Top e-commerce mergers and acquisitions news and analysis

Coupang’s $500 million Farfetch acquisition is complete, despite investor pushback

Brian Warmoth — Fri, 02 Feb 2024 17:23:38 +0000

Just over one month after a deal was first announced, Coupang completed its Farfetch acquisition. The companies will proceed despite opposition from a group of investors who challenged the $500 million acquisition’s short timeline.

The deal, made possible through bridge loans and a partnership with the investment firm Greenoaks Capital Partners, will position Farfetch “to pursue steady and thoughtful growth,” a statement from Coupang states.

Coupang ranks No. 12 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the top 100 online marketplaces. Farfetch is No. 30.

Why Coupang is acquiring Farfetch

London-based Farfetch faced possible bankruptcy without a dramatic influx of capital to cover its debts. The Coupang deal meant that Farfetch could abandon another proposal from the Swiss luxury goods group Richemont. Under the terms of that deal, Richemont would have taken a minority stake in Farfetch.

“By providing access to $500 million in capital, this acquisition allows Farfetch to continue delivering exceptional services for its brand and boutique partners, and to more than 4 million customers around the world,” Coupang’s statement on Wednesday read.

Investors opposed to the Farfetch acquisition

On Jan. 26, a group of investors calling themselves “the 2027 Ad Hoc Group” declared that it disagreed with the terms of the Coupang deal. They assessed that the sale undervalued Farfetch, based on previous valuation estimates from August 2023. In addition, the group accused Coupang of deterring competing bidders with a “US$1bn ‘poison pill.'”

Initial terms of Farfetch’s Dec. 18 agreement would have provided time to entertain other bidders until April 30.

According to the group’s own press release, the funds managed by institutional investors in the 2027 Ad Hoc Group held “over 50% of Farfetch’s 2027 convertible notes.” Their public move followed a notice of default and acceleration that meant debt to be paid for their notes would be wiped to zero.

“The Group believes this process sets an incredibly dangerous precedent,” stated a spokesperson for the 2027 Ad Hoc Group. “Allowing this transaction to complete fails to maximize the value of the assets of the Company, at a time when at least three other credible parties were publicly reported to be interested in all or parts of the business.”

Farfetch’s SEC filing and message on convertible notes

Farfetch addressed convertible notes in a filing with the Securities and Exchange Commission dated Jan. 31. The filing states that — as a part of its acquisition — debt related to notes such as those described by the 2027 Ad Hoc Group will not be recoverable going forward.

“Farfetch expects that holders of its Class A and B ordinary shares and its convertible notes will not recover any of their outstanding investments in Farfetch, and Farfetch expects to be liquidated,” the company stated in its Form 6-K filing.

Moreover, Farfetch maintains that its efforts to obtain a competitive bid were sufficient.

“Following a robust marketing process undertaken by JP Morgan on behalf of FF PLC for the sale of all of FF PLC’s business and assets, which process did not result in a proposal for a competing transaction, on January 30, 2024, Surpique LP consummated the purchase of FF PLC’s business and assets through an English-law pre-pack administration process (the ‘Sale’),” Farfetch stated in its filing.

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How American Freight is rebranding after merging with Sears Outlet

Mary Meisenzahl — Tue, 30 Jan 2024 19:39:58 +0000

Furniture retailer American Freight had an eventful few years, said Peter Corsa, CEO of parent company Franchise Group’s home segment. In February 2020, Franchise Group acquired Sears Outlet Group and merged the brands together under the American Freight name.

Four years and one pandemic later, the leadership team shared plans for 2024 with Digital Commerce 360.

American Freight ranks No. 239 in the Digital Commerce 360 Top 1000. The Top 1000 is a ranking of North America’s leading retailers by online sales

American Freight’s overdue rebrand

Some furniture retailers were early winners during the pandemic, as consumers spent to improve their homes while stuck inside. Overbuying in 2020 and 2021 led to declines in home goods sales in the following years. Now, the market is finally rightsizing and American Freight can carry out its rebrand in earnest, Corsa said.

“We’re now taking a step back and saying this brand needs a bit of a refresh, with a better identity, a better tone,” chief marketing officer Lauri Joffe said. “We’ve refreshed our color palette, brand standards, and we are bringing that to life now in all of our marketing.”

Part of that rebranding process also means growing the store footprint, Corsa said. American Freight has just under 400 stores today. Based on market studies, the retailer has runway to grow up to 1,000 locations eventually, Corsa says.

Finding the right mix of products to stock American Freight’s stores is key, too, said Alissa Ahlman, chief merchandising officer. When factories were shut down and shipping container costs were at their peak, keeping the right inventory in stock was a challenge.

“Stores got filled with some product that wasn’t necessarily always in our wheelhouse,” Ahlman said.

“We spent a lot of time last year getting the right product in place, getting that product liquidated, making sure that we cleaned up our inventory,” she said. Now, she finally feels confident that the retailer has the right product mix.

Investing in technology

American Freight has technology investments planned throughout the year and beyond to enable that growth. Top priorities for this year include implementing a new enterprise resource planning (ERP) software and reconsidering the product allocation system, Corsa said.

Of course, artificial intelligence (AI) is also in the discussion.

“We’re implementing it really thoughtfully and cautiously and not chasing after AI for the sake of AI,” Corsa said. “We’re trying to solve business problems and customer needs. We first identify the problem, and then we go tech shopping.”

For example, American Freight is about to launch a test with Lily AI, which generates ecommerce product descriptions based on images. The platform uses generative AI to pick from more than 20,000 attributes and assign them to the product.

The goal of many of American Freight’s planned technology investments is to replicate the in-store experience online. An ecommerce customer can’t touch and interact with the fabric of a couch she’s considering, Joffe said.

In that sense, “traditional photography is dead for products,” she said.

Instead, she believes sophisticated renderings that better replicate that experience are the future. That includes the ability to turn images for a 360-degree look at them, and using augmented reality to view a piece of furniture inside a person’s home.

The retailer did not share what percentage of its sales comes through ecommerce, but most customers interact with American Freight through both channels, Joffe said. It’s not about targeting the online shopper as a separate customer from the in-store shopper, but rather catching that consumer wherever they might be looking for furniture inspiration, including on social media. Then, the shopping process might start online and finish in store, she said.

Finding new customers with value

American Freight will continue to prioritize value for consumers furnishing their homes, Ahlman said. The retailer’s sweet spot is someone looking for a deal, either to furnish their home or apartment. That cuts across demographics, from someone furnishing a dorm room or first apartment, to a higher-income consumer looking to purchase appliances for their rentals, she said.

American Freight brought on the concept of open-box appliances sold at a discount from the Sears Outlet merger. These products are discounted because of scratches, dents or other physical imperfections.

The listing highlights imperfections on the unit and the discounted price.

Now, Ahlman is working on replicating that experience online. In practice, that means each listing gets a photo of that specific unit online so the customer can see why it’s discounted. Customers can also view it side by side with an undamaged unit to compare. That process is popular with American Freight customers and has traditionally helped it target value-conscious customers, she said. Optimizing the discounts online will allow it to reach more consumers.

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Amazon drops iRobot acquisition after regulatory roadblocks

Mary Meisenzahl — Mon, 29 Jan 2024 18:29:44 +0000

Amazon.com Inc. will not acquire iRobot, the companies jointly announced Jan. 29. The proposed acquisition has “no path to regulatory approval in the European Union,” according to the statement.

The retailer will pay iRobot a termination fee of $94 million.

Amazon ranks No. 1 in the Digital Commerce 360 Top 1000. The Top 1000 is a ranking of North America’s leading retailers by online sales. iRobot Corp. ranks No. 396.

Amazon also ranks No. 3 in Digital Commerce 360’s Global Online Marketplaces database. The database ranks the 100 largest such marketplaces by third-party gross merchandise volume (GMV). Digital Commerce 360’s 2023 Global Online Marketplaces Report includes key insights into the biggest players in the database.

Terms of the deal

Amazon previously agreed to acquire iRobot in August 2022 for $1.65 billion. The deal would have brought iRobot’s Roomba vacuum under Amazon’s umbrella, alongside Amazon’s devices including the Echo, Ring and Kindle.

Had the deal gone through, it also would have been Amazon’s fourth-largest acquisition to date, The Wall Street Journal reported.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” Amazon senior vice president and general counsel David Zapolsky said in a statement. “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products, which delight consumers and solve problems in ways that improve their lives. Amazon and iRobot were excited to see what our teams could build together, and we’re deeply grateful to everyone who worked tirelessly to try and make this collaboration a reality.”

Regulatory roadblocks

The European Commission opened an investigation into Amazon’s proposed acquisition of iRobot in July 2023. In November, the body released its findings that if the deal went through, Amazon might restrict competition for robot vacuum cleaners.

“Amazon may have the ability and the incentive to foreclose iRobot’s rivals by engaging in several foreclosing strategies aimed at preventing rivals from selling RVCs (robot vacuum cleaners) on Amazon’s online marketplace and/or at degrading their access to it,” the European Commission wrote. It noted that Amazon’s marketplace was a particularly important channel for consumers to find and purchase robot vacuum cleaners in France, Germany, Italy and Spain.

The Federal Trade Commission (FTC) also planned to sue to block the acquisition, the WSJ reported.

Amazon criticized regulators’ decisions.

“This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable. Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics,” Zapolsky said. “Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition — the very things that regulators say they’re trying to protect.”

What’s next for iRobot?

Following the announcement, iRobot plans to cut 350 jobs by the end of March. That amounts to 31% of the company’s workforce as part of a restructuring plan.

CEO and Chairman Colin Angle also stepped down from both roles, effective immediately. He was replaced by executive vice president and chief legal officer Glen Weinstein as interim CEO.

“The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love,” Angle said.

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Lawsuit threatens Kroger Albertsons merger

Mary Meisenzahl — Fri, 19 Jan 2024 15:32:26 +0000

Washington’s state attorney general is trying to stand in the way of the proposed merger between Kroger Co. and Albertsons with a new lawsuit.

State attorney general Bob Ferguson filed a lawsuit in King County Superior Court in an attempt to block the deal, The Seattle Times first reported.

The two grocery retailers first proposed the deal in 2022. Kroger was slated to buy Albertsons for $24.6 billion, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in a statement at the time.

Kroger is No. 8 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Albertsons ranks No. 26. The two chains also make up the first and second largest retailers in the food and beverage category of the Top 1000.

Why is the attorney general suing to stop the merger?

Ferguson says the merger would give Kroger a near-monopoly in Washington.

“The Proposed Transaction would combine the two largest — and, in some areas, the only — supermarkets in many communities across Washington, which is likely to lead to higher prices, lower quality, and less variety in many local markets throughout Washington,” the lawsuit reads.

Kroger and Albertsons are the two largest grocery chains in Washington. With more than 300 combined locations in the state, together they account for more than 50% of total grocery sales.

“This merger is bad for Washington shoppers and workers,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger.”

Kroger and Albertsons previously agreed to sell 100 stores in Washington in hopes of gaining regulatory approval. That’s not enough to offset the impact of the merger on Washington consumers, the lawsuit says, calling the move “woefully inadequate.”

Kroger and Albertsons respond to the lawsuit

The two retailers released a joint statement regarding the lawsuit.

“We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review. We remain in active and ongoing dialogue with the FTC and the other state Attorneys General,” they said in an emailed statement.

“The merging parties will vigorously defend this in court because we care deeply about our customers and the communities we serve, and this merger will result in the best outcomes for Washington consumers,” the statement continues. Kroger CEO Roger McMullen previously promised to fight for the merger in court if necessary.

“Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry. In contrast, Kroger and Albertsons Companies merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and bring more fresh, affordable food to more communities” Kroger and Albertsons said.

Amazon, Walmart and Costco and rank No. 1, No. 2, and No. 6, respectively, in the Top 1000. Digital Commerce 360 categorizes them as mass merchants, rather than food and beverage retailers.

Workers at Kroger and Albertsons are unionized with The United Food and Commercial Workers International Union (UFCW). The UFCW voted in May to oppose the merger.

The state of online grocery sales

U.S. online grocery sales declined slightly in 2023, according to annualized results from the monthly Brick Meets Click/Mercatus Grocery Shopper Survey. Sales totaled $95.8 billion, $97.0 billion in 2022 and $97.6 billion in 2021.

Meanwhile, Kroger and Albertsons both grew digital sales in their most recent fiscal quarters. Kroger grew online sales 11% year over year in its third quarter ended Nov. 4, 2023. Albertsons grew its online sales 19% in its second quarter ended Sept. 9.

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Editors’ picks: Our favorite stories about online retailers in 2023

Abbas Haleem — Fri, 19 Jan 2024 13:00:59 +0000

Ecommerce technology is constantly evolving, and online retailers managed to take advantage of that evolution in 2023.

Below, we recap some of Digital Commerce 360’s most insightful articles about online retailers from 2023 regarding 10 key coverage areas:

Industry news and trends (including the Bed Bath & Beyond saga)
Artificial intelligence
Digital marketing
Exploring new technology
Fulfillment and delivery
Livestreaming
Mergers and acquisitions
Online marketplaces
Payments and fraud
Sustainability

These stories highlight meaningful changes to online retailers’ ecommerce operations in 2023. Most notably, they include new and improved technologies and strategies that online retailers have implemented. We published roundups specifically for some of these coverage areas over the first couple weeks of 2024, and we link to them below. Those topic roundups — about artificial intelligence, fulfillment and delivery, and payments and fraud — include subtopics.

1) Industry news and trends

Silicon Valley Bank’s collapse hit the ecommerce world. See a list of impacted companies.

The bank had a history of investing in ecommerce startups, and Etsy, Shopify, and others had accounts with Silicon Valley Bank.

Gathering data in the age of privacy 

Learning how to collect and use first-party data is key if retailers are to navigate a world without third-party cookies.

Data shows online retailers with the highest carbon footprints

Websites emit carbon dioxide emissions (CO2). Recent data shows which retailers top the list of offenders versus those who don’t.

Retail profitability rebounds but remains pressured by online costs

Retailers’ profits declined from 2012-2019, in part due to the costs associated with online and omnichannel sales, but bounced back during the pandemic, Deloitte says. Cutting costs, including by limiting free shipping and handling returns more efficiently, will be essential to maintaining profit margins.

What ecommerce retailers can learn from HomeGoods exit

Despite giving ecommerce a go, HomeGoods found out that off-price retailing is not well suited for its online sales.

1.5) The Bed Bath & Beyond saga

Amid all this ecommerce news and the largest online retail trends of 2023, one story remained at the forefront for months. Bed Bath & Beyond’s downfall had — and continues to have — a meaningful impact on the retail industry.

Bed Bath & Beyond says it’s not beyond help, but reports further losses

Coming just days after the retailer said it might seek bankruptcy protection, the poor earnings report paints a dismal picture for the beleaguered retailer.

Which retailers will benefit from Bed Bath & Beyond’s demise?

Bed Bath & Beyond’s bankruptcy presents an opportunity for retailers to cash in on the shopping experience both in store and online.

Overstock CEO says brand name is a “boat anchor” ahead of Bed Bath & Beyond relaunch

Revenue and other key metrics were down for Overstock, but CEO Jonathan Johnson says the Bed Bath & Beyond relaunch will be a “new phase.”

Goodbye, hello: Buy Buy Baby preps to be born again

Under new ownership, Bed Bath & Beyond’s former baby-products retailing unit plans an ecommerce and brick-and-mortar revival.

2) Artificial intelligence

Perhaps the most-talked-about subject for months, if not the entire year, artificial intelligence had a resurgence in 2023. Many retailers were already using it — and machine-learning technology — to guide operating processes. But then, generative AI entered the arena at the end of 2022, and it drew global attention to its capabilities. Here’s how some online retailers are leading AI integration into ecommerce.

3) Digital marketing

How are digital marketers using AI to boost conversion?

Artificial intelligence allows digital marketers to quickly test how consumers respond to ads, images and emails. Over time, the algorithm learns, and its predictions become more accurate. Learn how three retailers increased their online sales after investing in AI.

Online flower retailer UrbanStems increases conversion 12% during Valentine’s Day season

Conversion through paid social channels drove that overall increase, growing 83% year over year.

Why wacky ads work on TikTok, while sober is better for Facebook

Four online marketers share ways they curate their brands’ social media content to cater to their target audience on each platform, and explain when it’s OK to repurpose content.

80% of Chico’s customers sign up for its loyalty program in the first nine months

Chico’s updated its loyalty program for the first time in 30 years, and after one year, more than 80% of customers are members.

Lights, camera, conversion: How some retailers use videos to entice shoppers to buy

Online retailers use video to provide shoppers with a rich customer experience that informs, engages and converts.

4) Exploring new technology

Generative AI wasn’t the only new technology to hit retailers’ tech stacks in 2023. Companies dived into the metaverse and other virtual realities. They also took advantage of atypical payment methods and found ways to change business models entirely.

American Girl invests in its virtual museum

The retailer’s digital museum provides content so girls can play, learn more about the brand’s doll characters and create product wish lists.

Crurated’s wine platform uses NFTs and memberships to find a younger market

70% of Crurated’s members using the blockchain wine service are under 45 years old.

Forever 21 caters to Gen Z shoppers with fast checkout, metaverse products

Despite an initially turbulent relationship, apparel brand Forever 21 and payment provider Bolt Financial are now touting positive results from the integration of the streamlined checkout button.

What online retailers can learn from Evite’s business model pivot

Evite’s customer experience suffered because of the company’s reliance on advertising revenue, CEO David Yeom tells Digital Commerce 360. Evite took the lull in parties during the pandemic to overhaul its revenue streams.

UK crafts retailer uses data to guide website replatforming process

Hobbycraft had to learn what parts of its website did and didn’t make sense for its shoppers, what bugs to work out, and what changes its website wasn’t capable of. And after about 12 years with its previous website, it replatformed in March 2022.

5) Fulfillment and delivery

Online retailers continued learning how to cut and manage shipping costs in 2023. Some major retailers optimized fulfillment and delivery by using stores to fulfill orders, whether via delivering from them or urging customers to use in-store and curbside pickup options. These stories highlight meaningful fulfillment trends among online retailers in 2023.

6) Livestreaming

Natori invests in livestreaming to appeal to new generation of customers

Luxury apparel brand The Natori Co. believes livestreaming will enable the brand to appeal to new customers.

Orchard Mile takes control by livestreaming its own shopping events

Luxury online marketplace Orchard Mile hosts livestreaming shopping events through its own website rather than other channels.

Newegg livestreams more than 24 hours a day

Newegg livestreams 30 hours of content on weekdays, which includes livestreams across its six handles and in China.

Women’s apparel retailer ‘Evereve TV’ attracts shoppers, increases conversion

Evereve staff model clothing and share their styling tips through video on the retailer’s Evereve TV — and it’s boosting sales.

7) Mergers and acquisitions

Although there were many more mergers and acquisitions in 2023, these are some of the most notable ones impacting the industry.

Walmart sells outdoor retailer Moosejaw to Dick’s Sporting Goods

It’s the latest example of Walmart selling off online-focused brands it acquired as it bulked up its ecommerce business several years ago. Moosejaw will be part of the Public Lands outdoor business unit that Dick’s launched in 2021.

Unilever is selling Dollar Shave Club after seven years

Private equity firm Nexus Capital Management will acquire a 65% stake in Dollar Shave Club, with Unilever retaining 35%. The deal is expected to close by the end of the year.

UPS to acquire Happy Returns

Happy Returns’ service for online orders will soon be available at more than 12,000 U.S. locations, the CEO of UPS says.

What Sycamore gets for $1 billion to buy Chico’s

Private equity firm Sycamore Partners unsuccessfully tried to buy Chico’s FAS in 2019. Why is Chico’s worth $1 billion?

Why a serial ecommerce entrepreneur bought Blue Apron

Blue Apron is being sold to Wonder Group, an online food-to-home delivery company, founded by serial ecommerce entrepreneur Marc Lore.

8) Online marketplaces

Michael’s is the latest retailer to add a third-party marketplace

The digital marketplace will quadruple the number of products for sale, with the majority from third-party sellers.

Walmart and Amazon are growing their online marketplaces. Here’s how they compare.

They are both growing the number of third-party sellers on their online marketplaces, but Amazon has a significant lead.

Selling on Amazon is key for SMBs, but it might not make money

Small and medium-sized retailers say selling on Amazon is a necessary part of customer acquisition, despite added costs.

Amazon fee change ‘completely out of the blue’ for some Amazon sellers

Amazon announced it will end its Small and Light Program and introduce Low-Price FBA rates for all items priced below $10 (previously $12).

Prime Day’s mixed message: some merchants boost prices during the event

Last year, retailers raised prices on 13% of top-selling items during the Prime Day promotion, according to new research. And this year, Amazon rolled out invitation-only deals that limit price drops to select shoppers.

Amazon announces updates to Buy with Prime to stay competitive

Updating Buy with Prime is a way for Amazon to collect data and keep its market share while competing with Shopify.

What were the biggest ecommerce takeaways from Amazon’s Q2 earnings call?

CEO Andy Jassy said Amazon is developing more AI technology, making its fulfillment more efficient and improving its B2B division for business buyers.

EBay rolls out its generative AI listing tool to all marketplace sellers in app

The generative AI tool writes product descriptions for eBay’s app marketplace sellers based on their listing’s metadata.

Michaels launches MakerPlace online marketplace

Michaels MakerPlace does not charge sellers a listing fee and allows them to sell access to virtual classes and how-to guides.

9) Payments and fraud

Buy now, pay later was already on the rise going into 2023, when its popularity continued to grow. And as retailers considered implementing BNPL, even if late in the game, they also looked into other ways to make the payments process smoother for their consumers. These stories highlight meaningful payments and fraud trends from last year, showing how online retailers are staying focused on their bottom lines.

10) Sustainability

Grove Collaborative CEO talks sustainable shipping

With a goal to be plastic-free by 2025, personal care and home products brand Grove details ways it makes direct-to-consumer shipping more sustainable.

The secondhand retail industry grew 28% in 2022, according to ThredUp’s latest report

The report shows Gen Z and millennials are growing more open to buying and selling used clothing online.

How an apparel brand eliminates polybags

Toad and Co. commits to less packaging by sending orders in reusable bags and switching to paper-based polybags that can be regularly recycled.

Bedding brand aims for luxury unboxing without extra tissue paper

Beflax, a small online business, ships its $300 linen bedsheets in reusable packages. The brand wants its customers to have a premium package without extra waste.

Jewelry retailer strives for sustainability on different levels

J’evar uses an in-house generative AI tool to boost its sustainability efforts, which also include using a solar farm to grow its own diamonds.

Archive helps retailers resell their own products

Hanna Andersson customers take advantage of store credit options as they list items on the retailer’s Hanna-Me-Downs resale site.

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AI in ecommerce: Rithum’s Aarthi Ramamurthy on tech priorities after Cadeera acquisition

Brian Warmoth — Thu, 18 Jan 2024 17:39:18 +0000

Rithum is a young brand in 2024. However, it is made up of a portfolio of established names in software and artificial intelligence (AI) in ecommerce. The company, which rebranded in December, was previously known as CommerceHub. The new name debuted as Rithum announced the acquisition of the AI startup Cadeera.

Aarthi Ramamurthy joined the company as chief product officer before the name change in 2023. This year, as chief product and technology officer at Rithum, she will play a leading role in bringing its offerings into their first year under the new brand. A veteran of the tech world, Ramamurthy previously held roles at companies including Facebook (pre-Meta), Netflix and Microsoft. Now, she is entrenched in online retail — and especially AI in ecommerce.

What does Rithum do?

Rithum’s offerings already included legacy brands such as ChannelAdvisor and Dsco. They encompass product listing management, marketing, sales and delivery, inventory management and more.

Among retailers in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers by online sales, 157 use Rithum for channel management. In addition, 45 retailers in the Top 1000 use Rithum’s fulfillment software. 41 use it for online advertising, and 24 use it for search engine marketing.

Ramamurthy fielded a range of questions from Digital Commerce 360 about Rithum’s future following the rebrand, as well as how it sees AI playing a role in the future of ecommerce. She corresponded via email.

Interview

Digital Commerce 360: I want to start with the recently announced changes – CommerceHub becoming Rithum, and the acquisition of Cadeera. What did Cadeera bring to the portfolio of AI capabilities in your offerings? What else have you added over the past year?

Aarthi Ramamurthy, chief product and technology officer at Rithum

Aarthi Ramamurthy: With regard to AI and the new capabilities the technology brings to our business, the end goal is always focused on the customer and what we can help them achieve. In the age of adaptive AI and advanced chatbots, customer expectations are exponentially increasing. To succeed, retailers must become even smarter about how they onboard and sell products across multiple marketplaces, personalize offerings for consumers, and facilitate seamless delivery.

Over the past year, we’ve integrated AI into the Rithum platform to help with tasks like automatic channel mapping, including inventory compliance and error correction. For example, we can take a brand or supplier’s product data and leverage AI to automatically map it all internally and have a normalized source of truth. From our normalized schema, we can then map the data to any marketplace’s specifications at the click of a button, shortening the time to market for brands to go live on any marketplace.

With Cadeera specifically, the company’s technology provides Rithum with a multi-modal AI platform that brings together capabilities across computer vision, language processing, and machine learning, to help automate and scale manual processes like product onboarding, search, and discovery. This technology will also be used toward streamlining tasks like product content generation and image validation. Additionally, Cadeera’s capabilities will enable AI-powered supplier and product recommendations.

Focus on AI in ecommerce in 2024

DC360: What are you most proud of in terms of AI capabilities that have been developed there since you joined the company? And what are you most eager to build out as you look ahead?

Ramamurthy: We’ve made significant progress in the past year. I’m extremely proud of the new capabilities we’ve introduced, from automatic channel mapping to scaling product onboarding across marketplaces, this year was a major milestone in Rithum’s AI journey — and it’s only the beginning. We’re being pragmatic about AI’s capabilities and limitations and leveraging the technology to solve well-established customer problems focused on time to value for our sellers.

We’re very excited about what’s to come over the next few years. We have a robust strategy where we expect to leverage AI in several ways. First, we’ll continue to invest in supplier onboarding and launch experience, shortening the time to go live by leveraging Cadeera’s technology.

Second, given that Rithum is the largest commerce network on the planet, we will leverage AI to make network discovery and matching a seamless process. What this means is, we will build out systems that accurately predict what sellers (and which categories of products) a specific retailer needs to be connected to, and make the discovery and connection a straightforward process.

And finally, we will invest in solving for inventory management for retailers. Stocking the right inventory at the right fulfillment centers so that the products can reach the customer on or ahead of customer expectations is a big priority for retailers and we plan to roll out products to help with this.

What AI means for retailers

DC360: Whether it’s reducing time spent on a certain cycle or improving the quality of a certain experience (on a retailer’s backend or for a customer), what are the most tangible ways you see the AI in your technology stack having an impact for retailers?

Ramamurthy: For Rithum, AI has always gone beyond the hype. We think about AI in a very customer-centric way. Ultimately, everything we do that involves AI boils down to customer benefits, such as driving faster time to market, reducing costs, and increasing customer revenue.

Beyond channel mapping, AI within Rithum’s technology stack enables our customers to identify how quickly merchandise can be delivered based on real-time insight into matching inventory levels with customer fulfillment centers. Capabilities like this help keep product costs within the threshold that retailers want.

Additionally, AI is helping to curate the perfect product catalog for brands and retailers. This has major implications for environmental conservation. Eliminating unwanted inventory means reducing waste, which is a major issue in the fashion industry. More than just increasing profits from high-demand items, AI can be a catalyst for a healthier corporate carbon footprint.

Impact for online retail professionals

DC360: Which professional roles at retail companies do you see benefiting the most from your AI-powered features?

Ramamurthy: On the seller side, we expect the onboarding and revenue teams to see direct impact, since our AI-powered onboarding process cuts out a lot of unnecessary time spent manually onboarding sellers to marketplaces and gets sellers live and selling products faster.

On the retailer side, the merchandizing teams will reap the most benefit in the immediate term since they will have valuable insights on which sellers and which products to onboard in order to profitably grow their business.

DC360: Do you have any best examples of specific retailers using AI-enabled features in Rithum products right now that you could point to?

Ramamurthy: We are using AI when we onboard new suppliers to a retailer, which is no small feat. For example, a supplier might categorize a product’s (such as a shirt) color to be indigo, while the marketplace that the supplier onboards to might only accept the color blue. That’s an AI use case – how to transform product attributes and match them. In this case, the technology would be simple algorithmic AI at work.

There are also applications for machine learning. For example, the system might discover that in Q2, puffer jackets will be especially popular. Then it can automatically alert the retailers, figure out the supply for those items and onboard the suppliers.

Then there are large language models, made popular by ChatGPT. In this case, we are using LLMs to mine data, including data that’s poorly structured. The LLM can also distill input from customers on what they’re seeking or what feedback they’re providing.

Speeding up onboarding

DC360: When you speak about speeding up the ecommerce lifecycle, which steps or processes have you seen impacted the most by AI?

Ramamurthy: The onboarding process — specifically onboarding onto large public marketplaces as well as retailers, has traditionally been an unoptimized process, and is time consuming, leaving valuable revenue on the table. This is the area that will and already is having the most impact.

DC360: For retail and ecommerce generally, where do you think AI use will be most pervasive in the coming year?

Ramamurthy: AI will be a game-changer for ecommerce — and it is happening faster than many realize. Its two most likely impacts are first, the customer shopping experience to provide a more personalized, curated experience. Second, AI has the ability to meaningfully reduce the operating expense for retailers of all sizes by increasing speed to site for new products and reducing the manual effort required with today’s methods. We expect that these trends will combine with asset-light models like drop shipping and marketplaces to help retailers better serve their customers, more rapidly adjust selection, better personalize the ability to serve customers, all while growing sales and margins.

We continue to invest in and accelerate our capabilities in this area and look forward to significant expansion of AI across our entire platform.

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The post AI in ecommerce: Rithum’s Aarthi Ramamurthy on tech priorities after Cadeera acquisition appeared first on Digital Commerce 360.

A big spirits distributor and B2B marketplace expand their digital alliance

Mark Brohan — Thu, 11 Jan 2024 18:44:27 +0000

Republic National Distributing Co. is expanding its relationship with marketplace operator Flaviar Inc.

Flaviar says it facilitates a million orders annually through its network of retailers across the world. It signed a strategic agreement with Republic National in 2022.

Republic National, Flaviar plan to expand B2B ecommerce sales together

Republic National is a distributor of alcoholic beverages and related spirits. Flaviar owns spirits marketplaces Flaviar.com and Caskers.com. Under the arrangement, the two companies agreed to collaborate to expand B2B digital commerce in the wholesale beverage industry.

“Ecommerce penetration in beverage alcohol sales is still very low compared to other product categories, especially in the U.S., and we believe that the main reason is due to the lack of modern, consumer-friendly services in our space,” says Flaviar CEO Jugoslav Petkovic. “We’re firm in our commitment to support partners across all three tiers of the U.S. alcohol system, as well as internationally, to enable more of such services to launch and capitalize on this giant growth opportunity.”

The latest move in the collaboration is giving Republic National access to Flaviar’s latest acquisition: Wine-Searcher, a global database of alcoholic beverage product, price, and availability. Wine-Searcher’s database collects and indexes products, prices, locations, producers, and retailers into the drinks-related data available. The database has 18 million listings from more than 33,000 vendors across 126 countries.

Users search the Wine-Searcher database is 300 million times per year, and it has over five million monthly active users, Flaviar says.

Terms of the acquisition were not disclosed. But Republic National, which reports about $12 billion in annual revenue, including about $1.3 million through ecommerce, will use Wine-Searcher for larger product inventory, marketing data and related services, the company says.

“Our collaboration with Flaviar aims to accelerate the pace of digital transformation within the industry,” says Republic National CEO Nicholas Mehall.

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Happy Returns looks forward to 2024

Mary Meisenzahl — Fri, 22 Dec 2023 14:11:19 +0000

Happy Returns has big plans for 2024, says CEO and co-founder David Sobie. The United Parcel Service (UPS) announced plans to acquire the reverse logistics company in October.

Happy Returns manages returns for online retailers through kiosks called Return Bars. Customers use Return Bars to send back purchases from online retailers. The vendor says it has more than 10,000 locations, many of which are through partnerships with retail chains Ulta, Petco and Staples. It works with 800 retailers and has grown revenue to 10 times 2020 levels, Happy Returns says.

Happy Returns charges retailers a monthly service fee for handling returns and a per-item fee that varies, depending on the processing work required. Retailers with return kiosks also benefit from the increased foot traffic, which can lead to browsing shoppers and potential sales.

Sobie told Digital Commerce 360 about how the acquisition is going so far, and what the vendor’s hopes are for 2024.

Sold by PayPal

PayPal’s sale of Happy Returns was unfairly painted in a negative light in some media portrayals, according to Sobie. It fits into a narrative he characterizes as “big software companies offloading their failed logistics investments,” which he claims is inaccurate in the case of Happy Returns. For comparison, Sobie points to Shopify selling logistics startup Deliverr in May and Affirm shutting down Returnly in July.

Happy Returns’ case is different, Sobie says. UPS paid $465 million for the company, a 75% increase from the $265 million PayPal paid in 2021. That growth shows Happy Returns is “certainly not a fire sale. It’s not that this is a failing business that we have to offload,” Sobie says, speaking from PayPal’s perspective.

The reverse logistics vendor grew substantially under PayPal, Sobie says. When PayPal purchased Happy Returns, it had one hub for processing returns on the east coast, and a smaller, half-size hub on the west coast, Sobie says, totaling about 45,000 square feet. Now, it has about 250,000 square feet in processing warehouses around the country to keep up with growing business.

“As we were looking at 2023 and planning our budget, every metric was through the roof. We wanted to keep investing to maintain that growth,” Sobie says. That’s when he and others within the company realized PayPal was likely not the best place for the future of Happy Returns, according to his account.

Why UPS makes sense for Happy Returns

Happy Returns considered a variety of options outside of PayPal, including a private equity investor and becoming an independent company once again, Sobie says.

“When you think about the two sides to our business, UPS stores fit really well as the anchor of the drop-off network. The other side is the merchants who use our services. Well, every merchant has a relationship with UPS,” Sobie explained.

Having an internal relationship with a major shipping carrier like UPS presents opportunities to cut costs and make operations more efficient. For example, Happy Returns is considering making changes on everything from how frequently packages are picked up from return bars, to what size boxes they accept and using reusable totes with UPS input, Sobie says.

The acquisition is beneficial for Happy Returns’ retail clients, too. Customers are giving positive feedback on the increased number of drop-off locations inside of UPS stores, says Ranu Coleman, head of marketing at children’s clothing retailer PatPat.

Since implementing Happy Returns in October, “it’s a money saver,” Coleman says. “The driver of this collaboration is really around customer retention — returns are a major part of our business, and Happy Returns makes the process easy for our customers.”

Happy Returns saved PatPat’s support team about 20 minutes per person per day in handling return requisitions and improved its Net Promoter Score from 40 to 85, she says.

Focuses going forward

Happy Returns is vying for more large, enterprise clients in 2024, Sobie says. That’s the reverse logistics vendor’s main goal going forward. Gaining those clients is possible in part thanks to UPS. The delivery company already has relationships with those clients and will lend the company credibility, he says.

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Coupang to acquire Farfetch assets in $500 million deal

Brian Warmoth — Mon, 18 Dec 2023 21:59:41 +0000

Farfetch will get an alternative to bankruptcy in the form of access to $500 million in capital, thanks to a deal for Coupang to acquire Farfetch’s business assets.

The $500 million will take the form of bridge loans made possible through a partnership with the investment firm Greenoaks Capital Partners, which is working on the deal with Coupang to acquire Farfetch and take the luxury fashion marketplace private.

Coupang ranks No. 12 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the top 100 online marketplaces. Farfetch is No. 30.

What Coupang gains

“Farfetch is a landmark of the luxury landscape and has been a transformative force in demonstrating that online luxury is the future of luxury retail,” said Bom Kim, founder and CEO of Coupang, which is based out of Seattle and Seoul. “Farfetch will rededicate itself to providing the most elevated experience for the world’s most exclusive brands, while pursuing steady and thoughtful growth as a private company. We also see tremendous opportunities to redefine the customer experience for luxury clients everywhere.”

Coupang, which already operates the largest online marketplace in South Korea, will seek to benefit from Farfetch’s reach in the luxury goods market to bolster sales in the country. South Korean consumer spending on luxury goods is the highest in the world at $325 per capita a year, according to research published by Morgan Stanley in 2023.

End of Farfetch’s deal with Richemont

The acquisition means that Farfetch will abandon another proposed deal with the Swiss luxury goods group Richemont. That transaction, which will not be completed, would have seen Richemont take a minority stake in Farfetch, with Farfetch gaining a stake in Richemont’s Yoox Net-A-Porter platform in exchange for shares.

Even with the Yoox Net-A-Porter spinoff lined up, however, Farfetch still faced the prospect of financial insolvency with additional measures before Christmas, The Sunday Times reported. The capital provided as a result of the Coupang and Greenoaks partnership will serve as a lifeline to avoid that fate.

Farfetch’s path from public trading to going private

“Coupang’s proven track record and deep experience in revolutionizing commerce will enable us to deliver exceptional service for our brand and boutique partners, as well as for our millions of customers around the world,” said José Neves, founder, CEO and chairman at Farfetch. “We are thrilled to be partnering with such a respected Fortune 200 company that is committed to investing in innovations that transform all aspects of the customer experience with Farfetch.”

Farfetch, which is based out of London, went public in 2018, trading at an opening share price of $27. On Friday, the stock closed at $0.64, down more than 97% from its all-time high.

Coupang’s stock price was down more than 4% after news of the acquisition broke on Monday.

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The post Coupang to acquire Farfetch assets in $500 million deal appeared first on Digital Commerce 360.

Deal makers hit the brakes on ecommerce funding

Mark Brohan — Mon, 18 Dec 2023 20:06:45 +0000

Ecommerce deal making in 2023 and the third quarter slowed from previous years, says data from Pitchbook.com. But even though the volume and value of deals did slow, there were still some significant deals struck.

In the third quarter there were 93 deals completed, totaling $1.6 billion, a significant 68% decrease from the previous year. Despite the downturn in deals completed, several notable transactions did take place. Builder, an AI-powered application development platform, raised $250 million, and ThoughtSpot, an analytics platform, raised $124.0 million. Tradeshift also raised $70.0 million in August to build source-to-pay software for B2B ecommerce, says Pitchbook.

Here is the breakdown of ecommerce commerce deals — and the value — over the past several years, according to Pitchbook.com.

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