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A Yoiko TKO? "Punch-Out!!"
Arino opens the show by cracking up — director Urakawa's weird countdown to recording time gave him the giggles. Anyway, let's get down to business: this episode's challenge is Nintendo's classic NES/Famicom game, Punch-Out!!
It's kind of a special challenge for the show, since Punch-Out!! only came out in Japan as a prize for those who placed high in a Famicom Golf tournament. So, while many Americans know Punch-Out!!, it's not quite on the same level to the Japanese (though, perhaps not coincidentally, the new Wii version of Punch-Out!! came out just a bit before this episode aired). It also explains why the cartridge is gold-plated.
Arino steps into the ring, and of course begins by fighting Glass Joe. Since he has no idea how to play, he begins by making Little Mac dodge left and right repeatedly, and pushes buttons until he finally starts punching Joe. Eventually Joe steps back, and lands his first power punch on Arino. After dodging the next one, Arino lands a few more successive punches, and eventually knocks Joe down.
Joe quickly stands back up, though Arino continues to land jabs. Luckily, just before he's knocked down himself, the bell rings — three minutes are up, and Round 2 is coming up. Arino keeps earning stars for landing sweet punches, but he has no idea how they work yet. Eventually, he knocks Joe down again, though it's not enough for a TKO (where he must knock down an opponent three times in one round).
We move to Round 3, where Glass Joe again walks right into Arino's gloves, and before long, he gets a TKO before the final round ends! And then, it's on to the next opponent: Von Kaiser. Kaiser's trickier, ducking and being a little faster on his feet. Arino almost loses it, but he's the first one to get a knockdown… until Kaiser retaliates and knocks down Arino mere seconds later.
After the bell rings to end the round (just before Kaiser lands another big hit!), Arino is downed more often, and after failling to dodge Kaiser enough times, Arino finally loses to a TKO. He continues from the Kaiser fight, and finally starts to learn the error of his ways. A dozen punches later, Kaiser is finally down for good.
Now it's onto the Minor Circuit Title Bout, against Piston Honda! Honda's the largest fighter yet, and also the fastest yet. Arino gets a few punches in, but then Honda steps back, hops back and forth, then unleashes a flurry of hard-hitters. Arino's taken completely off-guard, and he takes almost every punch. Honda finishes with an uppercut, and Arino, of course, goes right down.
Once he gets back up, Arino isn't much more keen as to what Honda will do. His next "Piston Rush" (move named by Arino) still fools him, though this time, he's saved by the bell. Two more failures and Arino is served with a TKO. And, unfortunately, he ranks down and is forced to continue at Von Kaiser. Even Kaiser gets the best of Arino, and he receives another Game Over.
Fast forward to Honda again, and Arino's still trying to avoid the Rush. After getting another star, he finally figures out how to use it — it activates a super uppercut of his own, and all he had to do was push every button until he found the right one: Start. That uppercut helps him knock down Honda.
Another knockdown in Round 2, but it's not the end. Honda gets ready for another Rush but Arino is equally ready: finally, he learns the timing of Honda's punches and blocks every one… well, except for the finishing uppercut. We go into Round 3, and again Arino succesfully dodges the punches, including the uppercut, and gives Honda a taste of his own medicine with a star uppercut! Honda falls, but quickly gets back up, and his life bar fills to the rim. But Arino lands another star punch, and that finally does it. Honda is KO'd for good, and Arino wins the title. As the intermission plays, he even gets a password that he subsequently writes down.
The next circuit starts with the nimble Don Flamenco (who, Arino points out, looks like good ol' AP Tojima). He practically begs Arino to punch him, and so when he does, he retaliates immediately. Arino is repeatedly knocked down this way, and eventually loses to a TKO. Fortunately, the password is already entered when he gets a Game Over, so he just jumps right back into the action.
Still, it's a lot of work. Arino is knocked down repeatedly, and fails to get up sometimes, winning Flamenco a KO. It's only through persistence that Arino finally whacks Flamenco enough times to earn a KO himself, and then move on to the next fight.
And this one is a doozy. Arino must now face King Hippo, the barking fatman of Hippo Island. Hippo's defense is seemingly impenetrable, and his offense swift and relentless. Each punch knocks Arino down immediately, and he soon loses to a TKO. Subsequent tries aren't much better, and soon it's Game Over time.
After losing over a dozen times, AD Ito walks over with some assistance, in the form of a visual strategy guide she drew. It's a simple four-panel comic of sorts that shows Mac hitting Hippo as his mouth is open.
Arino gives it a try. When Hippo is struck with his mouth open, his shorts drop. Arino doesn't really notice, though, and continues to punch normally as Hippo consistently blocks. Next time, though, it finally clicks: Arino lands low punches to Hippo's exposed belly, which really hurts the rotund royal. Unfortunately, that doesn't end the round, and Hippo manages to stay awake and finish off Arino with a TKO.
Just as Arino gets back in the groove and starts hitting Hippo's exposed belly again, the clock strikes three, and the round is over! Later, Arino "earns" himself another KO, and things start looking dire, despite Arino laughing it off. Finally, though, Arino hits the belly enough that Hippo finally stumbles and falls over. In fact, that's more than enough to completely KO the big guy and win the match! Took long enough.
The next opponent is Great Tiger, who seems to be a regular fighter in the first round, but by the second, he throws teleportation into the mix. His power move involves warping around the ring in a circle and delivering high-speed blows once he reaches Arino. As expected, Arino is totally surprised, and falls easily to a quick KO. Aaaand Game Over. Unfortunately, he can only continue from Don Flamenco, so it takes a little time to get back to Tiger.
When Arino does make it back, he's ready for Tiger's teleporting, and succesfully blocks almost all of his punches. After that's done, Tiger gets dizzy and stops, but Arino doesn't realize he can hit! And just then, the bell rings! By Round 2, Arino finally nails Tiger, and again in Round 3, though of course, he gets up, and Arino loses once more.
On the next try, on Round 3 and with just a little bit of time left, Arino gets up after a knockdown and retaliates, knocking down Tiger with just 20 seconds to go in the round… and getting a TKO!
Next is the Title Bout, and Arino faces the gargantuan Bald Bull. Bull spends little time playing around and quickly moves into his "Bull Charge," where he dashes down the ring and attempts a powerful uppercut. Arino dodges the hit, but Bull just keeps charging until he lands a hit. Arino lets the clock run out, and then in the next round, he falls instantly to a regular punch.
A couple of attempts later, Arino finally figures it out: hit Bull with a body blow just before he gets too close. Doing so knocks Bull down, but of course, the big Turk gets up in just a few seconds, and once again sends Arino to the mat in a TKO, and gets him another Game Over.
The TKOs keep coming, and Arino is getting visibly weathered. Arino returns to Bull for the 29th time, and is ready to punch him at the end of a Bull Charge when, once again, the bell rings at the exact split second he would have hit. And when Arino tries a star punch next time, Bull actually dodges it. It all leads to another KO.
Arino puts on a cold pad — oops, it's the kid's size one. Well, no big deal; it does the same thing. With chilled forehead, he continues to fight, and finally, on the 35th attempt, Arino succesfully hits Bull after two Bull Charges, which makes for a total of three in the whole match — a TKO! Another title is awarded, and Arino gets a new password.
But for the World Circuit, Piston Honda returns! Honda is a little faster than last time, but mostly the same. Still, the time away must have led to some short-term memory loss for Arino, because he still falls to him as easily as before. After a few attempts, though, Arino gets more knockdowns, but Honda's knockdowns are pretty powerful, forcing Arino to really mash the buttons. It still doesn't really help.
On the next attempt, though, the third round ends with no knockouts, so the match is decided. And it's decided in Arino's favor! A lucky win, in some ways. No time to celebrate, though; it's onto the next bout.
Now, Arino faces Soda Popinski, another gigantic brawler. He's speedy as heck, though, and keeps winning TKO after TKO. Arino's at a loss. And of course, a Game Over leads him back to Piston Honda. Arino wins by decision again, but then it's back to the hell of the Popinski fight.
Just then, AD Emoto appears, holding a chair and draped with a towel. He offers to be Arino's second, offering advice whenever he wants, just by going over to the chair. OK, then — Arino doens't even get back to the game, he just goes right over to the chair. Emoto gives the best advice he can for the start of the fight, and then Arino goes back to the game.
Popinski continues to slaughter Arino, and Arino gets another Game Over, being forced to work his way back through Honda. After several TKOs, AD Emoto speaks up again, and asks if he can give the game a shot, while Arino takes his place as second.
The two men trade places, and Emoto tries his hand at Popinski. Emoto starts well, deftly dodging Popinski's uppercuts and counteringm with a series of his own. But soon he chokes, and Popinski gets the upper hand, downing Emoto. At that point, Arino literally throws in the towel.
Emoto doesn't stop, though. He loses again, and Arino throws the towel again. The AD is wrecked; his timing ruined. Arino even taunts him by laughing like Popinski! Still refusing to give up, Emoto asks to try Piston Honda.
After nothing happens in the first round against Honda, Emoto begrudgingly sits down in the other chair. Arino does his best coach impression by shaking some confidence into the AD. Emoto goes back to the game, but still only gets past round 2 with both he and Honda standing.
By now, both men are at a loss, but Emoto is called back to the ring. Eventually, he loses to Honda by KO. It's a good time to change players, so Arino returns to his original seat. Arino beats Honda by decision again, and returns to Popinski. Needless to say, little has changed, and Popinski still wins by brute force.
Arino is then given a towel of a different kind — the clock. He's then asked if he wants to give up or– "That!" Says Arino in reponse. Well, he'll give up here, but he wonders if he should take this game to the 24-hour special, as well. So it shall be: a live rematch with Soda Popinski!
Another selection from the Tower of Druaga book, this time correlating the unpredictable movement of Slimes to one's journey through life.
Game Center CX News
Arino and the staff have a meeting regarding the upcoming 24-hour special, especially in regards to what games will be played. Arino thinks of some "favorites" from earlier seasons, including Astro Robo SASA and Adventure Island, as well as Genpei Touma Den from this season.
Howard & Nester


Thank you for visiting us at OI 2018 !
We would like to thank you for visiting us in London, at OI 2018. We were delighted to discuss with you and introduce our new products, and especially our new range of sensors: WiSens.
We would like to thank you for visiting us in London, at OI 2018.
We were delighted to discuss with you and introduce our new products, and especially our new range of sensors: WiSens.


Check out these fun gaming sites.
Play Bejeweled on Dig Bejeweled - Try the classic matching game.
Funzola Fun Games - A fun gaming portal with the best games around.
Scary Games - The scariest games you have ever played!
Truck Games - Lots of truck and monster truck games.
Othello - The classic game of reversi (Othello).


Thank you for joining us at the Transferring the Farm Workshop in Berlin, VT. If you were not able to make it, we look forwarding to connecting with you and supporting your planning efforts!
There is a lot to consider in farm transfer planning, and we couldn't cover it all in one day. But you are not alone, and there are many resources that can continue to help you on your way.
Please complete this form to initiate, and we'll schedule a time that is convenient to you. You can also call us at 603-357-1600.
We can also help you determine if your need for longer term, in-depth support makes you eligible for the VT Farm Viability Program where you can access ongoing farm succession advising.
We thank our funders for their support. Funding provided by Vermont Housing & Conservation Board and Land For Good grants from the USDA National Institute of Food and Agriculture through its Beginning Farmer and Rancher Development Program.


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redpajama_set_name: RedPajamaGithub


What the Heck Bird is This?
We were rained out on Sunday afternoon so we enjoyed a Photoshop session during which everyone picked their favorite Red Knot image from Sunday morning and optimized it. I was available for questions, guidance, and comments. The expected Northwest winds on Monday morning made photography very difficult but everyone persevered and came up with a few keepers. We tried a new spot, Heustis Beach (named after my friend/assistant Noel Heustis who discovered it). We had many chances with both Laughing Gull and Royal Tern but with wind against sun make a really good image was quite difficult. Our best situations were with some Ruddy Turnstones feeding along a seaweed-covered wall.
As always, lunch at the Neptune Grill was superb. During our long, post-lunch Photoshop session I entertained lots of questions dealing with cropping options and NIK Color EFEX Pro.
I have pretty much decided to have my inguinal hernia surgically repaired on May 3, the Thursday after the Gatorland IPT.
Today makes two hundred sixty-one days in a row with a new educational blog post! This one took less than an hour to prepare including the time spent on the image optimization. With all of my upcoming free time (or not…), the plan right now is to try to break the current record streak of 480 … Good health and good internet connections and my continuing insanity willing.
Muhammad Arif is offering a used Canon 300mm f/4L IS USM lens in near-mint condition for $719. The sale includes the front and rear lens caps, the tough fabric lens case, the tripod collar, the original product box with the CDs, a LensCoat but for the two rear sections, and insured ground shipping by major courier to US addresses only is also included. Your item will not ship until your check clears unless other arrangements are made.
Please contact Muhammad via e-mail.
Several folks on the Gatorland IPT used the Booking.Com link below and got great rates and saved a handsome $25.00 in the process. If you too would like to give Booking.Com a shot, click here and to earn a $25 reward on your first booking. Thanks to the many who have already tried and used this great service.
Center Group (grp)/Shutter button AF was active at the moment of exposure. The array was on the bird's neck, right on the same plane as the bird's eye.
The bird is much larger than any Snowy Egret, and much smaller and slimmer than any Great Blue Heron. It is likely smaller than a Great Egret (though we did not see it in direct comparison this year). It does not exhibit the drunken sailor feeding style that characterizes Reddish Egret. If you have any thoughts as to what it is, please do share. One thing that I do know is that it was a thrill to see it again this year as it is both unique and beautiful.
Knowing me and my style, which of today's featured images did I create first?
Which of today's two featured images do you like best? Please leave a comment and let us know why you made your choice. I will share my clear favorite with you in a future blog post.
All IPTs include an introductory briefing before the IPT begins so you know what to expect, frequent in-the-field instruction and guidance (priceless), image editing and small group Photoshop instruction during and after lunch. Breakfasts are on your own so that we can get in the field early. Lunches are on me. Dinners are on your own as well so that we can get to bed as the days in spring will be long.
Rides with the leader are available on a limited basis for $50/day.
To register for an IPT call Jim or Jen in the office at 863-692-0906 from Monday morning through Friday lunch with your credit card in hand to leave your $500 non-refundable deposit. Balances may not be paid by credit card so you will be asked to send a check for your balance along with the signed paperwork that you will find here.
Tame birds in breeding plumage and heron and egret chicks are great fun.
Gatorland IPT #2. Sunrise: 6:48am. Sunset: 7:58pm.
3 1/2 DAYs: THURS 26 APR through and including the morning of SUN 29 APR. $1599. Limit 5 photographers.
(2 1/2 DAY option) FRI 27 APR through and including the morning of SUN 29 APR. $1199.
Must purchase Gatorland Photographers Pass. Click here for details. All early entry. Late stays Thursday, Friday and Saturday. Gatorland IPT #2 should have lots of chicks, and lots of birds in breeding plumage. We will get to photograph Great Egret, Snowy Egret, Tricolored Heron, and Wood Stork. The Cattle Egrets in full breeding plumage will be present in good numbers. Learn my Gatorland strategy, to get the right exposure, flight photography techniques, my secret Gatorland spots, how to see the best situations (nobody is better at that than me), and how to make great images in extremely cluttered situations.
23 comments to What the Heck Bird is This?
I don't have a chance to observe the birds you are describing but I have not stopped digging to get an answer.
I understand your comment that it could not possibly be a Little Blue Heron. From a size perspective, it is too small to be a Great Blue Heron and more like the size of a Reddish Egret.
I also believe you mentioned it does not exhibit the drunken sailor feeding style of the Reddish Egret. I found a research paper "Plumage Dimorphism in the Reddish Egret: Does Plumage Coloration Influence Foraging Habitat Use and Tactics?" that assessed feeding style differences between white and dark morph Reddish Egrets. The study's findings suggest that the white morph is more likely to stand and wait, while the darker morph is more likely to walk and run. This might explain what you are seeing.
On the subject of the dark bill, I reviewed portions of Advanced Birding by The National Audubon Society. Although the bill of the Reddish Egret is characterized by an abrupt line separating the pink and black, this may not be present in immatures and some winter adults where the bill may be be entirely dark.
On the question of feather colour, I explored the possibility of a Reddish Egret intermediate morph. I recently observed large numbers of Snow Geese and there were clearly intermediates between the light and dark morphs. On the site for neotropical birds from Cornell, I reviewed the Reddish Egret and they advise that there are occasionally pied or intermediate birds.
So, for what it's worth and hopefully more helpful than my previous suggestion, it might be an intermediate morph of a Reddish Egret in winter plumage.
Lots of good research but your conclusion does not make a lot of sense to me as it does not take into account the ultramarine lores that match Great Blue Heron (actually they match the color of white morph GBH perfectly.
Interesting stuff about white morph REEGs being more likely to stand and wait but I can assure you that the white morph REEGs do the drunken sailor dance.
ps: a single feather from the bird for DNA testing would be the only way to get to a definitive answer. But speculating is fun.
Adding: The thing, I think, that confuses people and keeps them throwing great egret in the mix is that the reddish egret half of the equation is white morph. So it's GBHE x REEG (white morph).
Surely the coolest bird I've seen in a long time. Keep on batting away at those ID possibilities!
Hey Artie! Great to catch up with your doin's. I started blogging by doing it 7 days a week. Now, I'm lucky to get one post up weekly. But hey. It's a 13 year streak. Here's to you!
Just so everyone knows…I named that bird Artie long ago! I think he comes to that name now! Beautiful rare bird for sure.
Hey Arthur, I would say you created the clean graphic head portrait first. Then the whole bird second. My favorite is image #1 really like the full view of this unique bird. Have fun out there.
Good luck with the hernia Op. Best wishes for a speedy recovery.
Good move on fixing the hernia. All you would need is one not-thinking heavy lift to be the beginning of the longest day of your life.
Hey Artie, your mystery bird is a hybrid Great Egret x Great Blue Heron. I have seen reports identifying it as such. Quite interesting, maybe a trip down to find it is in the making. Thank you for sharing.
I have seen those reports and been in contact with Cornell. As the bird is smaller than a Great Egret and the plumage is reminiscent of Reddish Egret I am not convinced. The only way to tell for sure would be to grab a feather (or some blood) and do a DNA test. Here is another possibility: a similar bid was seen 5 years ago. As the bird seen last year was a juvenile it is possible that this is the offspring of a hybrid with genes from all three species.
As always, I do not recommend believing everything that you read on the internet.
Art, I believe the consensus is that this a Great Blue Heron x Great Egret and has been seen at Fort De Soto for at least a couple of years.
Hi Derek, Please see my reply to Joseph above.
Any chance this is a leucistic GBH? I ask only because we have a leucistic hawk up our way I have not seen yet, and it is very pale. My stepdaughter has a leucistic blackbird coming to her feeder and it is splotchy. So I have leucistic birds on the brain. I agree, beautiful! I like the full bird image only because it shows all the detail and I am curious!
I think this might be a juvenile Little Blue Heron. Both images complement each other and highlight different aspects of the bird. In one, it's the transition of the plumage colour from white to dark as the bird matures. In the other, it's the blue and black of the bill and surrounding head area. I'm guessing you started with the full bird image followed by tighter crops.
Although both are impressive, I prefer the full bird image. It gives more context and is a stronger composition. I like the dark bill-legs-beach objects relationship. It suggests a triangle and keeps my eyes on the image as they move back and forth to the different points of the triangle. Another triangle is suggested by the lighter neck, upper legs and tail feathers. With the tighter crop, I focus on the eye, and then follow the bill out of the image.
Would guess the distant is first and the closer and lower with sky background second. Both are great but I like the closer better as it really draws your attention to the beautiful lores and the matching background.
Hernia op. , should it be in May and not April 3 as indicated in the above note.
Thanks. I'd hate to have missed it!


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OPINION, Editorial: Cuts aren't only means to balance state budget
This is an editorial from the Savannah Morning News.
As state lawmakers packed for their return to the Georgia Capitol, they no doubt stuffed some cutting tools into their luggage and car trunks.
Some brought scalpels; others chainsaws.
Here's hoping enough legislators smuggle in logic and reason as well.
The Georgia General Assembly's top priority upon resumption of the 2020 legislative session is to pass a budget for the next fiscal year, which starts July 1. The COVID-19 pandemic has turned the proposed budget, passed by the Georgia House in March and based on pre-coronavirus revenue projections, into scrap paper.
The latest outlook shows a $3 billion shortfall. All indications are the Legislature's budget wonks intend to fill that hole by gutting state agencies across the board -- with no exceptions. The Department of Public Health and Department of Labor, two agencies feeling profound coronavirus-related strain, face 11% cuts. So does K-12 education and the university system.
The plan calls for hiring freezes; reduced support for select programs and grants; the shuttering of offices and other facilities; and furloughs, furloughs and more furloughs.
Leaning government sounds like a prudent approach in this situation. But there's a fine line between lean and frail, and these sorts of cuts threaten to put Georgians at risk. A coalition of 30-plus Georgia business and nonprofit organizations voiced those concerns in a letter to Gov. Brian Kemp and legislators last week.
"Georgia cannot cut its way to prosperity: that much has been made clear in the aftermath of the Great Recession and in the midst of the global pandemic," the letter stated. "Deep cuts will disproportionately harm communities of color and rural communities and curb the state's ability to recover."
Better, then, to consider a more holistic strategy. Georgia House Speaker David Ralston is right when he says, "An economic recession is not the time to ask people to give the state more money." An income tax hike is untenable.
State legislators could instead impose new or expanded sin taxes on cigarettes, vaping products and online sports betting. Georgia's cigarette tax is among the lowest in the country, and the state doesn't collect a tariff on vaping goods. Online sports betting would have to be legalized before the state could tax it, but unlike other forms of gambling, the Legislature could take action without a voter referendum, or so some legal experts believe.
Lawmakers could also roll back some of the state's more lucrative tax breaks used to lure new business, even if only temporarily. Then there's a loophole in the state tax code that allows some high-wealth taxpayers who itemize to pay less on their income taxes.
From there, the budget writers could re-evaluate agency cuts and also consider tapping the rainy-day fund. Don't drain the reserve, but do dip into it. It is raining, after all.
Other innovative solutions are waiting to be discovered as well. The remaining 11 days of the session are the perfect time for state legislators to demonstrate their leadership and ingenuity.
Georgians will be watching. And remember, this is an election year.
Adam Van Brimmer is the editorial page editor. Contact him at 912-652-0343 or adam.vanbrimmer@savannahnow.com.

redpajama_set_name: RedPajamaCommonCrawl


Join Ocho, Archonix, Dead Simon, and Kerilar on the Worlds Twitch channel for our next RIFT livestream! This week we'll be giving a final overview of RIFT 3.4: Into the Wilds! RIFT Livestream Twitch Channel: http://www.twitch.tv/trionworlds Start Time: Friday, October 2 at 3:30 PM PDT (GMT-7) Duration: 45 minutes See you all there!


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Q: How does a piston push on an enclosed, in-compressible liquid?
If I exerted a force $ F_1 $ onto an enclosed, in-compressible fluid then Pascal states that the change in the pressure that the fluid exerts on the container is distributed evenly at all points in the fluid.
According to my understanding, the piston that I use to exert $ F_1 $ never moves because the fluid exerts an equal pressure on the piston. So the piston on the other side would never move because no fluid is displaced? There is clearly a hole in my understanding of Pascal's law.

A: If both pistons are free, a strong enough pressure on piston 1 will create a movement that will move both pistons, lowering one and lifting the other.
If piston 2 is fixed, a force on piston 1 will increase the fluid pressure, but it will not move.
The fact the the fluid exerts a pressure on the piston does not means it cannot move. The same thing happens when you push into an object, it will exert an opposite force into your hand, but it will move if the object is free, and you will not if you are anchored by friction into the ground.

redpajama_set_name: RedPajamaStackExchange


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Category: Stocks
Posted on September 5, 2018 April 4, 2019 by ld_investments
Malayan United Industries (MUI Group): An Asset Rich, Undervalued Opportunity?
Wielding a collection of renowned brands such as Laura Ashley and Metrojaya in the retail sector, Corus Hotels in the hospitality sector, Kandos and Tudor in the food sector, and Bandar Springhill in the property development sector, could asset-rich Malaysian conglomerate Malayan United Industries prove to be a diamond in the rough?
Malayan United Industries (KLSE:MUIIND) once a corporate powerhouse has under-performed over the past several years and has consequently lost its charm among investors. However, with MUI founder Tan Sri Khoo Kay Peng relinquishing his role as Chief Executive Officer in December last year, and paving the way for his son Andew Khoo Boo Yeow to take over the reins, changes are already underway with the new CEO spearheading a restructuring exercise aimed at building a sustainable business in the long run.
Key restructuring initiatives include corporate restructuring, business transformation (which involves transforming MUI's key brands such as Laura Ashley into a lifestyle brand) and deleveraging (which will see the company's debt burden being reduced through divestitures among other options). With such measures to unlock shareholder value being implemented, can the asset-rich long-time laggard turn its fortunes around, and regain its former glory?
Laura Ashley (LON:ALY)
Plans are underway to transform Britain's iconic Laura Ashley brand (and one of MUI's crown jewels) into a lifestyle concept by expanding from the current fashion, accessories and home furnishings business into other areas such as hotels (currently the company owns two hotels – Laura Ashley The Manor, and Laura Ashley The Belsfield – both located in the UK) and cafés (the company's opened its first café – Laura Ashley The Tea Room – in June 2017). Future plans will see the brand expand into the spa business as well. The idea of transforming a brand into a lifestyle concept is nothing new and while some brands such as Missoni and Moschino have fallen off the runway (the fashion houses checked out of the hotel business a few years ago) a number of others, such as Bulgari, Mercedes Benz, Armani, Fendi, and Versace are still continuing the show. Buglari extended their famous jewelry brand into the now famous Bulgari Hotels and Resorts; Mercedes Benz steered their automobile brand into perfumes; Armani elevated the fashion brand towards luxury hotels and luxury furnishings; Versace strutted their fashion brand into fashion hotels; Jaguar took the auto brand up a notch with its lifestyle products ranging from clothing to accessories; Godiva sweetened their chocolate brand with its chain of lifestyle chocolatier cafés; and Fendi took the fashion brand to new heights with their hotel venture.
So can ailing Laura Ashley, which is struggling financially (profits have been falling over the past few years) as well on the stock market (its languishing share price has been a long time under-performer and is currently trading at a fraction of its value during its heyday decades ago in the mid-1990s), get back in vogue with a similar push?
While much would depend on strategy and execution, fundamentally, the idea holds potential. And if history is any guide, Laura Ashley appears to have had a reasonably fair track record in extending the brand beyond its core products. Starting out as a clothing brand, famous for its floral, billowy dresses typical of English fashion in the 1970s, which were in vogue up until the 1990s, Laura Ashley subsequently stumbled due to a combination of factors such as an ill-executed overseas expansion and a failure to adapt appropriately to changing fashions. The failed expansion dented the company's finances while the failure to evolve meant the brand's classic style gradually became more and more classic, which later on ended up looking completely outdated altogether. And although years later Laura Ashley made an effort to update its chintzy image, customer perceptions are hard to change, contributing to flagging financials.
Despite these setbacks, it is noteworthy that the company successfully made great strides in transforming the brand's product offering from one limited to just clothing to one spanning furniture, decorating items and home accessories. A few years ago clothing accounted for 50% of sales, but now it accounts for just 17% and is the smallest revenue generator of all of Laura Ashley's four business segments according to its latest annual report. The biggest revenue earner, Home Accessories (which includes products such as lighting, gifts, bed linen, rugs, cushions, and children's accessories), accounts for 34% of UK sales followed by the Furniture segment (cabinets, beds, and mirrors) which accounts for 29%. The balance 20% comes from the Decorating segment (fabric, curtains, wallpaper, paint and decorative accessories).
So could the new hotel venture be the key to unlock the brand's value and reverse the company's sagging financials?
Laura Ashley is an upscale brand synonymous with British heritage and the company's new hotel and café brands are clearly positioned in similar fashion with all three Laura Ashley hotels (Laura Ashley The Manor Elstree, Laura Ashley Belsfield Hotel, and the upcoming Laura Ashley Burnham Beeches) and its two cafés (Laura Ashley The Tea Room in Solihull and Buckinghamshire) offering quintessentially British experiences to their well-heeled guests.
Britain has no shortage of hotels offering "quintessentially British" experiences such as The Savoy, and The Langham London. However, Laura Ashley hotels differentiated themselves by offering their upscale iconic British-style getaways in some of England's endeared countryside locations. Laura Ashley Hotel The Belsfield for instance, is located along Lake Windermere in Lake District which is a World Heritage Site in North West England. Although plenty of travellers visit to enjoy the lake's shimmering water and picturesque surroundings, there is little traveller spend in the area. Sensing an opportunity, in 2014 Laura Ashley acquired a Victorian-era mansion (it was built in 1845) overlooking Lake Windermere, and spent millions of pounds on refurbishment (with décor and furnishings from Laura Ashley of course) to offer a classic English-style countryside retreat, ideal for corporate events and weddings (in fact winter weddings bookings were reportedly up 75% during 2017). The strategy seems to be working with revenues and operating profits at the hotel reportedly increasing three-fold since being converted to a Laura Ashley hotel.
Banking on the success of this approach, plans are underway to convert Corus Hotels' Burnham Beeches hotel which is located in the rolling Buckinghamshire countryside, into a Laura Ashley Hotel, which could potentially emerge as a promising top-line contributor going forward.
Yet, with Laura Ashley's hotel segment accounting for just a fraction of group revenue (revenues from Laura Ashley's hotel segment made up about 1% of total group sales according to Laura Ashley's latest annual report), the rosy numbers may not be enough to move the needle at Laura Ashley in the near term.
The long view seems more promising. With Laura Ashley hotels being located in England's countryside which tend to draw local travellers (as opposed to locations such as London, Manchester and Birmingham which are among UK's most popular tourist destinations), the company is positioned to tap the UK's domestic travel market which accounted for 80% of the UK visitor economy according to data from VisitBritain's 2016/2017 annual review.
In 2017, Brits took 59 million domestic holidays in Great Britain, a 6% increase from the previous year, spending £14.1billion on domestic holidays in Great Britain, also a 6% increase over the previous year according to VisitEngland's Trip-Tracker Survey.
Furthermore, there is considerable potential for the Laura Ashley hotel brand to expand internationally, and the management seems keen to exploit this opportunity having announced plans to increase the number of domestic and international hotels to 100 over the next five years through licensing agreements.
There exists clear demand for British heritage brands outside the UK, particularly in countries such as Japan, South Korea, Hong Kong, South Asia and Southeast Asia with British-style brands Burberry, Church's and Harrod's cashing in on enthusiastic customers in these regions. This market could be an opportunity for Laura Ashley and with the brand's planned hotels serving as a showcase for Laura Ashley products, they could potentially draw shoppers to Laura Ashley's product offering.
Towards this end, Laura Ashley is taking steps to export the brand worldwide; Laura Ashley derives much of its sales from the UK and with international sales making up just 7.4% of group revenue according to the company's latest annual report, the Laura Ashley brand is strongest among UK customers and appears to have relatively little recognition outside the UK. Laura Ashley has expanded into India with a signing of a licensing deal with India's leading fashion retailer, Future Group. The company has also tied up with a partner in Thailand to tackle the Southeast Asian market.
Growing its international customer base could help the brand reduce reliance on sales from the UK, its primary market, insulating its financials from geographical shocks and thereby smoothening out revenues over the longer term. According to the company's latest financial data, all business segments except Fashion suffered revenue declines, partly due to the impact of Brexit which saw UK consumers reigning in on big-ticket purchases. And with UK consumer spending not expected to recover as the uncertainty of Brexit's impact on jobs and income hit hard on consumer confidence, British brands with a heavy reliance on the UK market such as Laura Ashley may find themselves in challenging conditions in the coming years. Keeping a long term view in mind, an international expansion could Laura Ashley minimize such geographical risks.
Since Laura Ashley was thrown a lifeline by MUI about two decades ago, MUI has yet to see a return on its investment, with Laura Ashley trading at just a fraction of its market value in the mid-1990s when it was looking its prettiest. Will this time be different? Only time will tell, but the company could be worth watching.
Corus Hotels
MUI Group's hotel subsidiary Corus Hotels which operates a portfolio of hotels across the UK and Malaysia and is also the owner and operator of Laura Ashley Hotels has returned to profitability in its latest financial year with pre-tax profit of £1.7m on a turnover of £27.8m in the year to 30 June 2017 which is a 5.7% increase from the £26.3 million turnover recorded the previous year.
Having disposed of two "non-core" hotels in the UK (namely The Old Golfhouse Hotel in Huddersfield, and The Imperial Crown hotel in Halifax), Corus Hotels' UK portfolio comprises Corus Hyde Park in London, Burnham Beeches in Buckinghamshire, The Chace Hotel in Coventry, The Hillcrest Hotel in Widnes, Grimsby's The St James Hotel and The Regency Hotel in Solihull. Corus Hotels also operates two Laura Ashley Hotels namely The Belsfield and The Manor Elstree, while a third hotel will be added to the Laura Ashley Hotel portfolio soon with the rebranding of Corus Hotels' Burnham Beeches in Buckinghamshire.
Corus Hotels' flagship hotel Corus Hotel Hyde Park (in London) which generated revenue of £11.9 million (accounting for over 40% of Corus Hotels' revenue) recorded an average room occupancy of 75.8% for the year ended 30 June 2017. Although this is lower than the 2017 average room occupancy rate of 81.7% in London according to data from Colliers International, it is reportedly an improvement over the hotel's average room occupancy rate last year according to its latest annual report.
Over in Malaysia, for the year ended 30 June 2017, Corus Hotels Kuala Lumpur, which is strategically located within walking distance to Malaysia's major tourist attraction KLCC, recorded an average room occupancy rate of 61% (lower than the 66.1% hotel occupancy rate recorded for Kuala Lumpur in 2017 according to data from CEIC) while Corus Hotels Port Dickson recorded an average room occupancy of 64.1% (considerably higher than the 55.7% hotel occupancy rate recorded for Negeri Sembilan in 2017 according to data from CEIC).
It is not clear how well the other hotels in Corus Hotels' portfolio performed, however, what is known is that business has reportedly improved since two hotels, The Belsfield and The Manor Elstree were converted into Laura Ashley-themed hotels. The conversion of Burnham Beeches into a Laura Ashley Hotel is a continuation of this strategy and with more hotels under the Corus Hotels umbrella likely to follow the same path, Corus Hotels' bottom line could get a much needed lift, benefiting MUI Group as well; Laura Ashley hotels target upper middle class travelers and are positioned as boutique hotels with fewer rooms (often less than 100, compared to Corus Hotel Hyde Park which has over 300 rooms) and higher room rates (for instance room rates at Laura Ashley The Belsfield is almost double that of Corus Hotel Hyde Park), which makes Laura Ashley Hotels a higher-margin and less capital-intensive business.
While this potentially profitable strategy gives reason to be optimistic about Corus Hotels' future valuation, there is reason to be optimistic on its present valuation as well; many of Corus Hotels' properties have been valued decades ago and their current market values could be considerably higher than their current net book values (NBV). For instance, Corus Hotel Kuala Lumpur, which occupies prime freehold land in Jalan Ampang less than half a kilometer away from KLCC, was last valued in 1982, and its current NBV is just Malaysian Ringgit (RM) 54.5 million according to MUI Group's latest annual report. That values the property at about RM 843 per square foot. By comparison, an empty development land also along Jalan Ampang, about 2 kilometers away from KLCC and less than 2 kilometers away from Corus Hotels is currently seeking a buyer at about RM 2,300 per square foot, nearly three times the current NBV of Corus Hotels' Kuala Lumpur. That would suggest Corus Hotels Kuala Lumpur could command a value of at least RM 200 million (some reports have put the figure as high as RM 300 million), and this property alone would thereby make up about 40% of MUI Group's entire market capitalization of about RM 500 million currently.
Corus Hotels' other Malaysian property, Corus Paradise Resort in Port Dickson, currently carries a NBV of RM 24.5 million according to MUI Group's latest annual report, equivalent to about RM 41 per square foot. By comparison, a plot of land for sale along the same road as Corus Paradise Resort, was listed at a sale price of RM 45 per square foot. Meanwhile, hotel operator Avillion Berhad's (KLSE:AVI) Avillion Port Dickson hotel which occupies a mix of freehold and leasehold land about two kilometers away from Corus Paradise Resort, is valued at RM 236 per square foot according to the company's latest annual report.
Metrojaya
Metrojaya, at one time a high flying department store brand in Malaysia, is no longer doing business as briskly as it used to, and although the management is striving to revitalize the retail subsidiary through initiatives such as upgrading its string of department stores and participating in e-commerce, how well these plans bear fruit remain to be seen. Malaysia has no shortage of department stores (Parkson (KLSE:PARKSON), and Isetan (SGX: I15) are notable examples), and e-commerce is increasingly gaining momentum in Malaysia, the rise of which is likely to put downward pressure on brick and mortar retailers going forward as has been the case worldwide. Department store stalwarts such as JC Penny (NYSE:JCP), Sears (OTCMKTS: SHLDQ) and Macy's (NYSE:M), and specialty stores such as Gap (NYSE:GPS), and Toys R Us for instance have seen their store counts and market values shrink over the past decade as shoppers flocked to e-tailers such as Amazon (NASDAQ:AMZN), lured by an unrivalled product variety, competitive prices and the convenience of shopping anytime, anywhere. According to figures by consulting firm A.T. Kearney, department store sales in the United States as a percentage of total retail sales in America dropped from 10% in the mid-1980s to just 2.4% by 2011.
As shoppers increasingly click to shop, brick and mortar stores are crumbling under the onslaught of online retailers; by the end of 2018, more than 146 million square feet of retail space will be announced for closure in the United States alone, which is a nearly 40% increase from the roughly 105 million square feet that was announced for closure in 2017, according to figures from real estate information company CoStar Group.
The wave of store closures hitting the United States has so far not hit Malaysia and in fact, Malaysia's retail floor space has been on an upward trend over the past few years. In Klang Valley for instance, which is Malaysia's most prosperous region, about 6 million square feet of mall space is scheduled for completion by the end of 2018, a 11% YoY increase, according to data from Savills, bringing Klang Valley's total retail stock to an estimated 69 million square feet in 2018, from 62 million in 2017.
With retail space per capita in Klang Valley estimated at 8.1 square feet per person (one of the highest in Malaysia) according to a 2017 report by Nawawi Tie Leung Property Consultants Sdn Bhd (NTL), this influx of retail space could exert downward pressure on retail occupancy rates going forward. At slightly above 85%, occupancy rates in malls in Greater KL are already at a five year low (occupancy rates in Greater KL were over 90% in 2013) according to figures from Savills.
While Malaysia is unlikely to suffer the "retail apocalypse" currently affecting the United States where retail space per capita far exceeds that of any other country (according to a 2016 Morningstar Credit Ratings report, retail space per capita in the United States was estimated at about 23.5 square feet per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia) the country's increasing retail stock combined with rising e-commerce (Malaysia's e-commerce penetration is estimated at about 2.5% as of 2015 and is expected to grow to 4%-5% in 2018 according to online deal website 11street could suggest challenging business conditions for physical retailers going forward. This is particularly the case for department stores such as Metrojaya which are heavily exposed to popular online shopping product categories such as apparel and cosmetics.
The impact is already being felt with Parkson's department stores Sungei Wang Plaza (where it had operated for over three decades) and Maju Junction abruptly closing early this year, while American retailer Gap is shutting down all their stores in Malaysia, sparking concerns over the health of Malaysia's retail industry. However, "A" grade malls located in prime shopping centres such as Pavilion and and Suria KLCC in Kuala Lumpur, and Mid Valley Megamall (where Metrojaya is an anchor tenant), Sunway Pyramid and The Gardens Mall outside Kuala Lumpur, which have occupancy rates of over 90% are not expected to be badly affected. For these prime shopping malls and their tenants, e-commerce is unlikely to pose a major threat as they offer experiential shopping experiences that online shopping simply cannot offer. Parkson in fact still maintains its flagship store at Suria KLCC which is one of its best performing stores according to its annual report.
Keeping this in mind, while much would depend on execution, the Metrojaya management's effort to reinvigorate the retailer through store upgrades could prove fruitful in the face of a growing e-commerce industry; the in-store shopping experience is still very much in demand, (which explains why online retailers such as Amazon, Alibaba (NYSE:BABA), JD.com (NASDAQ:JD) and Bonobos have been building physical stores) and if done right, Metrojaya's store upgrades could help retain foot traffic as Malaysia ushers in an e-commerce era; the physical stores could function as showcases for customers (giving them a tactile, sensory experience and access to expertise which is difficult to replicate online), and with Metrojaya planning to dive into e-commerce, these physical stores could also double as distribution centers for e-commerce sales, a retail strategy known as "omni channel retailing".
Omni-channel retail success stories include century-old Hong Kong luxury department store chain Lane Crawford (having implemented a seamless customer experience across offline and online channels, the department store's omni-channel customers reportedly spend seven times more than single-channel customers) and Nordstrom (NYSE:JWN) (the American luxury department store chain found that its omni-channel customers spend five times more than single-channel customers).
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Categories: Asia, Stocks, Uncategorized
Tag: Malaysia
Posted on March 7, 2018 June 30, 2018 by ld_investments
China's Geely: A Formidable Global Automaker In The Making?
Chinese automaker Geely (HKG: 0175) (OTCMKTS: GELYF) is on a hot streak. The company reported record sales in 2017 selling 1.24 million units, a 63% year-on-year increase, emerging as the world's second-fastest growing automaker by sales volume in 2017.
Much of Geely's sales were concentrated in its home country China, the world's largest passenger car market, which accounted for over 99% of the brand's sales volume in 2017 according to data from its annual report. Geely's strong sales performance in China helped boost its market share to 5.06% of China's passenger car market in 2017, an increase of 1/75% from the previous year.
Outside China, Geely's subsidiary Volvo Cars which Zhejiang Geely Holding Group acquired in 2010 is also on a run, reporting its fourth straight year of record sales; revenues grew 17% in 2017 to 210.9 billion Swedish crowns while operating profit rose jumped 28% to 14.1 billion ($1.76 billion) from 11.0 billion in 2016. Volvo sold 571,577 Volvo cars globally last year, up 7% thanks to strong sales in China its biggest market, which accounted for 20% of Volvo's sales in 2017.
After years of lackluster performance under the Ford Motor Co umbrella, the upscale Sweden-based Volvo Cars is now a success story, enjoying a remarkable turnaround under Geely's ownership.
For Geely, already a major automaker in China, Volvo's success could be a sign of bigger things to come as Geely sets its sights on going global. The company has been aggressively amassing a formidable portfolio of international car brands thereby expanding its geographical reach and broadening it technical expertise; the company gained an avenue into Europe through its acquisition of Volvo Cars while its 49.9% stake in Malaysia's Proton Holdings Bhd gives it an inroad into Southeast Asia.
Geely's 51% stake in British sports car maker Lotus Cars will give the company a presence in the sports car segment while its acquisition of American flying-car startup Terrafugia gives it access to the nascent flying car industry. The investments may also play a part in uplifting the brand's image going forward; having started life as a cheap, low-cost, no-frills car brand, Geely has already come a long way since its inception boasting four design studios around the world (specifically in Los Angeles, Barcelona, Gothenburg and Shanghai) employing over 500 designers (headed by Geely's chief designer Peter Horbury who formerly worked at Volvo and Ford), and four R&D centers (in Hangzhou Bay, Ningbo, Coventry and Gothenburg) employing nearly 7,000 full-time engineers.
With average e-x-factory selling prices of its vehicles steadily climbing from RMB 47,872 per unit in 2012 to RMB 73,550 per unit in 2017 according to its latest annual report, the company is now making inroads into the midscale auto segment with its new car brand Lynk & Co which is being developed with technology from Gothenburg-based Volvo.
"Born global and connected", the millennial-aimed Lynk & Co car brand which made headlines as the "most connected car ever" (a 'smartphone on wheels') is unique in several aspects; the company's cars can be purchased outright, or they could be leased, or they could be subscribed to via the company's subscription model, or they could just be borrowed via the car's unique 'sharing' feature. The company's focus on mobility rather than car ownership means it fills a niche that taxi companies, ride-sharing solutions such as Uber, and traditional auto companies such as Honda do not fulfill. Lynk & Co is also differentiating itself by building a direct-to-consumer sales model, allowing customers to purchase a car online thereby bypassing traditional dealer networks.
Geely's new marque holds promise; in November last year, Lynk & Co held a three-day sales campaign in China for the brand's '01' SUV model. In just over two minutes, the stock of 6,000 vehicles was sold out.
However, while the Geely brand is expected to continue its goal of being a leading automotive brand in China, Lynk & Co which is European designed and engineered, aspires to be a global auto brand, competing against global car giants such as Volkswagen and Ford. Lynk & Co plans to launch sales of its cars in Europe in 2019 and in the United States in 2020. The brand is aiming to sell 500,000 cars globally by 2021.
Over in Southeast Asia, Geely has been busy trying to turn-around struggling Malaysian car company Proton, which it acquired last year. Established in 1983, Proton reached its zenith in 1996 when the company accounted for 64% of Malaysia's car sales, and exported its cars to over 50 countries including Australia, Ireland, New Zealand, Sri Lanka and Brunei. That was also the year Proton acquired sports car brand Lotus Cars.
Fast forward to today, Proton's market share has dwindled to less than 15% with sales dropping to 70,991 last year from 72,291 units in 2016. Meanwhile local rival Perodua, and Japanese car company Honda are flying high in the country with market leader Perodua's sales exceeding 200,000 units and Honda notching record-breaking sales of 109,511 last year.
Determined to regain lost ground, Proton is now on an aggressive transformation path with CEO Dr Li Chunrong introducing multiple changes for Proton dealerships and service centers in the country aimed at strengthening the brand and improving customer experience, as well as tapping into Geely's technical know-how and expertise to help Proton expand its current model lineup to include SUVs (Proton is reportedly developing its first SUV model from Geely's best selling SUV model the "Boyue"), and move up from producing fossil fuel vehicles to plug-in hybrid and electric vehicles. Malaysia is Southeast Asia's third largest automotive market after Thailand and Indonesia, and if Geely could repeat its Volvo turnaround success story with the currently loss-making Proton, Geely could be sitting on a potentially profitable investment as well as a platform to develop a beachhead in Southeast Asia.
Under its former owner Proton, iconic British sports car brand Lotus Cars struggled due to lack of funds and currently offers a handful of models dating back several years. However under its new deep-pocketed owner, Geely, it could be light at the end of the tunnel for Lotus Cars as Geely could do for Lotus Cars what it did for Volvo; offer much-needed financial support along with a relatively hands-off management to allow Lotus Cars to unlock its full potential.
The partnership could also result in a cross-pollination of technology, know-how and possibly other resources as well such as suppliers and distribution networks among Geely's portfolio of automotive marques similar to the way the Geely-Volvo tie-up gave birth to Lynk & Co which uses technology jointly developed by the two companies. Volvo and Lotus Cars are reportedly exploring options on sharing their technologies (Lotus Cars is renowned for lightweight engineering while Volvo is known for safety features and hybrid drivetrains). The resulting partnerships could generate significant cost savings such as through shared development costs and procurement costs.
Eye on costs
While Geely's global aspirations could boost top-line growth, such international expansion plans are expensive and hence if unchecked could negatively impact bottom-line performance resulting in poor investment returns. However, Geely seems to have its eye on costs as well. Geely's new marque Lynk & Co is reportedly aiming for success by being "brutally simple" by limiting model variations that rotate seasonally and offering limited options which the management believes is not only cost effective since production costs are lower but also offers a better, less-complex customer experience since Lynk & Co cars will be sold at a flat rate throughout Europe so buyers won't have the trouble of haggling for a discount.
Although the car companies under Geely's umbrella operate independently and maintain their own unique identity, they are forging close ties to cut costs. Volvo is deepening links with Geely and Lynk & Co to cut electric car development costs for instance by sharing knowledge and thereby cutting costs on developing expensive new technologies.
Volvo is also exploring ways to share technology with Lotus Cars for mutual benefit while Proton is depending on know-how from Geely to develop its first SUV.
Lynk & Co meanwhile has tapped into Volvo and Geely's jointly developed CMA platform (Compact Modular Architecture platform), a cost-effective move, particularly since the new CMA platform was developed to be highly scalable, allowing multiple models to be developed using the same platform.
Geely's global ambitions are clear and how far the company gets remains to be seen, however the company is worth watching.
Posted on February 16, 2018 August 14, 2018 by ld_investments
Reliance Industries: India's Answer To Amazon, Alibaba?
Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA) are two of the world's biggest e-commerce companies, each boasting a market value of about half a trillion dollars (specifically speaking, Amazon is more than half a trillion dollars while Alibaba is slightly less).
Both companies boast top-line figures that surpass the Gross Domestic Product of entire countries – Amazon raked in US$ 178 billion in revenues in 2017 while Alibaba earned CNY 250.3 billion or about US$ 40 billion for the year ended March 2018, higher than the 2017 GDP figures of countries such as Estonia (US$ 26 billion), Iceland (US$ 24 billion), Cyprus (US$ 21.6 billion), Afghanistan (US$ 20.8 billion), Jamaica (US$ 14 billion), Brunei (US$ 12.1 billion), Fiji (US$ 5 billion), and Maldives (US$ 4.5 billion) according to data from the World Bank.
Both companies also serve sizeable user bases the number of which is larger than the population of entire countries; Alibaba's over 600 million monthly active users would make it the third most populous country in the world after China and India, while Amazon's over 300 million monthly active users would make it the fourth most populous country in the world after China, India and the United States.
Both companies owe much of their initial success to the rapid growth of e-commerce in their respective home countries which make up the world's two biggest e-commerce markets; Alibaba in China (the world's biggest e-commerce market) and Amazon in the United States (the world's second biggest e-commerce market).
Both companies continue to dominate their respective home markets, with Amazon holding a market share of nearly 40% in 2017 while Alibaba commanded a market share of about 55%.
With India emerging as e-commerce's next major opportunity (Morgan Stanley estimates India's e-commerce market will grow from US$ 15 billion in 2016 to US$ 200 billion in 2026, representing at a CAGR of nearly 30% between 2017 and 2026), could the South Asian nation join China and the United States in producing its own e-commerce juggernaut?
India's crowded e-commerce landscape boasts its own share of homegrown online retailers notable examples include Flipkart, Snapdeal, Alibaba-backed Paytm Mall (the e-commerce arm of India's top digital payment firm Paytm) and ShopClues. With Reliance Industries (RIL) (NSE:RELIANCE) (BOM:500325) and Future Group planning on entering India's e-commerce sector, competition is set to intensify in an already hyper-competitive market where the majority of players are yet to show profits.
For instance, India's second-biggest online retailer and e-commerce veteran Amazon's loss from its international business jumped nearly 30% to US$ 3 billion in 2017 from US$ 1.28 billion in 2016, with much of it due to massive investments in India. Meanwhile India's leading homegrown e-commerce player, Flipkart saw its losses balloon by 68% during the fiscal year ended March 2018.
With e-commerce making up just 3%-4% of India's US$ 670 billion retail sector, it is still early days for India's e-commerce market which is undergoing rapid change. Founded in 2010, local competitor Snapdeal, at one time was India's number two e-commerce platform after Flipkart, while Amazon India stood at number three. By mid-2016, Snapdeal found itself dislodged from its second-placed position by deep pocketed Amazon India, which began life a couple of years after Snapdeal. With current market leader Flipkart holding retaining its crown (with a market share of 39.5%, ahead of Amazon's 31% share) the market has so far evolved to be a two-horse race with Flipkart (which was bought up by Walmart this year) and Amazon fighting tooth and nail for gold while ShopClues, Snapdeal and Alibaba-backed PayTM Mall battle for bronze.
Although late to the party, oil-to-telecom conglomerate Reliance Industries possesses several competitive advantages from an extensive brick-and-mortar network to a wide eco-system of businesses which could help it emerge as a formidable player in India's e-commerce war.
Amid stiffening competition, e-commerce platforms are investing substantial sums and burning money heavily as they vie for a slice of India's promising e-commerce market. Aiming for dominance, Amazon, the world's largest e-taiiler, has a massive US$ 5 billion war chest while local rival and current market leader Flipkart managed to add nearly US$ 4 billion to its kitty thanks to a funding round from investors such as Softbank, Tencent, Microsoft and eBay last year. The company reduced its burn to just US$ 17-18 million a month while arch rival Amazon continues to burn twice that amount estimated at over US$ 40 million. Against this backdrop, it is likely that smaller, cash-strapped rivals will gradually find themselves edged out by deep-pocketed players. Reliance Industries Ltd being a Fortune 500 company and India's biggest private sector corporation could have the financial wherewithal to compete against the incumbents similar to the manner in which its telecom arm, Reliance Jio disrupted India's telecom sector in less than two years of operation to emerge as India's fourth largest telco after Bharti Airtel, Vodafone and Idea Cellular.
Extensive brick-and-mortar store network
Omnichannel retail experiences (offering customers a seamless online and offline shopping experience) are increasingly becoming commonplace in mature retail markets such as China and the United States. India is expected to follow suit and retailers such as Pepperfry, Adidas, Urban Ladder, FirstCry and Nykaa are among the few in India to have already incorporated click-and-mortar shopping experiences.
Unsurprisingly, Amazon and Flipkart have also been busy plotting their own omnichannel retail strategies; last year, Amazon made its first investment in an offline retailer in India when it picked up a 5% stake in Shoppers Stop, a Mumbai-based department store chain for INR 179.24 crore (about US$ 28 million).
Under the partnership, the duo will conduct "joint marketing" initiatives which will see Amazon open Amazon Experience Centres showcasing Amazon's products across all 80 Shoppers Stop outlets located in 38 cities in India.
Not wanting to be outdone, Flipkart is reportedly in talks to acquire a 8%-10& stake in Future Lifestyle Fashions Ltd (NSE:FLFL), the listed fashion company owned by Future Group, one of India's largest retail companies with a presence in grocery, electronics, home furnishings and furniture with over 17 million square feet of retail space in more than 240 cities.
Future Lifestyle is one of India's largest branded apparel retailers in India with a total retail space of over 5 million sq ft across 400 stores in 90 cities.
Flipkart claims to have a 70% market share in India's online fashion retail space. A deal with Future Lifestyle Fashions could open an avenue for Flipkart to establish an offline presence in India's fashion retail sector thereby helping it solidify its market leading position as India's leading online fashion retailer.
While the e-commerce giants have bolstering their offline presence, Reliance Retail already has an extensive brick and mortar store network throughout India which the company can leverage as part of an omnichannel retail strategy. Similar to Future Group which was founded in 1997, Reliance Retail which was founded nearly a decade later in 2006 is one of India's largest retail enterprises with a presence in grocery, electronics, furniture and fashion. The company boasts a store network of over 3,700 stores across 750 cities with an area of over 14.5 million square feet of retail space according to the company's December 2017 quarterly report.
There has been a noticeable trend in developed markets where media companies such as Google, Amazon and Alibaba which deliver copious amounts of video and other content are increasingly morphing into telecom companies and telecom companies such as AT&T and Verizon are morphing into media companies.
In other words, the "pipe" owners i.e., the telecom companies are increasingly taking control of the content that flows through their "pipes" while the content owners i.e., the media companies, are increasingly evolving into pipe owners.
Google offers high-speed internet service through its subsidiary Google Fiber, Amazon has reportedly been considering the prospect of becoming an ISP in Europe, and Alibaba is reportedly looking at expanding into the telecom sector.
AT&T, America's second-largest wireless carrier merged with Time Warner while Verizon, America's largest wireless carrier, scooped up AOL in 2015 and Yahoo last year, and then clubbed the two companies together to launch its digital content subsidiary Oath Inc with the goal building a media business that could compete with the likes Google and Facebook.
Over in India, a similar trend has been unfolding and Reliance Industries has made its moves. Reliance Industries owns the "pipes" via its telecom arm Reliance Jio and the company also offers its own unique content via its plethora of content apps such as JioCinema, JioMusic etc.
In response to rising net neutrality concerns, the Telecom Regulatory Authority of India (TRAI) last year proposed guidelines in favor of net neutrality; however, Content Delivery Networks (CDNs) or "content "edge" providers (a network of computer servers set up inside an ISP which can deliver digital content faster to end users) do not fall under the proposed regulations and thus integrated operators such as Reliance Jio and Bharti Airtel are poised to benefit as they could leverage this CDN exemption and offer their content at lower prices to their subscribers.
Content Delivery Networks are often built and owned by third-party companies such as Akamai Technologies Inc and Cloudflare, however, some deep-pocketed content providers such as Google, Facebook, Netflix, Amazon, Microsoft and Alibaba have built their own private CDNs. The net neutrality debate focuses on ISPs (Internet Service Providers) and not CDNs.
Wide ecosystem of businesses
With businesses spanning cloud computing to video streaming Amazon and Alibaba are much more than just e-commerce companies. Interestingly, Indian stalwart Reliance Industries also boasts a highly diversified ecosystem of businesses which combined could prove to be a powerful force.
In brick-and-mortar retailing, Amazon owns the Whole Foods grocery chain, Alibaba owns Hema Supermarkets (盒马) while Reliance has Reliance Retail.
All three companies have logistics arms – Amazon with Amazon Logistics, Alibaba with its Cainiao and Reliance Industries with Reliance Logistics.
In video streaming, Amazon has Amazon Video while Alibaba has video hosting platform Youku Tudou. Relince has JioCinema.
In music streaming, Aamzon has Amazon Music, Alibaba has Ali Music and Reliance Industries has JioMusic.
All three companies have ventured into production of digital video content; Amazon through Amazon Studios, Alibaba through Alibaba Pictures and Reliance Industries via its partnership with Roy Kapur Films (RKF) which will produce original digital video content as "Jio Originals".
In the mobile wallet space, Amazon has Amazon Pay, Alibaba has Alipay and Reliance has Jio Money.
In messaging apps, Amazon has Amazon Chime, Alibaba has DingTalk and Reliance Industries has JioChat,
All three companies have their feet in the cloud business as well with Amazon offering cloud services through AWS, Alibaba through Alibaba Cloud and Reliance through JioCloud.
All three companies have a direct or indirect involvement in media as well, with Amazon founder Jeff Bezos owning the Washington Post, Alibaba founder Jack Ma owning the South China Morning Post and Reliance Industries holding Network 18.
Such a wide eco-system has several advantages; the businesses will reinforce each other as existing consumers and companies become more likely to use their platforms which not only generate diverse sources of revenue but vast quantities of consumer and business data as well, which ultimately could be used towards further business expansion.
RIL Chairman Mukesh Ambani famously said, "Data is the new oil and India does not need to import it".
While Reliance Industries is a latecomer to India's e-commerce arena and the company's success depends on several factors such as execution, Reliance's entry into e-commerce cannot be taken lightly; the Indian giant could be a formidable competitor, disrupting the current status quo similar to the manner in which it reshaped the Indian telecom sector within a few years of operation.


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