Future of Retail

Nadella particularly believes retailers must do a better job leveraging the data they are collecting on consumers, rather than dumping tons of money into search advertising on places such as Google and Facebook with mixed success.

Microsoft CEO Satya Nadella: Here’s what will define the future of retail

“Retail — and retailers — have the most precious asset, which is commercial intent data.

So is foolish to share this data with AMZN, FB and GOOG.

Amazon is in trouble

@manch Take note. Ads is out. AMZN is late to the party. Still not convince SHOP is eating AMZN’s lunch? Note that retailers realize they are foolishly sharing their most valuable data with AMZN and are hopping to SHOP. Is worth it in the long run even though may have short-term pain. WS is a lot smarter than you think, they don’t just do financial analysis, they do non-financial fundamental analysis. There is a good reason why AMZN share price has been going sideways in this raging bull market.

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When was the last time you shop at a Shopify site? How did people find out about any random Shopify site if not for ads at google and Facebook?

I shop at physical retail stores. Need to get myself out of the house and do some physical exercises.

A new trend is reward or loyalty points for online retailers. That gets you to be more loyal to the brand. It’s smarter than offering sales which don’t give you an incentive too shop with them again. Smart retailers create rewards levels the way airlines and hotels do. Then they’ll have merchandise that’s exclusively available to their most loyal customers.

There’s so much data. You can tell if they hit your site from an ad, which ad, etc. You can tell what was put in a cart. Was the cart abandoned? Did they wait to checkout? Imagine knowing someone built a cart 3 days ago and hasn’t checked out. You could send them a discount code valid for 24 hours. It’d be easy to measure the effectiveness on sales.

You’d also know what products each customer bought, so you can recommend new products. On amazon, someone puts your product in their cart, and amazon can recommend a competitor’s products to go with it. Amazon can recommend their own product to go with it as they do basics cables, batteries, TV mounts, etc. The accessories are the highest margin products, so missing out on those sales is huge.


Good point :+1:

There is word called “mass customization”. Several online retailers can do that by knowing their customers better. Another key point in retail business is margin of profit. The more you have to share with others, the lesser you get to keep. I think this may be true for brand-sellers who get too keep more of due to the clout of their brand. I remember about decade ago when Honda and Toyota were the largest car sellers ( in terms of volume) but Nissan was the most profitable. Pricing Power (your ability to dictate your price rather than be at mercy of market to set price for you ) is all that matters in retail. Look at Apple.


Glad you realize. @manch take note. Please don’t use financial analysis esp DCF and claimed that AAPL is overvalued. Do some non-financial fundamental analysis :wink:

Quick question: Amazon’s share of US online sales goes up year after year. Anyone here predicting it will go down this year?

Forget about data. The biggest problem any website has is traffic acquisition. Let’s say you launch your spanking new Shopify site. How do you let the world know about it? How much will you be spending on google and Facebook ads? And how many people clicking on those ads, and thus burning through your ad budget, will actually buy something on your site?

I have been asking for years if anyone have bought anything on a Shopify site. Anybody? How much did you spend compared to amazon?

There are two way you can earn tons of money. Walmart way ( by fighting for cost) or Apple way (product differentiation). Both are OK so long as you know your customers and you know how to address their needs. Having just few customers is OK so long has you know how to have them empty their pocket for you. Rather than having millions of customer on whom you loose money trying to sell them (think uber).


Do not forget use of working capital. I have never understood this concept well, but it matters a lot. Talk about a strong management!

Best working capital is when customers paid you in advance, so you don’t need any. In some cases like insurance, suckers customers paid you so much in advance, you have interest-free money to invest. See why WB loves insurance companies? Another one is club membership like Costco, interest-free working capital :slight_smile: again. iTunes card are also interest-free money. If you can start a business where customers willingly pay you cash in advance, you got a superb business.

Startups get interest-free $ from suckersprivate equity and paid themselves a handsome salary/RSUs, a very good business model if you have gift of the gap.

Ah hem.

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Look at where Shopify mentioned as their biggest markets: UK, Germany, Spain etc. Amazon has less than 30% share of online retail in each of these countries.

Notice which country they didn’t mention? The United States, where amazon has over 50% share and growing.

Amazon’s share in the European markets is rising as well. Europe is just a decade behind the US in terms of online retail. They will love amazon as much as the Americans. Nobody wants to pay for shipping and have their goods arriving slower rather than sooner.

Glad you realize that too.

Europe is 10 years behind in everything that comes with free market. They are years ahead in building things like railway

From Shopify’s own PR blurb:

London and Toronto ranked in the top-selling cities, while the UK , Germany , France and Spain were amongst the top-selling countries worldwide.

Spain is not even in the top 10 ecommerce sales countries. If you use France’s number, it’s 12% the size of the US market. And yet, Shopify did more business there than in the US. That tells you how little business they did in the US, the 2nd largest market in the world. They didn’t do any business in China either.

I thought Tesla uses Shopify’s e-commerce platform?

How many people bought a Tesla online? Don’t you at least want to go to the store to test drive a little bit?

@manch has a habit of gathering facts that support his thesis while blind to other alternative interpretations.

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What is the alternative interpretation?