News

22 Oct, 2019
Larry Summers: why I joined Afterpay
Financial Review

Prominent economist Larry Summers says he joined the Afterpay advisory board because he is attracted to its rapid growth rates, along with its principled stand on reducing credit card “addiction” in the United States.

Mr Summers, a former US secretary treasury, former economic adviser to US President Barack Obama and one of the world’s most prolific economists, also discussed with The Australian Financial Review challenges to the US economy thrown up by weakening US consumer confidence, and high levels of savings which he says is likely to depress interest rates for a long period.

 

Afterpay, which was slapped with a sell rating by UBS on Tuesday, appointed Mr Summers to a new advisory board last week. One of his key roles will be to help Afterpay navigate US regulation and introduce the company to contacts to smooth its growth in the US market. It currently has more than 2 million currently has more than 2 million customers in the US and is locked in an intense competitive battle with other ‘buy now pay later’ operators, including ASX-listed Sezzle and Klarna, which was recently backed by the Commonwealth Bank.

UBS cited growing competition and risks of more regulation around its relationships with merchants as it warned clients on Wednesday from buying shares at current prices, and also questioned whether it would be able to attract around 12 per cent of the US population as customers by 2030, as the current share price suggests it will.

Mr Summers said the same dynamic which has driven Afterpay’s growth in Australia – the shift by Millennials away from credit cards – could play out in America.

18 Oct, 2019
Google's latest iPhone rival adds new AI features
Financial Review

Google unveiled a new Pixel Smartphone and other hardware devices on Tuesday, all aimed at getting people even more dependent on its artificial-intelligence services.

The Pixel 4 phone promises to respond to AI queries even faster than before, and a home Wi-Fi system is getting the AI features for the first time. The company also unveiled a new smart speaker and wireless earbuds, both invoking the AI-powered Google Assistant.

The Assistant, akin to Apple's Siri and Amazon's Alexa , is now available on more than 1 billion devices, including ones made by other manufacturers. With Google's own products, though, the company can steer users to Assistant features even more.

That in turn, could encourage Google users to interact with other Google services such as search and maps more often, feeding into Google's multibillion-dollar advertising business. More use of the Assistant also means that Google gets more data on user preferences and activities to build its advertising profiles.

Amazon and Google are both pushing their voice assistants onto more devices, though they have different ultimate goals, said Victoria Petrock, principal analyst at eMarketer. Amazon is getting a shopping assistant into every device it can, she said, while Google is collecting more information about user preferences.

"I think their end game is trying to collect all this data and target you with advertising," she said.

The "helpful" features Assistant announces could make people even more likely to use it.

"The voice is a whole new way to capture people's behaviours," she said.

Assistant has faced scrutiny this year after reports revealed that Google contractors were transcribing some customer's spoken communication with the AI to help improve the system. Google has since clarified its policies and said it will make it more explicit that people must give explicit permission, or opt in.

Still, many are sceptical of the proliferation of digital assistants in homes and pockets.

With the new Pixel, the Google Assistant will complete some tasks entirely on the device - so it doesn't have to wait for answers from the cloud - allowing users to make commands and dictate text messages more quickly.

The Pixel 4 will have better facial recognition for unlocking the phone with a glance. Unlike the existing "trusted face" feature on Android phones, the new Face Unlock is intended to be more secure and easier to use, matching what Apple and Samsung already offer.

The new phone gets a second camera lens, for better zooming, even as some Apple and Samsung devices are getting a third lens, for wider-angle shots. True to Google's focus on AI, the Pixel's new camera will recognise people you have taken many photos of before and automatically focus on them in new shots.

And the new phone comes with motion-sensing technology that allows people to do simple hand-waving gestures to skip songs or switch apps without touching the phone.

The Pixel 4 will carry a starting price tag in Australia of $1049 for 64GB and $1199 for 128GB, whereas the larger XL version will start at $1279 for 64GB and $1429 for 128GB. They will go on sale on October 24.

Google's phones have been well reviewed, but have yet to make much of a splash in the market dominated by Apple, Huawei and Samsung. In fact, Google's hardware products have never been big money makers. Rather, they offer a way for Google to showcase its money-making services.

Google introduced a less expensive version of its phone, the Pixel 3a, to positive reviews in May, a trend that is sweeping across the smartphone market as consumers hold on to phones longer rather than buy new, expensive models. Google hinted the trend may continue, but offered no details.

"We see that being a really great long-term opportunity, both for our users and for us," said Rick Osterloh, senior vice president of hardware at Google

Earbuds, smart speakers and routers

The company also unveiled true wireless earbuds, called Pixel Buds, Google's answer to Apple's AirPods. The new model, which will go on sale early next year for $179, does away with the wire that connects the two buds.

Google introduced Nest Mini, the smaller version of its smart speaker. It comes out next Tuesday for $49. Google's refreshed Wi-Fi router, Nest Wifi, will be available in the coming weeks for $269. A new Pixelbook Go laptop goes on sale in January staring at $649.

On Wednesday morning Telstra announced that it had a partnership agreement with Google that meant any customers buying a new Pixel phone would get a Google Nest Hub for free.

Optus meanwhile said that any of its customers would get a free Google Assistant enabled Harman/Kardon Citation ONE speaker valued at $299 if they buy a Pixel 4 outright or on a plan before December 31.

Google's hardware team, including many former Google Glass engineers, work from a light-filled, architecturally impressive building near the company's main campus in Mountain View, California.

The building is complete with a "colour lab" for finding the perfect device hues, a materials library for all sorts of elemental inspiration and a small model shop to build device prototypes on site.

"We started by defining what it feels like to hold Google in your hands," hardware design executive Ivy Ross said. "The good thing about coming a little bit late to the hardware arena is you get to stand back and look at everyone else."

One of the challenges this time around was finding a way to make the products more sustainable, a feat especially notable on the Nest Mini, which has a "fabric" casing made of yarn created from plastic water bottles.

18 Oct, 2019
Apple adds noise cancelling to Beats headphones
Financial Review

The world's most popular headphones are getting an overdue refresh. Apple on Tuesday took the wraps off the Beats Solo Pro, the first big redesign of the on-ear pair since Apple acquired Beats Electronics back in 2014. Based on our first try of the Pro variant, the wait was worth it.

"Not one electrical or mechanical component in these headphones exists in prior Beats headphones," Luke Wood, president of Beats, said at a press briefing in Tokyo. The Solo Pro took more than three years of development but Wood said that the end result represents "dream headphones" for all the engineers who worked on it.

Unconstrained by the limits of smaller manufacturers, Beats leveraged Apple's scale to get primacy among suppliers, devised entirely new custom-made transducers just for the Solo Pro, and harnessed the talents of the same engineering teams that worked on the iPhone 11 Pro.

The side arms of the Solo Pro are now made of anodised aluminum, adding a hitherto absent touch of premium allure, sturdiness and a more consistent clamping force on the user's head. This new pair of headphones is still not the most accommodating for people with larger skulls, but comfort is improved relative to its predecessor, the Beats Solo 3. That's in large part down to the overhauled cushions: they no longer have an inner seam that can touch the ear, their surface area has been increased by 70 per cent and they have 35 per cent greater volume, offering more padding.

Active noise cancelling makes its debut on the Solo line with this model, and it works extremely well. "The ANC world is really big," said Wood. These new headphones expand it further by "taking ANC to a whole other customer." A feature that was once narrowly designed to appeal to long-haul air travellers is now becoming mainstream, and Apple's embrace of it with the Solo Pro is an acknowledgment and accelerant of that trend.

One thing that will make the Solo Pro less appealing to frequent flyers, however, is the complete absence of an analog connector - users will have to connect wirelessly over Bluetooth or purchase an accessory, as there's no option to connect these with a classic 3.5mm plug.

Among the subtle but important changes Apple has made in this upgrade is a general redesign to reduce water ingress. Sport is the second most popular use case for the Beats Solo, so Apple made sure to make its latest iteration resistant to sweat and splashes with new gaskets and coverings to protect the precious electronics within. They're still not waterproof headphones, but they're much more durable, to go with their nicer feel from the improved cushions and metal frame.

The Beats Solo Pro still collapse down as before, but now their opening and closing serves as the on-off switch as well. There's just one button to switch between active noise cancelling, no noise cancelling, and the transparency mode that lets you hear your surroundings, and the classic music and volume controls are still present as clicky buttons on the right ear cup. Apple has rightly resisted the temptation of building in fiddly touch controls.

Featuring Apple's excellent H1 wireless chip, a whole new circuit board design and a bespoke digital-to-analog converter, these are the most intricately designed and engineered headphones from either brand. Wood proudly described the Solo Pro as "extremely proprietary", though it's a little disappointing that Apple is sticking with a Lightning connector for charging instead of USB-C, which it uses on its iPad Pro and MacBook Pro devices. Away from a charger, the Solo Pro will last 22 hours with ANC turned on or 40 hours without it.

The Beats Solo Pro go on sale on October 30 for $US299 ($443), and the Beats Solo 3 will remain in Apple's lineup for now at a reduced price of $US199. A collaboration with superstar producer Pharrell Williams will see three limited-time colourways - a dark navy, a turquoise and a summery mix of orange and red - go on sale alongside the default black, grey and white options.

 

14 Oct, 2019
Kmart draws on personalisation to customise Christmas gifts
Inside Retail Australia

Discount department store Kmart will offer personalised shirts, socks, and stockings during the upcoming holiday period through a partnership with Wesfarmers-backed Onthego.

Onthego, which is partially owned by Kmart-owner Wesfarmers, launched a funding round alongside the announcement to continue expanding its customer acquisition efforts and advance its technology. 

“Customers are moving more and more to online to self-serve their personalisation ideas, from socks to Christmas stockings and tee-shirts with your name on it,” Onthego founder and chief executive Mick Spencer said in a statement. 

“In a time where customers have a lot of choice, retailers must be nimble and innovative in their customer offering, ensuring customers come back to their website or stores. 

“Customisation has proven [to be a] market that builds more brand loyalty.”

The customisation business already provides personalised clothing options through Officeworks, and previously told Inside Retail that the business saw a “massive opportunity” to expand across Wesfarmers’ other businesses. 

“If I fast forward five years there’s obviously going to be a huge amount of potential there, and the great thing is Wesfarmers are really keen on this young, ambitious company that they’ve got access to,” Spencer told IR.

Spencer also said the business plans to expand internationally, with a short term focus on South-East Asia and New Zealand, and a longer view to enter the UK, Europe or North American markets. 

7 Oct, 2019
Kogan launches credit cards, offers $300 credit
Financial Review

Kogan.com has launched its first credit card almost a year after flagging plans to do so, with offers of $300 credit and reward points geared towards its online retail products to entice customers.

The company's founder Ruslan Kogan hopes to snare more than 1 per cent of the credit card market with Kogan Money, a Visa card backed by Citi that has no annual fee and 55 days interest-free in addition to the rewards system.

Kogan Money Black card holders will be able to earn two rewards points for every dollar they spend on Kogan exclusive brands and one reward point for every dollar they spend on all other eligible purchases.

Rewards points are redeemable at Kogan.com and on Kogan Mobile and Kogan Internet at a rate of 1¢ per point. This means card holders who spend $500 on a Kogan branded TV, for example, will earn points equal to $10 which can be redeemed on future Kogan.com purchases.

Kogan.com is offering new credit card customers $300 in credit to spend on its website when they outlay $3000 on eligible purchases in the first 90 days from approval.

Card holders will also receive free membership of the retailer's Kogan First loyalty scheme, which offers free shipping on eligible purchases and usually costs $99 a year.

The tie-up with Citi was announced last November.

"Kogan.com delivers what Australians need at some of the most affordable prices and rates available in the market, and Kogan Money is extending this concept to a range of in-demand financial products and services," said Ross Metherell, Kogan's director of strategy.

Choong Yu Lum, head of cards and loans at Citi, said: "It’s fantastic to partner with an innovative company like Kogan.com to offer a card that is great value for consumers, offering a rich uncapped rewards program with no annual fee."

Verticals push

The Kogan credit card follows the launch in August of Kogan Super in partnership with Mercer, Kogan Cars in June, Kogan home loans in April and Kogan Marketplace in March. Kogan Energy and Kogan Mobile New Zealand launched last month.

The so-called verticals aim to attract new customers to the Kogan.com ecosystem by leveraging its customer database and low acquisition costs, and differentiating the online retailer from larger rivals such as eBay, Amazon and Alibaba.

The verticals, which include pre-paid mobile services, travel and insurance, accounted for more than 18 per cent of Kogan.com's gross profit in 2019. Investment bank UBS believes they will account for almost 30 per cent of gross profits by 2021 if customers embrace the new products.

This would help offset declining sales of third-party brands, which now account for about 27 per cent of gross profits compared with 39 per cent in 2018.

"Verticals should be the key growth driver over both the short and long term," UBS analyst Aryan Norozi said in a report last year, citing the large ($128 billion) addressable market and small incremental costs and capex involved.

"It allows Kogan.com to leverage its existing subscribers – with every incremental dollar of revenue at almost 100 per cent profit and [low] cost of acquisition, we see this a key competitive advantage vs peers," he said.

Kogan.com shares rose 0.5 per cent to $6.30, taking gains this year to 80 per cent.

7 Oct, 2019
Record-low interest rates aim to boost spending
Inside Retail

The Reserve Bank on Tuesday cut the official interest rates to a new record low of 0.75 per cent in a bid to drive up wage growth and reduce unemployment.

The new record low of 0.75 per cent is the third cut this year, and the first time rates have dipped below 1 per cent, but AMP chief economist Shane Oliver said the Reserve Bank’s work isn’t done yet.

“They want to get the economy humming faster, I don’t think this will be enough – it will help (though),” he told Sky News.

He predicted rates will drop again to 0.5 per cent on Melbourne Cup Day, and down to 0.25 per cent early in 2020.

Executive director of the Australian Retailers’ Association Russell Zimmerman said he was hopeful the decision to further cut interest rates would boost retail sales by easing pressure on household budgets.

“We haven’t seen the jump in retail sales we were hoping for, and we are still waiting to see the flow-on effects of earlier rate cuts, tax cuts, and increases to the minimum wage,” Zimmerman said.

“Retail trade figures in recent months have continued to lag but we keenly await the release of August retail trade figures to see whether the other stimulatory measures have kicked in,” he added.

Divide over how to boost economy

Treasurer Josh Frydenberg said the RBA cut rates to bring Australia into line with other low-rate economies, as well as to pursue its goals of cutting unemployment and lifting wage growth.

“The board has made clear in its statement today the domestic economy has reached a gentle turning point and they positively referred to the benefits that are flowing from the tax cuts, which are the most substantial in more than two decades,” he told reporters in Sydney.

But Labor shadow treasurer Jim Chalmers said the government was pretending it had no options to lift the flagging economy.

“If they were so good at managing the economy the Reserve Bank wouldn’t have had to cut rates again today,” he told reporters in Brisbane.

Deloitte Access Economics partner Chris Richardson says there are downsides to cutting rates so low.

“There is a risk that we’re spending down our recession insurance,” Richardson told Sky News before the cut was announced.

Frydenberg said the best way to avoid recession in a future global downturn was to pay down debt, giving the government more capacity to spend through it.

Banks urged to pass on rate cut in full

The Australian Chamber of Commerce and Industry urged the banks to pass on the rate cut in full to lift spending on retail.

“Small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants,” chief executive James Pearson said.

The Commonwealth Bank was the first of the big four banks to trim its interest rates in response to the RBA’s move.

However, while CBA cut its standard variable rate for home loan customers by between 0.13 and 0.25 per cent it did not match the RBA’s cut completely.

The other big banks are expected to follow CBA’s lead in the coming days.

7 Oct, 2019
Aussies spend big shopping on social media
Inside Retail

It only takes a quick scroll and some clicks to buy online and for Australians the dollars are adding up with more than $16 billion spent on shopping via social media each year. 

Research from ING released on Wednesday revealed over a third of Australians (34 per cent) admit shopping through social media has led to unplanned purchases.

On average Australians are spending an extra $860 annually, with 20 per cent revealing they consider buying something on social media every time they scroll through their feed.

ING’s head of retail Melanie Evans said close to a quarter of respondents admitted to not keeping track of their online spending. 

“Online shopping is undoubtedly very convenient and the recent emergence of shopping via social media has made it easier than ever to get what we want, but it’s also easy to unintentionally overspend,” Evans said. 

Targeted advertising also adds to the temptation, with 36 per cent finding that social media buying opportunities are very targeted to their interests.

“It’s a good idea to be aware of the highly targeted advertising often employed by social media platforms, which can increase temptation to buy things we otherwise wouldn’t have considered,” she said. 

“If you are focused on saving, try and avoid those impulse purchases and the buyer’s remorse that can come with them. Spontaneous dips into our hard-earned savings all add up.”

The most popular platform to shop on was Facebook with 22 per cent, followed by Instagram nine per cent, YouTube nine per cent, Snapchat four per cent and Pinterest four per cent.

2 Oct, 2019
Coles expands eBay offering with addition of fresh and frozen goods
Inside Australia Retail

Coles is expanding its grocery offering on eBay with the introduction of fresh and frozen goods, alongside new delivery windows to encourage more customers to get on-board.

The addition of new items such as milk and bread means customers can now do a more robust grocery shop on eBay.

The supermarket giant first began offering perishable and non-perishable goods on the site in March, with items including fresh fruit and vegetables, ready meals and pre-packaged fresh food.

“When we first launched Coles on eBay our focus was on pre-packed fresh food, pantry, personal care, and household items,” a spokesperson for Coles told Inside Retail.

“We listened to customer feedback and learned that people wanted access to more of our range to complete their weekly trolley in one transaction. By introducing Coles’ fresh and frozen products, we’re giving our customers the convenience they’re seeking and making it a one-stop-shop.”

Bulk-sized items such as coffee, rice, nappies and soft drinks have been most popular on the site to date with Coles Online chief executive Alister Jordan reporting that convenience and health are among the top priorities for Coles shoppers.

“We know convenience and health are a priority, with Coles customers increasingly seeking to reclaim their time, with minimum compromise on freshness, quality, and flavour,” he said.

“By enhancing our partnership with eBay, we are enabling anytime, anywhere shopping, providing our customers another convenient way to access our products and have them delivered straight to their door at a time that works for them.”

The addition of delivery windows gives shoppers the option of choosing a more convenient time frame for delivery, which will suit those who prefer to be there to receive the delivery.

“We’re seeing shopping needs change as Australians look for greater convenience. Coles on eBay shoppers prefer to shop during evenings, with Tuesday at 9pm the most common time,” senior director, B2C and advertising, Kristian Haigh, said.

Coles on eBay has also launched a $49 discount for eBay Plus members, when they spend $99 or more on their first shop; as well as a 5 per cent discount on every order thereafter. eBay Plus members also have the added benefit of free delivery on orders over $49 as well as double flybuys points.

Coles on eBay is still only available to consumers living in metropolitan areas, launching in Sydney, Melbourne and Brisbane in March and having since been expanded to metropolitan Adelaide and Perth.

25 Sep, 2019
The Iconic tackles packaging waste
SOURCE:
Ragtrader
Ragtrader

The Iconic has unveiled the latest step in its sustainability strategy, announcing a partnership with Australia's leading soft-plastic recycling service Redcycle. 

Moving forward, The Iconic is encouraging its customers to recycle their packaging via the Redcycle collection bins available at most major supermarkets. 

The partnership will help customers overcome the challenge of recycling The Iconic's low-density polyethylene soft plastic satchels, which are 100% recyclable and form the majority of customers’ order packaging.

As part of the partnership, the postcard inside all The Iconic orders will be updated to include messaging about Redcycle and how to recycle soft plastics. 

The Iconic head of sustainability and ethical sourcing Jaana Quaintance-James said that the business will continue to invest in finding more sustainable packaging solutions. 

"The Iconic is proud to be partnering with Redcycle to help educate customers on how they can reduce their personal impact by recycling their soft plastics packaging via Redcycle collection bins.

"We take our commitment to social and environmental responsibility very seriously and we’re currently working through plans to adopt more sustainable packaging by early 2020 as part of our sustainability strategy.

"Although we’ve made great progress to date for reducing our most significant environmental impacts, we know we still have a long way to go, and we hope that through our mantra of ‘progress, not immediate perfection’, we can encourage other large businesses to recognise their part in driving collective, actionable change," she said. 

Red Group director Elizabeth Kasell said that the partnership will go towards highlighting the changes both customers and businesses can make when it comes to waste. 

"Redcycle is thrilled to partner with The Iconic to help both their business and customers take control when it comes to recycling soft plastics.

"We hope that through this partnership more people recognise the responsibility they have at home and in their work environment for helping to reduce the amount of plastic packaging going into landfill.

"We need to work together to make true change, and we’re more than excited to help The Iconic educate its customers on how to do so when it comes to soft plastics," she said. 

According to Redcycle, The Iconic packaging is likely to be recycled alongside empty print toners and recycled glass to make Plastiphalt, a new and more sustainable high-quality alternative to asphalt.

17 Sep, 2019
Adore Beauty eyes expansion as Quadrant takes 60pc stake
The Australian Financial Review

Pioneering online beauty retailer Adore Beauty is expanding in Australia and overseas after founder and Young Rich lister Kate Morris sold a 60 per cent stake to Quadrant Private Equity.

Ms Morris started selling beauty products from the garage of her Melbourne home 20 years ago, when e-commerce was in its infancy, and with the help of husband James Height has built Adore into Australia's leading online beauty platform.

Sales have grown six-fold in four years - from $16 million in 2016 to an annual run rate of more than $100 million in 2020 - as Adore took share from bricks-and-mortar retailers such as Myer and David Jones.

But for Adore to achieve its ambitious growth plans the company needed to bring in external investors after buying back a 25 per cent stake acquired by Woolworths four years ago.

After six months of talks led by KPMG, Ms Morris and Mr Height have agreed to sell a 60 per cent stake in Adore to Quadrant's new $400 million growth fund.

Ms Morris, 40, was understandably apprehensive about selling control of her baby to private equity investors.

"I've had this business 19 years and I don't think I could have parted with any of it for someone I didn't really trust," Ms Morris told The Australian Financial Review on Monday.

Before agreeing to the deal, Ms Morris spoke to other business owners who have teamed up with Quadrant, whose previous investments have included Kathmandu, Burson, QSR Holdings, Amart and Barbecues Galore.

"Finding a partner who was going to respect the culture and values that have enabled Adore to deliver the results that it's delivered and is part of what makes us special ... was super important," she said.

"All the founders I spoke to had had a positive experience and said it was something they would do again and if we had the opportunity to work with Quadrant we should do it."

Ms Morris and Mr Height are selling down a portion of their 100 per cent interest, and Quadrant is investing additional capital to accelerate the company's growth.

Adore, which sells more than 220 beauty brands, plans to expand into new verticals such as fragrance, ramp up marketing to attract new customers and invest in technology and content to improve customer engagement.

"Consumers are more engaged with the category than they have ever been and looking for more information and education - the information we've been able to provide as a brand-agnostic retailer seems to be really resonating with consumers," Ms Morris said.

"We're acquiring more and more customers, and the customers we have are spending more with us every year."

After entering the New Zealand market two months ago, Adore plans to take advantage of strong interest from international customers, which accounts for about 45 per cent of site traffic, and explore expansion into Asia, adapting its site to include localised content, brands and currencies.

"We have so many international consumers coming to our site for the content it kind of makes sense to sell them something at some point," she said.

The sale price was not disclosed. But based on average valuations for e-commerce businesses of about 1.1 to 1.2 times revenues, Adore is estimated to be worth more than $110 million, valuing Quadrant's 60 per cent stake at more than $60 million.

Quadrant managing director Justin Ryan, partner Simon Pither and investment associate Youngsoo Kim will join the Adore Board.

The Adore stake is Quadrant's first pure-play online retail investment and the third this month founded by a woman.

"It's different to what we've done in the past - we've done a lot of consumer work and in bricks and mortar - but we all agree the future is in e-commerce and we really like what Kate and James have done," Mr Ryan said.

"They've built an unbelievable culture, it's a big market and they've carved out a nice niche - I think it has a very exciting future," he said.

Earlier this month Quadrant agreed to buy majority stakes in Love To Dream, which designs baby swaddles and sleepwear, and ModiBodi, which makes leak-proof apparel, underwear and swimwear.

Quadrant's exit options include an initial public offering, trade sale or sale to another private equity fund.

Ms Morris, who debuted on The Financial Review Young Rich List last year with an estimated wealth of $30 million, has not ruled out selling her entire stake in the future.

"Every business at some point is either sold or wound down so that's a potential outcome at some point ... right now I'm super excited about the growth that we have ahead of us - it's so much fun at the moment."

11 Sep, 2019
Dentsu Aegis Network elevates Ashish Bhasin to APac CEO
The Economic Times

MUMBAI: Media and digital marketing communications company Dentsu Aegis Network (DAN) has elevated Ashish Bhasin, currently CEO Greater South, and chairman and CEO – India, to the position of Asia Pacific CEO effective immediately. He will also be the first Indian executive to join the Dentsu AegisNSE 1.54 % Network Global Executive Team.


This is for the first time in the agency’s history that an Indian executive will head the entire Asia Pacific business and be a part of the Global CEO’s executive team.
 

Bhasin, who has been with the company for over 11 years, will relocate to Singapore. While he will continue to maintain his role as chairman of India, Anand Bhadkamkar, COO India and CFO Greater South, has been promoted to CEO, Dentsu Aegis Network India. Bhadkamkar will continue to report to Bhasin.
 

“I am thrilled to be taking on this new role within the APAC region,” Bhasin said. “There is never a more exciting time to be in this business; our competitive landscape is becoming more complex and fragmented while our clients are crying out for long-term vision and simplicity. We have to keep their needs as our North Star whilst delivering long-term, sustainable growth for our business. We are in a unique position to build propositions around our client needs, and I look forward to this next c ..
 

 

11 Sep, 2019
Jack Ma — the most flamboyant tech founder on the planet and China's richest man — steps down from his $460 billion Alibaba empire after 20 years
Business insider
  • Jack Ma, China’s richest man, is stepping down as the chairman of the $US460 billion Alibaba Group he founded 20 years ago.

  • The company, founded by Ma and 17 others in a small apartment in 1999, is now the world’s largest e-commerce group.

  • Ma, who’s worth almost $US40 billion, is known for his love of extravagant celebrations, including mass employee weddings and music performances.

  • His farewell party is taking place in an 80,000-seat stadium.

  • Ma’s successor is Alibaba CEO Daniel Zhang, who could face challenges from the US-China trade war and a slowing Chinese e-commerce industry.

  • Visit Business Insider’s homepage for more stories. 

Jack Ma, the flamboyant tech personality and the richest man in China, is leaving his $US460 billion Alibaba empire 20 years after founding the company.

Ma is stepping down as the chairman of Alibaba Group on Tuesday, his 55th birthday, as part of a long-planned succession scheme. Alibaba Group is the world’s largest e-commerce group, with more than triple Amazon’s total reported sales for 2018.

A former English teacher, Ma founded the company with 17 others in a small apartment in 1999. It began as a company that sold Chinese goods around the world but shifted its focus to the domestic Chinese market as the country’s economy boomed. It later expanded into online banking, artificial intelligence, and entertainment.

The company’s 2014 initial public offering remains the biggest in history, at $US25 billion. Ma is worth about $US40 billion, according to Bloomberg’s Billionaires Index, a net worth higher than anyone else in China and 21st in the world.

Alibaba now employs more than 100,000 people, according to Reuters.

While he is stepping down from a major leadership role, Ma said he would take a position in the Alibaba Partnership, a 38-person body with an indirect role in the governance of the group.

Ma has picked Daniel Zhang, the CEO of Alibaba since 2015, to take over, though Zhang is unlikely to match Ma’s famous flamboyance.

Ma starred in a kung fu movie, sang at a music festival, and once performed at a company party while dressed as Michael Jackson.

Ma is also known for the extravagant events he holds for employees during Alibaba’s annual Singles Day shopping event, whose sales last year quickly outstripped Amazon’s Prime Day. The event has featured performers like Mariah Carey and Cirque du Soleil.

And Ma also hasn’t held back for Ali Day, which celebrates employees and their families and has even included Ma officiating a lavish employee mass wedding.


His style is also apparent in his resignation plans, which involve a farewell party at an 80,000-seat stadium in Hangzhou, the city where he founded the company decades ago, Reuters reported.

Alibaba on Monday shared a video of Ma returning to that apartment, where he recalled telling early employees: “This is the place we’re going to work for a year probably. We’re going to eat here. We’re going to sleep here. We’re going to work day and night here.

“And we will probably achieve something. Or probably we’ll have to go out looking for jobs together.”

He said their goal then was to be among the world’s 10 most popular websites and to empower small businesses.

Zhang could face challenges amid the trade war between the US and China and a slowdown in the Chinese e-commerce industry.

Liu Yiming, an analyst at the Chinese tech publishing group 36kr, told Reuters that “if Alibaba wants to find new innovations or trends, this is going to be more difficult than before.”

“For Daniel Zhang,” Liu said, “this will be a big challenge.”

 

9 Sep, 2019
“You have to focus on what customers want”: eBay, 20 years later
Inside Retail Australia

Online marketplace eBay has witnessed the Australian e-commerce scene change much over the 20 years since it launched, but the most constant change has been the evolution of its product selection. 

According to eBay Australia and New Zealand managing director Tim MacKinnon, the marketplace started out as a place for people to buy quirky and unique inventory that couldn’t be found elsewhere, but has rapidly evolved as product demand shifted. 

“It became a habit for people who wanted to sell stuff from their homes, and buy second hand stuff or unwanted Christmas gifts, and that was the next wave of selection on our site,” MacKinnon told Inside Retail.  

“So many people were doing that that businesses came on and started buying from eBay sellers, discounting the product and selling it to another, or getting their hands on stock and selling in bulk.”

The latest shift, according to MacKinnon, is one driven by eBay itself – a focus more and more on new products, and making sure it has what people need every day. 

It is for this reason the brand brought Coles on board to add grocery to eBay’s product offer – a partnership MacKinnon teases ramp up in the lead in to Christmas. 

EBay also stocks products from retailers such as Myer, Bunnings and The Good Guys.

“At the end [of the day], you have to focus on what customers want, and if you’re not delivering that it doesn’t matter how long you’ve been in the market – 3 or 30 years – if you can’t deliver the product they want at the best prices, you won’t be able to engage customers,” MacKinnon said. 

However, eBay is in an interesting space as far as online platforms go: it is, as MacKinnon notes, the only marketplace in Australia that also doesn’t sell its own product. 

“We don’t compete with retailers, we partner with retailers,” MacKimnnon said.  

“We’re the only marketplace in the retail landscape that is not also a retailer, and I think an important point is that retailers compete with other retailers. Our job is to help retailers grow.”

According to MacKinnon, almost half of all Australians will start their shopping journey on a marketplace, whether they’re there to compare prices, learn about product options, or purchase.

However, in a time when customer spend is dipping and both physical and online sales down, according to the most recent ABS data and NAB online retail sales index, it is becoming increasingly important for retailers to ensure they are delivering what customers want.

“I think this is the most dynamic and challenging period for retail in a long time. There’s more competition, the environment is difficult,” MacKinnon said.

“Our job is to help Australian retailers compete and provide a channel of growth for them, and we see that as an important responsibility.”

9 Sep, 2019
Myer reports booming digital sales
SOURCE:
Ragtrader
Ragtrader

Myer has released its full year 2019 results, reporting that despite a decline in total sales the digital sales for the business increased by 21.9% to $292.1 million. 

While total sales declined by 3.5% to $2,991.8 million compared to $3,100.6 million in 2018, the digital sales – which comprise of online sales and sales via in-store iPads – now represent the largest store in the business and make up 9.8% of total sales. 

The business also reported that comparable store sales declined by 1.3% in 2019, however the cost of doing business improved by 3.1% to $1,002.4 million compared to $1,035.0 million in 2018. 

Myer CEO and MD John King cited store improvements and closures and the Customer First Plan as reasons for the results. 

"This result demonstrates our focus on profitable sales, a disciplined management of costs and cash, as well as deleveraging the business.

"In the first year of the Customer First Plan, we have progressed a number of strategic initiatives, but recognise there is much more to be done to transform this business in the interests of customers and shareholders.

"We have made progress working with landlords, through a portfolio partnership approach, to reduce our footprint and refurbish stores to transform the customer experience, whilst simultaneously delivering material cost savings.

"We announced with Scentre Group a plan to refurbish our store at Belconnen to create an enhanced shopping experience across a reduced floor space. 

"Similarly, we will hand back a floor and refurbish our Cairns store from January 2020. We have also agreed to exit level four of Emporium in Melbourne from May 2020," he said. 

King also cited improvements in the back-end operations, the relaunch of the website and improved staff training as factors in the results. 

"Pleasingly customer service metrics have improved during the year reflecting back office efficiencies, the new labour model that ensured more appropriate service levels at peak trading times, greater training levels and improved product knowledge.

"The rollout of new and ‘Only at Myer’ brands continues with a significant brand refresh currently underway across all stores, with more than 90 new brands expected to be added to our range by Christmas 2019.

"The continued strong growth in digital sales, now representing our largest store and 9.8% of total sales, was particularly pleasing. 

"This growth reflects both the upgraded website that was launched in September 2018 and a significant increase in products available online, which included the addition of several concessions. 

"We aim to match our store and online ranges by the end of this calendar year and are confident that there are significant opportunities to continue to grow this channel.

"During the year we reduced costs by $32.6 million reflecting the enhanced new staffing model in-store, more focused marketing spend, reduced store occupancy, as well as efficiencies and reduced waste across all areas of our business," he said. 

Further in the results statement, Myer said that it believes it can implement additional cost savings in its supply chain. 

Myer released its full year 2019 financial results on September 05.

9 Sep, 2019
'On a good wicket': Online sales a bright spot for dejected retailers
SOURCE:
The Age
The Age

Australia's biggest retailers, such as Coles, Woolworths and JB Hi-Fi, have grown their online sales by more than 20 per cent in the past financial year, creating a bright spot in an otherwise gloomy trading environment.

Online sales at electronics retailer JB Hi-Fi jumped 23 per cent in the last financial year and 25 per cent at Super Retail Group, which owns brands such as Supercheap Auto and Rebel Sports. The surge in online sales contributed between 5 to 7 per cent of total sales for the two major sellers.

The Australian Bureau of Statistics last week reported retail sales in July, which analysts and the government had expected to see lift on the back of tax cuts that started flowing into bank accounts from mid-July, fell 0.1 per cent.

Amid an environment National Australia Bank has labelled "recessionary" twice this year, online sales are providing a much-needed boost for retailers.

At their full-year results in August, supermarket chains Coles and Woolworths reported online sales growth of 30 per cent to more than $1 billion. Coles said digital sales had made a profit for the first time.

Coles online general manager Karen Donaldson said she expects that solid growth to continue and pointed to the online sales success of European supermarkets.

"If you look at overseas markets ... anything up towards 8 or 9 per cent penetration is entirely doable," she said. This would amount to between $2.5 billion and $2.7 billion in online sales for the grocery giant.

Despite recent impairments and significant losses for some of Australia's department stores, even the weakest part of the retail sector was buoyed by the online surge.

Digital sales at Myer were $292.1 million for 2019, exceeding the annual sales at its Bourke St, Melbourne store. David Jones online sales grew 46.8 per cent and contributed to 7.7 per cent of total sales, with chief executive Ian Moir saying the channel was "very profitable".

"You've got delivery costs, but you don't have the rental and labour costs. It's a much more profitable business online than physical stores," he said.

DJs is hoping its online growth will counteract the retailer slashing its store space over the next five years, a move which National Online Retailers Association (NORA) founder Paul Greenberg believes will see it start to grow its profits.

Retailers are realising that if they work their online channels harder, they're on a good wicket.

NORA founder Paul Greenberg

"Will they be more profitable with a consolidated footprint and a strong digital offer? The quick answer is yes," Mr Greenberg said.

"A lot of the upside of [online shopping] is being lost by inefficient, expensive, and ill-considered physical footprints."

"Retailers are realising that if they work their online channels harder, they're on a good wicket."

The "recessionary" slump, which has shadowed the retail sector for the past year could be coming to an end, however, with Citi analyst Bryan Raymond predicting a pick up in sales.

The effect of the Morrison government's tax cuts and two consecutive rate cuts have started to flow through into consumers' pockets, said Mr Raymond, who believes retail is coming out of a trough into the next phase of its cycle.

"It's safe to say we've troughed already, but we're still very early in that improvement phase," he said in a note to clients.

"I wouldn't say we're accelerating rapidly, it's still cautious out there. But I don't think we're seeing things get worse."

However, unless the Reserve Bank cuts rates again before the end of the year, Mr Raymond warns the short-lived boost from tax cuts might not support longer-term growth.

"As we roll into December, tax cut stimulus will be petering out, and the question will be, will rate cuts be supporting spending at that point or not?"

4 Sep, 2019
Online retail facing a 'dynamic and challenging' environment, says eBay boss
The Sydney Morning Herald

The head of eBay Australia has described the current environment as one of the worst periods in history for online retailing even as the auction site has hit new records for customer numbers.

eBay Australia's managing director Tim MacKinnon told The Age and The Sydney Morning Heraldthat June's meagre 0.5 per cent increase in the online retail sales index was the lowest he could remember.

"It's at the lowest point over my eight years at eBay, and one of the lowest in online history," he said.

"There's no doubt this is a challenging environment, there's a lot of competition, and there's a lot of focus on delivering value to consumers."

In the latest piece of bad news for the sector, the Australian Bureau of Statistics on Monday released data showing the seasonally adjusted estimate for inventories, which indicates the amount of merchandise a company has on hand, fell 0.9 per cent for the quarter.

In the wake of a poor June result for retail trade, economists said the inventory result showed retailers were adjusting stock levels to match weak demand.

Despite some "cautious optimism" from retail powerhouse such as JB Hi-Fi and Woolworths, analysts are predicting the pain to continue despite some fiscal and monetary stimulus.

Fresh retail trade figures for July will be released Tuesday, with Morgan Stanley analysts predicting a small 0.3 per cent increase, down slightly from 0.4 per cent in June.

Intense competition, but Amazon no worry

Mr MacKinnon said sellers on eBay were facing increasing competition, but noted that same competition didn't apply to eBay itself, despite pressure from players like Amazon and Kogan.

You can't change the rules of retail that great prices and great selection trump everything.

eBay Australia managing director Tim MacKinnon

eBay receives 11 million unique monthly visitors and has over 40,000 different small businesses selling on the platform. Mr MacKinnon said the company was in the strongest position it had even been.

"Two out of three Australians have bought something from eBay the last 12 months, which is the highest share of the population using eBay than any time in our history," he said. "We're clearly the market leader in online shopping."

The company is celebrating 20 years of operations locally, which Mr MacKinnon said had seen the company go through numerous changes, moving from a second-hand goods seller to a marketplace-focused business model.

Despite competitors such as Kogan constantly moving into new verticals like superannuation and credit cards, Mr MacKinnon said eBay wasn't planning to follow suit, predicting the future of online retail would likely be more of the same.

Technology advancements such as augmented reality and increased personalisation would likely play a limited role compared to the "fundamentals" of having low prices, cheap shipping and a broad selection.

"You can't change the rules of retail that great prices and great selection trump everything," he said. "I know that's a boring answer, but it's the most fundamental thing you need to do."

4 Sep, 2019
'We love that environment': Why an economic downturn is good for Kogan
The Sydney Morning Herald

Ruslan Kogan, founder of the eponymous electronics retailer, has welcomed a potential economic downturn, claiming the discount seller thrives when consumers are cautious.

Kogan reported a strong full-year result on Tuesday, with net profit after tax (NPAT) up 21.9 per cent to $17.2 million, and revenues up 6.4 per cent to $438.7 million, slightly under consensus estimates of $451 million in revenue and NPAT of $17.3 million.

The company had said last month it was beating the current 'recessionary' retail environment, but speaking to The Age and The Sydney Morning Herald Mr Kogan went a step further, claiming his business thrived when things were tough.

"Because we’re a price leader and we’re there fighting to get better deals and prices, if things do tighten up, we win customers in that environment," he said.

"We would love it if all customers did a Google search before they made a purchase, if they compared prices, if they went on multiple websites, compared specs, read reviews, we would love that.

"That's typically what happens when things tighten up, and we love that environment."

You hear the Amazon word a lot, but eBay’s the real player in this space.

Kogan founder Ruslan Kogan

Kogan's healthy result was complemented by the company's Marketplace launch: an answer to eBay and Amazon that allows third-party sellers to sell through the company's online store.

Going online in April, the offering has already contributed $1.5 million in gross profit for the retailer and $7.1 million in sales in July alone.

Mr Kogan said the Marketplace launch was a "brilliant step" for the business, saying he was annoyed the company hadn't launched the product years ago.

"This was on our radar a few years ago, and we at that point misjudged the value of our brand and the benefits a marketplace brings," he said.

Despite competing on Amazon's turf, the chief executive was dismissive of the multinational's threat, instead showing more concern about eBay.

"You hear the Amazon word a lot, but eBay’s the real player in this space," he said.

Neil Carter, global co-head of listed equities at Kogan shareholder IFM Investors, said he believed the market was underestimating the "growth potential" of Marketplace.

"Kogan is taking what looks to be a 10-15 per cent commission on these sales, but it’s a very capital-light model, they don’t have to hold any inventory or pay fulfilment or marketing costs," he said.

"So all profit goes to the bottom line. If gross profit was $1.5 million for the fourth quarter, if you annualise that you expect $6 million for the 2020 financial year, plus it’s growing rapidly."

Mr Carter said he predicted a $10 million-$12 million boost to EBITDA for the current financial year from Marketplace, which would put it at about $40 million, or approximately $4 million more than consensus forecasts.

Shaw and Partners analyst Jarrod Davis was even more positive, setting a share price target of $8.40, an increase of nearly 50 per cent, and claiming Marketplace "could double the current size of Kogan over the next five years".

Royal Bank of Canada analyst Tim Piper was also bullish on Marketplace, though noted the overall result was "mixed" due to lower gross margins.

Strong start to financial year

The start of Kogan's financial year got off to a roaring start, with gross profit for July up 32 per cent year-on-year, and comparable sales growth of 18.3 per cent.

This was broadly in line with the first-quarter sales growth seen by fellow retailers JB Hi-Fi and Super Retail, and Mr Kogan said while the sector was "challenging", he believed good businesses would "do well no matter what".

The company's "exclusive brands" private label products, where the retailer sells Kogan-branded goods directly from suppliers, also exploded, with revenue up 41.6 per cent. Private-label goods accounted for nearly 50 per cent of Kogan's gross profit for 2019.

The e-tailer's selection of complementary verticals also grew, with revenues for Kogan Mobile up 9.8 per cent and Kogan Insurance up 144 per cent.

Changes to GST law midway through last year is continuing to have flow-on effects for the retailer, with revenue from global third-party sellers decreasing year-on-year. Demand for Apple products was also "subdued" and suffered a material decline in 2019.

The company will pay a fully franked final dividend of 14.3 cents, up 10 per cent on the prior year, payable on October 14.

Shares were up 6 per cent to $5.65 midway through the afternoon, though remain down more than 16 per cent since May.

4 Sep, 2019
Lime&Tonic joins Big Red Group’s ballooning portfolio of experience brands
Inside Retail

RedBalloon parent company Big Red Group (BRG) has acquired its third experience brand in less than a year, with the addition of Lime&Tonic to its portfolio this week.

Announced on Wednesday, the purchase follows BRG’s acquisition of Adrenaline, a marketplace for adventure experiences, in November 2018, and IfOnly, a marketplace for experiences benefiting charitable causes, in June 2019.

Lime&Tonic focuses on dining, spas and other social events and experiences in Sydney and Melbourne, which Big Red Group co-founder Naomi Simson said is one of the fastest growing segments in the experience economy. 

“Gourmet dining and pamper experiences is what Lime&Tonic is known for, and we know from our other brands that these are two of the fastest-growing segments in the experience economy,” Simson said in a statement.

“The Lime&Tonic brand will allow the group to serve customers a broader range of experiences, curated on behalf of our customers.”

Big Red Group, which Simson co-founded in 2017 following the growth of her original online experience marketplace RedBalloon, claims to serve an experience every 49 seconds in Australia. 

The company, which also includes Marketics, the exclusive distributor of ‘Albert’ AI in Australia, and REDii, a platform to reward employees, aims to serve an experience somewhere in the world every second by 2025, and says the acquisition of Lime&Tonic is another step towards achieving that goal.

BRG is set to serve more than 600,000 experiences in FY20, according to the company. The group’s brands represent more than 2000 experience partners and offer more than 7000 experiences across Australia and New Zealand. 

While the trend of younger consumers prioritising spending on experiences over material products has benefited companies like BRG, they now face increased competition, as more businesses look to tap into the experience economy. 

“Every aspect of Australian retail is facing increased competition from global players, and this is no different for experiences,” Simson said. 

“To compete in the experience economy Australian brands must be of a size that allows capital investment for growth, and working together is one way to achieve this.”

BRG CEO and co-founder David Anderson said the company is rolling out a multi-brand strategy that will enable a central supply group to serve different customer needs via different experience brands. 

“We have a big vision for the next five years, both domestically and globally, and we’re excited to support Australian businesses along the way,” he said.

2 Sep, 2019
Apple says sorry for listening in on Siri conversations
Financial Review

 

As part of the apology posted on Wednesday (Thursday AEST), Apple reiterated an earlier pledge to stop keeping audio recorded through Siri unless consumers give their permission.

When permission is granted, Apple said only its own employees will be allowed to review audio to help improve the service. Previously, the company hired contractors to listen to some recordings.

"We realise we haven't been fully living up to our high ideals, and for that we apologise," Apple said.

Apple would not say how it will seek permission. In the past, the Cupertino, California, company has typically requested permissions through prompts during software update installations.

In recent months, Facebook, Google, Amazon, Microsoft and Apple have all acknowledged that people have been reviewing users' interactions with artificial intelligence assistants in order to improve the services. But users aren't typically aware that humans and not just computers are reviewing audio.

The backlash to the industry practice prompted Facebook and Google to stop relying on people to transcribe recorded conversations. Amazon is continuing the practice unless users of its digital assistant Alexa explicitly demand that humans be blocked from listening. Microsoft also is still doing it, too, contending it has adequate privacy safeguards in place for the Cortana digital assistant.

Apple intends to continue to rely upon computer-generated transcripts of what's being said to Siri as part of effort to improve services, even if a user hasn't explicitly granted permission, or opted in.

Unlike Facebook, Google and Amazon, which track what people are doing and where they are going to sell ads and merchandise, Apple has conspicuously emphasised that that it has no interest in peering into its customers' lives.

Chief executive Tim Cook repeatedly has declared the company's belief that "privacy is a fundamental human right," a phrase that cropped up again in Apple's apology.

27 Aug, 2019
Wesfarmers finally goes digital
Wesfarmers' managing director of industrial David Baxby is overseeing the implementation of Microsoft Dynamics 360 at Blackwoods.  Trevor Collens

The $30 million Bunnings project involves upgrading its online sales platform to enable click-and-collect, with $10 million spent in the six months to June 30 and $20 million budgeted expenditure this financial year.

Bunnings conducted a pilot program for click-and-collect at a store in Tasmania to ensure the new IT systems were working properly. This showed the company had learnt the lesson of the dangers of rushing headlong into a project without sufficient preparation, as happened with the Bunnings expansion in the UK.

The Bunnings pilot program in Tasmania was followed by the rollout of the Bunnings click-and-collect offering in Victoria in the first half of this year. It will roll out click-and-collect nationally this financial year.

Wesfarmers chief executive Rob Scott recognises digitisation is critical to the company’s engagement with customers at a time when its retail operations are threatened by a proliferation of foreign online competitors, led by Amazon.

The digital transformation happening inside  Wesfarmers' industrials division presents a good case study of the pitfalls and opportunities inherent in the implementation of new technology.

Blackwoods, which is the largest provider of industrial and safety supplies in Australia, is implementing a new enterprise resource planning (ERP) system supplied by Microsoft. It has employed the global firm DXC to implement the Microsoft Dynamics 365 suite of products.

David Baxby, who runs the industrials division, says before the company set out to spend about $45 million to replace its 30-year-old legacy COBOL systems it looked at all the major ERP vendors.

He says the company rejected SAP and Oracle because these software systems are not only expensive to install but have to be customised to suit the business. This leads to costly upgrades.

Baxby says Wesfarmers opted for Microsoft Dynamics for several important reasons. He says the software has an open architecture, it sits in the cloud, it is low cost and it is flexible. An equally important consideration was the buy-in by Microsoft’s senior engineers in Australia and in the head office in Seattle.

Baxby says Scott has met Microsoft CEO Satya Nadella, who is personally committed to the success of the Blackwoods implementation, as is Microsoft Australia CEO Steven Worrall.

He says the legacy systems at Blackwoods, combined with its extensive range of products, had combined to make it impossible for staff using a computer to check inventory in each of the seven Blackwoods distribution centres in real time. Blackwoods carries about 260,000 stock-keeping units (SKUs).

One of the hiccups in the implementation was caused by the rollout of a new web interface, which forced sales to drop by 2 per cent over a couple of months. This has now been fixed.

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