All posts in “retail”

b8ta raises $19 million Series B led by Macy’s

b8ta, the retail-as-a-service startup, has closed a $19 million Series B round led by Macy’s with participation from Sound Ventures, Palm Drive Capital, Capitaland, Graphene Ventures, Khosla Ventures and Plug and Play Ventures. This round brings b8ta’s total funding to $39 million.

Macy’s decision to lead this round comes in light of its recent partnership with b8ta to enhance the retailer’s experiential-based concept called The Market. Macy’s is also expanding its partnership with b8ta to launch The Market in a larger space, entirely powered by Built by b8ta, which functions as a retail-as-a-service platform for brands that want a physical presence. b8ta’s software solution includes checkout, inventory, point of sale, inventory management, staff scheduling services and more.

“Testing a shop with them in their store and having really good success made us feel bullish that this model would work well for them,” b8ta CEO Vibhu Norby told TechCrunch.

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To the outsider, there’s this idea that Macy’s is struggling — in light of a bunch of store closures. That was a conversation b8ta had internally, Norby said.

“As an example, our board was initially not certain we should do something with them but I felt like it was worth a shot,” Norby told me. “For us to get comfortable, we spent a lot of time trying to understand their business. What we found was that perception in the media didn’t really meet the reality for us. The reality is Macy’s is one of the most important companies in the country.”

Macy’s, Norby said, is also one of the largest real estate company’s in the world and owns “so much real estate in all of the best places.”

He added, “it’s not that retail itself is dying, it’s just that it’s changing. The way people want to shop is changing and we have a shared alignment on bringing that next generation of a company into the space.”

In addition to the expanded partnership with Macy’s, b8ta is opening up new flagship stores in Chicago and Tysons Corner, Va. b8ta currently has more than 78 flagship stores across the country to let consumers experience tech gadgets in real life.

Online shopping is about to get more expensive

Image: Getty Images/Westend61

Gird your (digital) wallets!

The Supreme Court has ruled that states can charge online retailers sales tax, even if they don’t have a physical presence in the state. That means that some of the biggest online retailers — including Wayfair, Overstock.com, and Newegg, who were named in the suit against the state of South Dakota — may soon have to pass on that additional cost to consumers.

“Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States,” Justice Kennedy wrote in his Court Opinion.

How does this affect the gargantuan elephant in the room, Amazon? Amazon actually already charges sales taxes on the goods that it sells directly. But the third party sellers on Amazon do not. So you might have to start paying sales tax alongside those non-Prime shipping charges. Ouch.

The Supreme Court ruled 5-4 in favor of South Dakota. It overturned a 1992 Supreme Court ruling that established that online retailers didn’t have to pay sales tax, which the New York Times says helped fuel the rise of online shopping.

Bloomberg reported that the stocks of Amazon, Wayfair, Etsy, and eBay all fell following the ruling.

It’s clear that the court’s decision will mean extra cash for states. But that money is likely to come out of the pockets of consumers. And may make it harder for shopping startups to break through.

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Microsoft could power Walmart’s Amazon Go rival

The race is on.

Microsoft is building automated, cashier-less, and checkout line-free technology to rival Amazon Go, Reuters reported Thursday. And Microsoft is reportedly in talks about the technology with Walmart, Amazon’s rival for all-out retail domination.

The technology would allow shoppers to buy goods from a store without checking out or exchanging any cash. Upon entering a store with Microsoft technology, shoppers would scan their smart phones. Then sensors would detect when items are removed from the shelves, and cameras could see what items are in shoppers’ carts. Shoppers would then simply walk out of the store, at which point their accounts would be charged.

Microsoft is reportedly meeting with retailers around the world about implementing the technology, including Walmart. An alliance between Microsoft and Walmart for cloud-based shopping tech could help Walmart compete with Amazon, with which it’s been in an arms race in retail and grocery sales.

Indeed, Microsoft’s system, as described by Reuters’ sources, sounds nearly identical to the tech employed in Amazon Go stores. Amazon debuted its first Amazon Go store in Seattle in January 2018. It plans to open more stores, starting with locations in San Francisco and Chicago. And in February, it was rumored that Amazon would open six more Amazon Go locations.

But as we’ve seen in social media, copying isn’t just the most sincere form of flattery — it’s also a pathway to success.

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With new shoppable stories, get ready to spend all your money on Instagram

It was only a matter of time.

On Tuesday, Instagram announced the introduction of shoppable stories. Now, brands can tag their stories with the specific products featured in them. Then, when ‘grammers click on the tag, they can see more information about the product on Instagram, which includes a link to the brand’s website to buy.

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Instagram first introduced in-feed shopping in November 2016. It further rolled out a more robust version of that feature in March 2017, including business analytics. Most recently, in May 2018, Instagram debuted “action buttons,” which allow users to do things like buy tickets or make restaurant reservations directly on businesses’ profiles. Shoppable stories are just the next step in making every piece of delicate jewelry, glass of sparkling rosé, or pair minimalist sneakers that appear on the app available to buy — immediately.

Instagram says these shopping options are all about turning “discovery into action.” And with Instagram’s focus on beautiful photos and aspirational lifestyle,  shopping on Instagram makes a whole lot of sense. It removes almost all the barriers between seeing something enticing that represents the literally picture-perfect life you want to lead, and turning that impulse into cash. 

Clicking on the briefcase reveals the tagged products.

Clicking on the briefcase reveals the tagged products.

Image: instagram

The product details page includes a link to buy.

The product details page includes a link to buy.

Image: instagram

Instagram debuted ephemeral stories in August 2016, a format it outright stole from Snapchat. But now, Instagram story use is crushing Snapchat, and stories have become an increasingly dominant way that people are using the app. Up from 200 million daily active users in April 2017, Instagram now reports reports that 300 million people use Instagram stories every day. Hot damn.

Monetizing those interactions could be huge for businesses. Especially since up to this point, story creation just might not have been worth it. With filters, stickers, tags, and the need for a narrative (and not just a single, ad-like image), Mashable reported in May that story creation is cumbersome for some brands. Making stories shoppable gives brands more incentive to invest that time in the app.

Mashable has asked Instagram whether it takes any commission on in-app purchases, and will update this story if and when we hear back. But either way, getting brands to invest more time and money in the app is good for business.

UPDATE 6/12/2018, 1:15 p.m. ET: When asked about whether Instagram would take a commission on in-app purchases, Instagram said: “Instagram does not charge businesses for Shopping capabilities.”

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Amazon’s next conquest will be apparel

Late last year, after Amazon announced it had acquired the rights to J.R.R. Tolkien’s epic “Lord of the Rings” saga for $250 million, I wrote how the move underscored Amazon’s relentless pursuit to build one platform to “rule them all.” Now that Amazon is investing half a billion dollars into developing a Middle Earth show – making it the most expensive TV series ever made – it won’t be a surprise to see Jeff Bezos front and center at the Emmys soon.

But Hollywood isn’t the only industry Amazon wants to upend. Based on the company’s great ambitions in apparel, it may not be long before we also see Bezos at New York Fashion Week next to Anna Wintour.

The 800-Pound Gorilla in the Fashion World

As traditional retail continues to recede, direct to commerce fashion brands continue to emerge. I’ve previously shared how Stitch Fix, Warby Parker, Everlane and Allbirds are just a few innovative companies proving the success of this model. As the master of D2C commerce, Amazon has been fine-tuning its fashion operation for over 15 years.

Amazon originally got into apparel all the way back in 2002 and acquired online shoe retailer Zappos for $1.2 billion in 2009, marking the largest purchase in its history at the time. But the company’s quest to dominate fashion has faced several historical obstacles, chief among them that people have not trusted buying apparel online out of a desire to try on the items first and that Amazon was not perceived as a “cool” brand.

Headwinds are now tailwinds. Online shopping for apparel took off and is now the highest online-penetration CPG sector; the majority of women have shopped for clothing online. E-commerce accounts for nearly twice as big a proportion of total clothing sales as it does for retail more broadly (17 percent vs. 10 percent). Amazon, meanwhile, has honed its apparel strategy, providing free returns, better photography and greater selection. Today, the company is the largest apparel retailer by gross merchandise volume. Mission accomplished? Not quite.

Building A Private-Label ‘Fashion House’

An actual Amazon fashion shoot

Bonobos CEO Andy Dunn once said, “Selling a bunch of other people’s stuff is a low margin game that requires a lot of capital and, ultimately, it’s hard to beat Jeff Bezos at that.” This is true, but when it comes to apparel, Bezos has greater ambitions than selling other people’s stuff. Currently, though, that’s mostly what Amazon does.

According to analysis from Coresight Research, nearly 14 percent of listings on the U.S. Amazon Fashion site are from Amazon itself, while third-party sellers account for the remaining 86 percent. Amazon is highly incentivized to increase its share of that pie. Apparel is a highly profitable category for the company, with 40 percent peak gross margins in the last 10 years. Additionally, Prime members heavily overindex for buying apparel on Amazon – nearly two-thirds have done so in the past year.

As it ramps up its private-label offerings, Amazon is clearly keen to move beyond selling the apparel equivalent of batteries and diapers through its Amazon Essentials brand. It started selling thigh-high velvet boots in September, and Coresight’s analysis indicates that the company is focusing on higher-value categories.

If its recent Lord of the Rings rights acquisition was an attempt to further capture young affluent consumers’ eyeballs, and Whole Foods an attempt to lock down their stomachs, it follows that Amazon would want to ensnare their wardrobes as well. Acquiring a hot digitally native vertical brand – or brands – would be a speedy way to accomplish that. Walmart has already pursued this strategy by buying Bonobos, Modcloth and others; Amazon could take a similar path and seek to bring buzzy brands like Everlane into the everything store. This could also go a long way in helping Amazon shed its “uncool” label.

Becoming A Fashion (Power)House

The Echo Look is just one sign Amazon is serious about dominating fashion

Last year, Amazon introduced a number of innovations designed to turbocharge its apparel business and make the online shopping experience as frictionless as possible. It launched Prime Wardrobe, a Stitch Fix-style service that allows you to try three or more items on at home before sending back the items you don’t want for free in a resealable box with a prepaid label.

 It also debuted Echo Look, a new Alexa-powered device that the company dubs a “hands-free camera and style assistant.” The addition of a camera enables the device to record and comment on its owner’s clothing choices, using a combination of machine learning and human stylist feedback. This advice also takes the form of recommendations, which can drive revenue to Amazon Fashion, and specifically its private-label brands.

Amazon is iterating on and rolling out more features for the Echo Look, including curated content and even crowdsourced (human!) style feedback. It also created an AI algorithm for designing clothes and patented an AR mirror that lets you virtually try on clothes. The value of such a mirror was validated recently by L’Oreal’s acquisition of ModiFace, a company that produces technology that powers similar applications in beauty AR.

Analyzing all these moves together, Amazon’s apparel strategy begins to crystallize. First it sells tons of clothes to learn how clothes are sold. Then it starts selling its own clothes to generate higher gross margin. And now has it has Prime Wardrobe to increase lock-in and reduce points at which customers can choose not to buy Amazon’s own clothing (all while gathering more data about individual preferences); and Echo Look to be its data collection and voice-commerce portal (and as an added bonus, it can route ambiguous purchase requests to its growing inventory of private-label items). If this strategy is successful, it will give Amazon an enormous data moat to drive high-margin sales – a competitive advantage that will be extremely difficult for fashion retailers and brands to replicate.

Bezos doesn’t need to even ask.

Amazon has become increasingly dominant in several increasingly important arenas: cloud services, voice assistants, self-serving brick-and-mortar stores with Amazon Go, and of course its now-traditional role as the online everything store. The company is poised to add apparel to this growing list as it changes the way people shop for clothing (again) and entices more of its customers to buy Amazon’s own threads. And it bears mentioning that Amazon Fashion will get a helpful hand from Amazon Studios as well. Bezos once shared that, “When we win a Golden Globe, it helps us sell more shoes.” If he has his way, Amazon will be doing a lot more of both in the coming years.