Visa has prioritized growth in Africa, and partnering with startups is central to its strategy.
This became obvious in 2019 after the global financial services giant entered a series of collaborations on the continent, but Visa confirmed it in their 2020 Investor Day presentation.
On the company’s annual call, participants mentioned Africa 28 times and featured regional startups prominently in the accompanying deck. Visa’s regional president for Central and Eastern Europe, Middle East and Africa (CEMEA), Andrew Torre, detailed the region’s payments potential and his company’s plans to tap it. “We’re partnering with non-conventional players to realize this potential — fintechs, neobanks and digital wallets — to reach the one billion consumer opportunity,” he said.
TechCrunch has covered a number of Visa’s Africa collaborations and spoke to two execs driving the company’s engagement with startups from Nigeria to South Africa.
Visa’s head of Strategic Partnerships, Fintech and Ventures for Africa, Otto Williams, has been out front, traveling the continent and engaging fintech founders.
Located in Cape Town, Visa’s group general manager for Sub-Saharan Africa, Aida Diarra, oversees the company’s operations in 48 countries. Visa has a long track record working with the region’s large banking entities, but that’s shifted to smaller ventures.
Image Credits: Visa
Modsy, an e-commerce company that creates 3D renderings of customized rooms, has confirmed to TechCrunch that it laid off a number of staff. In addition, several of its executives, including CEO Shanna Tellerman, will take a 25% pay cut. TechCrunch first heard about the layoffs from a source. The company’s confirmation of cuts comes amid a wave of layoffs in the technology and startup communities.
In a statement from the CEO Shanna Tellerman to TechCrunch, Modsy said that “[i]n an effort to maintain a sustainable business during these unprecedented circumstances, we made a round of necessary layoffs and ended a number of designer contracts this week.” The company reaffirmed belief in its “long-term growth plans” in the same statement.
Modsy did not immediately respond when asked about how many individuals were impacted by this layoff. Update: The company declined to share the number of employees impacted.
Modsy bets on individuals looking to glam up their homes by better visualizing the new furniture they want to buy. Users can enter the measurements of their living room and add budget and style preferences, and Modsy will help them with custom designs and finding furniture that fits — literally.
The layoffs show that customer appetite might be changing. Last week, home improvement platform Houzz confirmed that it has scratched plans to create in-house furniture for sale. It also laid off 10 people across three locations: the U.K., Germany and China. Houzz is comparatively larger than Modsy, with a roughly $4 billion valuation. But scratching its in-house plan that would have likely brought in more capital is yet another data point in how e-commerce companies are struggling right now to get consumers to spend on items other than beans, booze and bread starters.
In retrospect there were rumblings that the company was cutting staff. A number of recent reviews from its Glassdoor page note layoffs, with one review from March 25, 2020 calling them “mass” in nature; our original source on the company’s recent cuts also noted their breadth.
You can find other social media posts concerning the company’s layoffs, some noting more than one wave. TechCrunch has not confirmed if the recent layoffs are the first of two, or merely the first set of cuts.
A little over 10 months ago the company was in a very different mood. Back in May of 2019, flush with new capital, Modsy’s CEO said that the “home design space, the inspiration category is thriving.”
“Pinterest just IPO’d, and it seems as if every TV channel is entering the home design category,” she said. “Meanwhile, e-commerce sites have barely changed since the introduction of the Internet.”
In March, the virus gripping the world — COVID-19 — started to spread in Africa. In short order, actors across the continent’s tech ecosystem began to step up to stem the spread.
Early in March, Africa’s COVID-19 cases by country were in the single digits, but by mid-month those numbers had spiked leading the World Health Organization to sound an alarm.
“About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference on March 19. “It has been an extremely rapid…evolution.”
By the World Health Organization’s stats Tuesday there were 3,671 COVID-19 cases in Sub-Saharan Africa and 87 confirmed deaths related to the virus, up from 463 cases and 8 deaths on March 18.
As COVID-19 began to grow in major economies, governments and startups in Africa started measures to shift a greater volume of transactions toward digital payments and away from cash — which the World Health Organization flagged as a conduit for the spread of the coronavirus.
Kenya, Africa’s leader in digital payment adoption, turned to mobile money as a public-health tool.
At the urging of the Central Bank and President Uhuru Kenyatta, the country’s largest telecom, Safaricom, implemented a fee-waiver on East Africa’s leading mobile-money product, M-Pesa, to reduce the physical exchange of currency.
The company announced that all person-to-person (P2P) transactions under 1,000 Kenyan Schillings (≈ $10) would be free for three months.
Kenya has one of the highest rates of digital finance adoption in the world — largely due to the dominance of M-Pesa in the country — with 32 million of its 53 million population subscribed to mobile-money accounts, according to Kenya’s Communications Authority.
On March 20, Ghana’s central bank directed mobile money providers to waive fees on transactions of GH₵100 (≈ $18), with restrictions on transactions to withdraw cash from mobile-wallets.
Ghana’s monetary body also eased KYC requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers, according to a March 18 Bank of Ghana release.
Growth in COVID-19 cases in Nigeria, Africa’s most populous nation of 200 million, prompted one of the country’s largest digital payments startups to act.
Lagos based venture Paga made fee adjustments, allowing merchants to accept payments from Paga customers for free — a measure “aimed to help slow the spread of the coronavirus by reducing cash handling in Nigeria,” according to a company release.
In March, Africa’s largest innovation incubator, CcHub, announced funding and engineering support to tech projects aimed at curbing COVID-19 and its social and economic impact.
The Lagos and Nairobi based organization posted an open application on its website to provide $5,000 to $100,000 funding blocks to companies with COVID-19 related projects.
CcHub’s CEO Bosun Tijani expressed concern for Africa’s ability to combat a coronavirus outbreak. “Quite a number of African countries, if they get to the level of Italy or the UK, I don’t think the system… is resilient enough to provide support to something like that,” Tijani said.
Cape Town based crowdsolving startup Zindi — that uses AI and machine learning to tackle complex problems — opened a challenge to the 12,000 registered engineers on its platform.
The competition, sponsored by AI4D, tasks scientists to create models that can use data to predict the global spread of COVID-19 over the next three months. The challenge is open until April 19, solutions will be evaluated against future numbers and the winner will receive $5,000.
Zindi will also sponsor a hackathon in April to find solutions to coronavirus related problems.
Image Credits: Sam Masikini via Zindi
On the digital retail front, Pan-African e-commerce company Jumia announced measures it would take on its network to curb the spread of COVID-19.
The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — said it would donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.
The company has also offered African governments use of of its last-mile delivery network for distribution of supplies to healthcare facilities and workers.
Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” CEO Sacha Poignonnec told TechCrunch.
More Africa-related stories @TechCrunch
African tech around the ‘net
Since its inception, Cape Town based crowdsolving startup Zindi has been building a database of data scientists across Africa.
It now has 12,000 registered on its its platform that uses AI and machine learning to tackle complex problems and will offer them cash-prizes to find solutions to curb COVID-19.
Zindi has an open challenge focused on stemming the spread and havoc of coronavirus and will introduce a hackathon in April. The current competition, sponsored by AI4D, tasks scientists to create models that can use data to predict the global spread of COVID-19 over the next three months.
The challenge is open until April 19, solutions will be evaluated against future numbers and the winner will receive $5000.
The competition fits with Zindi’s business model of building a platform that can aggregate pressing private or public-sector challenges and match the solution seekers to problem solvers.
Founded in 2018, the early-stage venture allows companies, NGOs or government institutions to host online competitions around data oriented issues.
Zindi’s model has gained the attention of some notable corporate names in and outside of Africa. Those who have hosted competitions include Microsoft, IBM and Liquid Telecom. Public sector actors — such as the government of South Africa and UNICEF — have also tapped Zindi for challenges as varied as traffic safety and disruptions in agriculture.
Image Credits: Zindi
The startup’s CEO didn’t imagine a COVID-19 situation precisely, but sees it as one of the reasons she co-founded Zindi with South African Megan Yates and Ghanaian Ekow Duker.
The ability to apply Africa’s data science expertise, to solve problems around a complex health crisis such as COVID-19 is what Zindi was meant for, Lee explained to TechCrunch on a call from Cape Town.
“As an online platform, Zindi is well-positioned to mobilize data scientists at scale, across Africa and around the world, from the safety of their homes,” she said.
Lee explained that perception leads many to believe Africa is the victim or source of epidemics and disease. “We wanted to show Africa can actually also contribute to the solution for the globe.”
With COVID-19, Zindi is being employed to alleviate a problem that is also impacting its founder, staff and the world.
Lee spoke to TechCrunch while sheltering in place in Cape Town, as South Africa went into lockdown Friday due to coronavirus. Zindi’s founder explained she also has in-laws in New York and family in San Francisco living under similar circumstances due to the global spread of COVID-19.
Lee believes the startup’s competitions can produce solutions that nations in Africa could tap as the coronavirus spreads. “The government of Kenya just started a task force where they’re including companies from the ICT sector. So I think there could be interest,” she said.
Starting April, Zindi will launch six weekend hackathons focused on COVID-19.
That could be timely given the trend of COVID-19 in Africa. The continent’s cases by country were in the single digits in early March, but those numbers spiked last week — prompting the World Health Organization’s Regional Director Dr Matshidiso Moeti to sound an alarm on the rapid evolution of the virus on the continent.
By the WHO’s stats Wednesday there were 1691 COVID-19 cases in Sub-Saharan Africa and 29 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.
The trajectory of the coronavirus in Africa has prompted countries and startups, such as Zindi, to include the continent’s tech sector as part of a broader response. Central banks and fintech companies in Ghana, Nigeria, and Kenya have employed measures to encourage more mobile-money usage, vs. cash — which the World Health Organization flagged as a conduit for the spread of the virus.
The continent’s largest incubator, CcHub, launched a fund and open call for tech projects aimed at curbing COVID-19 and its social and economic impact.
Pan-African e-commerce company Jumia has offered African governments use of its last-mile delivery network for distribution of supplies to healthcare facilities and workers.
Zindi’s CEO Celina Lee anticipates the startup’s COVID-19 related competitions can provide additional means for policy-makers to combat the spread of the virus.
“The one that’s open right now should hopefully go into informing governments to be able to anticipate the spread of the disease and to more accurately predict the high risk areas in a country,” she said.
The impacts of telecommuting, shelter-in-place laws and home quarantines resulting from the COVID-19 outbreak are starting to impact broadband speeds across a number of U.S. cities, a new report has found. According to broadband analysis site BroadbandNow, 88 out of the top 200 most populous U.S. cities analyzed have now experienced some form of network degradation over the past week, compared with the 10 weeks prior, as more people are going online to work from home, video chat and stream movies and TV to keep themselves entertained. In a small handful of cities over the past week, there have even been significant degradations with download speeds dropping more than 40%, compared with the 10 weeks prior.
It’s not necessarily the areas hit hardest by the spread of the novel coronavirus that are experiencing the worst problems.
Cities including LA, Chicago, Brooklyn and San Francisco have seen little or no disruption in download speeds, the report claims. Seattle is also holding up well.
But New York City, now considered the epicenter of the virus in the U.S., saw download speeds drop by 24% last week, compared to the previous 10-week range. That said, NYC home network connections, which have a median speed of nearly 52 Mbps, are managing.
The good news is that in the majority of markets, network speeds are holding up.
But of the 88 out of 200 cities that saw declines, more than two dozen saw dips of either 20% below range or more, the data indicates.
Austin, TX (-44%); Charlotte, NC (-24%); Fayetteville, NC (-22%); Fort Lauderdale, FL (-29%); Hialeah, FL (-21%); Houston, TX (-24%); Irvine, CA (-20%); Jersey City, NJ (-25%); Kansas City, MO (-25%); Lawrenceville, GA (-24%); Littleton, CO (-22%); Marietta, GA (-29%); Miami, FL (-27%); Nashville, TN (-20%); New York, NY (-24%); Omaha, NE (-24%); Overland Park, KS (-33%); Oxnard, CA (-42%); Plano, TX (-31%); Raleigh, NC (-20%); Rochester, NY (-33%); St. Louis, MO (-21%) St. Paul, MN (-29%); San Jose, CA (-38%); Scottsdale, AZ (-32%); Washington, DC (-30%); and Winston-Salem, NC (-41%).
Three cities, in particular, were seeing serious network degradations of over 40%: Austin, TX (-44%), Winston Salem, NC (-41%), and Oxnard, CA (-42%). San Jose, CA was nearing this range, with a drop of 38%.
Internet service providers have been responding to the health crisis by suspending data caps, increasing base-level speeds and extending free access to low-income families during this time. But their ability to keep up with this level of high demand is being tested.
Streaming services, being one of the larger draws on bandwidth, have been lowering the quality of their streams to use less network capacity, as U.S. connectivity needs have grown. Yesterday, for example, YouTube announced it would default to SD connections to tame bandwidth demands. Amazon and Netflix have reduced stream quality in Europe. But despite record levels of network traffic in the U.S., Netflix hasn’t made any commitments to do the same in the U.S. Today, Netflix had an hour-long service interruption impacting some U.S. and European users.
Another area of concern is how well more rural areas will hold up with new stay-at-home and work-from-home orders in place. Often, these markets are only served by legacy technologies like DSL . So far, they’ve held up, BroadbandNow reports, but this could still change.
Disney+, the streaming service from the Walt Disney Company, has been rapidly ramping up in the last several weeks. But while some of that expansion has seen some hiccups, other regions are basically on track. Today, as expected, Disney announced that it is officially launching across 7 markets in Europe — but doing so using reduced bandwidth given the strain on broadband networks as more people are staying home because of the coronavirus pandemic. From today, it will be live in the U.K., Ireland, Germany, Italy, Spain, Austria and Switzerland; Disney also reconfirmed the delayed debut in France will be coming online on April 7. It’s the largest multi-country launch so far for the service.
“Launching in seven markets simultaneously marks a new milestone for Disney+,“ said Kevin Mayer, Chairman of Walt Disney Direct-to-Consumer & International, in a statement. “As the streaming home for Disney, Marvel, Pixar, Star Wars, and National Geographic, Disney+ delivers high-quality, optimistic storytelling that fans expect from our brands, now available broadly, conveniently, and permanently on Disney+. We humbly hope that this service can bring some much-needed moments of respite for families during these difficult times.”
Pricing is £5.99/€6.99 per month or £59.99/€69.99 for an annual subscription. Belgium, the Nordics, and Portugal, will follow in summer 2020.
The service being rolled out will feature 26 Disney+ Originals plus an “extensive collection” of titles (some 500 films, 26 exclusive original movies and series and thousands of TV episodes to start with) from Disney, Pixar, Marvel, Star Wars, National Geographic, and other content producers owned by the entertainment giant, in what has been one of the boldest moves yet from a content company to go head-to-head with OTT streaming services like Netflix, Amazon and Apple.
The expansion of Disney+ has been caught in the crossfire of world events.
The new service is launching at what has become an unprecedented time for streaming media. Because of the coronavirus pandemic, a lot of of the world is being told to stay home, and many people are turning to their televisions and other screens for diversion and information.
That means huge demand for new services to entertain or distract people who are now sheltering in place. And that has put a huge strain on broadband networks. So, to be a responsible streamer (and to make sure quality is not too impacted), Disney confirmed (as it previously said it would) that it would be launching the service with “lower overall bandwidth utilization by at least 25%.”
There are now dozens of places to get an online video fix, but Disney has a lot of valuable cards in its hand, specifically in the form of a gigantic catalog of famous, premium content, and the facilities to produce significantly more at scale, dwarfing the efforts (valiant or great as they are) from the likes of Netflix, Amazon and Apple .
Titles in the mix debuting today include “The Mandalorian” live-action Star Wars series; a live-action “Lady and the Tramp,” “High School Musical: The Musical: The Series,”; “The World According to Jeff Goldblum” docuseries from National Geographic; “Marvel’s Hero Project,” which celebrates extraordinary kids making a difference in their communities; “Encore!,” executive produced by the multi-talented Kristen Bell; “The Imagineering Story” a 6-part documentary from Emmy and Academy Award-nominated filmmaker Leslie Iwerks and animated short film collections “SparkShorts” and “Forky Asks A Question” from Pixar Animation Studios.
Some 600 episodes of “The Simpsons” is also included (with the latest season 31 coming later this year).
With entire households now being told to stay together and stay inside, we’re seeing a huge amount of pressure being put on to broadband networks and a true test of the multiscreen approach that streaming services have been building over the years.
In this case, you can use all the usuals: mobile phones, streaming media players, smart TVs and gaming consoles to watch the Disney+ service (including Amazon devices, Apple devices, Google devices, LG Smart TVs with webOS, Microsoft’s Xbox Ones, Roku, Samsung Smart TVs and Sony / Sony Interactive Entertainment, with the ability to use four concurrent streams per subscription, or up to 10 devices with unlimited downloads. As you would expect, there is also the ability to set up parental controls and individual profiles.
Carriers with paid-TV services that are also on board so far include Deutsche Telekom, O2 in the UK, Telefonica in Spain, TIM in Italy and Canal+ in France when the country comes online. No BT in the UK, which is too bad for me (sniff). Sky and NOW TV are also on board.
Pan-African e-commerce company Jumia is adapting its digital retail network to curb the spread of COVID-19.
The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — announced a series of measures on Friday. Jumia will donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.
The company has offered African governments use of of its last mile delivery network for distribution of supplies to healthcare facilities and workers. Jumia will also reduce fees on its JumiaPay finance product to encourage digital payments over cash, which can be a conduit for the spread of coronavirus.
Governments in Jumia’s operating countries have started to engage the private sector on a possible COVID-19 outbreak on the continent, according to Jumia CEO Sacha Poignonnec .
“I don’t have a crystal ball and no one knows what’s gonna happen,” he told TechCrunch on a call. But in the event the virus spreads rapidly on the continent, Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” Poignonnec said.
Africa’s COVID-19 cases by country were in the single digits until recently, but those numbers spiked last week leading the World Health Organization to sound an alarm. “About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference Thursday. “It’s has been an extremely rapid…evolution.”
By the World Health Organization’s latest stats Monday there were 1321 COVID-19 cases in Africa and 34 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.
Dr. Moeti noted that many socioeconomic factors in Africa — from housing to access to running water — make common measures to curb COVID-19, such as social-distancing or frequent hand washing, challenging. She went on to explain that the World Health Organization is looking for solutions that are adoptable to Africa’s circumstances, including working with partners and governments to get sanitizing materials to hospitals and families.
As coronavirus cases and related deaths grow, governments in Africa are responding. South Africa, which has the second highest COVID-19 numbers on the continent, declared a national disaster last week, banned public gatherings and announced travel restrictions on the U.S.
Across Africa’s tech ecosystem — which has seen significant growth in startups and now receives $2 billion in VC annually — a number of actors are stepping up.
Image Credit: Jumia
In addition to offering its logistics and supply-chain network, Jumia is collaborating with health ministries in several countries to use its website and mobile platforms to share COVID-19 related public service messages.
Heeding President Kenyatta’s call, last week Kenya’s largest telecom Safaricom waived fees on its M-Pesa mobile-money product (with over 20 million users) to increase digital payments use and lower the risk of spreading the COVID-19 through handling of cash.
Africa’s largest innovation incubator CcHub announced funding and a call for tech projects aimed at reducing COVID-19 and its social and economic impact.
A looming question for Africa’s tech scene is how startups in major markets such as Nigeria, Kenya and South Africa will weather major drops in revenue that could occur from a wider coronavirus outbreak.
Jumia is well capitalized, after going public in a 2019 IPO on the New York stock exchange, but still has losses exceeding its 2019 revenue of €160 million.
On managing business through a possible COVID-19 Africa downturn, “We’re very long-term oriented so it’s about doing what’s right with the governments and thinking about how we can help,” said Jumia’s CEO Sacha Poignonnec .
“Revenue wise, it’s really to early to tell. We do believe that e-commerce in Africa is a trend that goes beyond this particular situation.”
The $71 million in financing that quantum computing technology developer Rigetti Computing recently raised came at a significant cut to the company’s valuation, according to several sources with knowledge of the company.
The company declined to comment on its valuation or the recent round of funding it secured.
Rigetti is one of a handful of startups attempting to make quantum computing commercially viable. It’s a vitally important emerging technology with implications for national security and a broad swath of industries that depend on better data analysis and more powerful computing to continue innovating around materials science, genetics and … well… pretty much anything else.
In July, Rigetti acquired QxBranch, a quantum computing and data analytics software startup, to build on Rigetti’s full-stack strategy and expand the company’s ability to deliver quantum algorithms, solutions and services, according to a statement
“Our mission is to deliver the power of quantum computing to our customers and help them solve difficult and valuable problems,” said Chad Rigetti, founder and CEO of Rigetti Computing, in a statement at the time. “We believe we have the leading hardware platform, and QxBranch is the leader at the application layer. Together we can shorten the timeline to quantum advantage and open up new opportunities for our customers.”
Huge corporations, including Google and IBM, have invested hundreds of millions to develop quantum computers, and there’s a growing push among politicians in the U.S. government to devote more money to the technology — out of fear that China’s scientists and national efforts have outpaced American advances in the field.
Quantum computing is an area that’s set for a windfall of government dollars under the budget proposed earlier this year by the Trump administration. The National Science Foundation will receive $210 million for quantum research, while the Department of Energy will receive a $237 million boost and an additional carve out of $25 million for the Department of Energy to begin development of a nationwide Quantum Internet.
Fundamentally, quantum computing is hard, and there are few commercially viable applications for a technology that’s still in its infancy. The “computers” are notoriously difficult to operate, so not many companies are pursuing the creation of the hardware itself. Instead, companies in the market are pitching the ability to adapt into a form amenable to solving by quantum computing the hard questions that corporations and research institutions would like to pose, as well as flexible access to shared quantum hardware.
That’s a variation on the wildly successful cloud computing and software as a service business models now all the rage among technology companies developing services for other industries.
If commercial traction is one issue for quantum computing startups — which lack access to the billions available to companies like Alphabet (Google’s parent company) or even the struggling tech giant IBM — then recent trends in venture capital investment have proven to be another.
It’s very likely that the company fell victim to the irrational exuberance of the
stupid money unicorn era, where firms raised billions of dollars in capital in an effort to compete with massive sovereign wealth-backed corporate investment firms led by people who had previously burned dumpsters full of cash in the dot-com era made billions off well-timed investments in Chinese e-commerce companies.
That said, financing a company that can achieve a quantum breakthrough is one of those moonshot investments where the return on a successful investment is basically unlimited. There’s so much potential in the technology, and so little viable commercial business, that the first to break through the noise could be a real win.
Recently, investors are gambling more on the middleware layer of a quantum computing stack. These are companies like Zapata, Q-CTRL, Quantum Machines and Aliro, which improve the performance of quantum computers and create an easier user experience.
In 2017, Rigetti announced that it had raised $64 million over a period of several years while it developed its quantum computing technology. That was followed with another $50 million investment later that year, as Bloomberg reported. This latest investment was led by Battery Ventures, according to data available on Crunchbase.
The lack of available, non-dilutive capital for companies like Rigetti may be a problem going forward, if the U.S. wants to provide a broad base of support for the pursuit of quantum technology innovations, according to some industry observers.
“This is a national security issue. We should be trying to be doing everything we can,” said one industry observer. “If we don’t fight this war and somebody else wins this war it’s going to have significant ramifications for the U.S. For some of these things… private companies and government have to collaborate. For our own national security.”
Ford said it will produce and sell an all-electric version of its popular Ford Transit cargo van for the North American market starting with the 2022 model year as part of the automaker’s broader bet on electrification.
The all-electric Transit, which will be assembled in the U.S., is part of Ford’s more than $11.5 billion investment in electrification through 2022. Ford’s EV plan includes an all-electric Transit for the European market that it announced in April 2019, the Mustang Mach-E SUV and an electric F-150 truck.
Ford’s decision to include commercial vans into its EV strategy is linked to sales in U.S. and the company’s outlook on future growth. The company’s U.S. truck and van fleet sales have grown 33% since 2015. Ford said it expects continued growth of van sales in the U.S. as e-commerce and “last mile” delivery increase.
Ford said it expects electric vehicles to grow to 8% of the industry in 2025 in the United States.
“Commercial vehicles are a critical component to our big bet on electrification,” Ford chief operating officer said Jim Farley said in a statement. “As leaders in this space, we are accelerating our plans to create solutions that help businesses run better, starting with our all-electric Transit and F-150. This Ford Transit isn’t just about creating an electric drivetrain, it’s about designing and developing a digital product that propels fleets forward.”
Ford will focus on tech features like in-vehicle internet and driver assistance.
“The world is heading toward electrified products and fleet customers are asking for them now,” Farley said. “We know their vehicles operate as a connected mobile business and their technology needs are different than retail customers. So Ford is thinking deeply on connectivity relationships that integrate with our in-vehicle high-speed electrical architectures and cloud-based data services to provide these businesses smart vehicles beyond just the electric powertrains.”
These built-in “smart” features could help customers optimize fleet efficiency and reduce waste or improve driver behavior, according to Ford, an indication that fleets will be able to access data collected through Ford’s telematics system using an embedded FordPass Connect modem featuring a 4G LTE Wi-Fi hotspot with connectivity for up to 10 devices. Ford said managers can use Ford’s data tools like live map GPS tracking, geofencing and vehicle diagnostics to see key performance indicators at a glance for vehicle and driver.
Some big moves in the payments platform space: Ant Financial Group, the owner of China’s Alipay payment platform has announced it’s taking a minority stake in Swedish payments platform Klarna — which has a strong European presence and a flagship product that lets shoppers buy now and pay later in interest-free instalments (typically 14 or 30 days after the purchase).
The pair have not disclosed terms of the deal but Reuters reported the stake amounts to less than 1% and was made up of existing and new shares. It also cites its source telling it the stake was done at a “slight uptick” to Klarna’s $460 million funding round last August — which valued the company at $5.5BN.
A spokeswomen for Klarna told us it’s not disclosing the value of the investment but she confirmed Reuters reporting, saying the stake is less than 1%.
Ant Financial is part of Chinese ecommerce and retail services multinational giant, Alibaba Group, which took a 33% stake in the fintech affiliate back in 2018 that gave it direct ownership of its suite of products and services — including an investment fund, micro-loans, insurance services, a digital bank and the Alipay mobile payments platform.
Klarna and Alipay had already been collaborating via Alibaba’s global ecommerce marketplace, AliExpress — which offers Klarna’s ‘Pay later’ option in multiple markets.
Now the pair touted their deepening partnership as set to bring more “innovative and convenient” financial services to consumers worldwide.
They are also clearly hoping to further grease the wheels of East to West ecommerce by expanding opportunities for China’s growing middle class to tap into Klarna’s network of European and global merchants via their preferred local online payment method.
Commenting in a statement, Klarna CEO Sebastian Siemiątkowski said: “For too long consumers have had to endure non-intuitive, boring and overly complex services when shopping both online and offline. At the heart of this cooperation between Klarna and Alipay is a shared ambition of innovating truly superior shopping experiences and creating destinations of inspiration for consumers across the world.”
“Alipay, and the wider Alibaba Group, have truly set the global pace on retail innovation and the app economy. We are delighted in this confidence shown in Klarna in defining the future of payments and shopping and are very much looking forward to working together further in the future,” he added.
Klarna said its technology is being used by more than 200,000 retailers and e-commerce platforms globally at this point, including AliExpress, H&M, ASOS, Expedia Group, IKEA, Farfetch, Adidas, Spotify, Samsung and Nike .
Last year it said it added over 75,000 new merchants — describing itself as a “strategic growth partner” for these retailers and claiming it’s driving “millions of referrals and traffic each month” from owned channels to partner merchants from consumers who it says are actively seeking where they can shop with Klarna. (It claims a base of 85 million shoppers.)
Ant Financial, meanwhile, has been working on expanding Alipay’s global footprint by cutting local deals in markets outside China where it cannot build up its transaction volume organically. Notably, back in 2015, it took a stake in India’s One97 — which operates a major local mobile payment platform, Paytm.
TechCrunch’s Ingrid Lunden contributed to this report
Target today reported mixed fourth-quarter results, but promising growth on the e-commerce side of its business. The retailer’s earnings per share came in at $1.69 beating the Zacks Consensus Estimate of $1.66, but revenue fell short at $23.40 billion versus the $23.50 billion expected, as the company saw weaker holiday sales in key categories like toys, electronics, and home goods.
The retail industry overall has been struggling with toy sales, following the closure of Toys R Us. While that shutdown put 15% of the toy market up for grabs, the market is not what it used to be as kids today now spend much of their time on mobile devices and gaming. Softer toy sales were also a factor in Walmart’s lower-than-expected earnings in Q4, along with weaker sales of media, gaming, and apparel.
In addition, Target noted it saw a lower-than-average level of clearance sales in January, which also impacted fourth-quarter profits.
However, on the e-commerce side of Target’s business, the news was better. The company said its set of same-day services — including same-day delivery, Drive Up (curbside), and in-store pickup — accounted for more than 80% of Target’s fourth-quarter comparable digital sales growth.
For the year, same-day services grew more than 90% and accounted for nearly three-quarters of the company’s comparable digital sales growth.
Target has heavily invested in its e-commerce business in the past few years, with the launch of Drive Up, the acquisition of and further integration with same-day provider Shipt, and remodeled stores that better cater to online shoppers. Target says it will complete its 1,000th store remodel in 2020, with about 300 planned for the year. After the remodel completes, Target sees a 2-4% average sales lift that remains at 2+% in year two.
It has also rolled out more small-format stores in urban metros, with its 100th in 2019 and three dozen planned for 2020.
“The strategic investments we’ve made over the past several years to elevate the shopping experience, curate our multi-category assortment at scale, and deliver ease and convenience through our fulfillment capabilities are deepening our relationship with our guest,” said Brian Cornell, Chairman and CEO of Target, in a statement. “As we look ahead to 2020 and beyond, we are well-positioned to build on this strong foundation to further differentiate Target and drive long-term, profitable growth,” he added.
The strategy of using retail stores to serve online shoppers has been working well for Target in recent months. The company just broke into the top 10 list of e-commerce retailers, moving up from No. 11 to take No. 8, ahead of QVC, HSN (Qurate Retail Group), Costco and Macy’s.
Another advantage for Target is its successful rollout of exclusive brands and high-profile partnerships with third-parties including Disney and Levi’s. In 2019, the company launched 8 new, owned brands including its new activewear brand All in Motion, household essentials brand Everspring, an Away luggage competitor Open Story, and others, including what’s on pace to be its largest, Good & Gather.
For Q1 2020, Target forecast earnings per share in the range of $1.55 to $1.75, in line with expectations. It’s still unclear how much Target will be impacted by coronavirus, as much of the world still doesn’t know how dramatic its impacts will be at this point.
iPrice Group, which helps comparison shoppers in Southeast Asia by pulling together prices from different e-commerce platforms, has closed a $10 million Series B. Led by ACA Investments, the round also included participation from Daiwa PI Partners and returning investors Line Ventures, Mirae Asset-Naver Asia Growth Fund.
The company’s last funding announcement, from Line’s venture capital arm, was in May 2018 and its new round brings iPrice’s total funding so far to about $19.8 million.
The company said it has more than 20 million monthly visitors and about 5 million transactions were made through its platforms in 2019. Its core iPrice unit accounted for about half of its revenue and operated at a 30% EBITDA margin, a level of profitability the company expects its other businesses to hit in the next two to three years.
iPrice will use its funding to develop product discovery features, including recommendations and professional product reviews. The platform currently partners with “super apps,” like Line and Home Credit, that offer a wide array of services, through one app.
iPrice began by collecting coupons and discount codes when it launched, before expanding into price aggregation to help consumers navigate the growing roster of e-commerce platforms in Southeast Asia, such as Zalora, Shoppee and Lazada.
The platform is divided into verticals, including electronics and appliances, fashion and automotive, and now claims to aggregate more than 1.5 billion products from more than 1,500 e-commerce partners. It says it is the leading product aggregator in Indonesia, Vietnam, Thailand, the Philippines, Singapore, Malaysia and Hong Kong.
In a press statement, ACA Investments chief investment officer Tomohiro Fujita said, “The e-commerce industry in Southeast Asia is at its emerging stage and we see huge potential. iPrice Group will play an important role, especially with its comprehensive coverage of markets in Southeast Asia. It’s the prime gateway to online shopping.”
Last week, I sat down with Connie Chan, a general partner with Andreessen Horowitz who focuses on investing in consumer tech. She joined the firm in 2011 after working at HP in China.
From her temporary offices located in a modest skyscraper with unobscured views of San Francisco, we talked about where she sees the biggest opportunities right now, along with how big of an impact fears over coronavirus could have on the startup industry — and for how long.
Our conversation has been edited for length. You can also find a longer version of our chat in podcast form.
TechCrunch: There’s so much money flowing into the Bay Area and startups generally from all over the world. What happens if that slows down because of the coronavirus?
Connie Chan: It’s interesting, I was just talking to a friend of mine who is an investor in Asia, in China. And she said that some industries are going to suffer significantly. Restaurants, for example, are hurting [along with] any store that relies on foot traffic [like] bookstores, so forth. Yet you see a lot of companies also doing really well in this time. You’ll see grocery delivery as something that’s in high demand. Insurance is in very high demand. People are spending more time at home, so whether it’s games or streaming or whatever they’re doing at home is doing well. Lots of my counterparts in China are also taking all their pitches via video conference. They’re still doing work, but they’re all just working from home.
Where do you think we’ll see the biggest impact most immediately?
South African fintech startup Jumo closed a $55 million round from a diverse group of investors, the company confirmed.
Founded in 2015 and based in Cape Town, the venture offers a full tech stack for partners to build savings, lending, and insurance products for customers in emerging markets.
This week’s funding follows a $52 million raise by Jumo in 2018, led by U.S. investment bank Goldman Sachs, that saw the startup expand to Asia.
“This fresh investment comes from new and existing…investors including Goldman Sachs, Odey Asset Management and LeapFrog Investments,” Jumo said in a statement — though Goldman told TechCrunch its participation in this week’s round isn’t confirmed.
After the latest haul, Jumo has raised $146 million in capital, according to Crunchbase.
With its latest raise, the company plans to move into new markets and launch new products in Asia and Africa.
“I’m excited for our next phase. This backing will help us build a better business and break new ground,” Jumo founder Andrew Watkins-Ball said.
The company’s products have disbursed over $1 billion loans and served over 15 million people and small businesses, according to Jumo data.
Jumo is active in six markets and plans to expand to two new countries in Africa (Nigeria and Ivory Coast) and two in Asia (Bangladesh and India).
Nigeria, in particular, has become Africa’s unofficial capital for fintech development, surpassing Kenya in 2019 for drawing the most fintech specific and overall VC on the continent, according to WeeTracker.
Jumo joins a growing list of African digital-finance startups raising big money from outside investors and expanding abroad. A $200 million investment by Visa in 2019 catapulted Nigerian payments firm Interswitch to unicorn status, the same year the company launched its Verge card product on Discover’s global network.
Jumo’s funding also tracks Goldman Sachs’ growing investment in African startups. The U.S. bank has put several hundred million dollars into ventures on the continent — from Pan-African e-commerce company Jumia to Nigerian trucking-logistics firm Kobo360.
When I was a founder many years ago, I felt like I heard constantly conflicting advice and opinions on raising money for my startup.
It’s easy to raise. It’s hard to raise. If it’s easy to raise, you should raise a LOT of money. You should raise a little money. You should try to go for a high valuation. You should raise at a “normal valuation” so it doesn’t bite you later.
It was hard to understand what was going on and what I should actually do.
Many years later, now as a VC, it turned out that most of the things you hear people say about fundraising are generally true and generally good pieces of advice. All at the same time. Even when these ideas conflict. How is that possible?
Because, like anything else, different pieces of advice are apt for different types of companies and founders. Today’s fundraising landscape is particularly an interesting time of bifurcation that’s worth laying out in detail.
In the San Francisco Bay Area, if you’re a founder who has a “well-branded” resume, it’s a fantastic time to raise money at the earliest stages. It almost doesn’t even matter what company you’re building. You will get funding. You could be leaving Pinterest to start a company. Maybe you went to MIT and then did a 10-year stint at Google. Or maybe you were a former YC founder who is taking a second crack at a company. Or maybe you sold your last business for $10 million. If you did any of these things, it’s a great time.
For these founders, I’m seeing massive party rounds here in San Francisco — $3 million – $5 million seed rounds. Sometimes $10 million rounds right out of the gates! My friend, a fantastic serial entrepreneur with an exit, raised $8 million recently at $30 million+ post-money valuation with only a very early version of a product. Investors literally threw money at her and her round was oversubscribed.
And then, even if you don’t fit this profile, you can still generate a lot of heat on your fundraise. In the last few months, VCs have become very concerned about profitability. It’s not enough to be working on a fast-growth startup anymore. In part, we’ve all seen big-name startups that were once the darlings of Silicon Valley flounder in the late-stage markets because of high burn rates and being nowhere close to profitability.
And VCs have gotten quite scared. Almost to a fault.
So, I’m seeing companies at the Series A and Series B stages with 30% MoM growth that were popular before now struggle to raise their next rounds because they are not profitable. The feedback they receive is to “come back when you’re profitable or really close to it.” This mentality change has had a huge impact on marketplaces and e-commerce companies — companies that don’t have predictable repeat customers or high margins.
On the flip side, SaaS companies have become the new darlings VCs have gone gaga for. SaaS businesses have repeat customers, strong lifetime values and upsell potentials. They are capital-efficient, high-margin businesses. And if you are growing well as a differentiated (differentiated being a key word) SaaS company, you probably have many VCs knocking on your door — at all stages early and late even if you are not on the coasts.
For everyone else, after reading news stories about such large fundraises, it can be confusing to understand why their own fundraise is so challenging. Why is it so hard for me to raise money?
It turns out that fundraising is still hard for everyone else. Even in the Bay Area, if you don’t fall into the categories above, it’s hard. People often erroneously think that just being in San Francisco will miraculously make fundraising easier. That’s far from true. There are certainly many people who get funded there, but there are also just many more startups in San Francisco than elsewhere. Outside the SF Bay Area, it’s even harder to raise. So we have a weird Goldilocks and the Three Bears situation. Some companies are really hot. Most are really cold.
The press mostly writes about the hot deals, like companies that raise $5 million seed rounds and went through YC. After all, no one wants to read about how someone’s fundraising process is going horribly — that’s just not a news story that sells. So now, everyone thinks Silicon Valley is littered with gold just by reading the news. The reality is that San Francisco mostly has poop on the ground and a small number of people will find a Benjamin once in a while.
I’m seeing valuations well above $10 million post — even $20 million post for hot seed-stage companies. And then for companies that are cold, the valuations are where they’ve always been — largely anchored based on geography. As low as $1 million post within U.S. and Canada. And it can even be lower elsewhere globally.
So when people ask me what a fair valuation is, it’s a really hard question. It depends on where you are, what you’re working on and what your background is. Many people think valuations are based on a company’s progress. That’s just not how it works. Valuations are based on supply and demand. Supply of your fundraising round. And investor demand for your fundraising round. Valuations go up when more investors are interested in investing. There’s no such thing as a “typical” valuation.
Friends outside of Silicon Valley often ask me if I think this time VCs will favor profitable companies over fast growth.
I think the answer is VCs would love to back profitable companies with fast growth.
(That, of course, begs the question in this day and age with other debt or revenue-based financing options why such a company would raise a lot of VC money, but that’s besides the point.)
That said, I do think that in this new era we are entering in 2020, companies that focus on profitability will separate the winners from the losers in the next few years. Thriftier founders will win.
Now, here’s the irony. As we go into this new age where frugality is a strength, I think that the startup journey will actually be harder for the founders who are able to raise their large seed rounds so quickly at high valuations. From past experience, I’ve found that founders who can raise easily in a first raise really struggle later on subsequent raises because they don’t know just how hard a fundraise can be. Moreover, founders who can raise large amounts in the beginning tend to be less frugal and often burn through too much cash before their progress really kicks in. In contrast, overlooked founders who have often found it challenging to raise know that they need to be frugal by default, because it’s unclear how hard the next fundraise will be. These founders know they need to make the business work with or without investors.
The ironic twist is that investors throw money at founders with particular resumes because they believe those founders will be the most likely to succeed with big exits. A strength can quickly turn into a weakness in this market.
My hope for all founders is that they focus on staying thrifty, watch cashflow and chip away at getting to profitability so they can own their own destiny. By focusing on customers, instead of investors, you can sell more and sell quicker. Ultimately, the end goal for a company is to be able to serve customers sustainably and effect change in our larger society.
And that’s what I wish all startups find in 2020, so they don’t have to care about the whims and fancies of investors as they change with the times.
Read our extended interview with Elizabeth Yin (Extra Crunch membership required).
Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.
The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.
These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.
Jumia — with online goods and services verticals in 11 countries — posted 2019 revenues of €160, representing growth of 24% over 2018. The company increased its annual active customer base in the fourth-quarter by 54%, to 6.1 million, from 4.0 million for the same period last year.
Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.
Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.
The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.
Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.
That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.
The overall pattern of growing revenues and customers YoY has been consistent for Jumia.
But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million in 2018. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.
CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall.
“As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said.
Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec.
Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa.
Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.
Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders.
This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.
Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.
Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.
Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing.
The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.
That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26.
Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program.
The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.
That’s 50% below the company’s IPO opening in April and 80% below its high.
For the remainder of 2020, bringing back growth in GMV and delivering more positive metrics, such as attaining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.
It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and possible expansion in Africa of China’s Alibaba.
Walmart’s holiday quarter didn’t perform as expected. That’s the big news today from the retailer’s weak Q4 2019 earnings, which saw revenue of $141.67 billion versus the $142.55 expected and adjusted earnings per share of $1.38 versus the $1.44 expected. The company cited a number of factors, including “softer” than anticipated holiday sales in U.S. stores — particularly softer sales of toys, media and gaming, and apparel during the month of December.
Overall, the earnings point to the challenges for Walmart in a market where more consumers than ever are choosing to shop online. Walmart, meanwhile, still makes the bulk of its money from retail stores, not online, though it’s heavily investing in the latter. That leaves it at mercy of the sort of problems it faced in Q4 — like the trouble with the toy industry (that also hit Target), a lack of newness in gaming, a shorter holiday shopping season, and even a warmer winter than has depressed apparel sales across retailers.
Even as large as Walmart’s stores are, they’re still constrained by shelf space and square footage. And when inventory doesn’t move as quickly as it should, sales suffer. In Q4, Walmart’s U.S. same-store sales were up 1.9%, which was short of the 2.3% expected.
By comparison, Amazon’s holiday results crushed expectations. It reported record sales, Prime membership that soared to 150 million paying subscribers, and one-day and same-day deliveries that quadrupled over the same quarter the prior year.
So far, Walmart, like Target and others, has been fairly successful in taking the hybrid approach to retail — meaning its brick-and-mortar business and online side aren’t separated, but rather work together to drive shoppers into stores to pick up their online purchases. Walmart’s pickup business, including online grocery pickup, is helping capture market share and grow Walmart’s overall e-commerce sales.
That remained true in Q4, as e-commerce sales were up 35% with online grocery helping drive those increases. Walmart even boasted grocery sales on a two-year stacked basis were its “best in the past 10 years.” The retailer has also been quickly expanding the number of stores that support online grocery, and ended the year with nearly 3,200 grocery pickup locations and 1,600 stores offering grocery delivery.
However, in a quarter that’s all about boosting business by way of holiday shopping, it’s worth noting that Walmart’s e-commerce sales were up by 41% last quarter, more than the 35% in Q4.
One area where Walmart may need to more quickly expand in the months ahead is its Delivery Unlimited service. Launched in 2019, the membership program for grocery delivery competes with Instacart and others by allowing grocery delivery customers to save on their per-delivery fees by way of a monthly or annual subscription. The company didn’t offer an update on where the program is now available, though it had planned for 50% coverage across the U.S. by year-end.
Meanwhile, Target has now expanded its Shipt same-day grocery delivery service to include non-grocery items from its stores, and has integrated Shipt directly with its own app and on Target.com. And of course, Amazon’s Prime members can shop grocery thanks to Whole Foods, as well as rush their everyday orders courtesy of Amazon’s ever-faster ship times.
In addition, Walmart’s still unprofitable e-commerce business faced other struggles in 2019. Some of its acquisitions in apparel haven’t paid off as anticipated. Last year Walmart sold off Modcloth, Bonobos laid off staff and founder Andy Dunn left. Walmart also shut down Jet.com’s city grocery business, and it just wrapped up its experimental shopping service Jet black.
Walmart additionally pointed to issues in Q4 related to political unrest in Chile, which disrupted the majority of its stores. However, Sam’s Club, Walmex, China and Flipkart did well.
“The holiday season delivered positive transaction growth and underlying expense leverage was strong for the
quarter. However, it wasn’t as good as expected due to lower sales volumes and some pressure related to
associate scheduling,” said Walmart CFO Brett Biggs, in a statement. “We understand the factors that affected our results and are developing plans to address them. We remain confident in our business strategy and our ability to deliver value and convenience for our customers through an integrated omnichannel offering across the globe,” he added.
The retailer also offered lowered 2021 guidance, with earnings expected in the range of $5.00 to $5.15, below analysts’ estimates of $5.22. Walmart said this doesn’t include any impact from the coronavirus outbreak, but it’s continuing to monitor the situation.
7-Eleven is the latest retailer to test the “cashierless” store concept, following Amazon’s big push into the market with its Amazon Go convenience stores that use technology, instead of people, to monitor stock levels, track purchases, and process payments. This week, 7-Eleven announced it’s piloting its own take on the cashierless concept with a 700-square-foot store at its corporate HQ in Irving, Texas, open only to company employees.
The store stocks 7-Eleven’s most popular products, including beverages, snacks, food, groceries, over-the-counter drugs, and non-food items. This product mix may be refined over the course of the testing.
Similar to Amazon Go, the 7-Eleven pilot store will involve a mobile app that customers use to check into the store, pay for items, and view their receipts.
Meanwhile, to differentiate shoppers and their purchases, 7-Eleven is using a proprietary mix of algorithms and predictive technology, it says.
“Ultimately, our goal is to exceed consumers’ expectations for faster, easier transactions and a seamless shopping experience,” said Mani Suri, 7-Eleven Senior Vice President and Chief Information Officer, in a statement. “Introducing new store technology to 7-Eleven employees first has proven to be a very productive way to test and learn before launching to a wider audience. They are honest and candid with their feedback, which enables us to learn and quickly make adjustments to improve the experience. This in-house, custom-built technology by 7-Eleven engineers is designed for our current and future customers. We continue to innovate, and coupling fresh, innovative, healthy food options with a frictionless shopping experience could be a game-changer,” he added.
The company has been working to adapt to the changes needs of customers in other ways, before now, including through its on-demand delivery service and mobile checkout, for example. But given Amazon’s intention to directly compete in 7-Eleven’s market, it likely had no choice but to begin experimenting with cashierless technology sooner, rather than later.
7-Eleven is not alone on that front.
Since Amazon introduced its Amazon Go concept in 2018, other retailers have followed suit. Walmart and Walmart-owned Sam’s Club and supermarket chain Giant Eagle are testing A.I. technology similar to Amazon Go, among others. And several companies sell cashierless technology to retailers, including Standard Cognition, Zippin, Grabango, AiFi, and Trigo, to name a few.
The pilot program at 7-Eleven is underway now, but the company didn’t give any indication as to how long the tests would run or if and when it would expand to the public. It also didn’t detail the proprietary technology it’s using. But typically, cashierless stores use a combination of sensors, cameras, and A.I.
The retailer today operates, franchises and licenses more than 70,000 stores in 17 countries, including 11,800 in North America.
U.S. consumers aren’t adopting voice-based shopping as quickly as expected, according to a new report today from eMarketer. While consumers have been happy to bring smart speakers into their home, they continue to use them more often for simple commands — like playing music or getting information, for example — not for making purchases. However, the overall number of voice shoppers is growing. It’s just slower than previously forecast, the analysts explain.
By the end of this year, eMarketer estimates that 21.6 million people will have made a purchase using their smart speaker. That’s lower than the Q2 2019 forecast which then expected the number to reach 23.6 million.
Still, it’s important to point out that the overall number of people making purchases via a smart speaker is growing. It will even pass a milestone this year, when 10.8% of all digital buyers in the U.S. will have made a purchase using their smart speaker.
eMarketer attributes the slower-than-anticipated growth to a number of factors, including security concerns are leading people to not yet fully trust smart speakers and their makers. Many consumers would also prefer a device with a screen so they could preview the items before committing to buy. Apple and Google have addressed the latter by introducing smart home hubs that include screens, speakers and built-in voice assistants. But consumers may have already bought traditional Echo and Google Home devices and don’t feel the need to upgrade.
In addition, the report upped the estimates for percentage of users listening to audio (81.1%) or making inquiries (77.8%).
“Though there are thousands of smart speaker apps that do everything from let you order takeout to find recipes or play games, many consumers don’t realize that they need to take extra and more specific steps to utilize all capabilities,” said eMarketer principal analyst Victoria Petrock. “Instead, they stick with direct commands to play music, ask about the weather or ask questions, because those are basic to the device.”
To be fair, a forecast like this can’t give a complete picture of smart speaker usage. Many consumers do ask Alexa to add items to a shopping list, for instance, which they then go on to buy online at some point — but that wouldn’t be considered voice-based purchasing. Instead, the smart speaker sits as the top of the funnel, capturing a consumer’s intention to buy later, but doesn’t trigger the actual purchase.
That said, Amazon, in particular, has failed to capitalize on the potential for voice shopping, given how easily it can tie a voice command to a purchase from its site. Perhaps it became a little gun-shy from all those mistaken purchases, but the company hasn’t innovated on voice shopping features. There are a number of ways Amazon could make voice shopping a habit or turn one-time purchases into subscriptions, just by way of simple prompts.
Amazon could also develop a set of features, similar to Honey (now owned by PayPal), that allow users track prices drops and sales, then alert Echo owners using Alexa’s notifications platform or even an “Amazon companion” skill, that could be added to users’ daily Flash Briefings. (E.g. The item you were watching is now $50 off. The new price is…$X…would you like to buy it?”) The companion could also track out-of-stock items, alert you to new arrivals from a favorite brand, or even send product photos to the Alexa companion app, as suggested deals.
Instead, Alexa voice shopping remains fairly basic. Without improvements, consumers will likely continue to avoid the option.
eMarketer also today adjusted its forecast for overall smart speaker usage. Instead of the 84.5 million U.S. smart speaker users, the 2020 estimate has been dropped to 83.1 million users, indicating slightly slower adoption.
Factories and warehouses have been two of the biggest markets for robots in the last several years, with machines taking on mundane, if limited, processes to speed up work and free up humans to do other, more complex tasks. Now, a startup out of Poland that is widening the scope of what those robots can do is announcing funding, a sign not just of how robotic technology has been evolving, but of the growing demand for more automation, specifically in the world of logistics and fulfilment.
Nomagic, which has developed way for a robotic arm to identify an item from an unordered selection, pick it up and then pack it into a box, is today announcing that it has raised $8.6 million in funding, one of the largest-ever seed rounds for a Polish startup. Co-led by Khosla Ventures and Hoxton Ventures, the round also included participation from DN Capital, Capnamic Ventures and Manta Ray, all previous backers of Nomagic.
There are a number of robotic arms on the market today that can be programmed to pick up and deposit items from Point A to Point B. But we are only starting to see a new wave of companies focus on bringing these to fulfilment environments because of the limitations of those arms: they can only work when the items are already “ordered” in a predictable way, such as on an assembly line, which has mean that fulfilment of, for example, online orders is usually carried out by humans.
Nomagic has incorporated a new degree of computer vision, machine learning and other AI-based technologies to elevate the capabilities of those robotic arm. Robots powered by its tech can successfully select items from an “unstructured” group of objects — that is, not an assembly line, but potentially another box — before picking it up and placing it elsewhere.
Kacper Nowicki, the ex-Googler CEO of Nomagic who co-founded the company with Marek Cygan (an academic) and Tristan d’Orgeval (formerly of Climate Corporation), noted that while there has been some work on the problem of unstructured objects and industrial robots — in the US, there are some live implementations taking shape, with one, Covariant, recently exiting stealth mode — it has been mostly a “missing piece” in terms of the innovation that has been done to make logistics and fulfilment more efficient.
That is to say, there has been little in the way of bigger commercial roll outs of the technology, creating an opportunity in what is a huge market: fulfilment services are projected to be a $56 billion market by 2021 (currently the US is the biggest single region, estimated at between $13.5 billion and $15.5 billion).
“If every product were a tablet or phone, you could automate a regular robotic arm to pick and pack,” Nowicki said. “But if you have something else, say something in plastic, or a really huge diversity of products, then that is where the problems come in.”
Nowicki was a longtime Googler who moved from Silicon Valley back to Poland to build the company’s first engineering team in the country. In his years at Google, Nowicki worked in areas including Google Cloud and search, but also saw the AI developments underway at Google’s DeepMind subsidiary, and decided he wanted to tackle a new problem for his next challenge.
His interest underscores what has been something of a fork in artificial intelligence in recent years. While some of the earliest implementations of the principles of AI were indeed on robots, these days a lot of robotic hardware seems clunky and even outmoded, while much more of the focus of AI has shifted to software and “non-physical” systems aimed at replicating and improving upon human thought. Even the word “robot” is now just as likely to be seen in the phrase “robotic process automation”, which in fact has nothing to do with physical robots, but software.
“A lot of AI applications are not that appealing,” Nowicki simply noted (indeed, while Nowicki didn’t spell it out, DeepMind in particular has faced a lot of controversy over its own work in areas like healthcare). “But improvements in existing robotics systems by applying machine learning and computer vision so that they can operate in unstructured environments caught my attention. There has been so little automation actually in physical systems, and I believe it’s a place where we still will see a lot of change.”
Interestingly, while the company is focusing on hardware, it’s not actually building hardware per se, but is working on software that can run on the most popular robotic arms in the market today to make them “smarter”.
“We believe that most of the intellectual property in in AI is in the software stack, not the hardware,” said Orgeval. “We look at it as a mechatronics problem, but even there, we believe that this is mainly a software problem.”
Having Khosla as a backer is notable given that a very large part of the VC’s prolific investing has been in North America up to now. Nowicki said he had a connection to the firm by way of his time in the Bay Area, where before Google, Vinod Khosla backed a startup of his (which went bust in one of the dot-com downturns).
While there is an opportunity for Nomagic to take its idea global, for now Khosla’s interested because of the a closer opportunity at home, where Nomagic is already working with third-party logistics and fulfilment providers, as well as retailers like Cdiscount, a French Amazon-style, soup-to-nuts online marketplace.
“The Nomagic team has made significant strides since its founding in 2017,” says Sven Strohband, Managing Director of Khosla Ventures, in a statement. “There’s a massive opportunity within the European market for warehouse robotics and automation, and NoMagic is well-positioned to capture some of that market share.”