Amazon released its first quarter results, beating analysts revenue estimates while falling short of their earnings-per-share estimates.
Amazon has been at the center of the coronavirus pandemic, as the e-commerce giant has become a lifeline for many consumers sheltering in place. At the same time, Amazon has struggled to keep up with demand, initially hiring 100,000 extra warehouse workers, only to announce they would hire another 75,000 after that. The company also cut back fulfillment on non-essential items in an effort to keep up.
“From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never “before, but it’s also the hardest time we’ve ever faced,” said Jeff Bezos, Amazon founder and CEO.
With their earnings report, the dichotomy of Amazon’s position was made clear. The company reported $75.5 billion in revenue, up from analysts’ expectations of $73.61 billion. However, earnings-per-share were only $5.01, instead of the $6.25 analysts expected.
Even more significantly, the company expects to spend all of the operating profit it will earn next quarter in an effort to deal with the challenges it’s facing as a result of the pandemic.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit,” Bezos continued. “But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities.”
Many tech companies have expressed concern about the next quarter, in spite of doing reasonably well this quarter, and it appears Amazon is no exception, despite how important it has become during these times.
They’ve become a familiar sight in shopping malls, but Microsoft has announced it is permanently closing its retail shops.
The company’s announcement reflects the changing retail landscape in the wake of COVID-19. Like most industries, the pandemic forced Microsoft’s retail employees to work remotely, where they focused on helping customers do the same. As a result, and thanks to the success of that initiative, the company will continue to focus on remote sales teams, providing assistance to customers all over the world.
“Our sales have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success serving customers beyond any physical location,” said Microsoft Corporate Vice President David Porter. “We are grateful to our Microsoft Store customers and we look forward to continuing to serve them online and with our retail sales team at Microsoft corporate locations.
“We deliberately built teams with unique backgrounds and skills that could serve customers from anywhere. The evolution of our workforce ensured we could continue to serve customers of all sizes when they needed us most, working remotely these last months,” continued Porter. “Speaking over 120 languages, their diversity reflects the many communities we serve. Our commitment to growing and developing careers from this talent pool is stronger than ever.”
This is a significant change in the company’s operations and it’s unlikely Microsoft will be the last company to reimagine its retail operations.
“One trend that is going to happen is that travel as we knew it is over,” says Airbnb CEO Brian Chesky. “It doesn’t mean travel is over, just the travel we knew is over… and it’s never coming back. It’s just not. Not surprising, we’ve spent twelve years building Airbnb’s business and lost almost all of it in a matter of four to six weeks.”
Brian Chesky, CEO of Airbnb, discusses how COVID has wreaked havoc on the travel industry and Airbnb and how it has literally changed travel as we know it.
Airbnb’s Built Over 12 Years – Gone in 6 Weeks
One thing I’ve learned is not to try to get in the business of predicting the future. Anyone who has made predictions has not done very well in the last few months. What I can tell you is the following. Beginning with March travel was at a standstill, almost virtually stopped. There were 2.5 billion people locked down. Not surprising, we’ve spent twelve years building Airbnb’s business and lost almost all of it in a matter of four to six weeks.
What’s happened over the last three or four months though is something else entirely. People are saying they want to get out of the house but they want to be safe. They don’t want to get on airplanes. They don’t want to travel for business. They don’t want to go to cities and they don’t want to cross borders. What they are willing to do is to get in a car and drive a couple hundred miles to a small community where they are willing to stay in a house.
Now Something Remarkable Has Happened
Because of that, although our business has not recovered, something remarkable happened. At the end of May and early June, we have the same volume of bookings in the United States as the year before… without any marketing. Zero marketing whatsoever. This is just showing that people are yearning for something. They’re yearning for connection. They want to be connected to the communities and to each other. They want to get outside. I think that travel is going to come back. It’s just going to take a lot longer than we would have thought and it’s going to be different.
We have dramatically reduced our costs. We reduced our cost and it was an incredibly difficult and harrowing experience. We said that we don’t know how long this storm will take so I’m going to hope for the best but I’m planning for the worst. So if there is a new shutdown or multiple shutdowns and travel stops again we will be okay because of the changes we’ve made. We’ve cut nearly a billion dollars of marketing. We’ve had to reduce our staff, and we’ve become very lean and nimble.
We’ve also been resilient. We’ve launched online experiences that people can do from home. We have longer term stays. A large percentage of our bookings, almost a fifth, are for stays longer than 30 days. Another thing is that we have not lost any hosts on our platform. We actually have more hosts and homes today than before COVID started. The important thing here is that the market is resilient.
Travel As We Knew It Is Over
One trend that is going to happen is that travel as we knew it is over. It doesn’t mean travel is over, just the travel we knew is over… and it’s never coming back. It’s just not. No one quite knows what it will look like but I have a couple of thoughts. Instead of the world’s population traveling to only a few cities and staying in big tourist districts we are going to see a redistribution of where people travel. They’re going to start traveling because they are going nearby to thousands of local communities.
We have had fairly ambitious real estate expansion plans and we have paused those plans. We are not adding more real estate. I think more people are going to work remotely. Also, working from home can be working from any home, and that’s an opportunity for Airbnb. You are going to see major population redistribution on the table. Not everyone is going to want to live in the same city. That being said, we don’t know the full cost of entire workforces being remote.
Airbnb CEO Brian Chesky: Travel As We Knew It Is Over
T-Mobile took another step toward welcoming Sprint customers to the magenta family by giving them access to T-Mobile Tuesdays deals.
T-Mobile Tuesdays is the company’s loyalty rewards program that gives customers free stuff and discounts on popular services every Tuesday. According to the Un-carrier, over the past four years it has given away over $900 million in rewards.
With T-Mobile’s merger with Sprint now complete, the company is officially opening T-Mobile Tuesdays to Sprint customers.
“Four years ago, T-Mobile Tuesdays flipped the script on the traditional loyalty program. We believe customers shouldn’t have to spend more or collect points to be appreciated — especially right now. At T-Mobile, it’s about getting thanked, simply because you’re with us … and we’re with you,” said Mike Sievert, CEO of T-Mobile. “And now, we welcome Sprint customers with our biggest thankings ever this summer. Why? Because thank you. That’s why.”
Sprint customers are already enjoying access to double the number of LTE towers and better coverage nationwide. Today’s announcement is just an added benefit for the latest additions to the T-Mobile family. To take advantage of the rewards program, Sprint customers should download the iOS or Android app.
“Ecommerce exploded when everybody got their stimulus checks,” says marketing superstar Gary Vaynerchuk. “It reminded me how much of a materialistic capitalistic country we are. The numbers are through the roof on food and beverage and things of that nature. Obviously, apparel has been hit in certain ways also. But net-net this is a capitalistic materialistic country and people want to buy things so you’re seeing a ton of activity.”
Gary Vaynerchuk, CEO of VaynerMedia and host of his own “GaryVee” channel on YouTube with 2.6 million subscribers, discusses how ecommerce is booming in spite of the current pandemic:
Ecommerce Exploded With The Stimulus Checks
Ecommerce exploded when everybody got their stimulus checks. It reminded me how much of a materialistic capitalistic country we are. A lot of my businesses are in ecommerce and I was “micro happy.” But I was macro disappointed because I’m hoping that people learn how to save money during this time. With VaynerMedia, my marketing firm, we sit with a lot of Fortune 500 companies that have consumer brands and we’re very involved in a lot of their e-commerce businesses.
The numbers are through the roof on food and beverage and things of that nature. Obviously, apparel has been hit in certain ways also. But net-net this is a capitalistic materialistic country and people want to buy things so you’re seeing a ton of activity. Sports cards are a space I pay attention to. I can’t believe how well it’s doing.
People Still Think Another Stimulus Check Is Coming
I actually think the macro conversation is the way this is all playing out. It’s disguising some of the economic vulnerabilities because we’re still in this cocoon. People still think there may be another stimulus check coming for me. As soon as this is over I’m gonna get a job.
I think the most interesting part of this from a kind of thoughtful economic standpoint it’s kind of that first month to three months or four months after it gets back to normal-ish. I’m really eyeing February, March, and April of next year where I think that you could see a dip because people will say wait a minute we’re in something bad. Right now I think it’s fake to some people.
Ecommerce Exploded When Everybody Got Their Stimulus Checks
Tech visionary Jason Calacanis, in an interview on CNBC, says that California and Silicon Valley are doing everything they can to get rid of great companies like Telsa:
It seems like they’re singling Elon Musk out for some reason which is a really stupid mistake on the part of California. Elon Musk is a once-in-a-generation entrepreneur and the products he makes are second to none. They’re the category killers and category redefiners. At the end of the day what we do in investing in companies here in Silicon Valley and what you do in making bets on the public markets is about world-class products and services. This is the world-class product in the automotive space and it’s better than anything the incumbents have.
California is doing every they can everything they can in terms of taxes and in terms of regulation to get great companies out of here. In Silicon Valley right now the entire conversation is why am I here? Why am I paying these prices? Why am I dealing with dysfunctional government on the local level and on the state level? People are looking at Texas, Nevada, Florida, and Tokyo. People want out of this town. This a very real trend.
“If people can ride the subway and if people can go to Trader Joe’s and pack into all these different places we can start to open factories,” says legendary tech entrepreneur Jason Calacanis during an interview on CNBC:
When we look at the issues around reopening it’s very confusing for people running businesses today and I think for Americans generally. We’re not allowed to go to the beach and we’re not allowed to play golf but we can take the subway. This is the incredible failure of our government from the federal level down to the local level to not be able to give basic instructions and to have a clear voice.
Somehow this has turned into a political issue which is the worst of all outcomes. You’re a Republican right-wing person if you want to go back to work. On the left if you let people go back to work you’re committing murder. It’s ridiculous. We have to take a much more measured thoughtful approach to let people go back to work who want to. I understand people are scared people and they can opt-out of this.
We’ve got a lot of people who work behind keyboards, some of them in the media, who really want to tell people they can’t go back to work when they have a six-figure job clicking keys on a keyboard. It’s not very realistic. Certainly, if people can ride the subway and if people can go to Trader Joe’s and pack into all these different places we can start to open factories.
If People Can Ride the Subway We Can Open Factories, Says Jason Calacanis
Facebook and Instagram may be the darlings of many advertisers, but data shows Google is still the king of driving ecommerce traffic.
Analytics firm Oribi conducted an extensive study of shopping trends in 2019 and the results show that Facebook and Instagram still have a long way to go. According to the study, direct traffic in the form of mobile apps, email marketing and direct input accounts for nearly half of all traffic at 48.9%.
Behind that, however, is Google organic search at 20.6%. Rounding out the top three is Google paid search at 14.1%, while Facebook and Instagram came in at 9.6% and 1.5% respectively.
“Everyone seems to talk about Facebook’s shopping potential, but Google is, by far, the second traffic driver for online stores,” said Iris Shoor, Founder and CEO of Oribi. “And, despite Instagram’s rise, it’s responsible for less than 2% of traffic, even across the fashion stores we analyzed.”
When it comes to conversions, the news doesn’t look much better for either Facebook or Instagram. Google paid search provides 2.7% conversion rates, while Google organic search results in 2.5%. Facebook and Instagram, both paid and organic, only result in 1.5% and 0.8% respectively.
The study also showed a relatively clear distinction in the type of shopping the different platforms drive. Social media drives cheaper purchases, the digital equivalent of window shopping. In contrast, Google performs better for larger purchases where an individual is looking for, researching and buying something specific.
One thing is clear from Oribi’s study: Facebook and Instagram will need to work hard if they have any hope of challenging Google’s dominance in the ecommerce realm.
“How do we shorten the space between a signal that we get, say in behavioral data that we see show up either in an app or on a website, and then churn through all of the possibilities of what we could present, apply algorithms to determine what is the next best offer and next best experience?” asks Adam Justis, Director of Marketing at Adobe Experience Cloud. “Then how do we present that in a way that actually feels if not real-time pretty close to it? That would not be possible without artificial intelligence.”
Role of AI in Offering a Personalized Shopping Experience is Core
You definitely have the data piece and then the content piece. I would also add how the complexity of all that has certainly exceeded the capacity to manage this in a singular sort of engagement with a customer, let alone at scale millions of times a day. So the role of artificial intelligence and machine learning now is so core. It’s sort of the gearbox that’s turning at the center of the data on one hand and the content and elements, the assets, the offers, on the other that allows for ultimately the coalescing of those things and then the delivery of an experience worth having.
That’s the component pieces that we’re seeing at play and Adobe’s motivation in going into that space. At Adobe when we announced our intent to acquire Magento, we were talking about how does Adobe facilitate or help every experience become shoppable and every moment personal? Really that was a claim we couldn’t make without the Magento piece. It is absolutely a hand in glove relationship especially as we’ve all evolved as consumers.
Advancements in AI Are Going From the Absurd to the Very Real
To imagine that we would be subscribing to socks or that we could one-click purchase just about anything, you need the technology that can keep pace with the expectations. That’s what it’s all about. So many of those experiences that Adobe is intent on enabling our customers to present culminate in a transaction of some sort. Magento is absolutely not only the icing on the cake but it’s also so integral. It’s becoming a fundamental or elemental part of what we’re trying to accomplish.
That (personalized experience) is one of the things that I absolutely love about customer experience management or CXM. In a way I kind of love the absurdity of it. When you think of the scale, to say something like we’re going to make every experience shoppable and every moment personal, to imagine that that’s possible is almost absurd. But when you introduce the advancements that we’re seeing in artificial intelligence and machine learning now it’s literally going from the absurd or the realm of science fiction into very real. That’s what Adobe is looking at.
Without AI Real-Time Personalization Would Not Be Possible
How can we literally take some sort of statement like we’re going to personalize experiences across the customer journey and we’re going to do it at scale and in real-time? Really, unless you’re considering how we’re going to meet the needs of the customer in the moment that they’re expressing that need then it’s really moot. It is absolutely artificial intelligence and machine learning that we’re seeing expressed now across the Adobe Experience Cloud that is making that happen in multiple ways. One of the ways would be simply by shortening that span between the latent genius that marketers are walking around in their heads and actual execution. How can we take some of the friction out of the workflows that allow them to translate their ideas into offers?
How do we shorten the space between a signal that we get, say in behavioral data that we see show up either in an app or on a website, and then churn through all of the possibilities of what we could present, apply algorithms to determine what is the next best offer and next best experience? Then how do we present that in a way that actually feels if not real-time pretty close to it? That would not be possible without artificial intelligence. At Adobe we do that through a product called Adobe Sensei.
Adobe: Without AI Real-Time Personalization Would Not Be Possible
“We got our virtual banking license in April,” says WeLab CEO Simon Loong. “These are very exciting times. We’re busy building a bank, hiring, recruitment, that’s our core focus. What we’re working on right now is rebuilding the core functions of the bank but with a more innovative and more tech-driven approach. Traditional banks have their own way of doing things, but what we’re looking at is how do we look at offering technology-driven banking through innovation and technology?”
Simon Loong, co-founder and CEO at WeLab, discusses building a virtual bank in Hong Kong and how that will revolutionize banking in favor of the customers in an interview on Bloomberg at the Rise Conference in Hong Kong:
We’re Offering Technology-Driven Virtual Banking
We got our virtual banking license in April. These are very exciting times. We’re busy building a bank, hiring, recruitment, that’s our core focus. We’re looking at how do we launch a bank within this year and we’re still on track for that. What we’re working on right now is rebuilding the core functions of the bank but with a more innovative and more tech-driven approach. Traditional banks have their own way of doing things, but what we’re looking at is how do we look at offering technology-driven banking through innovation and technology?
We look at three I’s. How do we offer financial services instantly to consumers? The second is intelligence. How do we actually use data to predict what customers need and offer them the right set of products? The third is interactive. How do we interact with our customers? Marketing does not talk to people with a phone anymore, it’s completely through mobile apps.
Virtual Banking Is An Emerging Trend For Hong Kong
Competitiveness in the market is a very interesting thing that we’re seeing. Even now, before the launch, in just the last couple of weeks, four of the major banks in Hong Kong started reducing the minimum account balance in anticipation of the virtual banks launching this year. Existing banks have to change the way they work and we’re seeing that right now. Going forward, what we think will happen is initially people will have a second virtual bank account. They will enjoy it, use it, and it will increasingly become their core bank account.
For the younger generation who will come on to banking for the very first time in their lives maybe this will be their primary bank account going forward. Our internal projection is that this is going to be the emerging trend for Hong Kong. Virtual banks will offer better choices and more choices for consumers. In the end, consumers will be the beneficiaries of it. We haven’t looked at pricing yet but what we’re looking at is how an innovative customer experience allows us to attract customers. We look at the younger millennial tech-savvy set and what they look at is actually a better customer experience rather than an incremental few basis points on their savings.
Virtual Banks Have a Competitive Advantage
We as bankers have been trying to do (virtual banking) in the past in traditional banks as well. What we always found the difficulty in was the legacy systems, traditional management layers, and layers of (obstacles) that were built over the years. How do we unwind them? Starting afresh definitely has its own benefit. Also, if you look at traditional retail banking, it was built as a branch distribution model. You have branches, telephones, and stuff like that. Then you finally added onto it a layer of core internet and mobile.
Legal and compliance are an extremely important part of this and virtual banks are subject to the same regulations as a normal bank. But I think virtual banks do have a competitive advantage. Number one is when you start afresh you don’t have layers and layers of manual processes that you’ve built in the past. You start with the latest and most dynamic kind of regulatory regime in mind. The second thing is that virtual banks will initially offer simpler financial products where you have actually fewer compacts and compliance infrastructure to monitor. traditional banks typically have a wide array of products that you need to monitor. That allows virtual banks to be more specific and more nimble.
Adding a multi-only-channel approach becomes increasingly more complex for it to break down. If we start afresh where we only have mobile-only or online-only, that simplifies things and allows you to have a much faster time to market. That is very important in this very competitive world.
Focused On Building a Fantastic Virtual Bank
What we are going to look at is how do we build a bank with good economics and also provide customer lifetime value? In the past, we looked at products and their profitability. But what we look at right now is a whole relationship and a customer lifetime value by cohort and how they actually become profitable over the years. Bringing a customer on board today may not be profitable because of acquisition costs. Over time, when they become more and more loyal to us, when we have more products and services, and when they become more engaged with us (they will be profitable). It will be a new way of looking at the whole P&L, managing it on a customer lifetime value on a cohort basis.
We are massively hiring. I think this is an exciting time for virtual banks right now. We are looking at very specific talents, for example, in areas like products, technology, and compliance. These are areas that we are hiring for. I think for us we learned as a homegrown fintech champion in Hong Kong our benefit is that we already have an existing team in Hong Kong versus the rest of the virtual banks. We have around 80 to 100 people in Hong Kong today. What we need to do is just fill certain skillset gaps that we don’t have. What we’re looking for specifically is bankers with an open mind and intellectual curiosity who wants to do something different and build a bank that they love.
What we’re focusing on is building the bank now to make it a fantastic virtual bank in Hong Kong launching by the end of this year.
We’re Offering Technology-Driven Virtual Banking, Says WeLab CEO Simon Loong
“You’ve got to bail everyone out,” says Expedia and IAC Chairman Barry Diller. “This is like when you’re picking losers and winners. Everybody is in the same position which is the world stopped for commerce. You see this when you drive down streets and you see big cities and small cities and you see nothing is open. They’re ghost towns. The damage that is being done every day is enormous. Everybody needs to be bailed out of this one-time thing and we’ll worry about paying the bills later.”
Barry Diller, media mogul and Chairman of IAC and Expedia, says that every business in the United States must be bailed out in an interview on CNBC:
You’ve Got To Bail Everyone Out
What we’re doing at Expedia is using the time to do a lot of the things that we were not able to do when we were running a hundred miles an hour to keep up with our growth. You can think of it as a small business writ large. And then one day the door closes. And if you’ve got a small business with nobody coming in you have no revenue. Well, travel-related companies have no revenue. Expedia, like many large travel companies, has a very very large cost base so we haven’t yet dealt with that specifically. The real planning inside the company is to come out of this stronger than when we went into it.
The bailouts of the airlines are necessary. Full stop. You’ve got to bail everyone out. This is like when you’re picking losers and winners. Everybody is in the same position which is the world stopped for commerce. You see this when you drive down streets and you see big cities and small cities and you see nothing is open. They’re ghost towns. The damage that is being done every day is enormous. Everybody needs to be bailed out of this one-time thing and we’ll worry about paying the bills later.
What has to happen is the fear has to decline
What has to happen is the fear has to decline. The fear of associating with other people. There are plenty of friends of mine who say I’m not going to go to the theater or I’m not going to do this because I’m afraid. Actually, now people are saying, even though you’ve been isolating for three weeks you can’t come over to my house, which is kind of nuts. Fear is the next thing that’s going to thaw. Until that happens, whether you test people on the way in or whatever you do, at some point everybody’s going to have to be comfortable being a foot away from other people. If that fundamentally changes then a huge amount of our infrastructure disappears, which I don’t think will happen.
You kind of have to get over it (the fear). You go into a theater and you’re sitting literally within inches of people, you go in thinking that no one is going come in with enormous toxicity. No one is going to come in who has got some terrible communicable disease and sneeze on you. You kind of just trust in that. We’re all too frightened right now. We’re gonna have to get over it or everything will change.
One Way Or the Other This Is Going To Be Over or We’re Over
When we see the damage that is being done everywhere we’ll really see in the second quarter (what’s happening). How can you get fair value? I absolutely believe that in a year or two from now this will be over. One way or the other this is going to be over or we’re over. But how can you value that today? I don’t think you can do it?
II think the streaming will be impacted by (the crisis) also. You go a few more months and while people say (that Netflix) and other subscriptions to entertainment) will be the last things they’ll cut because people feel they desperately need it to just get through the day but that is eventually going to take its toll. People truly will not have the discretionary income to afford it.
Cornoavirus Doesn’t Change the Dynamics of Anything
But it doesn’t change the dynamics of anything. You’ve got the competitors. Streaming has taken over the world. Hollywood is irrelevant. The only companies that have a true path, an absolute clear business model path forward, have nothing to do with the entertainment business. Amazon and Netflix. Everybody else, good luck to them. They may be able to build subscription services that may be profitable but that world has changed forever. I think this pandemic has nothing to do with it other than earnings that are going to be much less for a while.
Of course, there are opportunities (to invest in) you just have to have a very long view or sure-footed look at things as not only they are but as you think they will be. We’re looking at some very large potential acquisitions for IAC. This is the environment where if you are acquisitive you’re going to do the thing that for many years everybody’s asked for. Oh my God, everything’s over-inflated and prices are crazy. You can’t buy things for this or that without these new premiums. Well, you know what, that’s all gone. If you’ve got capital what could be a better time than to exploit what is a terrible downfall for many companies.
You’ve Got To Bail Everyone Out, Says Barry Diller
In a letter to shareholders, Amazon CEO Jeff Bezos said regular testing may be a critical component in protecting Amazonians.
As the coronavirus pandemic continues to take its toll, Amazon has become a critical lifeline for many individuals and organizations. The company recently hired an additional 100,000 warehouse workers, only to announce it would hire an additional 75,000 more to help keep up with demand.
At the same time, the company is facing challenges keeping its workers safe. As workers become infected, there is an ever increasing threat of the virus spreading and shutting down entire warehouses and distribution centers, threatening the entire supply chain. To help reduce the risk, Amazon already has a team working on building out incremental testing capacity.
“A next step in protecting our employees might be regular testing of all Amazonians, including those showing no symptoms,” writes Bezos. “Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running. For this to work, we as a society would need vastly more testing capacity than is currently available. If every person could be tested regularly, it would make a huge difference in how we fight this virus. Those who test positive could be quarantined and cared for, and everyone who tests negative could re-enter the economy with confidence.
“We’ve begun the work of building incremental testing capacity. A team of Amazonians—from research scientists and program managers to procurement specialists and software engineers—moved from their normal day jobs onto a dedicated team to work on this initiative. We have begun assembling the equipment we need to build our first lab and hope to start testing small numbers of our frontline employees soon. We are not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn.”
Bezos’ announcement is good news and will hopefully help ensure Amazon is able to keep its employees safe, and keep the supply chain running.
Expedia and IAC Chairman Barry Diller said that the economic and business landscape caused by the coronavirus and the political actions to fight it have been cataclysmic. Diller does not see a return to normal anytime soon. He believes that people will first have get over being scared and that won’t be easy.
Barry Diller, Chairman of Expedia and IAC discusses our current “cataclysmic landscape in an interview on CNBC:
I See the Landscape As Cataclysmic
I see the landscape as cataclysmic,” says Diller. “We’re in something that it’s very hard to be objective about because we’re in the eye of it and we’re inside of it. We can’t really see it for what it is. Everybody says the same thing there’s been nothing like it before and while we know some things we really know nothing. We know nothing about what happened and when we’re going to get out of it. “
What will we be doing and will our habits change? Will this result in some really profound difference in people’s lives in the future? So I see it as everybody is scared. The fact that we have so much media and so much information with all it telling us that we’ve got to be quite scared about cohabitating with anyone. That ain’t good.
A Quick Return To Normalcy Will Not Happen
No, (I don’t believe that we will go back to normal on the other side of this as we did after 9/11). What I said then was that if there’s life there’s travel. I still do believe that but this is not going to be what happened then which was a very very quick return to normalcy. That is not going to happen. At best, we’ll have kind of a rolling way out.
As far as travel is concerned, while I’m absolutely optimistic that it will happen at some point, I don’t think it will be soon. It will probably be September, October, November, or December to really get life back. And in order to travel, you have got to have that. So they’re totally different conditions. This is not analogous. I don’t think this is analogous to anything and is certainly not analogous to 9/11 and to the financial crisis in 2008.
Amazon announced it has hired the initial 100,000 warehouse workers it originally pledged, and is now hiring an additional 75,000.
In the midst of the worst pandemic since the Spanish Flu, Amazon has been a lifeline for many individuals. The e-commerce giant has been struggling, however, to keep up with demand for groceries and basic necessities, even limiting fulfillment of non-essential items. In an effort to keep up, Amazon previously announced it would hire an additional 100,000 warehouse workers, even starting them at $2 an hour more than standard pay.
Now the company has confirmed it has hired those initial 100,000 additional workers, and is expanding its hiring to include 75,000 more.
“Today, we are proud to announce our original 100,000 jobs pledge is filled, and those new employees are working at sites across the U.S.,” reads the company’s blog post. “We continue to see increased demand as our teams support their communities, and are going to continue to hire, creating an additional 75,000 jobs to help serve customers during this unprecedented time. Interested candidates can apply at www.amazon.com/jobsnow.”
Amazon’s announcement is good news for everyone concerned. The additional workers will help the company keep up with demand as the crisis drags on, while the new jobs will be a lifesaver to individuals whose livelihood is being impacted.
“There are some banks who are actively trying not to take applications and to minimize the number of loans they make through the program,” says investor Mark Cuban. “This is despite the fact that it pays a five percent commission for the loans made on the small businesses. It might take the Treasury Department really pushing some banks who were unwilling participants to start to push some loans out there.”
Some Banks Actively Not Taking PPP Loan Applications
You have got to execute on what you’ve already promised obviously. Small businesses have been told that this (PPP forgivable loan) was coming since the legislation was passed more than almost two weeks ago. The rush was more than the banks were able to handle. The banks have just got to do their job.
Part two to that is I think there are some banks who are actively trying not to take applications and to minimize the number of loans they make through the program. This is despite the fact that it pays a five percent commission for the loans made on the small businesses. It might take the Treasury Department really pushing some banks who were unwilling participants to start to push some loans out there.
Surprising That Banks Not Taking Advantage Of Opportunity
It’s kind of surprising to me because the reality is that the Fed has said that they’ll buy back all the loans. Plus on top of that, they’ll pay that five percent origination fee slash commission for smaller loans. So banks have an incentive and it’s a unique opportunity for banks to pick up new clients. Never in the history of banking has a bank been able to say to a small business, I’ll loan you money and if you increase or maintain your employment you don’t have to pay it back.
I really truly expected that forward-thinking banks would use this as a way to attract new customers because it’s a unique opportunity. But they just haven’t. It’s going to take some prodding, unfortunately, to really get the stimulus in the hands of those who need it. Also, unfortunately, even more so, it’s a race against time because a lot of these companies are looking at going out of business if they don’t get that money in their hands.
Mark Cuban: Some Banks Actively Not Taking PPP Loan Applications
“The important thing to think about is that the biggest threat to brick-and-mortar retail is really the current version of themselves,” says Caruso CEO Rick Caruso. Caruso is one of the most successful retail developers in the United States. “Many of them have to evolve and many of them have to change because the consumer is going to change. This crisis, I believe, is going to change consumer culture, their expectations, and what they want from retailers in a really significant way.”
Rick Caruso, founder, and CEO of the Caruso real-estate empire discusses how retail will be forever changed even after the current crisis is over:
This Crisis Is Going To Change Retail
I hope (retail jobs) come back I think some are going to be lost. The retail environment is tough out there right now. The important thing to think about is that the biggest threat to brick-and-mortar retail is really the current version of themselves. Many of them have to evolve and many of them have to change because the consumer is going to change. This crisis, I believe, is going to change consumer culture, their expectations, and what they want from retailers in a really significant way.
They’re going to be winners and they’re going to be losers. I think the winners are going to be very connected. They’re going to be curated and feel more local. They’re going to feel more personalized and they’re going to have a better value proposition. There are many out there that we’re doing that before this crisis began and they’ll continue to do it. I think they will be rewarded with great success and hopefully, they will drive a lot of hiring. There will be more retail jobs coming back into the current economy.
People Are Going To Want More Physical Space
I do think that people are going to want to have more physical space (after this crisis is over). I think they’re going to operate differently. Listen, 9/11 fundamentally changed our habits as human beings. But the one thing that is always crystal clear is we’re human souls that want to have a sense of connection and community and our properties provide that. The challenge for retailers inside their four walls is going to be to meet the customer where the customer wants them to be.
The very innovative and very smart retailers are going to do very well. When you get to crowded restaurants and things like that I think they’re going to have to change how they operate. Movie theatres may have to change how they operate for a while. There’s certainly going to be a shift. What we have seen is the isolation gets very tiring very quickly. So I think people are going to want to come out and they’re going to want to celebrate life and they want to connect with their community.
Economy Is Built On The Back Of The Entrepreneur
Some (of our retail tenants) are and some aren’t (paying rent right now). The ones that I worry about the most and I care about a lot are the smaller ones. These are the entrepreneurs and the people that have started a small business or a small restaurant. We’re leaning in with all of those to support them. I’m a big believer that the economy is built off the back of the individual entrepreneur.
We’re going to support them to get them reopened so they can rehire and move forward. The tenants that are more creditworthy, which is a big chunk of our portfolio, they have been paying. My expectation is that they should, given these times, so that we can put more resources into the smaller businesses which clearly will need our help.
We’re Giving Smaller Tenants Concessions On Rent
We’re meeting with each of (our small business tenants) individually. It depends on certain circumstances but we’re going to give them concessions on rent. We certainly may give them concessions and investment in terms of TI’s and maybe upgrading their stores. Whatever they need to do. Our properties are very popular for a number of reasons but one of them is the small retailers, the entrepreneurs, the restaurant tourism. They’re the soul of the properties and they’re the fabric of the properties. We need those to survive.
What we don’t want to do is have successful properties that are just full of national retailers. National retailers could be great but they don’t have the same connection to the community and the same soul that a local entrepreneur has. Those are the ones we’re very focused on supporting and working with.
This Crisis Is Going To Change Retail, Says Caruso CEO Rick Caruso
“A $250 payment per restaurant (from Grubhub) doesn’t sound like a lot but it’s going to be a huge difference,” says Grubhub CEO Matt Maloney. “We’re looking at it as a stimulus almost because the way we’re rolling it out is a consumer gets $10 if they spend $30. So our $30 million dollars is going to transform into over $100 million dollars of food sales to restaurants across the country.”
Matt Maloney, CEO of Grubhub, announces a $30 million stimulus to restaurants in a discussion on CNBC:
Grubhub Rolls Out $30 Million Stimulus To Restaurants
A $250 payment per restaurant (from Grubhub) doesn’t sound like a lot but it’s going to be a huge difference. We’re looking at it as a stimulus almost because the way we’re rolling it out is a consumer gets $10 if they spend $30. So our $30 million dollars is going to transform into over $100 million dollars of food sales to restaurants across the country. That’s a big slug when everyone’s working really hard to try to put money in the hands of small businesses.
It depends on the market (in terms of how many restaurants are still open). In early COVID West Coast markets, we saw a dramatic dip in restaurants that went off the platform. Now they’re starting to come back on. You have New York and Detroit that are in the throes of the crisis right now and so you’re they’re peaking with about 30 percent of the restaurants off. But remember, we’re having thousands and thousands of restaurants coming on the platform for the first time so we’re seeing about the same number in terms of net. It’s just a transition.
Our teams are working around the clock. We tripled our most onboarding month ever of restaurants. We had 15,000 restaurants go live in March. We’re probably going to do more in April. It’s just an incredible intensity of need right now for restaurants. We’re doing everything we can to help them. With drivers, we launched contact-free pickup or drop-off. We also just launched, just last week, curbside pickup for the drivers to make sure there are two layers of protection.
There’s plenty of work on Grub and I know there’s lots of work on other delivery platforms as well. We have our own stimulus for our drivers too. If they get impacted directly by COVID we’re paying them. I know other platforms are also. And, of course, the CARES Act just came through with a lot of relief for gig workers also. Everyone right now is all hands on deck trying to help the restaurants, the drivers, and everyone impacted through this economic and health care crisis.
Fundamental Economics Are Still Intact
I am hoping for the best. I think that the fundamental economics of our society is still intact. There is a lot of demand right now for restaurants. If we can help restaurants get through the next few weeks or months, depending on how bad this is, they will come back, they will be there for our communities. If they can’t, then that’s going to be a real problem.
What we’re seeing right now is as the crisis bottoms out in the market growth does start to come back in that local area. We’re seeing the crises (at different levels) around the country in different markets at different times so we’re trying to dynamically manage that situation on the ground.
Grubhub Rolls Out $30 Million Stimulus To Restaurants, Says Grubhub CEO Matt Maloney
TransUnion research shows Americans are being targeted by coronavirus-related digital fraud in alarming numbers.
As the coronavirus pandemic forces more Americans to stay at home, ecommerce has become a critical part of everyday life. Even basic necessities are being purchased online, rather than through physical stores. Bad actors are taking advantage of that trend, targeting Americans in an effort to defraud them.
TransUnion surveyed 1068 adults, finding 1 in 5 (22%) had been targeted with coronavirus-related digital fraud. “In the report, TransUnion Global Fraud & Identity Solutions reported a 347% increase in account takeover and 391% rise in shipping fraud attempts globally against its online retail customers from 2018 to 2019.”
Methods of taking over accounts included buying credentials on the dark web, social engineering, romance scams, phishing and more. Once an account is taken over, fraudsters can steal packages by intercepting them at the carrier and changing the shipping address, rather than attracting attention by doing it online.
“With so many reported data breaches, it’s not just about if your account will be hijacked, it’s about when,” said Melissa Gaddis, senior director of customer success for TransUnion Fraud & Identity Solutions. “Once a fraudster breaks into an account, they have access to everything imaginable resulting in stolen credit card numbers and reward points, fraudulent purchases, and redirecting shipments to other addresses.”
TransUnsion’s report is a good reminder that, even in a time of global crisis, individuals need to practice solid cybersecurity to keep their information, purchases and finances safe.
While some industries may be reeling from the coronavirus pandemic, ecommerce ad spending is experiencing a boon.
According to Search Engine Land, a recent report details the growth ecommerce ad spending is currently undergoing, jumping “from $4.8 million the week of February 17 to $9.6 million the week of March 9. The data, released by media sales intelligence firm MediaRadar on Friday, encompasses advertising spend across national TV, print and digital media, including websites, Snapchat, YouTube and podcasts.”
The data is another indication that the U.S. and world economies are experiencing fundamental shifts as a result of the pandemic. People are practicing social distancing, working from home, turning to social gaming for human interaction, relying on cloud environments, communicating via Slack or Microsoft Teams and turning to videoconferencing in never before seen numbers. Similarly, the increase in ad spending corresponds to people sheltering in place and relying on ecommerce for their day-to-day needs.
The longer the pandemic goes on, the more likely such trends will become permanent, forever changing how people go about their personal and work lives.
Amazon is using artificial intelligence (AI) to better understand search queries and why a person may be looking for something.
Understanding why a customer searches for a product is just as import as knowing what they searched for. Knowing the context can help a retailer make relevant recommendations for other products that not only compliment the item being searched for, but the activity or reason behind the search. Amazon is intent on cracking that piece of the puzzle, and is applying AI to the problem.
“In a paper accepted to the ACM SIGIR Conference on Human Information Interaction and Retrieval, my colleagues and I present a new neural-network-based system for predicting context of use from customer queries,” writes Adrian Boteanu. “From the query ‘adidas mens pants’, for instance, the system predicts the activity ‘running.’
“In tests, human reviewers agreed, on average, with 81% of the system’s predictions, indicating that the system was identifying patterns that could improve the quality of Amazon’s product discovery algorithms.”
As Amazon continues to improve its algorithms, shoppers should see increasingly relevant shopping recommendations and the research could open a whole new arena for personalized digital shopping assistants.
Amid supply chain constraints as a result of the coronavirus pandemic, Apple is limiting online iPhone orders.
According to CNBC, “Apple’s online store began limiting U.S. customers to two units of each iPhone model per person this week. Customers can still buy more than two iPhones in one order, but they would have to be different models — for instance, two iPhone 11s and two iPhone 11 Pros.
“The restriction applies to the iPhone 8, iPhone 8 Plus, iPhone XR, iPhone 11, iPhone 11 Pro, and iPhone 11 Max.” Apple is also limiting orders of the new iPad Pro the company announced on Wednesday.
The news is the latest indication the coronavirus has had a significant impact on Apple’s supply chain. The company previously announced it would miss its quarterly guidance as a result of the virus, while analysts believe the supply chain issues could persist and impact Apple’s 2021 earnings. Apple also warned its store personnel that warranty replacement iPhones were in short supply.
Apple taking the drastic step of limiting purchases is further evidence the company doesn’t see its supply chain catching up anytime soon.
