“Customers that engage with us from a digital standpoint also continue to enjoy coming into the store,” says Kroger CEO Rodney McMullen. “They also spend about twice as much with us. When you look at those things together I really feel optimistic about the future. We’re continuing to make progress on the things that matter on a seamless experience… digital, fresh, and friendly.”
Rodney McMullen, CEO of Kroger, says that customers who engage digitally come in more often and spend twice as much on average as non-digital customers:
Seamless Experience of Digital, Fresh, and Friendly
Every day our associates are taking care of our customers. We’re continuing to make progress on the things that matter on a seamless experience… digital, fresh, and friendly. When you look at the things behind the numbers continuing strong trends. If you look at the things that we’re doing it sets us up well for the fourth quarter and sets us to continue to gain share in 2021 as well.
One of the things that our customers are telling us is they’ve learned how to cook, they enjoy cooking, and they enjoy the time together as a family. Also, I think the economy continually will continue to be a little bit soft which will cause people to eat at home more as well. Both of those things will continue to provide support (for increased sales).
Customers That Engage Digitally Spend Twice As Much
Obviously, we’re anxious for the vaccine to get here and to get widespread use of it just like everyone else is. We were making great progress in gaining share even before COVID 19 started and we expect once things get back to normal we’ll be able to continue to gain share as well. We can’t wait until a vaccine gets out there and it gets widespread usage.
I really believe our teams will continue to take care of our customers and the seamless experience will tie it all together. What we find are customers that engage with us from a digital standpoint also continue to enjoy coming into the store. They also spend about twice as much with us. When you look at those things together I really feel optimistic about the future.
Kroger CEO Rodney McMullen: Customers That Engage Digitally Spend Twice As Much
Google has announced that it is bringing free retail listings to the main Google Search results page.
The move follows Google’s decision to primarily include free listings on the Google Shopping tab. According to Bill Ready President of Commerce, that move resulted in a significant uptick in engagement between customers and merchants. This would seem to indicate that people are having better success finding what they’re looking for.
“Sellers of all sizes are benefitting from this incremental traffic, particularly small and medium-sized businesses,” writes Ready. “And we already see that these changes will help generate billions of dollars in sales for retailers and brands in the U.S., on an annual basis.
“Now, we’re bringing free listings to the main Google Search results page in the U.S., helping shoppers choose the products and sellers that will serve them best, from the widest variety of options.”
Given the impact the pandemic has had on the retail industry, this move will certainly help small and medium-sized businesses connect with more customers online.
“I know everyone wants to focus on the Travis Scott Meal and Spicy Chicken McNuggets which definitely contributed to the fantastic September that we had,” says McDonald’s USA President Joe Erlinger. “But the setup for this great quarter actually started much earlier in the year. Our drive-throughs have been getting faster at McDonald’s. We’ve made a lot of investments in digital and drive-through and delivery as well.”
Digital, Drive-Through and Delivery Powering McDonald’s
I know everyone wants to focus on the Travis Scott Meal and Spicy Chicken McNuggets which definitely contributed to the fantastic September that we had. But the setup for this great quarter actually started much earlier in the year. Our drive-throughs have been getting faster at McDonald’s. We’ve made a lot of investments in digital and drive-through and delivery as well.
Then really we made a lot of changes to our business model as the pandemic set upon us including over 50 changes in operations. We limited our menu and we’ve made our restaurants easier to run. At the same time, we conserved some of our marketing funds. We began to unleash those marketing funds in the third quarter. That’s what set up this great result of 4.6% double-digit comps in September.
Breakfast Is BACK At McDonalds
When we entered the pandemic we had reversed what was a long-term trend of negative guest counts. It’s been lost in the results of what happened in the epidemic. But in January and February, we actually had positive comps at breakfast and positive guest counts. It goes without saying that we don’t sell the Spicy McNuggets or the Travis Scott orders at breakfast and we’ve obviously seen positive comps across all dayparts.
So we are actually very optimistic about the daypart. We’re excited about the bakery launch that’ll take place later this month. We’ve got a real built-in advantage on this because of our drive-throughs and just because of our overall convenience factor. I like the characterization that yes, breakfast is back at McDonald’s.
Mood Amongst Franchisees Is Strong
Franchisees did come into this in a position of absolute strength. In fact, 2019 was the highest cash flow year ever for our franchisees. Some of the steps that we took through the pandemic both to support them in terms of their liquidity but also to make the operations of the restaurant easier (helped significantly). We actually improved margins at the restaurant level as well.
They’re actually coming out of the worst of the pandemic in a very good position and in a very strong financial position. The mood amongst our franchisees is strong. I was in restaurants uh in Washington state a few weeks ago. Last week I was actually in Washington DC. There’s a lot of optimism confidence as we enter the fourth quarter.
“The Uber Eats business continues to grow at unprecedented rates,” says Uber CEO Dara Khosrowshahi. “Revenue has almost tripled year on year. That business continues to accelerate. It looks like the Eats business is sticky. I wouldn’t count on the growth rates we are having now post-pandemic. However, I do think that you are going to have big growth rates off of a much larger base as a result of everything that has happened.”
Uber CEO Dara Khosrowshahi says that Uber Eats is growing at unprecedented rates during the pandemic and he expects the business to do well post-pandemic as well:
Uber Eats Growing At Unprecedented Rate
On the Uber Eats side, it is an entirely different story where the business continues to grow at unprecedented rates. Revenue has almost tripled year on year. That business continues to accelerate. When we look at Eats we are seeing some great trends. The monthly actives on Eats are up 70% on a year on year basis. The trips are up 110% on a year on year basis. New orders, orders per eater, or basket sizes, all of these trends are up double-digit.
We’ve taken a look at Eats’ performance in markets that are opening up such as New York City and we haven’t seen any kind of performance degradation in Eats. What that suggests to us is that there is a whole new class of consumer that’s experiencing the delight of being able to pick anything and have it delivered within 30 minutes and eat what you want how you want it. It looks like the Eats business is sticky. I wouldn’t count on the growth rates we are having now post-pandemic. However, I do think that you are going to have big growth rates off of a much larger base as a result of everything that has happened.
As Cities Open Up Uber Opens Up
It really is impossible to tell when the mobility business can come back. It depends entirely on the health situation on the ground. With markets that are opening up faster because of the health situation or the society, things are coming back. For example, we looked in New York City where the counts have been down relative to the rest of the country and in just October our volumes were 63% of pre-pandemic levels. This is materially higher than they were in the rest of the nation.
You have week-day use cases of the service outside of commute that is now at pre-pandemic levels or higher. As cities open up Uber opens up as well. We actually think that we can be a beneficiary of certain trends that we’re seeing.
We have invested in safety such as digital mask verification. We also have the No Mask No Rides advertising campaigns. People are feeling safer using Uber. Our reliability and predictability are absolutely unrivaled. While we look at share and we always want to make sure that we are competitive really what we focus on is the reliability of the service and safety of our drivers and hopefully coming back as the health situation improves.
Vaccine Could Radically Improve Bookings
There is a pretty consistent improvement in the mobility business as you go month to month to month. This is one of the benefits of having a truly global business. Within that steady improvement, there are all sorts of ups and downs. Hong Kong has had some openings and closings. Obviously, Europe is now going through another shutdown. US case counts are moving up. The individual curves are not smooth. But when you look at our global portfolio it smooths out.
We are seeing a month to month improvement. For example, if you look at our last quarter overall gross bookings were down 50%. In September, the last month of the quarter, they were down only 44%. You just see this kind of consistent improvement. We think that the consistent improvement will continue into next year. We think a vaccine could radically improve the slope of that improvement.
Uber CEO Dara Khosrowshahi Says ‘Eats’ Growing At Unprecedented Rate
Stitch Fix founder and CEO Katrina Lake says that “we are still early in the journey but have learned a lot in the last couple of years on the marketing front.” Stitch Fix, an online subscription and personal shopping service, was established in 2011 in San Francisco and went public in 2017.
Katrina Lake, founder, and CEO of Stitch Fix discussed their current marketing strategy on “Squawk Alley” earlier today:
Stitch Fix Enters the UK Market
I’m excited about heading into the UK. What we see in Stitch Fix Mens has given us a lot of confidence as we think about a new client base and a new set of inventory. We are now coming up on the two year anniversary of Stitch Fix Mens and now that we are in a place where that business is more mature and contributing to the business you can actually see it in our gross margin. We had the highest gross margin this quarter than we had in the last six quarters.
Then to add kids and now to add the UK we are really excited about planting those seeds. I think that the UK it is so important in the business of personalization which ours is. We understand each client and understand what each client is looking for.
There’s a lot of investment in localization, of localizing stylists, of bringing on merchants who understand the market and are buying from brands that our clients in the UK will expect. All of that localization definitely requires more work but we think really sets us up for greater success.
Revenue Per Client is Up
We are really excited about seeing revenue per client higher this quarter. What that means is we have high-quality clients that are spending more with us. Right now is a great time to see that because Men’s is getting to a place where we see greater maturity in that business. Kids, our newest business, has not blended into those client numbers yet.
Internally, figuring out how we can capture more wallet share and how we can make sure we are getting clients more what they love and capturing more of that revenue per client is a really big effort for us.
We Are Still Early in Our Marketing Journey
We are still early in the journey and we have learned a lot in the last couple of years on the marketing front. We’ve brought channels in-house. We have a lot of efforts around diversifying our channels. In the last quarter, we had national TV off for 10 of the 13 weeks which really helped us understand regional impacts, how much TV is adding directly and much it is helping our other channels.
We already knew that TV was an important part of the mix, but it really validated those learnings. It definitely helped us to plan in an accurate way going forward. That being said, even on the TV front, there is still a lot of opportunities as we think about diversification and different tactics.
Planning Brand Marketing Push Soon
What we haven’t done any of to date is brand marketing. We have a CMO who has been in the role for three or four months and as we are able to hone that marketing muscle and learn more about what’s working and what’s not working brand marketing is actually going to be another tactic that will be really helpful. This will not just be for activating and generating awareness but also driving more reengagement and driving retention.
We are part way on the journey on the marketing front but we are still really early. There’s still a lot of the addressable market out there, our awareness is still really really low. We are really excited how much more opportunity there is on the marketing front.
A survey about online shopping habits indicates that the massive shift to online shopping during COVID will continue after COVID. The increases in online shopping because of closures and fear are expected to be permanent.
A new study from the secure payment solution provider PCI Pal shows that millions of Americans have become online shoppers during COVID and that this behavioral shift will last long beyond the COVID-19 era. With over 70% of respondents reporting plans to continue shopping online for some or most of their shopping even after the COVID-19 pandemic is over.
“Retailers face an unpredictable and unexpectedly challenging year due to the COVID-19 pandemic,” said Geoff Forsyth, CISO, PCI Pal. “What they can control, however, is delivering a seamless, secure shopping experience in-store and across digital shopping channels to offer customers much-needed peace of mind this holiday season.”
A few other trends for retailers to pay attention to:
New year, same habits. Despite 2020 bringing many changes and unexpected turns, one thing remains constant: consumers’ loyalty. 86% of respondents reported they still plan to shop with their same favorite retailers this holiday season, with 54% planning to do so online and 32% in-store.
Sincerely Securely, Santa: It’s no surprise that data security is a top concern for consumers going into this holiday season, with 60% of those surveyed reporting they feel more concerned about their data security as a result of COVID-19. However, one slip-up from a business could have more dire consequences than ever before: 70% of respondents reported they would stop shopping with a brand for a few months or even permanently if it suffered a data breach ahead of the holidays.
Safety supersedes security: While 70% of consumers plan to continue shopping online after COVID-19, some still feel uneasy about how it could impact their personal data security. Nearly 20% of consumers perceive online shopping as the least secure method for making purchases, while in-store shopping is still seen as the most secure by 57% of respondents. If online shopping is the future, then businesses must take steps to ensure their customers feel as secure shopping on their website as they do in-store.
The social shopping dilemma: Given new features on Facebook and Instagram, consumers are increasingly turning to social media for their shopping. According to research from Salesforce, purchases from a social channel referral saw big increases in Q2 2020, growing 104% across the entire industry. Yet, just like online shopping, consumers feel insecure shopping on these platforms: 46% of respondents reported they find social media to be the least trusted shopping channel. It seems that when it comes to their sensitive financial information, consumers are not yet ready to divulge their credit card information on social media.
Customer experience should be on Santa’s “Nice” list: Just as shopping has shifted online, so, too, has the demand for excellent customer service. With a majority of respondents reporting a preference for email (about 36%) or phone (33%) for their customer service needs, retailers will need to ensure that both of these channels are set up to offer a smooth customer journey.
Alibaba today announced it will invest $3.6 billion in Sun Art Retail Group, a huge hypermarket and supermarket operator in China. Sun Art is the largest retailer in China and competes head to head with Walmart. The transaction will give Alibaba a 72% controlling interest in the China-based brick and mortar retailer. Alibaba says that this purchase furthers its ‘New Retail’ strategy of integrating online and offline retail in China.
“Alibaba’s strategic investment in Sun Art in 2017 was an important step in our New Retail strategy,” says Alibaba CEO Daniel Zhang. “The alliance we formed with Auchan Retail and Ruentex was instrumental in building a robust infrastructure to create opportunities and value in China’s retail sector. Led by Chief Executive Officer Peter Huang, Sun Art has achieved impressive results in its digitalization and pursued promising synergies with businesses across the Alibaba digital economy. As the COVID-19 pandemic is accelerating the digitalization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience.”
In 2017 Alibaba entered into a strategic alliance to digitalize and introduce New Retail solutions at Sun Art stores. The company says that since then “Sun Art has made significant progress in the digital transformation under a fast-changing market environment by leveraging resources and technology from the Alibaba ecosystem, to capitalize on the growth opportunities in China’s hypermarket and supermarket space.”
This acquisition reflects a growing retail trend in China. Euromonitor International said in a report earlier this year that merger and acquisition activities are expected to continue in the forecast period. As China’s retailing industry modernizes it is undergoing a drastic digital transformation. The forecasting firm also said that sun Art held a 14.1% share of the country’s hypermarket sales last year. That compares to Walmart’s 10.3% market share in that category.
As of June 30, 2020, Sun Art operates 481 hypermarkets and 3 mid-size supermarkets in China, with a focus on strengthening its position through small and offline community stores.
Here is the official joint announcement of the acquisition.
Amazon wants to emulate the success of Prime Day every day with ‘Holiday Dash,’ a new section on Amazon with daily deals that “equal Black Friday.”
Amazon says that “with new deals dropping every day starting October 16, customers can shop early and with confidence that they are getting Black Friday-worthy deals and incredible savings on a huge selection of products.”
Here are the announced details on Amazon’s Holiday Dash deals:
Amazon Brands
Save up to 30% on select kid’s clothing and more from our brands including Amazon Essentials, Spotted Zebra, and Simple Joys by Carter’s
Save up to 30% on select men’s and women’s clothing and more from our brands including Amazon Essentials, Daily Ritual and Goodthreads
Save up to 20% on AmazonBasics
Save 40% on Wag dog food, and treats
Save 20% on household and personal care products from Solimo
Save 20% on Presto! Refillable Cleaners
Save 20% on baby care products from Mama Bear and Solimo
Save 20% on Belei skincare
Save 20% on nutrition and wellness products from Amazon Elements and Revly
Save 20% on coffee, snacks, and other grocery essentials from Solimo, Happy Belly, and Amazon Fresh
Toys & Games
Save up to 40% on Star Wars toys
Save up to 40% on Collectible toys from L.O.L. Surprise!, Calico Critters, Fingerlings, and more
Save up to 30% on Hot Wheels toys
Save up to 30% on Building Sets from LEGO, Magna-Tiles, and PlayMonster
Save up to 30% on Marvel toys
Save up to 30% on Fortnite, Pokemon, Roblox and more
Save up to 40% on Tegu Building Blocks
Save up to 30% on Funko POPs!
Save up to 30% on Arts & Crafts sets
Save 30% on Evenflo Pivot Explore Wagon
Save up to 30% on preschool toys from Jazwares, Spin Master, Hape, and more
Save on AmScope 52-piece kids beginner microscope STEM kit
Fashion
Save up to 40% on select apparel from Calvin Klein
Save up to 40% on select Levi’s apparel for the whole family
Save up to 40% on Star Wars apparel
Save up to 30% on select New Balance footwear and apparel
Save up to 40% on select Tommy Hilfiger apparel
Save up to 40% on select kids’ clothing from Gerber, Hudson Baby, and more
Save up to 50% on select watches from Citizen, Bulova, Anne Klein, and more
Save up to 30% on select Lacoste apparel, shoes, and accessories
Save up to 30% on Marvel apparel
Save up to 30% on select seasonal fashion trends
Save up to 25% on select Nautica men’s and women’s apparel
Save up to 48% on select Hanna Anderson pajama sets and underwear styles
Save up to 30% on select styles from The Drop
Save up to 40% on select women’s shoes from Shopbop
Save up to 15% on select women’s accessories from Shopbop
Household, Kitchen, Home Improvement & Smart Home
Save on Le Creuset Cast Iron and Stoneware, including up to 48% on select Le Creuset 3.5Qt Oval Dutch Ovens
Save up to 50% on select Bissell Vacuums
Save up to 40% on SharkNinja Shark Navigator Lift-Away
Save up to 35% on Eufy by Anker RoboVac
Save up to 30% on Eureka Stick Vacuum
Save on iRobot Robotic vacuums and mops
Save up to 30% on iLife Robotic vacuum cleaner
Save up to 25% or more on Samsung vacuums
Save up to 36% on select Blueair air purifiers
Save up to 20% on select Molekule air purifiers
Save up to 40% on KitchenAid tools
Save up to 20% on the Instant Pot Duo Mini Plus
Save up to 30% on Hallmark gift wrap, ornaments, and cards
Save up to 20% on select Breville Smart Ovens
Save up to 20% on OXO BREW coffee makers
Save up to 30% on Tineco floorcare products
Save on Ninja AF161 Air Fryer and Ninja FG551 Foodi Indoor Smart Grill
Save on select SodaStream Fizzi Sparkling Water Maker Bundles
Save on the Keurig K-Mini Coffee Maker
Save up to 20% on OXO Good Grips Smart Seal and bakeware
Save up to 35% on Ayesha Curry Cookware
Save 30% on Linenspa 10″ hybrid mattresses
Save up to 30% on Zinus furniture and mattresses
Save 30% on Sweetnight mattresses
Save up to 30% on Moen bathroom fixtures and up to 20% off on Moen kitchen products
Save up to 25% on select Hansgrohe products
Save 15% on GE Profile Ice Maker
Save 20% on select Broan appliances
Save up to 15% on select Delta Faucet products
Save up to 15% on Whirlpool softeners
Save 15% or more on gaming, home education and home office furniture
Save on select August Smart Locks
Save on select Kwikset Smart and Mechanical Locks
Save on Smart Home products from Emerson, Kasa TP-Link, and more
Beauty, Health & Personal Care
Save up to 50% on your favorite Premium Beauty brands from Elemis, Mario Badescu, Redken, and more
Save up to 40% on Premium Beauty appliances from T3, Foreo and more
Save up to 40% on Waterpik and Colgate oral care appliances
Save up to 45% on skin care from NIVEA, Aquaphor, and Eucerin
Save up to 30% on hair dryers and products from Revlon, Bed Head, and more
Save up to 35% on razors from Braun, Gillette, and more
Save 33% on Panasonic and Norelco shavers
Save up to 20% on Fitbit Activity and Fitness Trackers
Electronics
Save up to 33% on select Nintendo Switch games
Save up to 35% on Nixplay Digital Frames
Save up to 30% on Kodak Instant Cameras and Printers
Save 25% on Adobe Creative Cloud Entire Collection
Save up to 20% on Samsung TVs
Save up to 20% on Sony TVs
Save up to 50% on JBL Speakers
Save up to 33% on Sony Headphones
Save up to 33% on Bose Headphones
Save up to 40% on select Mynt 3D printing pens and accessories
Save 30% on Mynt 3D PRO Pen with OLED Display
Save up to 30% on VAVA 4K Projectors
Save up to 30% on TaoTronics Headphones
Small Businesses on Amazon Launchpad
Save up to 50% on Kids Against Maturity: Card Game for Kids and Families
Save up to 30% on the SOLIOM S600 Outdoor Security Camera
Save up to 25% on the Zen Laboratory DIY Jumbo Slime Kit for Kids
From October 26 to November 19, Prime members can save 10% or more on select unique products from small brands on Amazon Launchpad like: Mobile Pixels Duex Portable Monitor for Laptops and Scentered Travel Essentials Aromatherapy Balm gift set
Entertainment: Amazon Music, Audible, Books & Prime Video
Amazon Music: Beginning October 23, new Amazon Music Unlimited customers can get three months of the premium streaming tier free, to enjoy unlimited access to more than 60 million songs, ad-free and a wide selection of popular podcasts.
Amazon Music: Beginning October 29, current Amazon Music Unlimited subscribers can upgrade to the Family Plan free for three months, with access for up to six accounts.
Audible: Between November 1 and December 31, new members save nearly 40% on the first six months of an Audible Plus membership at just $4.95 per month. Membership includes unlimited access to more than 10 thousand Audible Originals, audiobooks and podcasts.
Books: Deals on select multi-genre books and ebooks throughout the season
Prime Video: This holiday season, Prime Video will offer up to 50% off select popular Halloween, family and holiday movies to rent or buy. Deals will roll out over the next few months, so be sure to check www.amazon.com/pmd for updates.
Amazon Gift Cards
Starting today, customers using Amazon Reload to replenish their Amazon Gift Card balance for the first time will receive a $10 bonus with their reload of $100 or more. Offer available through December 31.
Starting October 26, first-time Amazon Gift Card shoppers will receive a $15 promotional credit with the purchase of $50 or more in Amazon Gift Cards. Offer available through December 20. The promotional credit expires on February 6, 2021. Other restrictions apply.
Amazon Credit Cards:
Now through December 22, with an eligible Prime membership, customers who apply and are approved for the Amazon Prime Rewards Visa Card will instantly receive a $100 Gift Card. Prime Cardmembers earn 5% back at Whole Foods Market and Amazon.com. Additionally, starting November 1 through December 22, customers without a Prime membership can apply for the Amazon Rewards Visa Card and receive a $60 Gift Card upon approval, in addition to earning 3% back at Whole Foods Market and Amazon.com as a cardmember. Restrictions apply. Visit amazon.com/visa for details.
Automotive, Tools and Lawn & Garden
Save 50% on tire installation
Save up to 25% on Miracle-Gro Expand ‘n Gro concentrated planting mix
Save 25% on Castrol GTX Conventional motor oil
Save 20% on Select Tonno Pro Tonneau covers
Save up to 20% on select Streamlight flashlights
Save on select DEWALT cordless drills and tools
Save up to 30% on select SKIL tools
Save up to 15% off on select ZGrills Pellet Grills & Smokers
Save up to 15% on Shintenchi 4 piece wicker rattan outdoor patio furniture set
Save on select Renogy monocrystalline solar panels
Sports & Outdoors
Save up to 20% on Select Coleman Tents & Gear
Save up to 20% on select CamelBak kids water bottles
Save up to 25% on select Sawyer Products water filters
Save up to 30% on select Stanley drinkware
Save up to 28% on select Segway scooters and kids bikes
Save up to 30% on select Stiga table tennis rackets and Zume badminton set
Save up to 30% on select Legendary Whitetails apparel
Save up to 30% on select Osprey Outdoor Packs
Pets
Save 20% on Catit Creamy cat treats
Save on Petsafe electronic dog toys
Save on The Honest Kitchen human grade pet treats
Save on Friends Forever donut pet beds
Whole Foods Market:
Both in-store and online, Prime members can receive discounts on customer favorites including 35% off Bare Bones broths and 35% off all packaged teas, available now through October 27.
Available now through October 20, customers can get 20% off pumpkins and gourds – excluding squash.
“We really doubled down on digital,” says Bed Bath & Beyond CEO Mark Tritton. “We weren’t easy and we weren’t convenient. Life’s tough at the moment and you really want to make it simple, easy, and frictionless for customers. The introduction of BOPIS (buy online, pick up in-store), curbside, and now same-day to really facilitate ease and frictionless shopping starting with digital or in-store, wherever the customer wants to go.”
Mark Tritton, CEO of Bed Bath & Beyond, after releasing their earnings report discusses how the company is driving success by leveraging digital with frictionless brick and mortar stores:
Doubling Down On Digital
Our (6 million) new customers coming on board are about six years younger which is great news for us as we expand our customer profile. The key to that is our omni-always strategy. We talk about understanding our customer, how they shop today, and this was pre-COVID. Even more important, we know that 80% of our customers pre-shop online and either purchase there or go to store.
We had a really broken paradigm. We had a fantastic digital business that was very large. We did about $1.8 billion last year. We already beat that by this time this year. We’re large, but we are growing. We really doubled down on that digital aspect. But we weren’t easy and we weren’t convenient. Life’s tough at the moment and you really want to make it simple, easy, and frictionless for our customers.
Stores Are Key To Profitability
So we looked at our website and our integration with our stores which is an ability to leverage our store asset and connect those strongly to an omni environment. It’s really worked out. The introduction of BOPIS (buy online, pick up in-store), curbside, and now same-day to really facilitate ease and frictionless shopping starting with digital or in-store, wherever the customer wants to go.
We know that if we have a digital side that is BOPIS, curbside, or same-day, our margin is actually equivalent to a store. We are driving behaviour, driving engagement, and driving those three assets. That’s helping to leverage out our gross margin. As we rapidly expand our digital business the stores are a key to this profitability.
Amazon has announced a new initiative, Climate Pledge Friendly, to help customers shop for sustainable products.
Amazon has increasingly been under fire from its own employees for a perceived lack of effort toward addressing climate change. This included a “climate strike” in 2019, when hundreds of employees walked out. The efforts appear to have made an impact, as Jeff Bezos pledged $10 billion to fight climate change in early 2020, and now Amazon has unveiled its new initiative.
Climate Pledge Friendly labels will appear on some 25,000 different products across a host of categories, including grocery, household, personal electronics, fashion and beauty, to name just a few. In order to receive the label, a product will need to have at least one of 19 sustainability certifications. A number of brands have gotten onboard, including Seventh Generation, Burt’s Bees Baby, Mrs. Meyer’s and HP.
“Climate Pledge Friendly is a simple way for customers to discover more sustainable products that help preserve the natural world,” said Jeff Bezos, Amazon founder and CEO. “With 18 external certification programs and our own Compact by Design certification, we’re incentivizing selling partners to create sustainable products that help protect the planet for future generations.”
“Revolve is a whole new species of fashion retail,” says Jesse Timmermans, the CFO at Revolve, in an interview with Entrepreneur Network partner Business Rockstars. “We’ve taken the traditional retail model and evolved that experience to be laser-focused on the largest buying power in the world, the millennial.” (View video below)
Timmermans says that the biggest challenge of being a CFO for him is balancing risk, cost, opportunities and reaching the right decision for the long-term. “There is a vast amount of data available out there, so how do you take all of that data, translate it, find the right indicators, and make the right decision for the long term,” he said.
On Competition: You Have to Offer More
Customer behavior is changing fast and customer expectations are increasing all the time with the larger more transactional based digital retailers making it harder and harder to compete, so you have to go beyond that and offer more. Beyond free shipping, it has to be fast shipping. Beyond free returns, it has to be easy returns.
We at Revolve treat the home as a dressing room, so we allow the customer to return, we encourage the customer to try new things. We offer a lot of emerging brands, so it’s important for that customer to try something on in their home and to be able to return free and easy.
Constantly Monitoring Data to Read Brand Performance
At Revolve we carry a lot of emerging brands, so we need to continually read and react to the performance of these brands. After launching on the site we read within 24 hours how that brand is performing, how that style is performing. We read many many attributes on each piece of clothing and then we make a quick call on do we go deeper or do we cut the brand and the style?
About Revolve
Revolve is an ecommerce startup that was founded in 2003 and is headquartered in Cerritos, California. The company describes itself as the virtual home for an unrivaled collection of over 700 of the world’s most-coveted established and emerging brands in women’s and men’s designer apparel, shoes, and accessories. Based in the Los Angeles area, Revolve’s is deeply rooted in the Southern California lifestyle from which it was founded, where a savvy view of fashion and fun-loving attitude are infused into the entire customer experience.
“We want to make sure that 70 to 80 percent of the volume for pizzerias is digital., says Slice CEO Ilir Sela. “This is very comparable to Domino’s and Papa John’s and other big chains. We’ve got to lead the digital transformation of these small businesses. We bring technology and marketing and we enable the existing operation of the pizzeria. We make them more efficient and we make these Pizzerias really powerful and valuable.”
Ilir Sela, CEO of Slice, discusses how the Slice app is driving the digital transformation of small pizzerias so that they can compete effectively with the national pizza chains:
Leading Digital Transformation Of Pizzerias
We take a merchant friendly approach because we really believe in the power of small business and the American dream. I am third generation in the pizza industry. My family consists of a ton of entrepreneurs who mostly opened up small business pizzerias. The goal for us was to make sure that as digital becomes an important component of their business that it doesn’t cannibalize the physical location.
So we take a digital-first approach in a way that means we want to make sure that 70 to 80 percent of the volume for these pizzerias is digital. This is very comparable to Domino’s and Papa John’s and other big chains. In order to do that you have to take a long-term view and you’ve got to take a merchant friendly view around loyalty and online ordering. Obviously, in order to do that we’ve got to run the playbook. We’ve got to lead the digital transformation of these small businesses.
All Pizzerias Need To Digitize Their Platforms
We are actually an all-in-one platform where we partner with a small business in order to digitize their operation. We are not a logistics company ourselves. We empower small businesses to have what we call first-party delivery. In a way, that’s been done forever. Small business pizzerias have delivered across the entire country for decades and they’ve made it work incredibly well.
The reality is that in the world of COVID and as we go further into the 2020s, all these pizzerias really need to digitize their platforms in order to become more efficient. What we do is we bring technology and marketing and we enable the existing operation of the pizzeria. We make it more efficient and we make it really powerful and valuable.
Slice CEO Ilir Sela Leading Digital Transformation Of Pizzerias
“There’s a real recognition that digitization and transformation are not doing what you used to do in the physical world,” says Publicis Sapient CEO Nigel Vaz. “Digitizing that and translating that is essentially the journey of going from being a caterpillar to a butterfly. Real transformation. How do you reimagine yourself in the context of a world that now is entirely digital? Customers are thinking very actively about how they actually create products and services that essentially create value for customers entirely digitally.”
Nigel Vaz, CEO of Publicis Sapient, discusses how the current pandemic has forced organizations to reimagine their businesses digitally. Nigel works closely with clients such as McDonald’s, Nationwide, and Unilever to deliver transformative experiences and business models:
https://youtu.be/VOKcTLcxHXw
Businesses Being Reimagined In A World That Is Now Entirely Digital
Digitization Has Become Existential For Business
I think Digital has always been important for business. Now more than ever what’s becoming very clear is this has gone from being something that’s important to something that’s existential. How do you support customers to make orders entirely online when your stores are closed? How do you create mashups with other partners to be able to facilitate deliveries when your own deliveries don’t suffice? How do you try to create experiences online through self-service that minimize the impact of people calling your call centers?
All of these things are things clients are facing on a regular basis. Most CEOs I’m in conversation with are acknowledging the fact that this has now got to be a priority, that they have to be ready more so than they’ve ever thought before.
3 Key Things Happening With the Transformation
There are three things happening here in terms of transformation. The first is the change in human behavior where I think there’s a recognizable shift now. We’re seeing significant accounts of over-70s, for example, ordering from retail and ramping that up. We’re seeing a big shift in institutions like schools and educational institutions, which historically had not thought about transformation as particularly applicable to them.
We’re also seeing a shift in industries like leisure looking at creating virtual experiences since physical experiences are essentially restricted and people can’t use them. The human behavior shift is translating to big investments in technology and technology platforms that enable this.
Businesses Being Reimagined In A World That Is Now Entirely Digital
Then lastly, new business models. There’s a real recognition that digitization and transformation are not doing what you used to do in the physical world. Digitizing that and translating that is essentially the journey of going from being a caterpillar to a butterfly. Real transformation. How do you reimagine yourself in the context of a world that now is entirely digital?
Customers are thinking very actively about how they actually create products and services that essentially create value for customers entirely digitally. There are plenty of examples in this from telemedicine and from the educational space with new courses coming online which can scale faster than traditional courses limited by a classroom and a professor.
Walmart launches Walmart+ a subscription service that competes directly with Amazon Prime and costs only $98 a year or optionally $12.95 a month. Walmart’s membership option is now available to customers across the country. Membership includes free 15-day trial period.
“We can’t wait for customers to use Walmart+ as a way to keep more time on their calendars and money in their pockets,” said Janey Whiteside, chief customer officer, Walmart. “We designed Walmart+ to be the ultimate life hack for customers, pulling together benefits they told us would be most helpful to them today and in the future. Its usefulness will only grow from here.”
The initial list of Walmart+ benefits is below. The company says that the list of benefits will continue to grow over time:
Unlimited free delivery: In-store prices as fast as same-day on more than 160,000 items from fresh produce, to milk, eggs and bread to tech and toys to household essentials. This service was previously known as Delivery Unlimited – a subscription service that allows customers to place an unlimited number of grocery deliveries for a low, flat yearly or monthly fee. Current subscribers will automatically become Walmart+ members.
Scan & Go: Unlock Scan & Go in the Walmart app – a fast way to shop in-store. Using the Walmart app, customers can scan their items as they shop and pay using Walmart Pay for a quick, easy, touch-free payment experience.
Fuel discounts: Fill up and save up to 5 cents a gallon at nearly 2,000 Walmart, Murphy USA and Murphy Express fuel stations. Sam’s Club fuel stations will soon be added to this lineup.
Bill Simon, former CEO of Walmart, discusses the launch of Walmart+ designed to take on Amazon by combining free delivery of groceries and general merchandise within a paid subscription service:
Walmart+ Goes Head To Head With Amazon
Walmart has long coveted a subscription service to go head to head with Amazon. They tried three or four times but this one is different. Walmart+ combines both their grocery and their general merchandise strength which is really trying to recreate the supercenter online through a subscription service. If they can use the frequency of their food business to also help sell their general merchandise line they can mix it out better and hopefully get to profitability sooner.
Retail has actually been better (this last quarter) than most people have expected. It’s not been even. There have been categories and retailers who have struggled. By and large, its help up pretty well. The pandemic accelerated digital ecommerce development by five to ten years. If you were not up to speed on that or didn’t get up to speed very quickly you would be behind. As we head into the fall it will be really interesting to see how it goes.
Holiday Selling Season Uncertain
Typically, Black Friday and Cyber Monday, that weekend has been really critical to the selling season. If you missed that it would be very difficult to have a really good holiday selling season. With the delayed openings now and Thanksgiving not on the line, the focus is going to be online and there won’t be as many in-person Black Friday deals. It’s going to be difficult for retailers to make up all that volume online. The holiday selling season is going to be a bit uncertain.
I’m really speaking from the consumer perspective when I say that digital ecommerce accelerated by five to ten years in the last six months. It accelerated at that pace and people had to head in that direction. That is likely where retail is going to head but it is going to still be a mix. The vast majority of retail will remain brick and mortar but ecommerce will take a larger role in the facilitation by online pickup in store. Customers are now completely blending the omnichannel retail experience.
The Amazon Effect: Digital Sales Rule!
There’s also been really a change from an investment standpoint. This has been really more the Amazon effect than anything I can think of. Five years ago, it used to be, grow your profit faster than your sales and your share price would move forward. Now, if you’re not growing digital sales at a hyperactive rate it’s really hard to get a good valuation on your company. Walmart is a great example of a retailer employing this strategy.
They’ve invested a ton of money, almost a third of their operating income they’ve given up in order to build an ecommerce business. Yet, investors have rewarded them by buying their stock. It’s near historic highs.
“In the most challenging operating environment I’ve ever seen for this team to deliver the strongest comps in our 50 year history is pretty incredible,” says Target CEO Brian Cornell. “This is in an environment where so many Americans are avoiding shopping in physical stores, our store comps were still up almost 11 percent. The investments we made in our team and in creating a safe shopping environment has built trust with the consumer. Certainly, our digital growth is industry leading at almost 200 percent.”
“Our second quarter comparable sales growth of 24.3 percent is the strongest we have ever reported, which is a true testament to the resilience of our team and the durability of our business model,” said Cornell. “Our stores were the key to this unprecedented growth, with in-store comp sales growing 10.9 percent and stores enabling more than three-quarters of Target’s digital sales, which rose nearly 200 percent.”
“We also generated outstanding profitability in the quarter, even as we made significant investments in pay and benefits for our team,” noted Target’s CEO. “We remain steadfast in our focus on investing in a safe and convenient shopping experience for our guests, and their trust has resulted in market share gains of $5 billion in the first six months of the year.”
The Company had comparable stores sales growth of 10.9 percent and digital sales growth of 195 percent. Total revenue of $23.0 billion grew 24.7 percent compared with last year, reflecting sales growth of 24.8 percent and a 16.6 percent increase in other revenue. Operating income was $2.3 billion in second quarter 2020, up 73.8 percent from $1.3 billion in 2019.
Target Delivers Strongest Comps In 50 Year History
I’ve been with Target now going on seven years. Obviously, this is a special moment for the team. It is a beautiful morning here in Minnesota. I’ve got to start by really recognizing our team. In the most challenging operating environment I’ve ever seen for this team to deliver the strongest comps in our 50 year history is pretty incredible. Our EPS was also a record high up over 80 percent. So to the 350,000 team members in the U.S. and in offices around the world these results were all about you.
We continue to see strength across our entire portfolio. The strength that we saw in the second quarter, which we will break down in our earnings call later today, the fact that we saw really consistent strength from May into June and July. May was the strongest month with comps over 30 percent. But in both June and July we saw comps over 20 percent. That strength has continued in August and we are seeing low to mid-teen growth.
Being Agile and Flexible Is Key To Our Success
The biggest adjustment is probably the consumer who is still waiting for a signal around back to school. As you might imagine uniforms, backpacks, and school supplies are a little slower than last year. But the overall momentum and growth in market share continues as we go into the third quarter. The key to our success when I think about the second quarter is one, we’ve been true to our strategy, but our team has really focused on being agile and flexible and adjusting to the current operating environment. We’ve been changing the playbook every week.
As we think about back to school as I’m sitting here today there are 56 million K-12 students that are waiting for direction. As of this week 66 percent of students will start remotely. They don’t know if they are going back into a classroom in September, October or if it’s going to happen in January. So we are going to have to extend the back to school season and make sure that we’ve got the items they need throughout the fall. We can adjust by market. We’ve got to be flexible and adaptable. That’s really been the key to our success so far this year in both the first and the second quarter.
Digital Growth Is Industry Leading – Up 200%
If you look at our results in the second quarter overall comps were up 24.3 percent. These are some of the strongest in retail. Our store performance is really for me a standout and probably one of the biggest surprises. This is in an environment where so many Americans are avoiding shopping in physical stores, our store comps were still up almost 11 percent. The investments we made in our team and in creating a safe shopping environment has built trust with the consumer. Certainly, our digital growth is industry leading at almost 200 percent.
We’ve been taking share on a broad based basis from both specialty and department stores but also some of our traditional competitors including club. Category by category we’re gaining share. In categories like food and beverage and household essentials we were up 20 percent during the quarter. As Americans have been working and learning from home we’ve seen categories like electronics grow by 70 percent in the quarter. We’ve picked up significant market share from our electronic competitors. Our business and home categories were up over 30 percent.
We Are Seeing Significant Market Share Gains
Categories like decor, categories like domestics, what we are seeing with kitchen ware, we are continuing to build momentum and market share. We also saw a big rebound in apparel which was down almost 20 percent in the first quarter. It grew in the low teens in the second quarter. We are seeing significant market share gains. Across our business we are picking up share from our competitors whether they are specialty players, department stores, or our traditional retail competitors.
The market share number of $5 billion is the most important number on the print. It just shows the relevance of our brand, the momentum, and the trust we are building with American consumers.
Target CEO Brian Cornell: Digital Growth Is Industry Leading – Up 200%
This may or may not worry you depending on your point of view. IBM has deployed a super intelligent face mask surveillance system for businesses (or government) to discreetly track face mask usage by employees, customers, and anyone who enters a building where their system is installed. The platform will send alerts to the powers that be if anyone is either not wearing a face mask properly or not wearing one at all.
Presumably, if the tech savvy eye in the sky notices an infraction it will quickly enable management and their enforcement teams to confront the individuals to rectify their face mask violation. How dare they! It will also monitor in real-time crowd density, social distancing, and elevated body temps of those who are entering an establishment.
IBM Cloud released a video narrated by Ian Smalley (below) that explains how their technology works to enable any business or government to surveil and enforce mask usage:
Here is a really cool way that Edge Computing is being used to help businesses reopen and operate safely. We know face masks can substantially reduce the transmission of aerosol borne viruses. But sometimes people forget to wear them properly or at all. IBM Edge Application Manager places analytical workloads with Edge enabled cameras that can recognize face masks and determine if they are being worn effectively.
Since analysis is being performed at the camera the video data and individual privacy are protected. You also avoid the expense of transmitting, storing, or analyzing that image data any further. Alerts are sent every time the camera detects improperly worn or non-existent face masks. Then it sends the aggregated data back to the IBM Maximo Worker Insights platform allowing you to highlight face mask activity in your facilities.
It’s pretty amazing stuff and that’s only scratching the surface. IBM Application Manager is also using Edge Computing to monitor crowd density, social distancing, and elevated body temps of those who are entering an establishment.
Walmart has partnered with Zipline to deliver health-related products directly to customers. “We are teaming up with Zipline to launch a first-of-its-kind drone delivery operation in the U.S.,” says Tom Ward, Senior Vice President of Customer Product at Walmart. “The new service will make on-demand deliveries of select health and wellness products with the potential to expand to general merchandise.”
Walmart will begin testing drone delivery early next year near their Arkansas headquarters. Zipline specializes in delivering medical supplies and other critical products for businesses via its unique drone technology. So far the company has made 58,436 commercial deliveries so far.
“Zipline will operate from a Walmart store and can service a 50-mile radius, which is about the size of the state of Connecticut,” said Ward. “And, not only does their launch and release system allow for quick on-demand delivery in under an hour, but it also eliminates carbon emissions, which lines up perfectly with our sustainability goals. The operation will likely begin early next year, and, if successful, we’ll look to expand.”
“As we continue to build upon the foundation of innovation laid for us by Mr. Sam, we’ll never stop looking into and learning about what the next best technology is and how we can use it to better serve our customers now and into the future.”
“In five or ten years from now, I’d be surprised if (Peloton wasn’t available as part of a subscription),” says Peloton CEO John Foley. “I think there’s a there for sure. It’s not something you’re going to see in the next year. We didn’t need to have it yet but I love moving in that direction.”
Peloton said in their Q2 earnings release that paid Peloton Digital subscriptions grew 210% year-over-year as they reduced the price of Peloton Digital to $12.99 and extended their Digital free trial period to 90 days during March and April because of sheltering in place restrictions that were in place around the world. Peloton also launched integrations with the four leading over-the-top TV platforms including Amazon Fire TV, Android, Apple TV, and Roku.
John Foley, CEO of Peloton, discusses the likelihood that the company will eventually offer subscriptions for its internet-connected fitness products instead of requiring an expensive purchase:
Moving In The Direction Of A Subscription
In five or ten years from now, I’d be surprised if (our connected fitness products weren’t available as part of a subscription). I think there’s a there for sure. It’s not something you’re going to see in the next year. We didn’t need to have it yet but I love moving in that direction. It’s all in the name of affordability for our members, our current members, and new members, and making sure they feel incredible about the value.
One thing I will point out is that my favorite metric last Q4 which was ended July 1, 2019, our subscriptions were used 12 times a month on average. This year, thequarter that just closed, they were used close to 25 times a month on average. So when you’re paying us $39 a month and getting 25 workouts from your household it’s close to $1.50 per workout. It’s just insane value. We’re very excited about that and we’re going to continue to push with more content and more access to our content.
Bike+ Is Now The Best Bike In The World
To the extent, we are having a hard time making bikes fast enough at the current price you would say we don’t have to change the price at all. Of course, we are with our better best strategy. With the better best we can have the premium product, the best product in the world, which the new Bike+ that we came out with this week is. Bike+ is now the best bike in the world and it’s at just under a $2,500 price point. Over time, it allows us to do a lot of creative pricing.
Right now, the original bike that’s the best cardio machine on the planet loved by millions is under $1,900. From a finance perspective, it is under $49 a month which we’re very excited about. We do think that as we grow the SAM and TAM globally price point for our products is going to matter so we’re getting out in front of it.
Peloton Moving Toward Subscription Model, Says CEO John Foley
“Our digital business is up 127 percent,” says Kroger CEO Rodney McMullen. “When you look at what our customers tell us and one of the reasons why our digital business is so strong is things that are personalized. We continue to look at what the customer wants and needs and then how do we serve those. What we find are our store teams, our pickup associates, and delivery is very important.”
“Customers are at the center of everything we do and, as a result, we are growing market share,” noted McMullen in their earnings release. “Kroger’s strong digital business is a key contributor to this growth, as the investments made to expand our digital ecosystem are resonating with customers. Our results continue to show that Kroger is a trusted brand and our customers choose to shop with us because they value the product quality and freshness, convenience, and digital offerings that we provide.”
Rodney McMullen, CEO of Kroger, discusses how their digital business has been particularly key to powering their massive growth amid the COVID pandemic:
Digital Business Is Up 127 Percent
Customers are continuing to shop in our stores. When they shop in our stores, the count is down but the amount they spend per visit is up significantly. Also, our digital business is up 127 percent. Customers continue to engage in that. What we’re finding is that in markets where COVID is having a lower incident rate or where it is having a higher incident rate, it really doesn’t have that much of a difference. The thing that’s exciting is that people are finding they enjoy cooking and they enjoy eating as a family. It’s really all those things together that gave us the confidence to go out with the (earnings) guidance that we did.
We’re really looking at this for the long term, what’s right for the customer today and what’s right for the customer two or three years out. The increased volume has allowed us to leverage some costs. What we’re doing is taking some of that and sharing it with the customer by waiving our pickup fee. Also, we’ve continued to do promotions throughout the pandemic and we continue to share some of that with the customer. We really do fundamentally just believe the customers will reward us once we get out of the pandemic as well. It’s just the right thing to do and it’s the right thing to do to help a customer’s budget go a little further.
Digital Business Is Strong Because Of Personalization
For us, it’s the whole total experience. When you look at what our customers tell us and one of the reasons why our digital business is so strong is things that are personalized. We also do incredibly well on fresh. Customers tell us and they expect that our fresh is really good and good relative to our competition. It’s really all of those things together. We’ve had a membership program for a long time and you didn’t have to pay for it. It’s fuel rewards and we do loyal customer mailings and all those things.
We continue to look at what the customer wants and needs and then how do we serve those. What we find are our store teams, our pickup associates, and delivery is very important. We are making sure we have that total balance of the experience both from a people standpoint, a price standpoint promotion, and then kind of sealing the deal with fresh products as well.
Digital Business Is Up 127 Percent Says Kroger CEO Rodney McMullen
Walmart is getting in on the TikTok action, joining Microsoft’s bid to purchase the beleaguered social media platform.
TikTok has gone from one privacy and security scandal to the next, culminating in the Trump administration instituting a ban that will go into effect on September 15, unless a buyer can be found. Microsoft has emerged as a frontrunner, although Oracle has also expressed interest.
Now it appears that Walmart is joining Microsoft in its bid, seeing a unique e-commerce opportunity.
“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets,” reads the company’s statement. “We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses. We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”
It will be interesting to see what Microsoft and Walmart can make of TikTok, should a sale be successful.
“Amazon then has turned around and supported a bill in California to say that every other online marketplace that’s not acting like a retailer (as Amazon is) should be held strictly liable,” says Etsy CEO Josh Silverman. “So Craigslist or eBay or Etsy should have liability. This is going to have tremendous consequences for the 3 million sellers on Etsy and for all sorts of small businesses all around the country should Amazon prevail in this fight. It’s really an anti-competitive act from amazon to consolidate their market power.”
Josh Silverman, CEO of Etsy, discusses how Amazon is using its financial power to cynically support legislation it was previously against for the sole purpose of crushing smaller competitors such as Etsy:
Wolf In Sheep’s Clothing To Protect Amazon’s Market Power
I think this is an important issue and it’s important for everyone in America. This is a wolf in sheep’s clothing designed to protect Amazon’s market power and extend Amazon’s market power. It’s dressed up to look like consumer protection.
Here’s what’s going on. Consumers, of course, need to be protected if something goes wrong with a purchase. There’s a long history of law that says if you buy something from a retailer and something goes wrong that retailer is strictly liable. It also says if you buy something on a marketplace the vendor on the marketplace is liable but the marketplace itself is not. Think if you buy something from a flea market, the landlord who owns the parking lot is not liable, it’s the person you bought it from at the flea market.
Tremendous Consequences For Etsy Should Amazon Prevail
So the question, and there’s been a gap in recent law, what happens when a marketplace starts to look and act like a retailer? We don’t need California to come and pass a law on that because the California judiciary just settled that issue last week. They said Amazon looks like a duck and smells like a duck so it acts like a retailer. It exerts control, it picks the inventory, it stores the inventory in its warehouses, it pick-packs and ships the inventory, it puts it in an Amazon box and it delivers the box to your door in an Amazon van. It said Amazon meets the standard of acting like a retailer and therefore it should be liable like a retailer.
Amazon then has turned around and supported the bill in California to say, well then every other online marketplace that’s not acting like a retailer should be held strictly liable. So Craigslist or eBay or Etsy should have liability. This is going to have tremendous consequences for the 3 million sellers on Etsy and for all sorts of small businesses all around the country should Amazon prevail in this fight.
Anti-Competitive Act By Amazon To Consolidate Market Power
Amazon has previously been fighting these kinds of bills for years. It’s so cynical. They lost this court case because the court found that they act like a retailer. So they’re now strictly liable in the cases where they act like a retailer. The court didn’t find that they do it every time. The court set a standard for what are the tripping points. They gave guidance for other courts on when is a marketplace actually acting so much like a retailer that they should be held strictly liable. Amazon would trip that wire most of the time.
Amazon then flipped and said well this is an inconvenience for us but it would be a crushing burden for small businesses, for our competitors, for people like Craigslist or Etsy. They’ve now backed a law saying since we have to do this because we act like a retailer we want all online marketplaces to also be held liable even if they don’t act like a retailer. The reason is that this is so complex that a smaller place, a marketplace like Etsy, which never touches the merchandise, which doesn’t fulfill, which doesn’t pick pack and ship, simply can’t comply. It’s really an anti-competitive act from amazon to consolidate their market power.
Etsy CEO Josh Silverman: Anti-Competitive Act By Amazon To Consolidate Market Power
