazon is moving further into physical retail, a long-term move for the company. Prime members may also see benefits from this move as Amazon may consider adding prime benefits for movie theatres as a physical retail approach, as they are also doing with their recent acquisition of Whole Foods. This would also be a further step into their competition with services like Netflix and HBO for movies.

Amazon’s ad business secret weapon

In their last earnings reports, it was noted by Brian T. Olsavsky, Amazon’s CFO, that Amazon’s advertising business has become a “multi-billion dollar business”. The adoption of this service is said to have been strong for ‘individuals and corporations’ that are ‘seeking to reach a larger number of Amazon customers’. In addition, Olsavsky stated that there are “hundreds of thousands of emerging and established advertisers” moving towards this advertising business to help aid their discoverability, ‘pushing traffic to external websites, enhancing their brand, encourage app downloads, or to drive sales on the platform.’ Amazon has been making improvements to their advertising tools which is streamlining the ad buying processes for sellers as well as developing tools which allow advertisers to run their own campaigns. They are also working with the utilisation of competition for the advantage of attribution. Attribution is a key system for advertisers to determine profitability for the advertising campaigns, which in turn, also allows for further optimisation to be performed. Measurement capabilities and facilities are also being worked on to allow the advertisers to understand the outcomes from their advertising. The monitoring systems that Amazon are working on and improving is one of their key competitive advantages that they have when it comes to the ad market. This is heavily due to the amount of data that Amazon collects and collates for the advertisers/sellers to see allowing for the further enhancements and optimisation of attribution. The potential of Amazon’s ad service is further increasing with predictions of $8 billion revenue in 2018 and $16 billion by 2020, by analyst Michael J. Olson.

Is Amazon planning to kill TiVo with Frank?

Amazon are working on creating a new DVR device to compete with TiVo and Slingbox. This new device is currently named Frank. One of the features of Frank is that it will be able to record live TV and stream it to your smartphone. The Frank DVR box is said to work around the content distributors to ‘extract the live TV programming from your cable or satellite provider’. The device will connect to your TV wirelessly using the same technology which allow Echo speakers and Fire TV boxes to communicate with each other. Frank could be considered as an alternative for ‘non cord-cutters’ as it isn’t a true rival to Sling TV and YouTube TV. It is said that the device would fit in well with Amazon’s Fire TV Cube, as that allows a plethora of voice commands to be used with your cable box but doesn’t have the capability of storing programming. As of now, there is no scheduled release or announcement of Frank. Not all of the features may be included in the device, particularly the streaming feature as that has been said that: “Amazon hasn’t made a final decision on rolling out the streaming feature” and “plans could either be canceled or delayed”. Even though none of this is set in stone, the news of this device caused TiVo’s stock to drop as much as 10%!

If you have any questions or queries regarding marketplaces including Amazon, eBay, Alibaba or JD.com then feel free to get in touch with us to see how we can help.

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