2PM - Memo: Working Capital

Intro: A recent WSJ article began: “Rising Rates Boost Companies’ Focus on Working Capital Management.” Times are getting tougher for small business owners and Shopify sees an opportunity to expand its market position by stepping into fortify its suite of service to merchants.

Shopify has smartly built efficient systems to manage payments and approval processes based on an “instant settlement of eCommerce sales” (according to PYMNTS) within days of the capital request. Working capital is the company’s next frontier. It represents a flow of information between Shopify’s clientele and the company itself. (Read More...)

As Shopify battles eCommerce slowdown, lending emerges as a bright spot

Source / The Information: Shopify's sales growth has evaporated over the past year as the boom in online spending sparked by the pandemic has dissipated. But the e-commerce software giant has focused on squeezing more money out of its existing merchants from the sale of other services. One notable way it's doing that is ...

The new DTC Power List was updated for November 5 with new data for 700 companies; the list his been re-adjusted to measure historical performance. Join here to gain access to this growing list. 

Carvana shares plunge to record low

DTC Auto / Bloomberg: Shares of the online dealer have sunk 49% in the two trading days since the company reported disappointing third-quarter results late on Thursday, bringing its once-lofty market capitalization down to about $1.3 billion from $2.6 billion before the earnings miss. That’s a far cry from the $60 billion valuation the firm commanded last year.

If you shorted Carvana upon reading this 2PM report in on November 5, 2021 - you would have seen a stock drop from $297 to $7.29 in one year. Three months later, in February 2022, we explored the impact of manufacturers going vertical by launching their on DTC used car properties. The stock had halved by then.

Adobe is trying to spend $20 billion to buy back its swagger

Commerce / Bloomberg: Crucially for Adobe, many Figma users pay nothing at all; the company’s revenue comes from power users paying for premium features. This so-called freemium model is common in the modern software industry, but Adobe doesn’t use it for most of its products. A key reason Adobe was interested in the deal was to remake itself in the image of its more nimble competitors. 

Editor's Note: the graph in this report explains Adobe's need for Figma.

Peloton co-founders are launching a DTC rug brand

Brand / Business of Home: Off the bike and onto the floor. Three Peloton co-founders-including former CEO John Foley-are uniting for a new venture, Ernesta, a direct-to-consumer custom rug brand. Along for the ride are Hisao Kushi, Peloton's former chief legal officer, and Yony Feng, former chief technology officer.

eGrocery begins to bite brick-and-mortar

eGrocery / PYMNTS: Noting the shift to eCommerce, brick-and-mortar incumbents are doing everything in their power to drive up digital sales. For instance, Kroger, the largest U.S. pure-play grocery retailer, is investing in its digital business with the rollout of automated fulfillment centers for online orders, created in partnership with United Kingdom-based grocery technology company Ocado. Plus, the company has also been driving adoption of its delivery subscription, entitled Boost.

Why Walmart could win hyperlocal delivery in the US

eCommerce / Forbes: Competition in the on-demand delivery space is fierce, but the short-term outlook continues to worsen. The stage is set for an intense round of consolidation as larger, better-financed players snap up their smaller rivals or force them out of business. In the U.S., for example, the top-three third-party delivery players across retail and foodservice control almost 90% of the market, according to Euromonitor, up from 40% in 2017.

Meta's looming layoffs will decide the direction of Zuckerberg's metaverse

Web3 / Quartz: The metaverse may be the steady financial leak that sinks Meta's ship, as the economic waters become more turbulent. Meta founder and CEOMark Zuckerberg has been spending roughly $10 billion a year on virtual reality (VR) and augmented reality (AR), which may be the future of computing.

How the metaverse is set to shake up retail

Web3 / NRF: It's been one year since Facebook renamed itself to Meta and cemented its bet on the metaverse, which has since become the most expensive tech project in history. It's no wonder the metaverse has been the term on the tip of everyone's tongue for the past year.

Amazon's new warehouse in eastern China will get shoppers overseas goods faster

Logistics / SCMP: The e-commerce giant is setting up a bonded warehouse in Ningbo, which it estimates will cut shipping times by four to five days, amid an explosion in cross-border e-commerce.

Editor's Note: surely this was in the works before China's "five year plan" to speed delivery to the United States was published, the timing is interesting nonetheless. 

Excerpt: The one common trait shared by Musk’s companies are their implied relationship with the betterment of civilization. Twitter is no exception and I believe that if you were to diagram the many synergies that Musk believes his companies share, Twitter could rest at the center.

It is the first place you go to see a launched SpaceX vessel, it’s the first place you go to observe Musk communicating directly with Tesla bulls. There, commentary on the Boring Company rises and falls with political convenience. And of course any update on Neuralink’s progress will be seen there before all else. Why? Musk and his 113 million followers sit at the center of Twitter’s influence – whether that is a good thing or bad. Futurists have long believed that products like Twitter, TikTok, and Instagram are examples of the Internet Mind – a melding of thought patterns, ideas, and ideals. A sort of collectivism that represents the directional trajectory of society.  (Read More...)