Amazon has reported its first coronavirus case in one of their warehouses, raising questions about the possible impact on supply lines.
The Atlantic is reporting that an Amazon warehouse worker in Queens, New York has tested positive for coronavirus, prompting the company to email all the other workers to inform them.
“We’re writing to let you know that a positive case of the coronavirus (COVID-19) was found at our facility today,” the email read.
In the short-term, Amazon has closed the facility and is taking extra time to deep-clean it, while all employees were sent home with full pay. In the long-term, the revelation leaves a lot of questions about the supply chain at a time when companies’ capabilities are already being pushed to the limit. Amazon recently announced it would suspend shipments of all non-essential items in an effort to keep up with demand.
Studies have shown that the coronavirus can live for up to 24 hours on cardboard, and as long as 72 hours on plastic or steel. If more warehouse workers test positive for the virus, it could raise concerns about transmission through the very supplies people are relying on to stay safely at home. As Amazon and other fulfillment centers have to close facilities to disinfect following confirmed cases, it could have a profound impact on the entire supply chain, causing delays that no one can afford.
Amazon is prioritizing shipments of essential items to its warehouses, as it struggles to keep up with demand in the face of the coronavirus pandemic.
As governments, schools and companies take drastic measures to stop the spread of the virus, unprecedented numbers of individuals are staying home. With restaurants and bars closed in many areas, and grocery store shelves running light, people are having to rely on their home supplies and online shopping like never before. The new status quo has strained supply chains, prompting even Walmart to adjust hours to help give stocking crews a chance to catch up.
Amazon has likewise felt the strain, and is now taking major action to try to meet demand.
“As COVID-19 has spread, we’ve recently seen an increase in people shopping online which has had an impact on how we serve our customers,” reads a company blog post. “So in the short term, we are making the decision to temporarily prioritize household staples, medical supplies and other high-demand products coming into our fulfillment centers so we can more quickly receive, restock and ship these products to customers. Products already on its way to our fulfillment centers will be accepted. This does not impact products being delivered to customers, or products currently in stock in our store. Customers can continue to buy any in-stock product in our store, and we will continue to deliver them.”
Amazon’s announcement is a major change and will likely have far-reaching financial consequences for companies that rely on Amazon to sell their products. Amazon has already faced tremendous skepticism from retail companies who are reluctant to rely on the company’s cloud solutions, as Amazon is one of their biggest competitors. Now that many companies are seeing one of their primary order fulfillment avenues suspend shipment of their products, even temporarily, companies may be more hesitant to rely as heavily on Amazon in the future.
With more Americans relying on online shopping during the coronavirus pandemic, Amazon is hiring an additional 100,000 warehouse workers.
Dave Clark, Senior Vice President of Worldwide Operations said: “We are opening 100,000 new full and part-time positions across the U.S. in our fulfillment centers and delivery network to meet the surge in demand from people relying on Amazon’s service during this stressful time, particularly those most vulnerable to being out in public.”
In addition to working to meet demand and help people who are relying on the ecommerce giant, Amazon is also taking measures to help employees cope with the added challenges by offering a $2 per hour raise.
“In addition to the additional 100,000 new roles we’re creating, we want to recognize our employees who are playing an essential role for people at a time when many of the services that might normally be there to support them are closed,” Clark continued. “In the U.S., we will be adding an additional $2 USD per hour worked through April from our current rate of $15/hour or more, depending on the region, £2 per hour in the UK, and approximately €2 per hour in many EU countries. This commitment to increased pay through the end of April represents an investment of over $350 million in increased compensation for hourly employees across the U.S., Europe, and Canada.”
Amazon’s announcement is welcome news for customers and warehouse employees alike, and will hopefully help ease the strain from the coronavirus pandemic.
France’s competition authority, Autorité de la concurrence has fined Apple a record €1,1 billion ($1.23 billion) for price-fixing.
At the heart of the issue is Apple’s practice of requiring distributors to sell Apple’s products for the same price as Apple itself, giving little room for companies to offer promotions or specials. One of Apple’s premier French resellers, eBizcuss, eventually shut down its operations in France, citing unfair competition.
According to the Autorité de la concurrencereport, “after receiving a complaint in 2012 from eBizcuss, a distributor of specialised high-end Apple products (Apple Premium Reseller, APR), the Autorité de la concurrence fined Apple €1,1 billion, as well as wholesalers Tech Data and Ingram Micro €76,1 million and €62,9 million respectively.”
Tech Data and Ingram Micro’s fines were a result of their participation in Apple’s price-fixing efforts.
The agency offered a detailed explanation for its actions: “First, Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products. Secondly, so-called Premium distributors could not safely carry out promotions or lower prices, which led to an alignment of retail prices between Apple’s integrated distributors and independent Premium distributors. Finally, Apple has abused the economic dependence of these Premium distributors on it, by subjecting them to unfair and unfavorable commercial conditions compared to its network of integrated distributors. Given the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers, the Autorité has imposed the highest penalty ever pronounced in a case (€1.24 billion).”
France’s decision could ultimately have profound impacts on how Apple—as well as other companies—sells products, and crack open the door to more varied pricing.
It’s a good time to work for Shopify, as the company is giving employees $1,000 to help them make the transition to working from home.
As the coronavirus pandemic spreads around the country and globe, Shopify has joined the ranks of tech companies instructing their employees to work from home. The company made the announcement in a tweet:
As COVID-19 continues to impact people and countries around the world, Shopify will be going remote first starting March 16th. Working from home will help play a part in reducing the spread of the virus, and hopefully lessen its potentially huge burden on the healthcare system.
According to Business Insider sources, the company is going a step further by giving all of its employees $1,000 to buy what they need to help furnish and set up their work-from-home space. It’s unclear how the company is doing this, whether in the form of a bonus or strictly by reimbursement. The company is also allowing employees to take home whatever office equipment they need to work from home.
Numerous companies have already announced work-from-home plans, and in the wake of President Trump’s address Wednesday night, that number is likely to grow.
President Trump addressed the nation Wednesday evening, walking back comments he has previously made and unveiling sweeping measures to address the coronavirus threat.
A somber and subdued Trump began by highlighting the World Health Organization’s recent classification of the virus as a global pandemic, pointing out that from the beginning of time nations have faced health threats. The President then said “it only matters how you respond, and we are responding with great speed and professionalism.”
Trump then outlined a number of measures that have been taken, as well as those that will now be taken, some of which will have profound impacts on a wide range of industries. Most significantly, the U.S. will suspend all travel from Europe for the next 30 days. These restrictions go into effect Friday at midnight.
“These prohibitions will not only apply to the tremendous amount of trade and cargo, but various other things as we get approval,” said Trump. “Anything coming from Europe to the United States is what we are discussing. These restrictions will also not apply to the United Kingdom.”
Trump also said travel restrictions on China and South Korea would be evaluated as those countries get the virus under control. In addition, health insurers have agreed to waive copayments for coronavirus treatment, extend insurance treatment to cover the virus and reduce surprise billing issues.
The President highlighted the $8.3 billion package signed into law last week to help agencies combat the virus. He also said testing capabilities are expanding rapidly.
“The vast majority of Americans—the risk is very, very low,” Trump continued. “Young and healthy people can expect to recover fully and quickly if they should get the virus. The highest risk is for [the] elderly population with underlying health conditions. The elderly population must be very, very careful. In particular, we are strongly advising that nursing homes for the elderly suspend all medically unnecessary visits. In general, older Americans should avoid non-essential travel and crowded areas….Smart action today will prevent the spread of the virus tomorrow.”
After highlighting basic hygiene rules that should be followed, the President said those who are sick should stay home. To help ensure they can stay home without financial hardship, Trump said he will soon be taking emergency action to provide financial relief for “workers who are ill, quarantined or caring for others due to coronavirus.”
Trump also said he was authorizing the Small Business Administration to provide loans in impacted areas, and will be asking Congress to provide an additional $50 billion in funding for the program. The President is also using emergency authority to instruct the Treasury Department to defer tax payments, without penalties or fees, for those impacted, providing “more than $200 billion of additional liquidity to the economy. Finally, I am calling on Congress to provide Americans with immediate payroll tax relief.”
Overall the address was a substantial change of tone for the President and illustrates the risk the coronavirus poses to world. Throughout the address, Trump tried to reassure viewers that “this is just a temporary moment of time, that we will overcome together as a nation and as a world,” while at the same time acknowledging “we are at a critical time in the fight against the virus.”
Coronavirus: Trump Administration Bans Travel, Cargo From Europe
eBay has been considering selling its classified-ads business for some time, but it appears the company is finally taking steps in that direction.
The company’s classifieds business is estimated to be worth some $10 billion and mainly operates internationally, similar to Craigslist in the U.S. Selling the classifieds division would leave eBay with its core marketplace business.
According to The Wall Street Journal, “Private-equity firms including TPG and Blackstone Group Inc. and strategic bidders including Naspers Ltd. and German publishing company Axel Springer SE have recently expressed interest in the business.” eBay has also been approaching other companies to gauge interest.
Both Naspers and Axel Springer have existing online classifieds businesses, and the addition of eBay’s business would no doubt significantly increase their reach. The WSJ reports that indications of interest are due in March.
We will continue to monitor developments and report updates.
“Foot traffic has been the secret,” says Tim Lesko of Granite Investment Advisors. “Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. Stores that are able to maintain foot traffic, people that are going for grocery and then buying other goods, really creates a strong backdrop against other retailers.”
Tim Lesko, partner at Granite Investment Advisors, discusses how foot traffic driven by their grocery business is key to Walmart’s continued growth in an otherwise difficult retail sector:
Grocery Foot Traffic is Walmart’s Secret
There are two things that are most important to us. One is that Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. So pretty happy to see that even though same store sales were a little light compared to street estimates, they were still positive.
Second is the online business. They continued to spend a lot of money and have done a really good job of growing that online business. People fail to recognize that they’re the second largest online retailer in the US.
Foot traffic has been the secret. Stores that are able to maintain foot traffic, whether they be stores that are people hunting for bargains in the TJ Max’s of the world or people that are going for grocery and then buying other goods really creates a strong backdrop against companies like Pier 1 which went bankrupt over the weekend. You’re seeing bankruptcies all over the landscape. You have to drive foot traffic.
Multiple Revenue Streams Makes Amazon a Difficult Competitor
Multiple revenue streams is why Amazon is such a difficult competitor. They have businesses outside of their core retail business that really drive the profits and they continue to sell goods at a loss online. But interestingly, you have Amazon that’s moving from being a virtual merchant to now a bricks and mortar merchant, getting into grocery, getting into daily distribution of goods to people.
Walmart’s been doing that for years and has all of the goods in your geography. In the future world of same-day delivery and next day delivery, Walmart’s very well-positioned to provide that service. It’s almost like they’re both heading towards the same way but with Walmart at a much better valuation.
Grocery Foot Traffic is Walmart’s Secret, Says Analyst
Google is doubling down on its efforts to make inroads in the retail market, with its latest planned acquisition aimed at helping brick and mortar businesses list their inventory online.
Pointy is a Dublin, Ireland-based tech startup that specializes in helping businesses easily list and manage their inventory online. The company works with retailers throughout Ireland, as well as in nearly every town and city in the U.S.
“With Pointy, merchants simply plug a small box into their barcode scanner or install the Pointy app on their point of sale system, which surfaces the products that they sell directly into the ‘See what’s in store’ section of their business profile on Google Search,” according to Google’s announcement. “Since we introduced this functionality a few years ago, Pointy has been one of our key partners, helping thousands of local merchants display this data within Google. We’re looking forward to working with Pointy to help even more local retailers bring their product inventory online.”
Pointy already has close ties with Google, having partnered with the search giant over the years, and sees the deal as the next logical step.
“When we started Pointy, our mission was to make things better for local retailers,” reads a blog post on Pointy’s site. “That remains our mission today. All of our services continue to operate as usual. We look forward to building even better services in the future, with the backing of Google’s resources and reach.”
“Today is a big step forward for Pointy, but there is still a very long way to go. We’re as excited about the future as when we first started.”
The terms of the deal were not disclosed but, pending the standard approval process, the deal is expected to close in the coming weeks.
Just a week after FedEx Ground announced it would offer Sunday deliveries, UPS said it plans to more than double its weekend deliveries in 2020, according to Reuters.
As Reuters points out, UPS “pioneered seven-day delivery in 2013, in partnership with the U.S. Postal Service (USPS), and is now spending billions of dollars to speed up its free shipping.” In recent years, however, it has faced increasing competition from FedEx, as well as from Amazon. Amazon has started using its own drivers for deliveries, and often reserves the most desirable, high-density delivery routes, leaving UPS to handle rural and low volume routes.
One way to offset the challenges is by increasing the delivery volume, and is part of the motivation behind UPS’ announcement. Expanding weekend delivery also ensures UPS stays a viable option in the minds of customers who want items delivered as soon as possible.
“E-commerce spikes on the weekends, and retailers want those orders delivered sooner,” said UPS Chief Marketing Officer Kevin Warren, according to Reuters.
As the delivery market continues to heat up, it will be interesting to see if UPS and FedEx’s weekend options help them better compete with Amazon.
The Wall Street Journal is reporting that Intercontinental Exchange (ICE), the owner of the New York Stock Exchange “has made a takeover offer for eBay Inc.”
ICE has been interested in buying eBay before, and has now approached the e-commerce giant once again, although the WSJ says the talks are not formal. If eBay were interested, ICE would likely have to come up with more than $30 billion to make the deal happen, reflecting eBay’s current valuation of $28 billion, plus a considerable premium.
The WSJ’s sources said ICE is mainly interested in eBay’s marketing business, not the online classified division, which even eBay has considered selling.
We will continue to monitor the story and provide updates as it develops.
Direct to consumer brands are doing incredible numbers on Shopify, says Shopify COO Harley Finkelstein. He says that Kylie Jenner has generated almost a billion dollars in sales on the platform and many other influencers such as Kanye West, Drake, and most recently Tom Brady are also doing very well.
“Even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind,” says Finklestein. “Shopify was built to help anyone that has an idea start a great business and sell to a global audience.”
Harley Finkelstein, COO of Shopify, talks about the incredible numbers DTC brands are doing on Shopify, the huge success of Shopify Capital, and their quick acceptance of cannabis stores in Canada and potentially the rest of the world, in an interview with Jim Cramer on CNBC:
DTC Brands Doing Incredible Numbers on Shopify
We’re really happy with how we ended the year and certainly, the quarter was great and we’re really excited about our future. We’ve been at this now for almost 14 years. We’ve grown to 820,000 merchants up from 600,000 merchants a year ago. We have a big top of funnel with brand new entrepreneurs getting started on Shopify for the very first time. We also have some very large brands like the big CPGs and some big direct to consumer (DTC) companies all using Shopify to scale their businesses. We’ve got a really great business model and we’re having a lot of fun.
It’s amazing. I think the Kylie story ($1 billion in sales) was surprising to a lot of people, not for us because we see so many stories like that all the time. Whether it’s Kanye West launching his Yeezy store on Shopify or Drake’s store or Tom Brady’s new store, we see all of these major brands and huge influencers using Shopify to create authentic products and sell it to the audience. I always sort of think back to if DTC and direct-to-consumer were around when Michael Jordan was creating the Jordan brand with Nike I think Nike would be a supplier and Michael Jordan would be the brand. He would own the entirety of his business as opposed to getting a licensing fee.
We’re really excited about this. But even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind. Shopify was built to help anyone that has an idea start a great business and sell to a global audience. We really do bend the learning curve to make it really easy to get started.
Shopify Helping Democratize the Entire Business Process
The ones that succeed, not all of them do, but the ones that do succeed they grow really large with us and over time we want to provide them with more services and more solutions. For example, we launched Shopify Payments a couple of years ago. We went to the payments companies and negotiated rates on their behalf. We launched Shopify Shipping and went to the shipping company and negotiated shipping costs on their behalf. We always are trying to find economies of scale to help democratize the entire business process for these small businesses.
More recently we realized that a lot of these small businesses also need capital. Because we have so much information on them we’re able to make really quick and very effective underwriting decisions so we were able to go and offer them capital cash advances. We’ve given out hundreds of millions of dollars of cash advances to a lot of these small businesses who if it wasn’t for Shopify would not be able to get this money on their own.
Entrepreneurs Want to Own Their Audience
Etsy fundamentally is a marketplace. Etsy is a place where someone who makes a product can go to find an audience. But our feeling is that you know for an entrepreneur they don’t always want to rent the audience. They want to own the audience. They want to have a direct relationship with their customers. They want to own the entire to profit margin. They want to be able to sell and have long-term relations with the people that are buying their products.
So companies like Etsy do a really good job of curating a bunch of products and renting those customers to those makers. We think the marketplaces are really great but we think ultimately makers and entrepreneurs and merchants want to have a direct relationship with the people buying their products. One of the things that is not well known about Shopify but one way to think about what we do is really this retail operating system. Merchants can start a store with us very easily and they can build a beautiful online store but they can also cross-sell to different marketplaces like eBay or Amazon.
The idea is that it feeds all feeds back in one centralized back office which is Shopify. That’s where they can run the entirety of their business. Really the idea is let’s become the most important piece of software they use on a daily basis. The first thing they open every morning, the last thing they close every night. So obviously marketplace will play a role there but ultimately merchants want to find customers wherever those customers exist and more and more they want to sell direct to those customers.
Shopify Facilitating Cannabis Sales in Canada
The reason we started with Canada was there was clarity in Canada. The Canadian government, the legislature, they were very clear with how they were going to roll out the commercialization and the legalization of cannabis sales on the consumer side. We felt it was really important for us to act quickly and effectively to not only win as much of the Canadian market as we possibly could but also to show the rest of the world as they begin to think about cannabis sales that we are the first phone call that they should be making.
Whether it’s the province of Ontario or British Columbia or most of the largest licensed producers like Canopy in Canada, Shopify is what’s powering those retail sales. We think that we can do a great job helping other countries and other regions do the same thing.
“Amazon is not going to put everyone out of business,” says retail guru Dan Hurwitz of Raider Hill Advisors. ”In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner.”
Dan Hurwitz, CEO of Raider Hill Advisors, discusses how Amazon’s retail success has driven other retailers to improve and some may have found ways to create a retail experience even better than Amazon.
Amazon Is NOT Going To Put Everyone Out of Business
Amazon is not going to put everyone out of business. In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. We’ve all learned never to bet against Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner. Target is doing it right, Walmart’s doing it right, and Best Buy is doing it great.
What’s happening is 70 percent of those people that buy online pick up in-store are also buying something else in the store. The cohesion between bricks and mortar and digital is what’s making people successful. Those that aren’t doing it successfully will ultimately fail. There is (significant) up-sale when you buy online and you still pick up in-store. Don’t forget, people are going to be incentivized to pick up in the store because retailers lose money shipping goods for free. They’re going to have to figure out a better way to get you into the store. When they get you into the store there’s an up-sale and that up-sale is a highly profitable up-sale. We’re going to see more of that as this evolution continues.
The whole concept of an apocalypse of bricks and mortar was really overblown. Best Buy was the best example. People were talking about them disappearing. They’ve done a phenomenal job turning it around as has Target and as has Walmart. That will continue.
Some Department Stores Will Struggle To Survive
Some (department stores) will struggle to survive and some will get it done. I happen to be a fan of Macy’s. I like what Macy’s is doing. I think they have a very strong management team and they have great real estate. They have sophisticated buyers and they’re reinventing their inventory. They’re looking they’re sourcing the right goods just at the right price at the right time. They have to make the experience better obviously. People talk about experience, but the merchandise is the experience. You can have a great experience but if you have lousy merchandise it’s not going to work. Macy’s has a great buying group that I wouldn’t bet against.
There would have been a number of great retailers for Amazon to own (via acquisition) nationally. The question is, if they really have a store, forget about Whole Foods for a minute, just an Amazon store, I’m not so sure what they put in it. They’re great distributors of goods but if you walk into their stores today I don’t know if you would argue that they run a great experience or store with terrific merchandise. I think they have to run a different kind of store. But I do think there’s an opportunity for them to expand their reach dramatically.
Amazon Is NOT Going To Put Everyone Out of Business
“We started the rollout to all of the Walmart retail environments at the end of 2019 and so far so good,” says STRIVR CEO Derek Belch. “We’ve had almost a million Associates go through different training modules. Doug McMillon actually in their earnings report a month ago did reference employee training as being one of the reasons that their earnings are what they are. So it’s definitely something that we’re seeing have a very positive effect as it relates to placing employees in these simulation-based learning environments that virtual reality affords.”
Derek Belch, founder and CEO of STRIVR, discusses the success that enterprise companies such as Walmart, Verizon, and BMW are having with their virtual reality employee training technology in an interview on CNBC:
Walmart VR Training Positively Impacting Earnings
We started the rollout to all of the Walmart retail environments at the end of 2019 and so far so good. We’ve had almost a million Associates go through different training modules. Doug McMillon actually in their earnings report a month ago did reference employee training as being one of the reasons that their earnings are what they are. So it’s definitely something that we’re seeing have a very positive effect as it relates to placing employees in these simulation-based learning environments that virtual reality affords. It’s been really cool.
Walmart VR Training – Oculus x Walmart x STRIVR
We have about 30 customers in the Fortune 500 right now. It’s definitely crossing the chasm. We’re still on our way up here in the early adopters’ phase but we’re seeing this catch on. There’s definitely product-market fit for immersive learning as we call it. This is the real deal. This is very similar to pilots in a flight simulator. Historically, we’ve trained employees or we’ve assessed employees via PowerPoint’s, videos, and lectures. Candidly, we don’t know if people are half asleep or if they’re actually engaged.
Now with virtual reality, we’re able to put people through simulation-based learning, simulation-based training, simulation-based assessment, and it’s catching on. I think by this time next year if you’re not doing something (with VR training) you’re behind in the Fortune 500. We’re seeing that this is the real deal.
VR Technology Finding Its Legs As a Useful Tool In the Enterprise
At this point, we’ve talked to everybody. There isn’t a company in the Fortune 500 that we have not talked to in some way, shape, or form. We are not working with Amazon currently. We have talked to them on and off and we’ll see where that goes. To be honest, I’m not really worried about anyone doing this themselves. This is still the very early days of virtual reality. We work very closely with Oculus, which is owned by Facebook, they’re a great partner of ours.
We take a lot of pride at STRIVR and what we call the end-to-end solution which is basically, hey, in the early days while you’re an early adopter and the technology is certainly viable and ready it’s also really difficult to scale. So we do a lot of heavy lifting for our partners, Walmart being one of them along with Verizon and BMW. We just do a lot of work for them up front while the technology is finding its legs to get to the point where computers, iPads, and cell phones are right now as a useful tool in the enterprise. I’m not worried about anybody in the next 18 months or so doing this on their own but certainly, we’ll see as the ecosystem evolves where it goes from there.
STRIVR VR Technology Being Used by Verizon
As it relates to the viability of using this as a predictive tool, this is how the Walmart use case came about with using this for assessments. Were actually patent pending right now on what we call an engagement algorithm to see how engaged somebody is during a simulation. We tell our partners all the things we’re working on behind the scenes and Walmart said they wanted to test that out to see if this would be a good use case for them.
We Take Pride That Our VR Experiences Won’t Lead To Nausea
This (disorientation) is an issue for sure. That question always comes up in every demo. “Hey, am I going to get sick? Oh, I’m good, I don’t need to put it on. I got sick last time.” This is all about how the brain works and your equilibrium. If you’re sitting or you’re standing and you put on a headset and now you’re on a rollercoaster or you’re running through an active shooter game or something like that, yeah you’re going to get nauseous because your body is static but your brain thinks that it’s doing something else.
We take a lot of pride in making sure that the experiences we build along with some of the subtle things we do in the software aren’t going to lead to nausea.
Walmart, Verizon, BMW Having Success With Virtual Reality Training Technology – STRIVR CEO Derek Belch
“The market narrative is always it’s a zero-sum game,” says Imran Khan, co-founder and CEO of Verishop, a new Amazon competitor launching soon. “You are coming in and it’s Verishop versus Amazon or Snap versus Facebook. Those are great stories, but ultimately I fundamentally believe that all of us are on the right side of the history in a sense. Not one company will take everything. It’s just impossible for one company to solve every problem.”
Imran Khan, co-founder and CEO of Verishop, discusses how the Verishop shopping platform can compete and win market share from Amazon and others in an interview on Bloomberg Technology:
There’s a Lot of Opportunity to Innovate in Ecommerce
Ecommerce is now only 9 percent of the overall retail market. I believe that over the next decade 30-40 percent of all retail will be online. There are actually not that many consumer choices when you look for buying branded products, having a better experience, or having a better way to discover products. We think there’s a lot of opportunity to innovate. In markets like China, for example, where 25 percent of the market is ecommerce there are many more players in China compared to the US. So I think that’s a better way to bring joy in the consumer mind when they’re trying to buy things.
In my time at Snap I noticed that millennials like to do more research before they buy something. They also care about responsibility in terms of shopping. They care about economy and sustainability. If you as a consumer, for example, want to buy sustainable products where do you really go? So we have a lot of different ways of discovering products. On our platform, we’ll have around 200 different attributes that consumers can use to find products. I’m really excited to bring in a new way of shopping to consumers. The market is very large and I think it can accommodate a lot of players.
As Ecommerce Grows Not One Company Can Solve Everything
I really admire Amazon and I’m a shareholder of Amazon personally through my fund. However, I think as ecommerce goes from 10 percent to 40 percent, not one company can solve everything. Amazon is also a juggernaut. They do software, they do a lot of different things. Again, I really admire the company but there are a lot of parts of ecommerce that are not being addressed by existing players. I think we can bring that. For example, discovery, we know that because ecommerce is still very much intent based I think we can give consumers a lot of different ways to discover new products.
The key thing to keep in mind is the time spent on mobile device is only going to grow. The market narrative is always it’s a zero-sum game. You are coming in and it’s Verishop versus Amazon or Snap versus Facebook. Those are great stories, but ultimately I fundamentally believe that all of us are on the right side of the history in a sense. People are spending more and more time digitally and as people spend more time digitally there will be a lot more new businesses. Not one company will take everything. It’s just impossible for one company to solve every problem. Facebook does a great job with Instagram and Snap has done a great job with camera. I think one will be bigger and the other smaller, but only time will tell. But I think both can co-exist very well.
Verishop to Focus on Trust
We are going to launch in late June or early July. You will see our commitment in four areas. Number one is trust. Most of the ecommerce players are marketplaces. When you’re in a marketplace where anybody can go list something or anybody can post something the platform is prone to counterfeit and fraud. We saw that with eBay we saw that with Facebook with the Russians and we saw that with Talbot in China. What we’re doing is we’re acquiring all the product directly from the brands by guaranteeing that everything you’re buying is real.
Trust is going to become an important topic on the internet. Over the last 25 years, the internet was built on the premise of an open platform and we saw that when everything is open and there are no rules it brings chaos. We solve that at Verishop by sourcing all of the products that we are sourcing directly from the brands to ensure that they are real.
The second key thing (that distinguishes) the Verishop platform is discovering new products. Again, ecommerce is very much intent-based, so we are giving consumers more choices to discover products through a lot of different ways that you will see. Our third focus is we’re going to continue to make a big commitment on convenience. I know Amazon and other companies do this it but we’re going to continue to do so by offering free shipping, free return, all those kind of things. We’re excited and it’s just the beginning. It takes a long time to build a business and hopefully we’ll continue to bring new products and new innovation to the platform.
Verishop CEO Imran Khan On Competing With Amazon: “It’s Not a Zero Sum Game”
Walmart and Nuro have partnered to bring driverless grocery delivery to Houston, Texas, according to an announcement Nuro posted on Medium.
Nuro is a robotics company specializing in electric, self-driving vehicles. The company already operates a delivery service in Houston for Kroger. In their blog post, Nuro emphasized the benefits of working with Walmart, a company that revolutionized the supply chain and retail experience.
The service will be available to a select group of pilot customers at first.
“Nuro’s self-driving technology and fleet will power this pilot with Walmart to provide customers in Houston with another innovative, accessible option for getting the groceries they need day-to-day.
“To start, self-driving deliveries will be available to a pilot group of participants who have opted in to try the service, teaching us more about how to best serve those customers. Through the pilot, we’ll gain insights that will enable us to further develop and refine our service, while helping Walmart create the best end-to-end customer experiences.
“At Nuro, we believe in the power for self-driving technology to support and improve local commerce, and see this technology as a key part of our future. We’re working to expand our footprint in Houston, to maximize the impact of our delivery platform for the community at city-scale. Throughout 2019, we’ve been building toward this objective, and this partnership represents another step forward.”
Should the Nuro/Walmart venture prove successful, it’s a safe bet communities around the country may start getting their groceries delivered this way.
Google has used the National Retail Federation’s annual conference as a platform to unveil its latest efforts to gain retail cloud customers.
Amazon may be the dominant cloud player, but Microsoft and Google are both working to chip away at that lead. One area, in particular, that Amazon is vulnerable is in the retail market. Many retailers are reluctant to rely on the cloud giant, with whom they often compete with for online sales. Microsoft has made headlines lately with a focus on the retail market, emphasizing partnership with retail customers, rather than competing with them.
Google appears to be taking the same approach, improving their retail-oriented features in the hopes of continuing to be an appealing alternative to Amazon. According to a post on the company’s blog, Google has expanded its Retail Acceleration Program (RAP).
“That’s why we’re excited to expand our Retail Acceleration Program (RAP) to a broader set of customers in 2020. RAP is a services offering that helps retailers optimize their websites, build a unified view of customer data, and drive increased foot traffic. Today, we’re also expanding the availability of Customer Reliability Engineering, a white-glove service that helps retailers plan and execute flawlessly during their peak shopping seasons. Customers such as Kohl’s, Wayfair, and Shopify have already turned to Google Cloud to help them stay worry-free during Black Friday and Cyber Monday.”
Google is also using its position to help retailers provided a unified experience for customers.
“Retail customers are becoming more and more “channel-less” in their shopping. It’s imperative, then, to provide a consistent experience for customers as they move between channels in their shopping journeys. Our Google Cloud API Management for Retail solution, powered by Apigee, allows retailers to easily integrate the systems that power different sales channels, providing a more unified shopping experience for customers.
“Retailers struggle with the real estate that bulky computer servers take up in their stock rooms, and also face challenges in centrally managing all of their server applications. Today, we’re piloting Google Cloud Anthos for Retail, which helps retailers streamline and modernize their store operations. Rolling out more broadly in 2020, Anthos for Retail enables retailers to consistently deploy, configure, and manage applications across their fleet of stores at scale—without sacrificing performance or reliability.”
With Google a distant third among U.S. cloud providers, behind Amazon and Microsoft, it will be interesting to see if the company’s retail efforts yield results.
“The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there,” says legendary retail analyst Jan Kniffen. “But the 1,100 malls they’re struggling. It’s the levered retailers and the mall-based retailers that are struggling. We’re going to have 26 retail bankruptcies this year. But in a downturn, we could see 100 and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.”
We’ve had really good retail reports. Think about it. Walmart was fabulous. Target was fabulous. Home Depot was good. Lowe’s was good. Just run down through the group that has already reported and, in general, if you weren’t mall-based full price you did great. Off-mall did great, online did great, and discount did great. The retail market and the consumer couldn’t be better. Levered mall-based retailers are dead. The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there. But the 1,100 malls they’re struggling. They’re running down comps. The mall is not the place to hang out anymore. Now you hang out in front of your computer and then you go with your friends to do something like go to restaurants and you don’t care about hanging in the mall.
But the people hanging in the mall were never the people that bought the stuff in them. All the people who bought the stuff in the mall were all the women in America who went to work for the first time in the 1980s and blasted them all to the ceiling. We pulled everything out of the mall except for women’s apparel for all practical purposes and that has now settled into this nice slow roll. People don’t dress for work anymore and the malls not any fun and there’s plenty of other alternatives. Just 20 years ago when the mall was really booming we didn’t have a strong T.J. Maxx and Ross stores and Burlington stores. The stuff across the street from the mall was very boring in those days. Those are really good retailers today.
Business Is Moving Online At a Fierce Pace
The two best retailers in the world right now are Costco and Walmart. They are big, strong, have super supply chains, and can handle the tariffs no problem. They’ll gain market share under tariffs. They can even handle a downturn in the economy because they’re both super well-capitalized. Even people like Macy’s that have been struggling, they can handle a downturn in the economy because they’re not levered. They’ve got plenty of cash flow. They pay a 10 percent dividend and they buy back stock.
It’s the levered retailers and the mall-based retailers that are struggling. I keep saying we’re going to have 26 retail bankruptcies this year. We just got two more to talk about. But in a downturn, we could see a hundred and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.
We Know That Everybody’s Getting Out of China
We know that everybody’s getting out of China. They were getting out of China before the tariffs started. Now they’re just getting out of China faster. Yeah, the shoe guys are still getting 60 percent of their stuff out of China but it used to be 90 percent. The apparel guys are still getting 15 percent of their stuff out of China but it used to be 50 percent. So that’s already happening.
The tariffs have not been that big a deal. Tier four, the new tariffs that are about to kick in, if they kick in, would be a big deal for my world. But maybe they’re not going to kick in, which is the other thing that’s going on. We’re not really sure it’s going to happen but it’s still causing everybody to move faster out of China. So Trump has accomplished what he wanted to accomplish. He’s getting American business out of China.
The Mall Is More or Less Dead, Says Legendary Retail Analyst Jan Kniffen
“We’ve got 4,700 stores within ten miles of 90 percent of the US population,” says Walmart Ecommerce CEO Marc Lore. “In those locations, we’ve got about 100,000 products including fresh and frozen. We’ve started doing pickup a couple of years back and now same-day delivery to the door. We decided to take it a step further and actually deliver it directly into customers fridges and so far so good.”
Marc Lore, CEO of Walmart Ecommerce U.S., discusses In-Home Delivery and Next Day Delivery in an interview on Bloomberg Technology:
Walmart Now Delivering Groceries Directly Into The Fridge
This (delivery to a customer’s fridge) is a great opportunity for Walmart to leverage this unique asset to do things that only Walmart can do. We’ve got 4,700 stores within ten miles of 90 percent of the US population. In those locations, we’ve got about 100,000 products including fresh and frozen. We’ve started doing pickup a couple of years back and now same-day delivery to the door. We decided to take it a step further and actually deliver it directly into customers fridges and so far so good.
I do think this is a great step change in the value proposition. Imagine going to work and coming home and having all the groceries stocked in your fridge. We just saw (in a previous trial using a third party) a really big opportunity to use our own Walmart associates to do the delivery. Their W-2 employees. They’ve been with Walmart for at least a year. We feel like that’s a big advantage.
Can Deliver All Purchases Into Your Home Without Packaging
We don’t actually need to have cameras in the home. The actual associate will have a camera on their vest. You could actually as a customer track on your app the associate going into your home, putting groceries into the fridge, and then leaving. You can look at it in real time or you can go back and look at it anytime you want. It’s very safe for customers as well.
There are lots of possibilities (that will stem from in-home deliver). For example, being able to do a return. Imagine just leaving something on your kitchen table. That’s it, going to work and coming home and we’ll just take it away from you. Also, being able to deliver general merchandise into your home without any packaging. I think there’re lots of opportunities for services and health and wellness and all sorts of opportunities. We’re thinking them through now. We have some ideas.
One Day Delivery Actually Costs Us Less Than Two Day
Next Day Delivery has been great so far. It’s down in the LA region right now. By the end of the year, we’ll have about 75 percent of the population will have access to Next Day Delivery. Typically, the cutoff time is around 3 p.m. If you order by 3 p.m. you will get it the next day in a single box. That’s the other great thing too. A lot of times now you might receive it in multiple packages. It’ll be overnight in one box. We are really excited about that.
It actually costs us less than Two Day Delivery. The big reason is that we’re able to get it in a single box. All this inventory is now mirrored or replicated close to the customer. If it’s close to the customer and it costs us less to ship it. If it’s one box it costs us less to ship as well. So yes It’s actually cheaper. We’re just being very measured in how we roll it out. By the end of the year, three-quarters of the country will have it. It’s gonna be moving pretty fast. About 40 of the top 50 metro areas will have access to it. So it’s about four or five areas a month that we’re adding.
Dramatically Improved Contributed Profit Margins
Right now, we’re in a really good position (regarding online profitability). Over the last year, we’ve dramatically improved our contributed profit margins. We’re starting to drive more mix into the higher margin categories like fashion and home. So feeling really good about the momentum we have. We have some dates in mind that we’re not obviously sharing. But we feel good about where we are right now. We feel really good about where we are and where we’re going.
Walmart Now Delivering Groceries Directly Into The Fridge – Walmart Ecommerce CEO Marc Lore
FedEx has announced “that FedEx Ground has officially started delivering FedEx Home Delivery packages on Sunday for the majority of the U.S. population.”
The moves comes as FedEx strives to “better serve the fast-growing e-commerce market.” Over the holiday season, Amazon banned its third-party sellers form using FedEx Ground over concerns the service was too slow and that packages would not arrive in time for Christmas. The news should go a long way toward dispelling those concerns moving forward.
“Now that FedEx Ground delivers FedEx Home Delivery packages on Sundays to most U.S. residences, we have increased our speed advantage significantly to kick off the new year,” said Raj Subramaniam, president and chief operating officer of FedEx. Corp. “This provides added value to e-commerce shippers throughout the U.S. and the 188 million online shoppers in 7,700 cities and towns where FedEx Home Delivery packages are delivered on Sundays. As more customers expect weekend delivery, this enhancement to our network means that every day is now a delivery day at FedEx.”
The change is another example of the increasing importance of e-commerce to the U.S. economy and the changes companies are willing to make to keep pace with it.
“I don’t know about social commerce overall but I definitely know that our users often want to buy the things they find on Pinterest,” said Pinterest CEO Ben Silbermann while discussing going public on the NYSE. “A lot of people say they discovered a product or service while browsing Pinterest,” says Silbermann. “We just want to make it easier for them to go from that inspiration all the way to reality, which in this case would be a purchase.”
Pinterest was initially priced at $19 per share, which gave it a value of $10 billion on Wednesday morning. The company closed Friday up 28% at $24.40, which vaulted Pinterest to a value of just under $13 billion.
Pinterest Goes Public on the NYSE!
Ben Silbermann, co-founder and CEO of Pinterest, discusses on Bloomberg how Pinterest is unique both in how consumers use the product and how advertisements have simply become part of the experience:
The Ads On Pinterest Can Actually Be Really Additive
We really talked with investors about how regular people use the product every day. People use it to get inspiration for a whole range of things, everything from the food they cook to the clothes they wear to their homes. It’s really more about your personal inspiration and it’s less about your friends. It’s not really about following celebrities in the news. We wanted to make sure that everyone understood that because that’s how our users see the product every day.
The thing that makes it really special is that the reason people are on Pinterest is to get inspiration and do things with their life. It’s really lined up with what advertisers want which is to inspire new customers and get them to buy products and services they really love. What that means is that the ads on Pinterest can actually be really additive as long as we do a good job of making sure they’re highly relevant. I think that’s just really different from a lot of media companies where ads are candidly a little bit of a tax. That difference in alignment I think is the biggest difference between us and some other media properties.
My Eye Is On What’s Going to Make Pinterest Great 10 Years From Now
I still think there’s a real opportunity to grow over time and increase engagement. A lot of people might use Pinterest for one thing or two things but they don’t know the wide range of different ways people all over the world use the product. I also got to say that we’re super proud that we’re growing globally. If it (IPO) was just a few years ago the story would have been primarily a US-based service. It’s just really fulfilling for the company to know that the product works all over the world.
We’re in the very first chapter of that story (selling internationally) so we’re just hiring our first local sales teams in places like Canada, Western Europe, Germany, and France. We’re just at the beginning of the journey but I think there’s going to be a real opportunity to show the same great results we’ve seen in the United States to advertisers all over the world. We’re going to continue to invest for the long term. We’ve shown really good margin improvement over the last few years but my eye is always on what’s going to make Pinterest great three years, five years, and even ten years from now. That’s going to be how we continue to run the business and we’re really excited to see it keep growing.
We Want To Make It Easier For People To Go From Inspiration To Purchase
We’re always working to make sure people can bridge that gap between seeing something inspiring and doing it. One area that we’re investing in is making sure that we match inspirational images with more and more products that are at a price point that matters for people and for retailers they really trust. We just enabled people who are retailers to upload all of their catalogs into Pinterest. We’re investing a lot into computer vision technology to match those products with images and we’re not just doing it with shopping, we’re also doing it with all the different use cases. If you have a recipe on Pinterest now you’ll see the ingredients and people can write reviews. If you have a DIY project you can see other people’s experiences, whether it was easy or whether it was a little harder than they expected.
I don’t know about social commerce overall but I definitely know that our users often want to buy the things they find on Pinterest. A lot of people say they discovered a product or service while browsing Pinterest. We just want to make it easier for them to go from that inspiration all the way to reality, which in this case would be a purchase.
Making It Easier For People To Go From Inspiration To Purchase – Pinterest CEO
