BREAKING AMAZON NEWS: Amazon this week announced one of the biggest strategy shifts in the history of its independent vendor partnership program. Amazon plans to lower COGS and operational complexity by gearing its wholesale supply strategy towards partnerships larger enterprise companies like Proctor and Gamble and Sony and more direct relationships with manufacturers, versus purchasing from many smaller suppliers. While Amazon has stated that it reviews relationships individually and will not be culling independent vendors en masse, it is generally anticipated that suppliers with less than $10 million in product sales on Amazon will be cut from the e-commerce giant’s wholesale list. This announcement follows concerns which arose as recently as March, when Amazon temporarily paused purchases under claims of checking for counterfeit items.
One of the most challenging aspects of this new strategy will be the short notice that Amazon provides to suppliers before it stops purchases—meaning this change has the potential to critically hurt holiday shopping season sales if left mismanaged.
Existing vendors now face difficult stock decisions based on this limited information at a time when historically many look to boost stock levels ahead of the all-important holiday shopping seasons. Experts warn that without a multi-channel sales strategy, vendors may be left holding stock and scrambling towards annual targets in a ‘worst case’ scenario.
In digital marketing news, Google will index all new websites using mobile-first methods beginning July 1, 2019. Websites launched or indexing after July 1 must be fluidly navigable on mobile in order to rank well, meaning webmasters should prioritize how pages render on mobile phones versus desktop. Existing sites which have not yet migrated to mobile-first indexing will remain indexed desktop-first, while sites which have already moved to mobile-first (over 50% of sites indexed by Google) will continue to be weighted on mobile performance.
The PaaS world this week saw CrowdStrike, a leading cloud-native endpoint protection platform, set the terms for its Nasdaq IPO to sell 18 million shares at a PPS of $19 – $23. Taken at the midpoint of this range, CrowdStrike would raise $378 million listing at a $4 billion valuation. As the second cybersecurity IPO in 2019, CrowdStrike follows a path laid by Zscaler, Carbon Black and Tenable in 2018, pointing to the continuing strength of the industry.
In new listings, FE is pleased to present a very well-known Nationwide Property Rental Platform business at the $1.74M price point. The platform boasts a market leading brand in a rapidly-growing space, 13 years of operational history, revenue expansion at a c.18.4% CAGR over the 2014 to 2018 period, lucrative partnerships with national sporting bodies, a clear value proposition with a 95% customer satisfaction rating and highly capable and autonomous team staying on post-sale. If you are interested in this business, please follow the link to request a prospectus.
In events news, we are looking forward to sponsoring SaaStock East Coast next week as they gather SaaS founders, executives and investors on June 4-5 to share what they have learned about growing and scaling their SaaS. Founder Thomas Smale will be heading to SaaSociety before the main event in a mastermind with fellow founders and experts in the industry, but make sure to set up a meeting if you will be in attendance!
Continue reading below for more on Amazon’s vendor strategy shift, Google’s mobile-first indexing for new sites and CrowdStrike’s IPO terms.
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In the News…
Amazon to Purchase from Bigger Suppliers
Amazon is implementing one of the largest shifts in its e-commerce strategy since its founding.
In the coming months, Amazon will stop buying in bulk from smaller suppliers and retailers, and will instead focus on cutting costs and shifting focus to wholesale purchasing from major retailers such as Lego and Sony. Smaller “mom-and-pop” retailers will likely have to win sales on a customer to customer basis. In general, vendors bringing in a revenue of less than $10 million in product sales per year on the site will no longer receive wholesale orders from Amazon. This likely stems from Amazon’s move to compete with stores like Walmart, Target, and Best Buy, and also benefits the distribution giant by ensuring its warehouses won’t be filled with unsold merchandise from over-ordered bulk purchases.
Vendors with less than $10 million in product sales are advised to seek new channels ahead of Q4.
Google Moves to Mobile-First Indexing for New Sites
Google announced this week that beginning July 1, all new websites will be automatically indexed and ranked using mobile crawling.
Mobile-first indexing will prioritize how website pages look and perform on mobile devices versus on desktops, and will serve as the basis by which Google ranks all new websites. While desktop-first is the historical default for indexing, already upwards of 50% of what Google indexes is done on a mobile-first model. This implementation beginning on July 1 will only apply to new websites as well as continuing to index already-migrated websites via mobile first. Of moving existing websites to mobile-first, Google stated, “For older websites, we’ll continue monitoring and evaluating pages for their readiness for mobile first indexing, and will notify them through Search Console once they’re seen as being ready.”
In contrast to how old websites got notifications when moved over, new sites will not receive these notifications as mobile-first indexing will be the new norm.
CrowdStrike Sets IPO Terms
CrowdStrike is in the midst of preparing for its Nasdaq initial public offering, charted to raise $378 million with a valuation over $4 billion.
CrowdStrike is known for its cloud-based cybersecurity technology and has raised $480 million in venture capital funds to date. Following revenue growth of 110% up to $250 million in the year ending January 31, 2019, Cloudstrike’s revenues in the subsequent quarter continued steadily increasing c.100% to between $93.6 and $95.7 million. The company released they are planning to trade under the ticker symbol “CRWD”.
CrowdStrike is just one of many heavily valued ventured-backed startups this year, following companies such as Uber, Lyft, Pinterest, and Zoom.
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