FDA threatens Amazon / U.S. retailers by e-commerce share / Best Buy posts downbeat Q2 results

Plus, E.L.F. beauty plans to acquire Naturium for $355M

Inside Ecommerce For August 30, 2023

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Hi Insiders! Today, we: Cover the FDA's warning to Amazon CEO Andy Jassy Compare U.S. retailers by e-commerce market share Explore Best Buy's Q2 results And much more! If you find this newsletter helpful, please share it with your friends and colleagues. Thank you! Gregory p/Gregory_Bridgman

1 The U.S. Food and Drug Administration (FDA) threatened Amazon with legal action. The agency claimed that Amazon has been selling "unapproved" drugs on its online marketplace. More: The FDA wrote a letter to Amazon CEO Andy Jassy this month. The letter claimed that Amazon had been selling certain drugs that had no over-the-counter treatment options. The FDA warned that Amazon faces "legal action" if it fails to address the issue. Amazon has received at least three warnings from the FDA over its alleged sale of unapproved drugs in the last 12 months. Is Amazon's growing presence in healthcare a good thing for patients? Join the conversation here!

2 What the numbers say: Amazon accounted for 37.8 percent of the U.S. e-commerce market in June 2022. Walmart came in second place with a 6.3% market share, while Apple had a market share of 3.9%, placing it ahead of eBay. Relevance: The U.S. is the second largest e-commerce market in the world, with online sales expected to reach $1.16T this year. Notably, Apple had the third largest e-commerce market share in the U.S. in June 2022 despite not primarily being an e-commerce firm. Another unexpected e-commerce leader is Best Buy, which surpassed Wayfair and Macy's in June 2022. E-commerce comprised almost one-third of Best Buy's sales that year. What's next:  Best Buy is working to expand its e-commerce presence by relying on its extensive store fleet. The company is reducing the display areas in its stores and increasing the capacity of store backrooms to better support its omnichannel capabilities.

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3 Best Buy's Q2 revenue decreased 7.2% YoY. The retailer said consumers are avoiding electronics purchases. More: Best Buy reported Q2 revenue of $9.6B, down 7.2% YoY. Net earnings fell 10.5% to $274M. Domestic online revenue stood at $2.76B, down 7.1% YoY on a comparable basis. Best Buy is trying to leverage its store fleet to encourage more e-commerce. The company lowered the top end of its full-year revenue forecast from $45.2B to  $43.8B.

4 E.L.F. Beauty agreed to acquire Naturium for $355M. Naturium expects to generate net sales of $90M this year, boosting E.L.F.'s fiscal 2024 by $48M. More: E.L.F was founded in 2004 as one of the first digitally native beauty brands. The company plans to finance its acquisition of Naturium using cash, stock, and a credit facility.  Naturium sells products in the U.S. through Amazon, Target, and on its D2C site. E.L.F plans to widen Naturium's retailer relationships following the merger.

5 Bill Jordan will depart as president of Designer Brands. His departure comes after the retailer faced a series of sales declines in recent quarters. More: Jordan will step down from his roles as president of Designer Brands and Camuto on or before Dec. 1. Jordan's departure comes after Doug Howe's arrival as CEO in April. Designer Brands saw sales fall over 10% in Q1, 2023, and 7.5% in Q4, 2022. The company aims to double sales from its owned brands by 2026. It also seeks to reach $4B in revenue by that time.

6 Authentic Brands Group (ABG) reached a deal for Hunter Boots in China. The company partnered with Baozun Inc. to sell Hunter Boots products in China and South East Asia.  More: Hunter Boots Limited sold its intellectual property to ABG in June.  Hunter will transition to a licensing model through ABG's platform. Baozun acquired a 51% equity interest in Hunter's intellectual property in China and across Southeast Asia. Baozun will design, manufacture, market, and distribute Hunter boots in those regions.

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Gregory Bridgman Writer / Editor Gregory Bridgman is an e-commerce researcher with a PhD. from the University of Cambridge. He also holds a Master of Science from University College London and a Bachelor's degree from the University of Cape Town.  Please follow me on Twitter or email me at gregory@inside.com. This newsletter was edited by Aaron Crutchfield

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