Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder.
TechCrunch surveyed five key investors who touch different aspects of the consumer electronics industry, based on our TechCrunch List of top VCs recommended by founders, along with other sources.
We asked these investors the same six questions, and each provided similar thoughts, but different approaches:
Despite the pandemic, each identified bright spots in the consumer electronic world. One thing is clear, investors are generally bullish on at-home fitness startups. Multiple respondents cited Peloton, Tonal and Mirror as recent highlights in consumer electronics.
Said Shasta Venture’s Rob Coneybeer, “With all due respect to my friends at Nest (where Shasta was a Series A investor), Tonal is the most exciting consumer connected hardware company I’ve ever been involved with.”
Besides asking about the trends and opportunities they’re pursuing in 2021, the investors we spoke to also identified other investors, founders and companies who are leaders in consumer hardware and shared how they’ve reshaped their investment strategies during the pandemic. Their responses have been edited for space and clarity.
Which consumer hardware sector shows the most promise for explosive growth?
For consumer hardware, offering end users a differentiated experience is extremely important. Social interactions, gamification and high-quality PGC (professionally generated content) such as with Peloton, Xiaomi and Tonal is a must to drive growth. It’s also easy to see how the acceleration of the digital economy created by COVID-19 will also drive growth for hardware.
First, services improved by the speed and reliability of 5G such as live streaming, gaming, cloud computing, etc. will create opportunity for new mobile devices and global mass market consumers will continue to demand high-quality, low-cost hardware. For example, Arevo is experimenting with “hardware as a service” with a 3D printing facility in Vietnam.
For enterprise hardware, security, reliability and fast updates are key competitive advantages. Also as a result of 5G… manufacturing automation and industrial applications. Finally IoT for health and safety may find its sweet spot thanks to COVID-19 with new wearables that track sleep, fitness and overall wellness.
How did COVID-19 change consumer hardware and your investment strategy?
One opportunity for consumer hardware companies to consider as a result of COVID-19 is how they engage with their customers. They should think of themselves more like e-commerce companies, where user experience, ongoing engagement with the consumer and iteration based on market feedback rule the day. While Peloton had this approach well before COVID, it has built a $46 billion company thinking about their products in this way.
For example, some consumers felt the bike was too expensive so instead of responding with a low-end product, the company partnered with Affirm to make their hardware more affordable with pay-as-you-go plans. A Peloton bike is not a one-and-done purchase; there is constant interaction between users, and the company that drives more satisfaction in the hardware adds more value in the business.
Entering 2021, in what way is hardware still hard?
Hardware is still hard because it takes more to iterate fast. The outcome for competitors relative to speed-to-market can be dramatic. For example, every year I look at future generation of EVs with lots of innovations and cool features from existing OEMs but see very few of these making it to market compared to Tesla and other pure players that are cranking out vehicles. Their speed of execution is impressive.
Who are some leaders in consumer hardware — founders, companies, investors?
Is there anything else you would like to share with TechCrunch readers?
Worry less about trends and build products that resonate with customers.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter href="https://twitter.com/equitypod">here and myself here — and don’t forget to check out the extra episode we dropped on Saturday, as there was just too much to talk about last week.
So, what’s on the docket for today? A great host of things:
Closing, I am befuddled by how dissonant the global economy feels, with seemingly two different eras going on at once. It’s not clear if I have finally become the softy I have always threatened to become, or merely that the inequality of outcomes in the 2020-2021 economy are merely as heartbreaking as I imagine them to be.
SpaceX is set to significantly ramp up its Starship development program in the new year, in more ways than one. SpaceX CEO and founder Elon Musk noted on Twitter on Thursday that the company will seek to make use of both of its two launch pads at its development facility in Boca Chica, Texas with prototype rockets set up on each, and that it will begin flight testing its Super Heavy booster (starting with low-altitude ‘hops’) in as few as “a few months” from now.
Recently, SpaceX has set up its SN9 prototype of Starship (the ninth in the current series) at Pad B at its Texas testing facility, which is on the Gulf of Mexico. SN9 will be next to undergo active testing, after SpaceX successfully flew its predecessor SN8 to an altitude of around 40,000 feet, and then executed a crucial belly flop maneuver that will be used to help control the powered landing of the production version. SN8 was destroyed when it touched down harder than expected, but SpaceX still achieved all its testing goals with the flight – and more.
SN9 will now undergo ground tests before hopefully doing its own flight test later on. That’ll provide the team with even more valuable data to carry on to further tests – with the ultimate goal of eventually achieving orbit with a Starship prototype vehicle. Musk’s tweet that two prototypes will be stood up next to each other on both Pad A and Pad B at the Boca Chica site could indicate the pace of these test flights might speed up, to match the fast clip at which SpaceX is constructing new rocket iterations.
Meanwhile, news that Super Heavy could be undergoing testing soon is also reason to get excited about 2021 for SpaceX and Starship. Super Heavy is the booster that SpaceX will eventually use to fly Starship for orbital launches, and to eventually help propel it to deep space – for destinations including Mars. Super Heavy will be around 240-feet tall, and will include 28 Raptor engines to provide it with the lift capacity needed to break Earth’s gravity well when it’s stacked with a Starship loaded down with cargo.
Ahead of the turning of the New Year, many people are wishing they could do something about the environment. Now, a U.K. startup hopes to make our environmental impact more personal.
Yayzy has now launched an iOS app (Android is coming) which literally links to your bank account to work out the environmental impact of what you buy. It uses payment data via Open Banking standards to automatically calculate the carbon footprint of each purchase a user makes, giving them a picture of their total monthly carbon emissions. This makes the carbon footprint calculated more accurate and bespoke to the individual, allowing them to immediately connect their spending to its impact on the planet.
Yayzy has secured £900,000 in backing from Antler Venture Capital, Seedrs (a crowdfunding round) and the CoreAngels Impact Fund. As the user sees what the carbon footprint is of their purchase, they can choose to offset it right then and there on the app via the carbon offsetter Ecosphere Plus. In the app, users can also find tips to reduce their carbon footprint, eco-friendly retailers near them or insights into lifestyle choices that have the highest environmental impact.
But Yayzy is taking a different approach. It brings together all of a user’s spending and shows them item by item as they spend, what the carbon footprint of that spend is. So far – it claims – its competitors don’t do that.
Yayzy app. Image Credits: Yayzy
This can be done ad hoc, item by item, or by signing up to a monthly subscription to either carbon offsetting projects or the user’s own unique climate portfolio. This portfolio would bundle multiple projects together for a more ‘holistic’ impact. Yayzy says all of these projects have been carefully selected based on strict criteria, and also advance the UN Sustainable development goals.
For its underlying carbon data, Yayzy is using Vital Metrics https://www.vitalmetricsgroup.com/
as used by Google, Microsoft and both the UK and US governments, among others.
Mankaran Ahluwalia, cofounder and CEO of Yayzy said in a statement: “While emissions have gradually risen as lockdown eases, YAYZY wants to put us all in the driver’s seat to control our own environmental impact… It is clear from a plethora of surveys that the majority of people want to address climate change before it is too late, but that a huge intention/action gap blocks much of it. Our solution with Yayzy is to make environmental impact ‘up close and personal’ and the action to tackle it super easy, all via your phone.”
Ahluwalia, was as a technology analyst with Infosys and built a lending platform for alternate credit. Cofounder Cristian Dan, CTO, previously built a discounts platform and cofounder Pedro Cabrero, CFO was in equity sales and trading for UBS and Citigroup, and co-founded the a leading online pharmacy in Mexico.
In their rush to offer alternatives to advanced western chipsets, Chinese semiconductor companies are racking up large fundings from investors. Horizon Robotics, a five-year-old unicorn specializing in AI chips for robots and autonomous vehicles, announced Tuesday that it has secured $150 million in funding.
The proceeds are the first close of a more than $700 million Series C round that Horizon is seeking to raise. The partial funding is jointly led by prominent investors 5Y Capital (formerly Morningside Venture Capital), Hillhouse Capital, and Capital Today. Chinese brokerage Guotai Junan’s international arm and KTB Network, an investment entity under the Korean conglomerate KTB.
The round arrived less than two years after Horizon completed its $600 million Series B round, which valued the firm at $3 billion post-money and also saw the participation of prominent Korean financiers including SK China, the China subsidiary of conglomerate SK Group, and SK Hynix, SK’s semiconductor unit.
The startup, founded by a Baidu veteran, raised its Series A round of over $100 million led by Intel Capital in late 2017.
With the fresh capital, Horizon plans to hasten the development and commercialization of its automotive chips and autonomous driving solutions. It also aims to build an “open ecosystem” for industry partners.
For the past couple of years, China has been striving to wean dependence on western chip giants in sectors ranging from smartphones to vehicles. Local startups like Horizon Robotics and Black Sesame Technologies, as well as telecoms titan Huawei, are pouring resources into autonomous driving processors, hoping to match or overtake the technologies from Nvidia and Intel’s Mobileye.
75% of China’s ADAS (advanced driver-assistance system)-equipped cars and Level 3 (autonomous driving under certain circumstances) vehicles will be supported by Chinese suppliers by 2030, up from 20% in 2019, investment bank CITIC Securities projects.
Inspiration to launch a lawn-care company struck Coulter Lewis when he was shopping for lawn-care products one day. The entrepreneur, who previously worked as a designer and co-founder of a snack company, says the stench of pesticides and herbicides piled high was too strong to ignore.
Lewis began researching safer alternatives to fertilize his backyard. His research showed him that he wasn’t alone: a typical managed lawn in the United States gets five times more pesticides per acre than the average industrial farm. A lack of options on the market inspired him to create his own.
Founded in 2019, Sunday is a direct-to-consumer company that wants to sell customized, eco-friendly lawn care to the approximately 90 million Americans who have lawns. To date, it has fertilized more than 10,000 acres of lawn.
“We’re selling agtech for your backyard,” Lewis said. It’s a catchy way to describe the more complicated process of creating custom lawn plans. The company brought on chief science officer Frank Rossi, who has a PhD at Cornell, to create its core product, which requires a mix of tech and science to work.
Sunday starts by taking a customer’s home address and, based on the location, can begin gleaning what types of soil it will be working with. By using machine learning, satellite imagery and property data, Sunday creates a custom plan with nutrients to address problem areas, such as grass health in different bio-environmental situations. The end-product includes ingredients that are hard to find in on-shelf solutions, like seaweed extract and soy protein.
Kits include instructions, a pouch of pre-measured nutrients to attach to a hose and spray, and soil test. While each kit is customized, lawn-care products are highly regulated and need state approval. Sunday has 24 iterations of its core product now out that meet this approval.
Image Credits: Sunday
Once the solution is created, customers have to pay for a full season or full year to get installments shipped to their homes. As customers use Sunday’s lawn-care products, the startup also uses aerial imagery to check on the status of users’ lawns throughout the experience.
Sunday sells at a variety of price points, and is dependent on lawn size, but Lewis does claim it’s “much cheaper” than hiring a professional to come and fertilize your lawn. “When you look at a lot of more modern, [consumer] businesses, there’s kind of more of a coastal millennial focus,” he said. “Whereas we’re thinking more about 90 million Americans, where the…median American income is $65,000 per household.”
Interestingly, Sunday says that its customers skew younger, between 30 and 40 years old, and concentrate in Middle America states (where lawns are more of a reality). The age range makes sense because it encapsulates new families moving to the suburbs and first-time homeowners. Most of its customers have smaller suburban lawns.
When asked why they aren’t selling to golf courses or going the B2B route, Lewis said that “it’s certainly something that we think about a lot.” The company is currently working to partner with parks to help remove toxic pesticides from public spaces, but talks are in the early stages.
The lack of innovation around lawn care might also signal a lack of demand from consumers. One of Sunday’s biggest hurdles when launching in 2019 was if it could convince consumers to care about one of the biggest crops in the backyard — their backyards.
The coronavirus has also accelerated the migration of new families from cities to suburbs, Lewis says. According to the Census, home ownership has hit a 12-year high. This year, Sunday is set to do 8X in revenue as it did in 2019, where it was making “millions in revenue.” Lewis declined to share profitability metrics or answer if Sunday was profitable.
Despite this, venture capitalists seem bullish on a startup serving up an alternative to lawn care.
Today, Sunday announced that it has raised $19 million in Series B financing led by Sequoia Capital, with participation from Tusk Ventures and Forerunner Ventures. The raise brings Stephanie Zhan, partner at Sequoia Capital, to the board.
In an email to TechCrunch, Zhan likened Sunday to other Sequoia portfolio companies such as Glossier, DoorDash, Instacart and Noom, saying that she thinks that “Sunday has a similar opportunity to build a compounding consumer subscription business and a defining brand for outdoor homecare.”
The new money will allow Sunday to grow its 40-person staff with 30 new hires. Currently, there is only one female executive on Sunday’s team, although Lewis says they are committed to hiring a more diverse team.
It takes capital to serve the average American household, and with the new financing, Sunday has a total of $28 million in known venture financing to help, at the very least, with your backyard.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Thursday’s epic run of early-stage rounds.
It was busy this morning. So, in blocs, here’s what the show got to:
And that was our show. Hugs from here, and chat Thursday at the latest.
Many U.S. consumers spent this year’s Black Friday sales event shopping from home on mobile devices. That led to first-time installs of mobile shopping apps in the U.S. to break a new record for single-day installs on Black Friday 2020, according to a report from Sensor Tower. The firm estimates that U.S. consumers downloaded approximately 2.8 million shopping apps on November 27th — a figure that’s up by nearly 8% over last year.
However, this number doesn’t necessarily represent faster growth than in 2019, which also saw about an 8% year-over-year increase in Black Friday shopping app installs, the report noted. This could be because mobile shopping and the related app installs are now taking place throughout the month of November, though, as retailers adjusted to the pandemic and other online shopping trends by hosting earlier sales or even month-long sales events.
Image Credits: Sensor Tower
The data seems to indicate this is true. Between Nov. 1 and Nov. 29, U.S. consumers downloaded approximately 59.2 million shopping apps from across the App Store and Google Play — an increase of roughly 15% from the 51.7 million they downloaded in Nov. 2019. That’s a much higher figure than the 2% year-over-year growth seen during this same period in 2019.
Another shift taking place in mobile shopping is the growing adoption of app from brick-and-mortar retailers. During the first three quarters of 2020, apps from brick-and-mortar retailers grew installs 27%. This trend continued on Black Friday, when 5 out of the top 10 mobile shopping apps were those from brick-and-mortar retailers, led by Walmart.
Image Credits: Sensor Tower
Walmart saw the highest adoption this year, with around 131,000 Black Friday installs, followed by Amazon at 106,000, then Shopify’s Shop at 81,000. Combined, the top 10 apps saw 763,000 total new installs, or 27% of the first-time downloads in the Shopping category.
Because the firms are only looking at new app installs, they aren’t giving a full picture of the U.S. mobile shopping market, as many consumers already have these apps installed on their devices. And many more simply shop online via a desktop or laptop computer.
To give these figures some context, Shopify reported on Saturday it had seen record Black Friday sales of $2.4 billion, with 68% on mobile. And today, Amazon announced its small business sales alone topped $4.8 billion from Black Friday to Cyber Monday, a 60% year-over-year increase, but it didn’t break out the percentage that came from mobile.
Sensor Tower and rival app store analytics firm App Annie largely agreed on the top 5 shopping apps downloaded this Black Friday. They both saw Walmart again beating Amazon to become the most-downloaded U.S. shopping app on Black Friday — as it did in 2019. The two firms reported that Amazon remained No. 2 by downloads, followed by Shopify’s Shop app, then Target. However, Sensor Tower put Best Buy in 5th place, followed by Nike, while App Annie saw those positions swapped.
Image Credits: App Annie
The rest of Sensor Tower’s top 10 included SHEIN, Sam’s Club, Klarna, then Offer Up, while App Annie’s list was rounded out by SHEIN, Sam’s Club, Wish, then Offer Up.
The pandemic’s impact may not have been obvious given the growth in online shopping this year, but the recession it triggered has played a role in how U.S. consumers are paying for their purchases. “Buy Now, Pay Later” apps like Klarna were up this year, even breaking into the top 10 per Sensor Tower’s data. The firm also noted that many new shopping apps launched this year focused on discounts and deals and retailers ran longer sales this year, as well.
Thanksgiving and Black Friday online shopping this year had big gains on 2019, but both still fell somewhat short of expectations in what is proving to be a good if more muted holiday shopping season, without the usual physical crowds to help enforce Covid-19 social distancing and many feeling the economic strain of the health pandemic.
Now all eyes are on “Cyber Monday,” which has for the last several years has been the biggest online shopping day of the four-day stretch. Adobe predicts that it will be the biggest shopping day yet in the US, with between $10.8 billion and $12.7 billion spent, while Salesforce’s forecast is in the middle of that range, $11.8 billion. Globally, Salesforce believes the figure will be $46 billion.
Adobe figure of 40% of sales on smartphones has been relative steady all week. Shopify, which typically works with smaller merchants, has put the figure closer to 70%.
Salesforce was more optimistic: it said that digital revenues on Black Friday were $12.8 billion with global figures coming in at $62 billion, while Thanksgiving was closer to $6.8 billion in online sales in the US, with the global figure around $30.4 billion.
“Cyber Monday is on track to break all previous records for online sales. Consumers will likely take advantage of the best discounted items today like TVs, toys and computers before price levels start creeping back up throughout the rest of the season,” said Taylor Schreiner, director, Adobe Digital Insights. “Shoppers are encouraged to do their gift buying soon as shipping in time for Christmas will get more expensive in the coming weeks.”
We will continue to update these figures as we get more data in. Adobe, for example, said that it believes that a whopping 29% of today’s revenue will come only between 7pm and 11pm Pacific (after work is over for the day).
(Part of the disparity in the two companies’ figures is based on methodology. Adobe bases its figures on 80 of the top 100 retailers in the US, covering some 1 trillion transactions. Salesforce is using data gleaned from its Commerce Cloud, covering billions of engagements and millions of social media conversations, which it then combines with further analytics in its Shopping Index.)
One thing that is clear from both companies is that Cyber Monday continues to be the biggest day of them all. Why? It’s a perfect storm: the big rush of sales for the holiday season are up, but everyone is back at work, so they shop online instead of in person. Hence, big numbers on Cyber Monday.
As with the other days of the long weekend, one thing that has been impacting sales numbers is the fact that sales are starting earlier and earlier, but Adobe said that many consumers still believe that big bargains are laid on for the specific day. Some of the most popular shopping categories have included computers (marked down 30% on average), toys (20% discount), appliances (21%) and electronics (26%).
Bigger businesses continue to reap the biggest spoils in online shopping — not least because they still provide the best range of delivery, pick-up and return options to consumers, which become an even bigger set of priorities as you move further away from more amenable early adopters and into the more general population and potentially less experienced online shoppers. The conversion rates for big retailers (over $1 billion in revenues annually) are typically 70% higher than for smaller businesses.
Still, small businesses have tried to spend years catching up, boosted by various startups and companies like Shopify building tools for them to “be like Amazon” in their fulfillment, delivery and other features. Adobe said that Small Business Saturday, the newest of the Thanksgiving shopping holidays, saw $4.7 billion spent, a record for the day and up 30.2% on 2019. And to underscore just how tough times are for small businesses, Adobe said that the money small businesses were bringing in online this year was a whopping 294% higher than an average day in October.
So far some $23.5 billion has been spent during the holiday weekend.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Thursday’s edtech deep dive from our own Natasha Mascarenhas.
Right, now through the first of America’s national Q4 feast days, it’s time to get back to business. Namely, the business of VC and startups. Here’s what we got into this morning:
And finally, we are heading into a deluge of IPOs over the next few weeks. So strap in, it’s going to be messy and fun.
We are now into the all-important holiday sales period, and new numbers from Gartner point to some recovery underway for the smartphone market as vendors roll out a raft of new 5G handsets.
Q3 smartphone figures from the analysts published today showed that smartphone unit sales were 366 million units, a decline of 5.7% globally compared to the same period last year. Yes, it’s a drop; but it is still a clear improvement on the first half of this year, when sales slumped by 20% in each quarter, due largely to the effects of Covid-19 on spending and consumer confidence overall.
That confidence is being further bolstered by some other signals. We are coming out of a relatively strong string of sales days over the Thanksgiving weekend, traditionally the “opening” of the holiday sales cycle. While sales on Thursday and Black Friday were at the lower end of predicted estimates, they still set records over previous years. With a lot of tech like smartphones often bought online, this could point to stronger numbers for smartphone sales as well.
On top of that, last week IDC — which also tracks and analyses smartphones sales — published a report predicting that sales would grow 2.4% in Q4 compared to 2019’s Q4. Its take is that while 5G smartphones will drive buying, prices still need to come down on these newer generation handsets to really see them hit with wider audiences. The average selling price for a 5G-enabled smartphone in 2020 is $611, said IDC, but it thinkgs that by 2024 that will come down to $453, likely driven by Android-powered handsets, which have collectively dominated smartphone sales for years.
Indeed, in terms of brands, Samsung, with its Android devices, continued to lead the pack in terms of overall units, with 80.8 million units, and a 22% market share. In fact, the Korean handset maker and China’s Xiaomi were the only two in the top five to see growth in their sales in the quarter, respectively at 2.2% and 34.9%. Xiaomi’s numbers were strong enough to see it overtake Apple for the quarter to become the number-three slot in terms of overall sales rankings. Huawei just about held on to number two. See the full chart further down in this story with more detail.
Also worth noting: overall mobile sales — a figure that includes both smartphones and feature phones — were down 8.7% 401 million units. That underscores not just how few feature phones are selling at the moment (smartphones can often even be cheaper to buy, depending on the brands involved or the carrier bundles), but also that those less sophisticated devices are seeing even more sales pressure than more advanced models.
It’s worth remembering that even before the global health pandemic, smartphone sales were facing slowing growth. The reasons: after a period of huge enthusiasm from consumers to pick up devices, many countries reached market penetration. And then, the latest features were too incremental to spur people to sell up and pay a premium on newer models.
In that context, the big hope from the industry has been 5G, which has been marketed by both carriers and handset makers as having more data efficiency and speed than older technologies. Yet when you look at the wider roadmap for 5G, rollout has remained patchy, and consumers by and large are still not fully convinced they need it.
Notably, in this past quarter, there is still some evidence that emerging/developing markets continue to have an impact on growth — in contrast to new features being drivers in penetrated markets.
“Early signs of recovery can be seen in a few markets, including parts of mature Asia/Pacific and Latin America. Near normal conditions in China improved smartphone production to fill in the supply gap in the third quarter which benefited sales to some extent,” said Anshul Gupta, senior research director at Gartner, in a statement. “For the first time this year, smartphone sales to end users in three of the top five markets i.e., India, Indonesia and Brazil increased, growing 9.3%, 8.5% and 3.3%, respectively.”
The more positive Q3 figures coincide with a period this summer that saw new Covid-19 cases slowing down in many places and the relaxation of many restrictions, so now all eyes are on this coming holiday period, at a time when Covid-19 cases have picked up with a vengeance, and with no rollout (yet) of large-scale vaccination or therapeutic programs. That is having an inevitable drag on the economy.
“Consumers are limiting their discretionary spend even as some lockdown conditions have started to improve,” said Gupta of the Q3 numbers. “Global smartphone sales experienced moderate growth from the second quarter of 2020 to the third quarter. This was due to pent-up demand from previous quarters.”
Digging into the numbers, Samsung has held on to its top spot, although its growth was significantly less strong in the quarter. Even with that slump, Samsung is still a long way ahead.
That is in part because number-two Huawei, with 51.8 million units sold, was down by more than 21% since last year. It has been having a hard time in the wake of a public relations crisis after sanctions in the US and UK, due to accusations that its equipment is used by China for spying. (Those UK sanctions, indeed, have been brought up in timing, just as of last night.)
That also led Huawei earlier this month to confirm the long-rumored plan to sell off its Honor smartphone division. That deal will involve selling the division, reportedly valued at around $15 billion, to a consortium of companies.
It will be interesting to see how Apple’s small decline of 0.6% to 40.6 million units to Xiaomi’s 44.4 million, will shift in the next quarter, on the back of the company launching a new raft of iPhone 12 devices.
“Apple sold 40.5 million units in the third quarter of 2020, a decline of 0.6% as compared to 2019,” said Annette Zimmermann, research vice president at Gartner, in a statement. “The slight decrease was mainly due to Apple’s delayed shipment start of its new 2020 iPhone generation, which in previous years would always start mid/end September. This year, the launch event and shipment start began 4 weeks later than usual.”
Oppo, which is still not available through carriers or retail partners in the US, rounded out the top five sellers with just under 30 million phones sold. The fact that it and Xiaomi do so well despite not really having a phone presence in the US is an interesting testament to what kind of role the US plays in the global smartphone market: huge in terms of perception, but perhaps less so when the chips are down.
“Others” — that category that can take in the long tail of players who make phones, continues to be a huge force, accounting for more sales than any one of the top five. That underscores the fragmentation in the Android-based smartphone industry, but all the same, its collective numbers were in decline, a sign that consumers are indeed slowly continuing to consolidate around a smaller group of trusted brands.
|3Q20 Market Share (%)||3Q19
|3Q19 Market Share (%)||3Q20-3Q19 Growth (%)|
Source: Gartner (November 2020)
Black Friday — the day that launched 1,000 other shopping holidays — may have lost its place as the “start” of the Christmas shopping season by now (it gets bigger and earlier with each passing year). But the day after Thanksgiving still pulls in a crowd of buyers looking for a bargain and remains a major bellwether for tracking how sales will progress in what is the most important period for the retail and commerce sector.
This year saw growth, but at the low end of the predicted range.
Adobe, which is following online sales in real-time at 80 of the top 100 retailers in the U.S., covering some 100 million SKUs, said US consumers spent $9 billion online on Black Friday, up 21.6% on a year ago. Adobe had originally forecast sales of between $8.9 billion and $9.6 billion.
The figure makes Black Friday (for now at least) the second-largest online spending day in US history (after 2019’s Cyber Monday).
Although growth was not as wild as some thought it might be, it still had a fillip from current circumstances. Because of the Covid-19 pandemic, this year was definitely slimmer when it came to actual, in-person crowds — kind of a refreshing break from those times when you feel like it’s the worst of humanity when people are breaking out into fights over TVs at a local Walmart.
Smartphones continued to account for an increasing proportion of online sales, with this year’s $3.6 billion up 25.3%, while alternative deliveries — a sign of the e-commerce space maturing — also continued to grow, with in-store and curbside pickup up 52% on 2019.
Adobe predicts Cyber Monday 2020 will see spending of between $10.8 billion and $12.7 billion.
For some context, in 2019, Adobe tracked $7.4 billion in online sales, and yesterday it said that shoppers spent $5.1 billion on Thanksgiving, with more than $3 billion spent online each day in the week leading up to Thursday.
Its analysts said evening would be big for online shopping — which makes sense since people might have been either going out in person during the day, or just doing something else on a day off.
Not all are in agreement that night time is the right time, however. Figures from Shopify — which analyses activity from the 1 million-plus merchants that use its e-commerce platform — said that the peak shopping hour on its platform was actually 9am Eastern, when there were as many as $3 million in sales per minute. The average cart size for US shoppers was $95.60, it added.
Interestingly, Shopify’s per-minute sales number underscores how the long tail of merchants are still quite a ways behind the very biggest: Adobe noted that its figures, across the sites that it tracks (which have at least $1 billion in annual sales) tally to $6.3 million spent per minute on Black Friday.
In either case, smartphones continue to be a major driver of how sales get made. Adobe said 40% of all sales were on handsets, lower than the day before but 7% higher than in 2019.
And just as it was yesterday, it seems that smaller retailers are attracting more shoppers on mobile: Shopify said that some 70% of its sales are being made via smartphones.
We’ll see how all of that plays out later today also with the initial figures from “Small Business Saturday”, which is the latest of the shopping designations added to the holiday weekend, this one trying to hone focus more squarely away from major chains and big box merchants.
One big takeaway from the bigger weekend figures will be that offering items — electronics, tech, toys and sports goods being the most popular categories — at the right price will help retailers continue to bring in sales, in what has proven to be an especially strong year for online shopping. Many have opted to stay away from crowded places due to the pandemic, and it has also been a critical year for retailers because of the drag that the pandemic has had on the wider economy.
Cyber Monday is likely to continue to be the biggest of them all, expected to bring in between $11.2 billion and $13 billion in e-commerce transactions, up 19%-38% year-on-year.
Perhaps because of the shift to more online shopping, and the concern over flagging sales, it’s interesting that “holiday season” has also been extended and now comes earlier. Adobe said a survey of consumers found that 41% said they would start shopping earlier this year than previous years due to much earlier discounts. Recall too that Amazon’s Prime Day was delayed to start in October this year, an ‘event’ that many treated as a moment to get a jump start on holiday shopping.
“Black Friday is headed for record-breaking levels as consumers flock online to shop for both holiday gifts and necessities,” said Taylor Schreiner, director, Adobe Digital Insights. “Concurrently, it’s also worth noting that this year, we’re seeing strong online sales momentum across not only the major shopping days like Thanksgiving weekend, but throughout the holiday season as consumers spread out their shopping across several weeks in reaction to continued, heavy discounting from retailers.”