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BFD Expert Voices - Retail Deals

BFD Expert Voices

Amazon CEO Andy Jassy put a spotlight on physical retail in his second annual shareholder letter, emphasizing that the e-commerce giant must "find a mass grocery format that we believe is worth expanding broadly."

Why it matters: The only way for the tech conglomerate to continue to significantly build its retail operations is via physical stores as online sales have slowed, particularly in the U.S., Richard writes.

Of note: Slowing e-commerce growth comes after Amazon's consumer business increased from $245 billion in 2019 to $434 billion in 2022, driven by pandemic-era shopping behavior.

To satisfy the demand, Amazon doubled its fulfillment footprint and built "a last-mile transportation network that’s now the size of UPS," according to Jassy.

Details: While Jassy said he is "pleased with the size and growth of our grocery business," he still wants to grab a bigger share of the $800 billion segment.

"To do so, we need a broader physical store footprint given that most of the grocery shopping still happens in physical venues," he said.

Jassy noted that while Whole Foods is "a large and growing business," Amazon "must find a mass grocery format that we believe is worth expanding broadly."

Between the lines: Whether Amazon Fresh is the answer remains unclear.

"Amazon Fresh is the brand we’ve been experimenting with for a few years, and we’re working hard to identify and build the right mass grocery format for Amazon scale," Jassy said.

Per previous reports, some Amazon Fresh stores have sat empty. The company has even moved to close some locations.

The big picture: "While we have a consumer business that’s $434B in 2022, the vast majority of total market segment share in global retail still resides in physical stores (roughly 80%)," he said.

The bottom line: "Grocery is a big growth opportunity for Amazon," Jassy said.

Go deeper: For additional insights from the letter, including thoughts on generative AI, read the latest from our colleague Hope King.

1 big thing: Amazon chief spotlights physical retail

Illustration of a grocery basket full of cash.

SoftBank plans to sell almost all of its remaining shares in Alibaba, bringing its stake to about 3.8%, the Financial Times reports.

Why it's the BFD: The retreat of one of the Chinese group’s longtime backers comes as the company seeks to restructure itself by splitting into six businesses, Kimberly writes.

What’s happening: The Japanese group has sold about $7.2 billion worth of the company’s shares this year via prepaid forward contracts. It sold $29 billion last year.

SoftBank has the option to buy back the shares through these contracts.

The Japanese company once owned 34% of Alibaba.

Catch up fast: As Axios reported, a big benefit of Alibaba's reorganization is that each division is now freed to focus on its own growth strategy.

A split-up or spinoff of its units makes it easier for the company if it were to face further regulatory scrutiny.

SoftBank and Alibaba declined to comment. 

2. The BFD: Alibaba backer SoftBank cuts its stake

Illustration of a dollar sign with strings attached to it possibly about to get cut by a hand with scissors.

🧴Purell hand sanitizer owner Gojo Industries tapped JPMorgan Chase to run an auction for the business, the Wall Street Journal reports. 

With about $1 billion of annual sales, the company could be valued at around $3 billion, the report says.

The sale is targeting "industry players rather than private-equity firms," WSJ notes. 

🤳 Flip, the Los Angeles-based social commerce platform, has launched a self-service e-commerce operating system to help consumers, creators and companies, launch their brands on its platform and drive awareness.

The company, which allows customers and brand loyalists to share video reviews of products they have purchased, is extending beyond beauty to other categories like lifestyle, wellness and nutrition, electronics and home goods.

With the end-to-end MagicOS platform, shoppers will be “using the same platform as brands uploading their product catalogs and teams managing inventory, orders and the supply chain.”

3. Retail therapy

Illustration of a Rorschach inkblot showing shopping carts reflected on either side.

• Procuritas, a private equity firm with a long track record in Sweden, has raised its largest fund to-date, with €407 million in capital. https://www.procuritas.com/

• Warren Equity Partners raised more than $1.4b for its fourth flagship PE fund. http://www.warrenequity.com

🐶 Companion, an SF-based AI engagement tool for dogs (you read that correctly), raised $6m from Lerer Hippeau and Digitalis Ventures. http://www.joincompanion.com

• Metric Capital, a European private equity fund, and Scope, a growth investor, have acquired a majority stake in Danish toy brand Maileg for an undisclosed sum. https://axios.link/3KBJgLV

4. Retail transactions

• Rob Crea is joining Bryan Cave Leighton Paisner as head of the law firm’s fund formation group. He previously was with Vedder Price. http://www.bclplaw.com/

• Deutsche Bank is hiring William Mansfield, Credit Suisse’s head of European M&A, per Bloomberg. https://axios.link/3mlfFhO

• Harley-Davidson, the motorcycle maker, said CFO Gina Goetter was departing at the end of April. She will join Hasbro as its finance chief. https://axios.link/41r0KBc

• Hasbro has also named Tim Kilpin as its president of toy, licensing and entertainment. https://axios.link/41jfYs2

• Flip, the social commerce platform, has named Kapil Mokhat, the former head of commerce at Venmo, its president, and Hao Ma, a director at Meta, as its vice president of AI and data science. https://flip.shop/

• Invenda, the Swiss automated retail software platform, has named Andreas Pfluger as CEO of North America, Urs Reinhard as chief growth officer, Mark Crandell as managing director of North America and Gregory Byers as chief of staff. https://axios.link/3H2Idnp

5. It's Personnel

🍽️ What we're eating: Richard recommends French cafe La Mercerie in SoHo for a light meal served in style.

✏️ Big thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

April 13, 2023

1 big thing: Amazon chief spotlights physical retail