It’s only a rumor, and it’s probably very unlikely such a deal would go through, if only because the regulatory scrutiny that banks endure would put off any retailer in minutes. But who knows. The Trump administration is just decorated with Wall Street execs that can’t wait to deregulate banks.
The idea that a Silicon Valley giant could buy a bank is not new. Twenty percent of people would happily bank with them, according to a Fujitsu survey of 7,000 people. About 37 percent of respondents indicated they would leave their bank if it wasn’t up-to-date with technology and innovation that could improve customer experience. After all, banks exist to manage dollars and cents, but in a digital world, people would rather trust tech companies with the exchange of data that comes with financial transactions.
Among the obvious tech contenders — Google, Facebook and Amazon — Amazon is the only one that needs payments as part of its core business. If Amazon wants a bank badly enough and the price is right, Capital One would be a great fit. Amazon has a large marketplace that includes many retailers. Most of Capital One’s business is in credit and lending. It lends to a wide spectrum of people with different needs when most major banks only want to look at potential borrowers with FICO scores above 700. The prospect of a deal like this really happening might not be so crazy. (Amazon and Capital One declined to comment for this story.)
That’s one of three aspects that would be of greatest interest to Amazon, according to Mike Moeser, director of payments at Javelin Strategy & Research.
“When you get down to people with spotty or thin credit, a lot of banks will back off from that, whereas Capital One has been doing it for years,” he said. “They’re able to look at someone and determine if you have a thin file but you’re a young person or new to the country. Sometimes they have awesome credit, which is easy. But that full spectrum credit lending capability is something they bring to the table.”
Secondly, Capital One knows how to get new customers by marketing the right product. One of the biggest problems with credit cards is the high cost of customer acquisitions, said David True, a partner at Paygility Advisors. Each company would benefit from the other’s customer data to create smarter marketing and selling strategies.
“If you had some of the information Amazon has — what motivates people, what do people buy — you could provide target offers at a lower cost that would help the card business a lot,” True said. “That would be very attractive because that’s the core of Capital One’s business.”
Finally, Amazon currently has a branded credit card issued by Chase. Since Capital One also issues branded cards, Amazon could earn more money on fees and interest by bringing the bank into the company.
If the two came together, Capital One’s credit and lending expertise would probably manifest as an installment lending option at checkout, Moeser suggested.
“There’s a whole host of little guys in that digital installment lending business,” he said. “But no one with real clout, real money. I think that’s where Amazon’s purchase of Capital One could really come to force.”
For example, when online shoppers get to the checkout point, they might see a popup or button from PayPal Credit, formerly named Bill Me Later, or Affirm, that advertises some sort of no-interest or low-interest credit option instead of entering or card details or using stored card information.
That’s a situation that should scare rival retailer Walmart, Moeser said, which has been purchasing companies it probably won’t capitalize on as much as Amazon would on Capital One. Walmart has been on a buying spree to keep up with Amazon. In August, it bought Jet.com for $3.3 billion; in December, it closed its $70 million acquisition of online retailer ShoeBuy; and last week, it completed a $51 million deal to purchase outdoors retailer Moosejaw.
“If Amazon were to underwrite that using Capital One’s acquisition analytics, their full spectrum lending and issuer economics, it would be a killer app that would really have Walmart quaking in its boots,” he said.
Amazon and Capital One already have a relationship. Last year, they teamed up to put the Capital One skill on the Amazon Echo, making the bank the first to integrate with a voice-controlled virtual assistant. By November, Capital One had migrated its core business and customer applications to Amazon’s cloud infrastructure provider, Amazon Web Services, signaling the bank’s commitment to delivering improved and more innovative customer digital experiences.
But other factors need to come together, too. Capital One has some 800 branches and may be a more attractive target if it sold off that consumer business, Moeser said. It has a long-term agreement with payments processor Vantiv, which does the bank’s merchant acquiring, so it would have to take care of that agreement before a deal with Amazon closes. And Capital One is in murky water with regulators over compliance deficiencies they found in the bank’s program that prevents money laundering, which halted their bid for outdoor-gear retailer Cabela’s when seeking regulatory approval.
Why Capital One, or any bank, would allow a deal of this kind to take place is impossible to parse right now, said Simon Taylor, a co-founder of fintech consultancy 11FS who previously worked at Barclays and TSYS.
“Do the bank staff and sharesholders get a good deal? How much does Capital One get to benefit from Amazon’s global muscle and footprint? If 20 percent of Amazon’s global customer base had a Capital One card, would that be wildly profitable? There are simply too many unknowns,” he said.
And where is Richard Fairbank on all this? The credit card giant’s 67-year-old founder and CEO keeps a low profile, as much as he can anyway considering how high-profile he really is in his position. He’s a famously nontraditional, contrarian and innovative leader who said on an earnings call a couple years ago that the bank should “think more like technology companies and maybe a little less like banks.”
It’s unlikely we’ll hear from him anytime soon, but he seems like the type of leader that will mesh well with the likes of Amazon.
While Nigeria has its fair share of financial issues, luxury rules supreme in the city of Lagos, a place where the rich and famous live, work and spend massive amounts of money on designer goods. There are even rumors that a Nobu will be opening at some point.
As an article by Forbes detailed, when Nigeria’s wealthy want to spend, they often turn to the services of Polo Luxury. The Nigeria-headquartered holding company operates across the West Africa region through multiple luxury retail outlets. Polo is the only authorized retailer in the region for brands including Rolex, Hublot, Cartier, Gucci and Dolce & Gabbana.
Polo Limited is the main money maker inside the Polo Luxury entity, specializing in luxury watches, writing instruments and leather goods to a predominantly male audience. In 2014, Polo Avenue was launched, which offers luxury handbags, shoes and luggage by such brands as Versace, Salvatore Ferragamo, Balenciaga, Les Petits Joueurs and Giannico.
In addition to its retail stores in Lagos, the Polo Avenue brand is set to enter into the world of eCommerce with ThePoloAvenue.com. The online shopping platform — the first of its kind in Africa — will launch in March, shipping orders throughout Africa.
“The eCommerce sector is rapidly gaining acceptance as a retail channel for luxury goods in emerging countries — especially Nigeria,” said Jennifer Obayuwana, founder of The Polo Avenue. “Despite the infrastructural limitations, we decided to leverage on eCommerce to address the growing demand for luxury goods. The expectations of the typical African shopper are pretty high. From the latest and hottest luxury designers only found overseas, to our carefully packaged items, everything has been curated to give shoppers the feeling of shopping at an international high-end mall.”
The website will offer a highly editorialized shopping experience, including giving customers their own private concierge shopper who can select items based on their tastes and needs.
Besides selling international luxury brands, the website will also offer sustaining fashion made by Africans, for Africans. “We will serve as a marketplace for some exclusive brands in Nigeria,” said Obayuwana. “Over the past 10 years, African designers have made significant contributions to the global fashion industry. Through our Polo Avenue fashion series, we will offer products from an emerging generation of African designers and offer them the platform to showcase their work, grow their clientele and compete on a global scale.”
Lei Jun launched Xiaomi’s first phone in 2011. Photo credit: Xiaomi.
Chinese gadget manufacturer Xiaomi announced today it’s launching in Pakistan – the world’s sixth-most populous country – after months of speculation and official denials.
Xiaomi has expanded slowly since its 2011 debut in China, focusing mainly on Southeast Asia, India, parts of the Middle East, and Brazil. Its Pakistan entry is the largest since it ventured into Brazil mid-2015.
Xiaomi’s coming to Pakistan through a distribution partnership – as it did in Brazil – with Rocket Internet’s ecommerce marketplace, Daraz, which is present in Pakistan, Bangladesh, Myanmar, and Sri Lanka.
Jack Yung, Xiaomi’s sales director for South Asia, said three models will be available initially – the Mi Max, plus the budget Redmi Note 4 and Redmi 4A. There are also plans to sell the Mi Band 2, but the company is tight-lipped whether the full range of Xiaomi’s products will eventually reach the country.
Precise estimates of Pakistan’s smartphone market aren’t available, but the country imported almost a billion dollars worth of phones in fiscal year 2015. The actual figure is probably much higher, given the sizeable nature of the undocumented gray market in the country – which included some Xiaomi smartphones.
Chinese smartphone brands like Huawei and Oppo have had an official presence in Pakistan for several years. They’ve roped in celebrities and sport personalities to push their products relentlessly – including billboards and primetime spots on national television.
Xiaomi’s presence will be met with a wave of publicity and fanfare but it could be tough to carve out a space, especially if it sticks to selling exclusively online. Most shopping in the country is offline – estimates of the ecommerce sector vary between US$40 million and $50 million – so unless Xiaomi puts its phones and gadgets in retail stores, it might prove hard to make an impact.
Pakistan’s adding one million 3G/4G connections every month. Smartphone imports increased by 124 percent in the first quarter of 2015, according to data from IDC. And large swaths of the population are still offline – so there’s pent-up demand for cheap, sturdy 3G-enabled phones.
With a focus on retailers and sports brands, Brian Cristiano’s agency Bold Worldwide is running a lot of Snapchat geofilter campaigns around games, races and other sporting events for the clients, which total approximately $400,000 in advertising on the platform.
But $400,000 is not enough for Snapchat’s parent company Snap Inc. to assign Bold Worldwide an account manager who can provide product education, advise on best practices and relevant ad opportunities.
“There is lots of confusion on Snapchat,” said Cristiano, CEO for Bold Worldwide. “There are so many buying variables. But when we want to talk to a Snap rep about data, how other brands are finding success and unique ways to advertise on the platform, we can hardly find anyone.”
Cristiano is not alone. Three out of seven media agency executives interviewed for this article think that Snap’s lack of agency-focused reps, various pricing models and buying options may trigger confusion around advertising on the platform. Others (mostly from holding group agencies) think that it is simply a natural evolution for Snap, and maturity takes time.
“It is true that at the moment, there are more options on — and misunderstandings of — Snapchat than other social networks,” said Jared Belsky, president for Dentsu Aegis-owned agency 360i.
Sales teams are structured by vertical and region
As a young company, Snap takes a page from big players like Google, Facebook and Twitter in organizing its sales teams by vertical, and by country or region. A team of salespeople and account managers collaborate with brands in their assigned industry — like automotive, technology and consumer packaged goods — on ad campaigns.
A company spokesperson said that Snap also built a “significant” in-house global agency team over the course of 2016, which works closely with its sales team. The global agency team is growing, with members assigned to large agency holding companies, said the Snap rep.
For instance, 360i has two reps on the Snap agency partner team: One serves on the agency level, the other on the group level, as Snapchat evangelist and educator, said Belsky. Publicis-owned Team One and SapientRazorfish have their own Snap rep, as well.
Interestingly, independent agency RPA also works with both vertical reps and an agencywide one who is client-agnostic, said Mike Dossett, associate director of digital strategy for RPA. Dossett declined to disclose how much his agency spends on Snap.
But Snap’s agency partnership team seems to be operated at a much smaller scale than Facebook, Google and Twitter, according to people interviewed for this story. Many media shops outside of holding groups are not even aware of the Snap agency team’s existence.
That means those agencies have to work through their clients’ reps at Snap when they place a media buy, according to Tom Buontempo, president for KBS’s social media arm Attention.
Buontempo thinks that this type of structure cuts down on agencywide dialogue with Snap, creating an opportunity for misinformation, especially as Snap continues to ramp up ad targeting and asset options.
“I would expect Snap to be investing in an agency relations team, knowing how integral a role agency partners — especially media agencies — play in ad buying for their clients,” he said. “And I would expect Snap to get much more aggressive in hiring an internal team post-IPO, when it has more cash flow and wants to scale up quickly to drive ad growth.”
Snap declined to share if it plans to assign independent shops agency reps going forward.
Snap offers various pricing models and buying options
Currently, Snap only offers three ad units: lenses, geofilters and Snap ads that are full-screen vertical videos. But there are far more than three pricing models and buying options on the platform, which adds another layer of complexity in media buying. While advertisers can purchase Instagram and Facebook ads in a self-serve Facebook dashboard, Snapchat ads require manual customization most of the time.
Sponsored lenses – that reportedly cost $450,000 each per day Sunday through Thursday, $500,000 for Fridays and Saturdays and over $700,000 for holidays or special events – are perhaps the most challenging ad unit. Agencies have to work closely with the Snap team that develops and codes lenses, and the process can take as long as a couple of months before one is released to the market, per RPA’s Dossett.
Geofilters, on the other hand, are static so they can be done in days or weeks. Geofilters that encompass more than 5 million square feet require the involvement of a Snap rep. But if an advertiser purchases less than that, they can use the self-serve platform at Snapchat.com to create a campaign on their own. The Snap team will approve your request between 30 minutes and six hours, according to Bold Worldwide’s Cristiano.
But the self-serve platform is not always handy. If an advertiser wants to run a geofilter from 5 a.m. to 7 p.m., Monday through Friday, they need to do everything from scratch each day; and if they want to run a geofilter both in Chicago and New York City, they can’t do the two cities in the same media buy.
The cost of a geofilter has a massive range, depending on the size of geofence, length of time, location and population density (if there is an ongoing event, for example), explained Cristiano.
“You can run a filter in a small area for $10 if you want to, and then you can easily spend into the hundreds of thousands of dollars based on those variables,” he said.
Compared to lenses and geofilters, Snap ads are the easiest to buy. Advertisers can purchase those vertical video ads either through Snap itself or one of its 14 API partners in an automated fashion. Snap ad CMPs — which approximately run between $20 and $40 — vary depending on where the placement shows up (Discover, Live Stories or between your friends’ snaps) and format (swipe up or standard), according to ad executives.
Aside from those standard buying options, Snap also offers ad packages around major sporting or cultural events like Super Bowl, March Madness and Valentine’s Day, with a minimum spend requirement ($95,000 for NBA and $150,000 for March Madness, for instance). Those packages can include everything from a lens or a geofilter plus a Snap ad in Live Stories or Discover, to just Snap ads or lenses, according to RPA’s Dossett. This mirrors how other social networks and publishers package and sell their high-demand inventory around major cultural moments, he explained.
“Sometimes those may be priced on a flat-fee basis, other times they are on a CPM basis,” Dossett noted.
Of course, advertisers can also strike Snap ad deals directly with Discover publishers if they think contextual alignment are critical and they only want to work with one or two preferred media companies. While Discover partners have the flexibility to sell their inventory at any price, they can only sell their own channel – they may not bundle with other publishers, said a Snap spokesperson.
Snapchat is still Wild West
Agency executives think that having so many ways to buy at such an early stage smacks of a lack of standardization or simplicity, and Snap’s targeting and measurement capabilities are not keeping up with its ad offerings.
Since Snap’s inventory is unique, advertisers can’t compare it with other social networks. For instance, you can’t say Snapchat geofilters are more successful than Facebook ads because they are apples and oranges, said Carly Costantino, senior media director for SapientRazorfish.
For the time being, Snapchat works well for branding as it offers metrics like reach, video views, engagement and completion rate, but not so much for performance marketing, agency executives noted. They cannot measure conversion or drill Snapchat audience down to household income, for instance.
“We really need to reply on its in-house teams to learn the platform,” said Costantino. “Snapchat is so new, so it is not sophisticated in terms of targeting and measurement.”
Amazon has announced its plans to create 15,000 new full-time jobs in Europe this year. It would mean the European-based workforce of the US retail giant will grow from over 50,000 today to more than 65,000 by the end of the year.
Initially, it looked as though last year’s Brexit decision didn’t have much of an impact on how much consumers were spending, with strong sales reported last summer and eventually reaching a 14-year annual high in October.
However, since then, retail sales have continued to shrink, falling by 0.3 percent in January compared to the previous month. According to the Office for National Statistics, the annual rate of growth has also dropped down to 1.5 percent, the smallest expansion in more than three years.
“This is a micro demonstration of what is likely to be happening to the consumer over the whole of 2017,” Alan Clarke, head of European fixed-income strategy at Scotiabank, told WSJ.
Last month, credit company Mastercard said that, while retailers had high hopes U.K. consumers would storm the stores after the holidays to take advantage of steep discounts, pre-Christmas sales overtook sales in January as the preferred time to shop in the U.K. for deals.
Mastercard said 48 percent of people got the bargains in the days right before Christmas compared to 44 percent who took advantage of January sales. What’s more, Brits want better deals, with two-thirds of consumers saying an item has to be discounted by greater than 30 percent to count as a bargain. Twenty-six percent said the item has to be discounted by greater than 50 percent to get them to purchase it, and 37 percent said their expectations about deals are higher than last year.
“The January sales appear to have lost their luster for many shoppers, as sales fatigue has set in,” Mark Barnett, president of Mastercard U.K. and Ireland, said in a press release highlighting the results. “This situation has been heightened by pre-Christmas price cuts. Together with Black Friday and Cyber Monday, they are cannibalizing the Boxing Day and January sales. By the time the New Year discounts hit the shelves, many consumers have already had their fill of bargains.”
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