Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: ecommerce

  • Introducing Crosby Studios’ virtual shoppable showroom

    One of my favorite interior design firms — Crosby Studios — has just launched a new home goods and accessories concept called Crosby Studios Home. The offerings are unmistakingly Harry Nuriev (the founder of Crosby Studios). It’s all about design, art, and fashion coming together. But what is also noteworthy is how the concept was launched using a virtual shoppable showroom. And the experience, which is pictured above, is shockingly good. You simply wander around this blue-floored apartment and click on whatever stuff you would like to add to your shopping cart. This isn’t the first virtual showroom experience, but as I was using it, I couldn’t help but think that we’ll be seeing a lot more of this in the future. This and things like shoppable augmented reality.

    Images: Crosby Studios Home

  • Delivering happiness

    I was both surprised and saddened to learn about the death of Tony Hsieh this weekend. Forty-six years old is far too young.

    Though best known as a pioneer of e-commerce (he was previously CEO of Zappos) and for his brilliant/wacky management ideas, Tony was also a city builder, particularly in Las Vegas.

    Here’s an excerpt from a recent WSJ article:

    In Las Vegas, Mr. Hsieh became beloved locally for investing $350 million into revitalizing part of the city’s downtown including real estate, restaurants, retail and a tech startup fund starting in 2012. His vision included the development Container Park, a quirky shopping and entertainment center where retailers operate in converted shipping containers. Visitors are greeted by a giant sculpture of a praying mantis that shoots fire.

    But perhaps more importantly, everything I have read this weekend about Tony describes him as a good human being with a great sense of humor and a commitment to “delivering happiness.”

    Here’s another excerpt from the same article:

    After Zappos had a rash of late deliveries, he sent an apology note to customers and provided a phone number for use by anyone who suffered “undue hardship.” As for those who were merely annoyed, he said, they were welcome to call Zappos and “ask whoever answers the phone to do something weird and embarrassing, like sing ‘I’m a Little Teacup.’”

    Happiness. I can’t think of anything better to be delivering to people in the world right now.

  • Ecommerce during lockdown

    The United States and the United Kingdom recently published some official statistics on the impacts that this pandemic has had on ecommerce. The above chart is from Benedict Evans and he has some more over here. It’s worth a click through. What is clear is that lockdown forced a whole bunch of adoption and accelerated trends that were already underway. More people turned to shopping online. The UK went from 20% ecommerce penetration to over 30%. And the US went from 17% to about 22%. What is also clear is that grocery has demonstrated to be exceptionally resilient. Most physical retailers saw a decline in sales during lockdown. Grocery proved to be a notable exception. But what is unclear is how much of this adoption will actually stick. The UK is reporting monthly (as opposed to quarterly for the US) and already you can see signs of a possible reversion. My guess is that — provided we don’t see another major lockdown — there will be a meaningful reversion before the trend line resumes its march.

  • Shoppable AR

    I don’t think Snapchat is on a lot of people’s radars these days. (Though it did recently become worth more than Twitter.) But every time I hear about what they’re building I can’t help but think, “Wow, that’s really cleaver and creative. I see a longer-term vision at work here. And if it all works out, this could be something very special.”

    This past week it was announced that the company is going long on something they call shoppable AR (augmented reality). Already, more than 170 million of its users engage with its AR features on a daily basis. Shoppable AR is an extension of that and will allow people to do things like try on clothes, similar to the way people currently apply selfie filters. Obviously this could be a boon to online shopping.

    They’re also continuing to develop something called “Scan,” which allows people to scan a logo or barcode and trigger a specific AR experience related to a product they may be thinking about buying. It doesn’t take much to think about how some of this functionality could be applied to specific industries, such as real estate.

    But will all of this fuel growth for the company? Or will Facebook simply steal the idea if or when it catches on?

  • Amazon’s delivery network is now the 4th largest in the US

    This is an interesting article about Amazon’s delivery network, which is now the 4th largest in the United States. Here are the numbers (most of which are as of 2019):

    • Since 2014, Amazon has spent $39 billion building out its delivery network. When you add in warehouses and airplanes, this number increases to about $60 billion. As of 2019, Amazon leased 97% of its fulfillment and data center spaces.
    • Amazon is becoming increasingly vertically integrated. Last year, Amazon delivered about 58% of the 4.5 billion parcels that it shipped to US consumers. This represents about 22% of all online retail deliveries.
    • Outside of the US, Amazon still handles close to 50% of its own order deliveries. By 2025, Bank of America Global Research is predicting that Amazon could grow to handle somewhere between 38% and 49% of all online order deliveries in the US.
    • Amazon is the 4th largest in terms of US package deliveries (2019), behind FedEx, UPS, and USPS (in that order).
    • Amazon’s fulfillment network roughly entails: receiving centers -> fulfillment centers -> sortation centers -> last-mile delivery stations. It’s a hub and spoke system with the physical real estate naturally getting smaller as you get closer to the end destination. For a lot more information on their network, click here.

  • Shoppable videos

    Sometimes I think that writing a blog has become a bit old fashioned. I should probably be making videos. But the reality is that I like writing. Getting up in the morning, reading, having a coffee, and writing my thoughts down is a ritual that I really enjoy. Making videos is also a bigger time commitment, and I would rather focus my energy elsewhere.

    But there’s no question that user-generated videos have and will continue to change ecommerce and many other aspects of society. This recent blog post by Connie Chan and Avery Segal called, “Ecommerce as video’s killer app,” is a perfect example of that. In it, they talk about a handful of Chinese companies that are pioneering “shoppable videos.”

    What these platforms are doing is allowing consumers to buy things natively within their app and through a “video-centric checkout flow.” In other words: watch a story being told (from an individual, as opposed to a company); become interested in a particular product or service; and then immediately purchase it with only a few taps.

    Another use case, which I think many of you will find interesting, is the creation of “crowdsourced video city guides.” Instead of checking for hotel reviews on TripAdvisor, simply find someone who has already vlogged a stay and book it that way. The individual who uploaded the video will then earn a commission.

    This behavior already exists. Discovery and buying decisions — for many products and services — have moved to social platforms. Just today a friend reached out asking me about a bar that she saw on my Instagram stories a few weeks. She’s planning to go next week. Now where’s my commission?

    Shoppable videos are a natural extension. They may also lower the barriers to participation. And so maybe I will end up making videos, after all.

  • Pleasure and product discovery

    Benedict Evan’s most recent blog post, called “Amazon as experiment,” draws some interesting parallels between what Amazon is doing today (and experimenting with) and the beginning of mass retail, namely the invention of the department store. He also talks about some of the shortcomings of Amazon’s model, which isn’t at all focused on (or good at) things such as “pleasure” and product discovery. Here are a couple of excerpts:

    On the other hand, it’s interesting that Amazon seems to be doing as much experimentation as possible around the logistics model—from stores to drones to warehouse robots of every kind—but much less around the buying experience, other than small-scale tests of the Four-Star stores. After all, historically, department stores were about pleasure as much as they were about convenience or price. They changed what it meant to “go shopping” and helped turn retail into a leisure activity.

    This has always been the gap in the Amazon model. It’s ever more efficient at finding what you already know you want and shipping it to you, but bad at suggesting things you don’t already know about, and terrible whenever a product needs something specific—just try finding children’s shoes by size.

    This is probably inherent in the model. For Amazon to scale indefinitely to unlimited kinds of products, it needs to have more or less the same commodity logistics model for all of them. That’s the line it’s never been willing to cross. Amazon doesn’t do “unscalable.” And yet, while we now know there is nothing that people won’t happily buy online, not everything will fit that commodity model. So maybe that’s the real test of Amazon’s pride: can it work out how to let us shop, rather than just buy?

  • Amazon and retail

    This is an excellent talk by NYU professor Scott Galloway about Amazon, online grocery, and many other aspects of the retail landscape. The bits about Amazon’s scale and reach are fascinating. There is about 30 minutes of him speaking quickly and then another 15 minutes of Q&A. If you can’t see it below, click here.

    [youtube https://www.youtube.com/watch?v=_HyiY_m_YxI&w=560&h=315]

  • How ecommerce is growing in rural China

    This piece in the New Yorker about how e-commerce, and in particular JD.com, is transforming rural China is worth a read.

    In typical New Yorker fashion, it’s a good long-form read, but one that you can also listen to if that’s your thing.

    What’s immediately fascinating are how important trust is to JD’s rural expansion strategy and how locals from these rural communities are used to penetrate the social networks.

    Today, Xia oversees deliveries to more than two hundred villages around the Wuling Mountains, including his birthplace. But, in line with JD’s growth strategy, an equally important aspect of Xia’s job is to be a promoter for the company, getting the word out about its services. His income depends in part on the number of orders that come from his region. Across China, JD has made a policy of recruiting local representatives who can exploit the thick social ties of traditional communities to drum up business.

    This is important because:

    “Chinese people don’t easily believe the good will of strangers,” Liu told me. “Why do you think Chinese fight tooth and nail to get on the bus and subway?” He shook his head and laughed. “It doesn’t matter that it’s less efficient or unnecessary. It’s a complete reflex for them, because it’s what they’ve been taught since they were young.”

    When you have some time, here is the full article. 

    According to the New Yorker, JD.com is the third largest tech company in the world in terms of revenue. They also have the largest drone delivery platform in the world.

  • My even shorter Amazon HQ2 shortlist

    Amazon released its shortlist of HQ2 cities this morning. Below are the 20 metropolitan areas. They were selected from 238 bids, so this shortlist represents 8.4% of the original pool.

    • Atlanta, GA
    • Austin, TX
    • Boston, MA
    • Chicago, IL
    • Columbus, OH
    • Dallas, TX
    • Denver, CO
    • Indianapolis, IN
    • Los Angeles, CA
    • Miami, FL
    • Montgomery County, MD
    • Nashville, TN
    • Newark, NJ
    • New York City, NY
    • Northern Virginia, VA
    • Philadelphia, PA
    • Pittsburgh, PA
    • Raleigh, NC
    • Toronto, ON
    • Washington D.C.

    I saw some people on Twitter say that they were surprised to see Toronto and Miami on this list. I was not. If you remember, I publicly predicted on this blog that Toronto would be selected for Amazon HQ2.

    That said, I thought it would be fun to guess at an even shorter list from Amazon’s shortlist. I have no knowledge of Amazon’s actual selections process, but if I had to guess, here is who I would cross off the list:

    • Atlanta, GA
    • Austin, TX
    • Boston, MA
    • Chicago, IL
    • Columbus, OH
    • Dallas, TX
    • Denver, CO
    • Indianapolis, IN
    • Los Angeles, CA
    • Miami, FL
    • Montgomery County, MD
    • Nashville, TN
    • Newark, NJ
    • New York City, NY
    • Northern Virginia, VA
    • Philadelphia, PA
    • Pittsburgh, PA
    • Raleigh, NC
    • Toronto, ON
    • Washington D.C.

    That leaves us with a list that looks like this:

    1. Boston, MA
    2. Miami, FL
    3. Montgomery County, MD
    4. Newark, NJ
    5. Northern Virginia, VA
    6. Toronto, ON
    7. Washington D.C.

    So why this list? I’m probably wrong, but my reasons are as follows:

    – I think Amazon will opt for a metro area on eastern time.

    – There seems to be a predilection for areas around Washington D.C., so I left Montgomery County and Northern Virginia. 

    – As wonderful as it is, New York City feels too center ice for Amazon – at least in my view. But maybe Newark places them in the catchment area.

    – The area needs to be of a certain scale so Amazon doesn’t overpower it and they have enough human capital to draw from.

    – Miami is my sleeper bet. Most people think of it simply as a resort town, but there’s a huge percentage of foreign born residents and powerful arts/design scene.

    – Talent is number one, which is why I left Boston and Toronto and why I continue to believe in Toronto. Toronto is more dynamic than Boston.

    If I had to pick just three from the above shortlist, my bets would be, in alphabetical order: Boston, Toronto, and Washington D.C. What are yours?