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E-Commerce Round-Up: November 2015

E-Commerce Round-Up covers major recent events and news from the past month in the e-commerce world, and provides a brief analysis of what they mean. This month’s Round-Up covers the struggle of retailers like Macy’s, Nordstrom, and Target to transition to multichannel, Zalando’s ambitions to become a technology company, and strong growth at Latin America’s biggest e-commerce company, Mercadolibre, despite the macroeconomic challenges in that region.

Disappointing Q3 results for Macy’s, Nordstrom, and Target illustrate complexity of multichannel 

Some of the biggest U.S. retailers have come out with disappointing financial results for Q3 2015:

  • Macy’s missed third quarter earnings expectations and lowered its estimates for the rest of the year in earnings, revenue, and same-store sales. This was despite reported double-digit growth in e-commerce sales.
  • Nordstrom also missed Q3 estimates, despite healthy e-commerce growth.
  • Target met earnings expectations, but reported that e-commerce grew just 20% in the three months ending October, rather than the 40% that the company forecast for online sales earlier in the year. Target’s CEO suggested that part of this might be due to problems with’s infrastructure.


One quarter does not make a trend, and none of these retailers is in dire straits as a result of missing expectations for the quarter. What these results do indicate, however, is how extraordinarily difficult it is for retailers to invest in and implement multichannel strategies while satisfying their shareholders at the same time.

Target’s overestimation of its e-commerce growth is particularly notable as it has spent millions with vendors on building out its infrastructure, including on IBM Websphere and Adobe Scene7 and Omniture – perhaps these purchases were not accompanied by investment in software integration and employee training to monitor and measure what this infrastructure enables.

Whatever the case, retail executives and their investors should take note: successful multichannel management cannot be mastered in a single quarter. It is a longer term process that affects all parts of a business, involving change management as well as technology and marketing strategy.

Online fashion retailer Zalando to provide e-commerce infrastructure services 

One of Europe’s largest online retailers, Zalando, has announced plans to provide e-commerce infrastructure and management services to other companies in the fashion industry. Founded in Germany and publicly-traded on the Frankfurt stock exchange since its IPO in 2014, Zalando aggregates fashion from around 1,500 brands across the continent. The retailer reached €2.2 billion in sales and positive profitability in that year, and is on track to hit  €3 billion in 2015, despite the fact that the European retail sector continues to experience relatively flat growth overall.

A key part of Zalando’s strategy is to build and own their technology and operations infrastructure, including three logistics centers in Germany and eight returns centers in local countries, and they have also invested in building several in-house brands.


Zalando is not the first European on-line retailer to detail plans to become an as-a-service company serving other fashion industry companies: UK-based Farfetch is also launching a white label commerce service, with the first sites coming online by Q1 2016 (for details see E-commerce Round-Up September 2015). The two companies differ in size (Farfetch is smaller, but no slouch with $1 billion in sales), and Farfetch puts more stress on higher-end, boutique items while Zalando covers those plus more mid-range products.

The two companies are similar in that they both built their businesses on proprietary technology platforms and are now directly challenging existing e-commerce technology vendors. However, becoming a successful B2B technology company has some major differences with being a successful retailer, such as being able to sell to IT executives, manage partner networks, and maintain a high standard of professional services. Nevertheless, established software vendors selling to fashion companies should follow these developments closely.

Mercadolibre posts strong Q3 results

Mercadolibre, the largest e-commerce marketplace in Latin America, announced in its most recent earnings release that it beat Q3 expectations. The company operates in most countries in Latin America and is the predominant e-commerce player in the largest ones, including Brazil, Argentina, and Mexico. In those countries, Mercadolibre it has more unique visitors than global e-commerce heavyweights such as Amazon, Walmart, Alibaba, and eBay.

Mercadolibre reported net revenues of $170 million for the quarter and nearly $700 million for the first nine months of the year, despite currency fluctuations, particularly those resulting from Venezuela’s devaluation in 2014. While a majority of the company’s revenues come from marketplaces, Mercadolibre is also diversifying into additional commerce-related services: it provides both a payments platform and an advertising platform similar to Google’s Adwords, and those services are growing as a portion of total revenues.


The size of the Latin American market for e-commerce is small in the context of the total global market, yet it also has significant growth potential. E-commerce is just 3% of total retail sales in the region, compared to a global average of about 6%. Mercadolibre is well-positioned to remain the leading e-commerce company in the region: it understands the differences and similarities between the 13 countries in which it operates, and is expanding beyond marketplace services to meet the needs of customers that are more mature e-commerce players. For sellers looking to enter Latin America for the first time, Mercadolibre is clearly the place to start.

However, Mercadolibre nevertheless faces strong competition from global commerce companies in other regions that are looking for growth opportunities. To meet the challenges from these players, who may have more experience in managing multinational commerce, Mercadolibre will need to match and exceed them in customer experience management, investing in retaining, engaging and upselling existing customers as well as attracting new ones. This will require increasing sophistication in analytics in order to understand different customer segments and to create more personalized offers for those segments.

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