Amid the FBA aggregation explosion and recent news on the consolidation in the instant/neighborhood commerce, I thought I would talk about the risk related to mergers and acquisitions (M&A) in the commerce sector. Acquisitions are hard and their long-term success is uncertain at best. 

I was part of businesses that were acquired, then sold, acquired again which on the African continent is somewhat unique. In my consultancy business – I have been part of the M&A cycle again but this time from a different perspective.

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In a year of regulatory and operating headwinds, Alibaba concluded its 11.11 Global Shopping Festival recently. The event which was first created in 2009 has evolved from a single-day event to a multi-day shopping festival in which merchants can access the world’s most sophisticated and digitally savvy consumer group – the Chinese customer.

Alibaba is the largest e-commerce business globally based on GMV.  It has also been playing a significant part in accelerating the Chinese digital economy. Its marketplaces enable merchants of all sizes to provide consumers with an ecosystem of businesses across the entire value chain of consumption, from capturing the trend and searching for the right products, to livestreaming that provides a “see now buy now” experience; and from the prompt logistic services that get packages delivered within an hour, to recycling products in its second-hand marketplace.     

The 11 highlights that caught my attention this year are as follows:

• I was and remain “amazed” at some press coverage that presented an extremely negative outlook to the 11.11 Global Shopping Festival this past year. Previous versions of the 11.11 Global Shopping Festival won’t return and are based on the regulatory changes seen in China related to the technology sector.  The media coverage has swung from extremes in terms of tone which for me is not a reflection of what is happening in China. Imagine if Amazon was hit with a record fine and told to allow merchants to interact with Walmart, Facebook and others. 11.11 Global Shopping Festival has never been material to the stock price of Alibaba and this won’t change as the company continues to provide small businesses with an opportunity to access Chinese consumers.

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This past week I read and had conversations related to the future of commerce. Having previously written about the need for digitization being akin to a north star for the sector I also thought about the building block (atom) of the sector. I thought about writing a preview for the 11.11 Global Shopping Festival which is on coming Thursday but want to use the event as a frame for the future. 

Alibaba’s current CEO and Chairman, Daniel Zhang designed Singles Day as an early shopping holiday in China. Since then we have seen a plethora of shopping holidays around the world such as Big Billions Day in India, Prime Day in the markets in which Amazon operate formed and used as a way to reward loyalty by offering deals only available on a single platform.

In the immediate future, I doubt we will see a singular Chinese platform offering exclusivity as a part of their value proposition as that goes in the opposite direction of the current regulatory frameworks seen in China. Platforms have to be open and enable customers to seamlessly interact and transact with whatever stakeholder without the consumer being negatively impacted.

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I wrote about FBA aggregation before it became widely known and seemingly am seeing a newer version of this. FBA aggregation in its simplest form is financial gymnastics as investors hope for a 10-15x return based on financial engineering. Is a different flavor of aggregation a better idea? Does app rollups not make more sense?

Acquiring FBA businesses at scale is essentially a bet on economies of scale, and creating an ecosystem that can provide profitability due to scale. It still seems crazy to think that this concept got off the ground and it raised billions of dollars and credit lines from investors who saw lottery winnings instead of a single lottery ticket. The supposed market leader ¹ Thrasio was going to go public via a SPAC and then raised a boatload of capital from non-traditional commerce investors. What could go wrong I ask?

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Having written about live-streaming and the social commerce gold rush in the past, I have been looking for live shopping/livestreaming companies that will move this sector forward in the West. After many hours of speaking with entrepreneurs, investors I believe I finally found it.

OOOOO (OOOOO:TSVX), founded by Sam Jones and Eric Zhang, is creating an app-based platform that helps top-tier brands utilize livestreaming in a tactical manner that replicates the experience I first saw in China. Jones previously was a Managing Director of Wish in Europe, and Eric was in the founding team of Musical.ly , later TikTok; that in itself should be a signal to those of us looking for what is next.

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