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Every week, The Current rounds up the latest funding and M&A news in Dealboard. As 2022 draws to a close, let's look back at the deals that we're most likely to be recalling for a long time to come. Whether it was due to size or impact, these were the moves that made waves in the industry. Throughout, there are plenty of opportunities to learn from entrepreneurs who exited, and get a glimpse at where the big platforms see commerce heading next.
Check out the top ecommerce deals of 2022:
Kroger x Albertsons merger
The word mega-merger doesn’t often live up to its billing, but this one qualifies. The top two pure-play US grocers announced plans to come together in October in a deal that would see Kroger acquire Albertsons for $24.6 billion. It will combine physical footprints of two grocers that already have a nationwide reach, as well as data from a combined 85 million households to fuel retail media and personalization. This is not a done deal, as there are regulatory hurdles to clear before the deal closes and the companies will likely have to give up some stores. But the move in and of itself signals how the grocery market is being reshaped by big players like Walmart, Amazon and Costco, as well as digital and delivery offerings that saw use accelerate in the pandemic.
Liquid Death’s $700M valuation
Image: Liquid Death
The Liquid Death story was already becoming a touchstone of brand building lore, as many looked to study the strategy and tactics that made canned water one part craft beer, one part punk rock. The company’s living legend was only confirmed further by a $70 million Series D fundraise in October that valued it at a whopping $700 million. Will it be the next startup brand to IPO?
Hero Cosmetics acquired
Ju Rhyu and Hero Cosmetics showed the way to launch a brand on Amazon, and boostrap to acquisition in five years. On the back of the runaway popularity of The Mighty Patch, the acne and skincare brand was acquired by Church & Dwight for $630 million in a deal announced in September. In a year where the direct-to-consumer model came under pressure from rising CACs and privacy changes, Hero’s story showed another path, and provided hope to disruption-minded founders everywhere in the process. The brand's story is already the subject of Twitter threads across the platform.
Resale was among the hottest retail trends of 2022, as climate concerns and logistics imperatives led brands and retailers to stand up and expand channels to make secondhand products part of their primary offerings. The movement in the market included deal activity among the existing players. Poshmark was acquired by resale South Korean internet giant Naver in an October deal valued at $1.2 billion. A few weeks later, resale platform manager GOAT Group added men’s fashion with the acquisition of Grailed. It’s a reminder of a truism about emerging market areas: Growth can bring consolidation. Is more coming in resale?
Amazon acquires the RoombaA Roomba in action. (Photo via iRobot)
While the theme of most Amazon news tended toward correction and cutback this year, the company was still making plenty of moves to grow in 2022. On the commerce side, nowhere was that more visible than in the acquisition of Roomba maker iRobot. The $1.7 billion deal was Amazon’s fourth-largest acquisition ever. As always with Amazon, this wasn’t only about adding a new product to the portfolio; it was also a way to get closer to the customer. The robot vacuum gives Amazon a window into the home through data. How will it use it?
Shopify's app marketplace offers independent entrepreneurs and developers space to build software that powers direct-to-consumer commerce right alongside the company. Shopify has extended this unique role as ecosystem leader into making investments and acquiring software that it can add to its offerings. That role was prominently on view in two of the deals that turned industry heads this year. To speed expansion in logistics and delivery, Shopify acquired Deliverr for $1.2 billion in a May move that was widely viewed as a counterpoint to Amazon’s then-recent launch of Buy With Prime. Then, in August, Shopify made a $100 million investment in Klaviyo that gave the email and SMS marketing automation software company recommended email partner status with the biggest merchants on its platform. These were just a couple of the highlights in an active year. With Wall Street veteran Jeff Hoffmeister now onboard as CFO, it leaves us pondering what’s on Shopify’s dealboard heading into 2023.
Pinterest x The Yes
Sometimes, an acquisition is exhibit A in where a company is heading. That was true of Pinterest this year. In June, the visual discovery-based social platform acquired The Yes, a fashion-focused shopping platform that uses AI to provide users with a personalized feed. This was quickly followed by the announcement of former Google commerce chief Bill Reddy as the Pinterest's new CEO, and the rollout of a series of new features. With The Yes cofounder and leading ecommerce mind Julie Bornstein leading shopping efforts, Pinterest is poised to integrate shopping more deeply into the experience at a time when platforms are keen to become the first to crack the social commerce code. We'll hope 2023 brings a look at what they're building.
Of the many categories where disruptive brands made an impact, intimates stood out. DTC brands saw an opening to market directly to women, and offer digital shopping experiences while incumbents were still at the mall. This year saw the disruptor and the incumbent come together, as Victoria’s Secret acquired Adore Me for $400 million in November. Victoria’s Secret has aggressively added new products to reinvent itself, but the Adore Me acquisition figures to expand capabilities like home try-on and personalization that could change how the brand reaches consumers, as well. This deal came after fellow disruptor ThirdLove bought Kit Undergarments, offering a sign that even the newer brands have to stay fresh to reach Gen Z.
Instacart’s IPO was the landmark deal of 2022 that wasn’t, as the grocery tech company confidentially filed for a debut on the public markets back in May, then delayed the offering by the end of the year amid a broader market slowdown. Yet Instacart made plenty of acquisitions in the meantime. There were deals in September to bring on pricing and promotions platform Eversight and independent grocery ecommerce platform Rosie. Plus, it acquired smart cart maker Caper AI in fall 2021. In 2023, one question for the company will be how these new teams and technologies integrate with Instacart's existing offerings.
Farfetch building luxury destinationFarfetch CEO José Neves and NMG CEO Geoffroy van Raemdonck. (Courtesy photo)
Farfetch hasn’t been shy about its ambitions to bring luxury into the ecommerce era. Status requires spending, and two deals this year show that Farfetch was willing to back up the talk with significant checks. In April, it invested $200 million into Neiman Marcus Group to bring its platform prowess to the department store retailer. The potential game-changing move came over the summer, when it acquired a sizable stake in Yoox Net-a-Porter that could see it own the fellow platform in the next five years. Johann Rupert, chairman of former Yoox owner Richemont laid out the goal ahead succinctly: “Building an independent, neutral online platform for the luxury industry that would be highly attractive to both luxury brands and their discerning clientele.”
eBay adds to the collection
Look at eBay’s strategy roadmap, and there’s a 2022 deal to pair with many of the planks. Pop culture? It now has a 25% stake in Funko. Auto parts? It now owns myFitment. Collectibles? It acquired trading card marketplace TCGPlayer. NFTs? It brought on the marketplace KnownOrigin. eBay has proven very acquisitive over the years, so we don’t expect this wave to taper off.
Trending in Retail Channels
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.