Peak covid infections combined with peak shutdowns of physical businesses delivered peak e-commerce growth – across the world.
Now, e-commerce revenue growth has slowed or gone negative, and difficulty accessing new capital raisings for e-commerce stores has made life very difficult for many e-commerce operators.
Startup businesses often require multi-year capital support; some require multi-decade capital support until their revenue scale and profitability arrive – many fail.
When capital raisings fall, the result is a merger lift in the overall market and an increase in closing businesses.
Mergers help get two or more businesses to scale faster, often delivering expense and revenue gains – providing a more straightforward path to profitability – sooner.
www.misfitsmarkets.com and www.imperfect.com are two businesses that found a merger was a better strategic outcome.
- Misfits market was valued at $2 billion last year after raising $225 million,
- Imperfect was worth $700 million after raising $95 million in January 2021,
The two businesses’ purposes share a similar view of sustainability – less food waste.
The businesses were founded three years apart (Misfits in 2018 and Imperfect in 2015),
Misfits CEO and founder Abhi Ramesh approached Imperfect – post their review – their team…said, ‘Hey, we agree.
Imperfect justified the merger on the grounds of
- Capital markets are a little bit more challenging these days than they were a year ago,
- We see brand alignment,
- We get mission alignment,
- We see operational similarities and efficiencies,
Today: The two brands will “coexist” in the short term, Ramesh said, and will likely integrate into one brand over the next year.
Operations: will be consolidated more quickly.
- Merge their product assortments, including both companies’ private-label products (Imperfect has 100+ items of its own, and Misfits rolled out its home brand label Odds & Ends in April.)
- Ramesh will serve as CEO – typically, the more prominent business CEO becomes the new group CEO, with Imperfect CEO Dan Park staying on during the transition.
Scale is critical: The merger offers “the revenue scale neither business could achieve as a standalone business without more time and capital. The merger expects to deliver profitability in 2024.
- Consumer value: expectations are there will be lower prices,
- lower free-shipping thresholds,
- plus a further reduction in packaging use,
Ramesh said – that the online grocery space in the US is “fragmented” with Amazon Fresh, Instacart, and Walmart.
In Ireland, Instagram fined $402 million
for breaches of privacy laws around the failure to manage children’s data.
Privacy Laws:
- Ireland’s data privacy regulator tracked business accounts of teenagers on Instagram and saw that the company was making their email addresses and phone numbers publicly available.
- The investigation began in 2020 and focused on accounts run by 13 to 17-year-olds.
- The regulator imposed $402 million fines on Instagram ( Meta) for its data privacy practices.
What is Instagram (Meta) doing now?
Instagram disagrees with the size of the fine. Meta Platforms is planning to appeal the file.
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Thanks for reading,
David
