Random

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Offline SEO

I am not sure if this is sui generis, if it’s even accurate, but this discussion in the Economist does raise an interesting question:

Britain’s brick-burdened retailers may be heartened, though, by the example of Dixons Retail, owner of Britain’s biggest electronics and computer retailers, Currys and PC World, and of similar chains in other countries. Between 15% and 20% of sales at Dixons are online, depending on the season, and the proportion is rising. But Dixons thinks the advantages which online-only merchants get by doing away with shops and sales staff are undercut by the need to pay more than high-street shops do to acquire customers (largely by paying Google for clicks on adverts) and to spend a lot on shipping. So instead of doing away with shops and sales staff, Dixons is trying to get more out of them.

Maybe the value in offline retail is to get consumers to your online site, without having to pay for expensive Google Adwords or other online acquisition techniques.

Another reason why Amazon is so well-positioned in the US.  It has a much lower consumer acquisition cost than competing retailers because so many customers (30%) start their online product searches there.  See here.

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The Next Willie Mays Is Not Playing Baseball

That is what matters.

As military historians know, better than looking at current victories in judging the future course of a war is looking at re-supply lines and logistics.  This was the lesson the British Empire learned in the Revolutionary War, as early victories could not be sustained as supplies and personnel could not be replenished across the ocean.

On the day that we expect the  once potential “greatest player ever” to be suspended a season and a half to a lifetime, the baseball grey hair might want to consider that lesson.  The quintupling of revenues in less than two decades and the recent sale price of the LA Dodgers should not give false comfort.  More important is what is happening “down the supply line.”  The numbers to pay attention to — as a dad of a young told me — are that Little League participation is down by over a third, and leagues are struggling to fill teams.

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Virtual Webvan

In 2000, Sequoia and others lost hundreds of millions as Webvan’s national distribution business fell apart; I lost $1000 investing in its IPO.

Today, FreshDirect does locally what Webvan endeavoured to do nationally.  Yet, over the course of a week, we still choose to shop for groceries through a mix and match combination of five sources: Western Beef, Trader’s Joe, a local “farmer’s market,” Whole Foods, and Amazon.

That makes Instacart such an interesting idea: no large costs to build warehouses and a distribution network, and perhaps better matching customer shopping behavior.  It is not clear what the business model is other than delivery charges, but my guess is that the arbitrage opportunity in prices at local supermarkets — price differences which are surprisingly high – may provide an interesting arbitrage opportunity.

This is how BusinessWeek describes the business:

Its 10 full-time employees, mostly engineers, work from a small office in San Francisco’s South Park neighborhood. The company’s app sends customer orders to about 200 independent Bay Area personal shoppers, who receive commissions based on the number of items and orders they deliver in their own vehicles. The app features detailed maps of local supermarkets and can direct the personal shoppers to specific aisles. Founder Apoorva Mehta says Instacart’s “secret sauce” is its fulfillment software, which allows the online retailer to combine orders placed at different times and fill them from different stores—supplementing frozen food from Trader Joe’s with fresh fruit from Whole Foods and cereal from Costco. Customers assemble their orders with lengthy drop-down menus on Instacart’s website or app.

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Education Is Not The Answer

Yesterday was catching up on Krugman day:

The McKinsey Global Institute recently released a report on a dozen major new technologies that it considers likely to be “disruptive,” upsetting existing market and social arrangements. Even a quick scan of the report’s list suggests that some of the victims of disruption will be workers who are currently considered highly skilled, and who invested a lot of time and money in acquiring those skills. For example, the report suggests that we’re going to be seeing a lot of “automation of knowledge work,” with software doing things that used to require college graduates. Advanced robotics could further diminish employment in manufacturing, but it could also replace some medical professionals.

So should workers simply be prepared to acquire new skills? The woolworkers of 18th-century Leeds addressed this issue back in 1786: “Who will maintain our families, whilst we undertake the arduous task” of learning a new trade? Also, they asked, what will happen if the new trade, in turn, gets devalued by further technological advance?

And the modern counterparts of those woolworkers might well ask further, what will happen to us if, like so many students, we go deep into debt to acquire the skills we’re told we need, only to learn that the economy no longer wants those skills?

Education, then, is no longer the answer to rising inequality, if it ever was (which I doubt).

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Putin Jacks Up Kraft

Vladimir Putin responds to the notion that he gives a crap about such small loot such as a NE Patriots Super Bowl ring:

You know, I don’t remember either Mr. Kraft, or the ring. But if it is such a big treasure for Mr. Kraft and the team – I remember some souvenirs were being presented – I have a suggestion.

I will ask a jewelry firm to make a really good and big thing, so everyone will see it is a luxury piece, made of quality metal and with a stone, so this piece will be passed from generation to generation in the team whose interests are represented by Mr. Kraft.

This would be the smartest solution partners can ever achieve while tackling such a complicated international problem.

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The Internet Kill Switch

Yep – the Chinese have one.

They have already demonstrated this by cutting off the Internet for ten months or so to the Muslim Uighur region of Xinjiang. The Economist explains how the central government has the capability to do this for the entire country, and how it would go about doing so:

The Great Firewall could easily block the foreign internet for most users in China; an unexplained glitch actually made this happen by accident one day last year for a couple of hours. Some large enterprises, banks and foreign companies have leased their own lines out of China, which might need to be shut down separately. As for the domestic internet, which would be of most concern to the party, shutting down the country’s home-based internet service providers, and with them access to microblogs, video sites, bulletin boards and the rest, should be within its capabilities.

 

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Good Decisions

From the Heath brothers new book on decision-making, as reviewed in the FT:

●Think “both/and” not “either/or” when deciding  between options. Decisions are rarely as binary or as neatly framed as you  think.

●Keep widening your perspective and your range  of expert advisers.

●Repeatedly test your prejudices and emotions  with facts. Ground your decision in reality, not bias.

●Prepare to be wrong. Chances are, you often  will be

 

 

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The Dark Continent’s Fixers

Gujarati fixers in Africa from Schumpeter’s column in the Economist last week:

The real money in Africa is in selling stuff to the emerging middle class. Plenty of foreign firms know how to make things that Africans want to buy. But they don’t know their way around Africa. They need a guide. That is where Mr Thakkar comes in. He is the founder of the Mara Group, a conglomerate that helps outsiders do business in Africa. Mara has fingers in pies of every flavour. Its joint ventures not only make boxes in Uganda; they also make glass, build hotels and operate call centres all over Africa.

Mr Thakkar is no expert in any of these businesses. Ask him what exactly Mara does for IBM to help it fulfil its IT contract for Bharti Airtel, a mobile-phone firm, and he puts the man in charge on speakerphone to explain. In a typical Mara venture, the foreign partner provides the technical expertise. Mara offers local knowledge: how to buy land, cope with red tape, promote the business, manage relations with suppliers and so on.

This is a potent business model. For all the current optimism about Africa, it is still a tough place to do business. Mr Thakkar knows this only too well. His family arrived in Uganda (from India) in 1890. They lost everything in 1972, when Idi Amin, a dunce of a despot, kicked out Uganda’s Asians and grabbed their shops. The Thakkars returned to Africa in 1993: to Rwanda, shortly before the genocide. They lost everything again. Mr Thakkar, who was a schoolboy at the time, saw bodies strewn in the streets as he was evacuated. Undeterred, he started his first business when he was 15. Every weekend he flew from Entebbe to Dubai to fill a suitcase with electronic gizmos, which he took back to Uganda and sold. The Mara Group now employs 7,000 people. Since it is privately held, it is impossible to say how profitable it is, but Mr Thakkar says margins are “decent”.

Mara is different from other African fixers in two ways. First, it is pan-African. Most fixers only have contacts in one country; Mara has operations in 19. This is crucial. Many African countries are small. Multinationals would rather sign a single pan-African contract than lots of small ones. Starting in Uganda, where his family knows everyone, Mr Thakkar has forged ties with bigwigs across the continent. It helps that his family knows the other Gujarati business families in east Africa. It helps even more that Mr Thakkar gets invited to shindigs like Davos, where African presidents are plentiful and far more approachable than at home.

Second, Mara has a brand: a reputation for integrity, and for getting the job done. This was hard-earned. Once, when the operator of a box-making machine was sick, Mr Thakkar grabbed the instruction manual, took charge and stayed up all night so as not to be late delivering an order to Unilever. Potential partners know Mr Thakkar will do anything to avoid tarnishing the Mara brand, so they trust him. In countries where the rule of law is weak and contracts hard to enforce, that matters.