MNB TV: From Amazon to Zipcar - Innovations from the E-Revolution, Part Nine
"The Online Sales Tax Issue" - Part 9 of a 12-Part Series
Today: It seems inevitable that before too long, Amazon.com will begin collecting sales taxes on all purchases made by its customers. What is less inevitable is the likely impact that this will have on its business...and that's the subject of this morning's video.
This morning, MNB continues a series of videos culled from a presentation that I did at the recent Food Marketing Institute (FMI) 2012 Show in Dallas. The session, entitled "From Amazon to Zipcar: Innovations from the E-Revolution," featured an extended conversation with Tom Furphy, CEO of Consumer Equity Partners and the guy who helped Amazon.com get into the grocery business.
This series is made possible by MyWeb Grocer, the leading provider of digital grocery and CPG solutions.
Tuesday Morning Eye-Opener: The Price - And Cost - Of Loyalty
by Kevin Coupe
The Chicago Tribune has an instructive story about George Lagen, who is suing United Airlines saying that in the aftermath of its merger with Continental Airlines, the company breached its contract with him be reducing his benefits as a million-mile flier.
According to the story, " Lagen claims he spent hundreds of thousands of dollars in becoming a Million Miler, which reaped such benefits as seating upgrades, early boarding privileges and bonus miles credited to his frequent-flier account. Million Milers had lifetime 'premier executive' flying status, the second-highest level.
"Under the new MileagePlus program, Million Milers belong to the third tier, called Premier Gold. 'The result is a severe cut in benefits including fewer bonus miles for flights, a reduced chance of upgrades and lower priorities in boarding and seating assignments,' the suit alleges.
"For example, Million Milers now receive a 50 percent bonus on the miles they fly with United, instead of 100 percent, the suit says."
Now, to be completely honest, I have a dog in this hunt. I also happen to be a United Airlines Million Mile flier ... though I am not so compulsive or obsessive about my status that I noticed any change in treatment. But what intrigues me - and what I think offers lessons to any marketer - is the following passage from the Tribune story:
The suit notes a recent comment by John Rainey, United's new chief financial officer during an investor conference this month. Rainey said some members of the frequent-flier program were "over-entitled," a comment that drew customer ire on frequent-flier message boards.
I'm not quite sure what that means, but it doesn't sound like music to my ears. I also do not think it is ever what company executives should be saying - in public or private - about the people who are their most loyal customers.
Now, United takes the official position that the lawsuit is "without merit" and that its rewards for Million Milers are both "valuable and highly competitive."
But as was clear in the recent story that made the rounds about how American Airlines is trying to revoke a program that allowed customers to spend hundreds of thousands of dollars to obtain unlimited first-class tickets for life - believing that it was costing them millions of dollars in revenue - there are companies out there that are seeing the whole question of loyalty through a short-term rather than long-term prism.
For me, loyalty programs are mostly a joke. Too many of them have nothing to do with loyalty, and everything to do with offering short-term financial reasons to make immediate purchases. And that's it.
Companies - and this ranges from airlines to supermarkets - that want to engender loyalty ought to be spending their time a) identifying their best customers, and b) figuring out ways to demonstrate the company's loyalty to them.
What United and American are doing is an eye-opener. it is the difference between words and actions.
Perhaps it is not customers who are feeling over-entitled, but these airlines.
It is a virus that in times of economic constriction can spread.
In Minnesota, the Star Tribune reports that a dozen workers at an east St. Paul Aldi store will vote next month on whether to join the United Food and Commercial Workers (UFCW) union - the first time in anyone's memory that a union vote has been taken at an Aldi store.
The story notes that unlike other assiduously non-union retailers, such as Walmart and Target, Aldi has not been a big factor as organized labor looks for places to expand its footprint. In part, this is because organizing at Aldi, with more than one thousand small stores spread around the country, is not efficient - each store tends to have 12-15 workers.
But, says Bernie Hesse of UFCW Local 1189, "We have to start somewhere."
The logistics involved in organizing Aldi employees nationwide makes this a very tough nut to crack. I would not bet on the UFCW's success.
The Bangor Daily News reports that last week, Delhaize-owned Hannaford Supermarkets said that "it has put into place a sustainable policy that encapsulates all seafood across the store - from fresh fish and shellfish to canned and packaged goods to frozen product," and said that it is the “first and only” major grocery chain to implement the “broadest sustainable seafood policy” in the US.
According to the story, George Parmenter, sustainability manager for Hannaford, said that "the new policy was developed with help from the Gulf of Maine Research Institute in Portland, and traces each of more than 2,500 products back to where they were sourced, down to the precise fishery. The store’s policy for wild seafood requires products are caught in a fishery that is under a scientifically based management plan. The policy on farmed seafood demands that production doesn’t harm communities, workers, the environment or human health."
Parmenter said that the Hannaford policy also is in place at all the more than 1,400 Delhaize stores in the US, including Food Lion and Sweetbay.
This is just the first of three stories this morning that point to the fact that doing good can be good for business. I approve ... all things being equal, I'd rather patronize a company that has solid sustainability practices and credentials.
It is amazing how this story has evolved over just a few years. It was not that long ago that we had a story on MNB about scientists worrying that the oceans were being over-fished, and I got a ton of email saying that this was absurd. Now, in most respected scientific circles, this seems to be accepted fact.
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Playing Chicken: Egg Ranchers, Animal Rights Activists, Team Up
The Los Angeles Times reports that California state regulations recently approved by voters there that "requires chicken farmers to give their egg-laying birds enough room to stand and spread their wings" could be "going national." The story notes that "in a rare alliance, the Humane Society of the United States and egg ranchers have joined forces to lobby for federal legislation that would set national standards for egg ranches."
The California initiative, the story suggests, forced egg ranchers to see the light, realizing that consumer priorities were shifting and that they needed to shift with them.
"No question about it: Proposition 2 was a major wake-up call to the entire U.S. egg industry," Chad Gregory, senior vice president of United Egg Producers, tells the Times.
However, not everybody is happy. Some animal rights activists say they are concerned that a national standard could be less rigorous than California's, and that federal rules - because they would supplant state laws - could end up watering down hard-fought-for advances.
I have no idea whether the cynical view of this alliance is accurate. My first instinct is that it is smart to pursue a national approach to such regulations, but I have to respect - with a certain amount of bemusement - the inclination to believe that behind every positive initiative lies some sort of Machiavellian plan to actually deprive people/animals of their rights.
Lessons Learned From The Ben & Jerry's Acquisition
Interesting piece on the BBC website about Ben & Jerry's, and how Unilever - which bought the counter-culture, decidedly liberal-leaning ice cream company in 2000 - has allowed current management to remain committed to the principles of founders Ben Cohen and jerry Greenfield.
For example, Ben & Jerry's supported the Occupy Wall Street movement, and Greenfield notes that nobody got fired. "I am pleased that Ben & Jerry's is able to continue its innovative mission," he says. "We get a lot of support - sometimes I'm a little surprised at how supportive Unilever is."
While Greenfield does not suggest that there is a cause-and-effect relationship, there is at least the suggestion that the Ben & Jerry's experience taught Unilever the same lesson that other companies are learning - that social responsibility can be good business.
Greenfield puts it this way to the BBC: "The real power of a business is is in how it conducts its everyday operations and integrating environmental concerns right in the day-to-day activities: how you source your ingredients, your banking relationships, your marketing, all these activities."
I, too, have been impressed that Unilever has not screwed up the Ben & Jerry's acquisition. The odds had to be pretty good back in 2000 that the corporate powers that be would try to decapitate the company's well-know sense of social responsibility. Kudos to Unilever for understanding what Ben & Jerry's brand equity really was.
Pacific Bluefin Tuna Carried Radioactivity From Japan Nuclear Disaster to US
The Los Angeles Times reports that "Pacific bluefin tuna carried radioactivity from Japan’s 2011 Fukushima Daiichi nuclear disaster all the way across the ocean to the shores of California, scientists reported Monday.
"They didn’t bring much — the levels were far lower than, for instance, levels of naturally occurring potassium 40 that have existed in the ocean for centuries — but the radioactivity was enough to survive the fishes’ migration east to North America from the Western Pacific."
“We showed that a bluefin tuna is capable of picking up radioactive material and transporting it across the ocean. That’s new. Traditionally people don’t think of migratory animals as transport vectors for radioactive materials,” says doctoral student Daniel Madigan, who studies the migration patterns of tuna at Stanford University.
...with brief, occasional, italicized and sometimes gratuitous commentary...
• Advertising Age reports that at McDonald's shareholder meeting last week, a proposal was made that would have had the fast feeder's board of directors "issue a report, at reasonable expense and excluding proprietary information, within six months of the 2012 annual meeting, assessing the company's policy responses to growing evidence of linkages between fast food and childhood obesity, diet-related diseases and other impacts on children's health."
The proposal was overwhelmingly rejected, with less than seven percent of its shareholders voting in favor of it.
In opposing the initiative, the company said: "We offer a variety of food choices to our customers; provide nutrition information about our menu items in a variety of accessible ways so that families can make informed decisions; communicate with children in a responsible manner through age appropriate marketing and promotional activities; and encourage children and families to live balanced, active lifestyles."
• The Chicago Tribune reports that Costco members now can get mortgages from the retailer's website through "an online mortgage platform developed by First Choice Bank that is being offered as a perk to Costco's more than 65 million members ... When a member goes to the mortgage site, the user can put in the required personal data and information about the loan sought, and the system will generate a list of lenders that are licensed in the person's state and details about the loan offered. Members can then check off which lenders they want to receive their loan request. No personal data is transmitted to the lenders without the member's permission ... Consumers who aren't Costco members may qualify for the same sort of mortgage rates, but they wouldn't be able to receive the discounted lender fees that are offered to members."
Costco sells wedding dresses and caskets. Why not mortgages? It's all part of the same circle of life...
• USA Today reports that ice cream marketers are turning to new concoctions this summer - from "sushi" ice cream cupcakes to ice cream "pizza" to an ice cream "Brrrger" - as a way of breathing life into the category at a time when the economy seems to be improving and people may have a bit more money to indulge themselves.
However, the story notes, while people may be intrigued with ice cream innovations, most people end up buying vanilla, chocolate or strawberry.
When I was first dating Mrs. Content Guy, we went out for ice cream and she made the observation that I'd probably order vanilla because I was that kind of guy. One of the meanest things that she - or anybody else for that matter - has ever said about me. Not sure why I'm sharing that, except that I want to make clear that I, for one, would be willing to try sushi ice cream cupcakes.
• The Chicago Tribune reports that Groupon "has begun testing a mobile credit card reader, encroaching on a domain innovated by Square that PayPal has also recently entered.
"The Groupon payment platform will charge a 1.8% transaction fee along with a 15-cent transaction charge. At that rate, the fee is less than Square's 2.75% or the 2.7% charged by PayPal Here and Verifone SAIL, another player in the market ... Groupon is giving the card readers away free to merchants along with an iPod Touch, according to VentureBeat That's more than Groupon's competitors, which just hand out readers."
• As expected, Hy-Vee's board of directors has elected Randy Edeker, the company's president/COO and a 30-year veteran of the company, to succeed the retiring Ric Jurgens as Chairman, CEO and President of Hy-Vee, Inc.
Edeker is only the fourth chairman/CEO in the company's history.
Jurgens, who is retiring after more than four decades with the company, had announced last December his intention to nominate Edeker to succeed him.
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Your Views: Intelligent Conversation
We had a story the other day about how a man described as "a Soviet biologist turned oligarch turned government minister turned fish farming entrepreneur" seems to be the only thing keeping alive the dream of creating a genetically engineered fast-growing salmon that can be eaten by American consumers.
Commenting on the continuing debate over GM foods, I commented:
I'm so torn on this one. There is a big part of me that worries about eating GM products, and I certainly think they ought to be labeled as such ... but I also don't want to be a Luddite about it. Creating such items may indeed be a way to generate more food and feed more people, which could help eradicate hunger in the US and the rest of the world. I'd hate to lose that opportunity because I'm a little squeamish...
To which MNB user Rosemary Fifield responded:
If the purpose of biotechnology was to "help eradicate hunger in the US and the rest of the world," that would be something to consider. However, to date, it's all about the producer, not the consumer. Can the producer grow a bigger fish faster? Can they spray pesticides at will because the plant of choice won't die along with everything else? Not a single GM product on the market today is there for the benefit of the consumer. Yet what will be the ramifications for all of us if those unnatural salmon escape and change the ecology of the oceans? Or those weeds subjected to all the pesticides come back stronger, and now more and harsher pesticides are needed?
World hunger is about politics and distribution, not lack of food. World hunger is going to be even worse when a select few own the rights to the seeds and when more farmers have been put out of business because they don't want to--or can't afford to--grow GMO crops or animals. Those pigs and cows bred for healthy omega 3 fatty acids in their meat will only promote world hunger. Raising animals consumes more grains and water pound for pound than if the grain were fed directly to hungry people instead, and they'd be healthier for it. Plus, do you really believe the "better for you" meats will be used to eradicate world hunger? As for mad cow resistance, we wouldn't have to worry if we didn't feed unnatural things like chicken manure to cows in the first place. Our priorities are so messed up, and GMOs are not the answer by a long shot.
MNB user Elizabeth Archerd wrote:
Luddism was about machines putting people out of work so bigger profits could be made.
GMOs have yet to be developed that increase yield or resist drought. They may well destroy species of wild fish or animals, if released into the wild, however.
So there is a sort of association with Luddism, in that the products of laboratory genetic engineering will destroy essential elements of the natural world so bigger profits can be made.
Don't fall for the PR hype behind GMOs. Do you believe that major corporations are investing in expensive technology in order to feed poor people? Think about that. How will poor people pay for products that carry multiple patents on the genetic code?
Major studies by UN agriculture specialists conclude that the future of feeding humanity is "eco-agriculture" which is awfully close to what we call "organic" in this country.
MNB user Kelly Dean Wiseman wrote:
The concern of many of us with GMO salmon is not that we are squeamish, but that these fish will inevitably make it into the wild.
They will be farmed in salt water farms near of even in the ocean, and if history is any lesson all domesticated species enter the surrounding environment, whether by accident or ill-advised design.
Once free the genetic purity of millions of years of salmon evolution could be destroyed, all because we thought, somehow, this would feed the people of Mali.
Truth is: to many people, not too few fish.
MNB user Ellen Ornato wrote:
Had to chime in here. There are so many challenges with GM fish and a few possible upsides, too. The upside is that the fish are raised in a managed environment so that hopefully the water doesn’t contain heavy metals and is free (or less) polluted. Farming fish can increase yields substantially and yes, feed the hungry. It’s hard to argue against increasing food production.
The downside is that creating these strains of fish almost always has detrimental effects on the natural fish living in close proximity; they’re not being pumped up with antibiotics and are not disease-resistant so the water that comes OUT of the farmed areas into lakes, rivers and oceans carries diseases that kill natural populations. This doesn’t begin to address what happens when we consume this fish and what chemicals we add to the list of things we didn’t know we were ingesting.
But another MNB user wrote:
Why are you "squeamish"? It's exactly the same meat as from any other animal. These are just products of "intelligent design" instead of the randomness of nature. Genes have been "modifying" for billions of years. What do you think evolution is all about? Now we're just modifying them with specific purposes in mind. Relax!
Actually, it is responses like this one that make me squeamish.
It is not "exactly" the same.
And in another context, equating "intelligent design" with "evolution" might raise a few eyebrows.
Finally, "intelligent" is not always the same thing as "profitable." I think that there is a legitimate case to be made that the companies focusing on biotechnology are a lot more interested in the latter than they are in using biotechnology for the greater good. (Let me be clear. I am not anti-profit. I am not anti-science. But I am in favor of contextual, long-term, strategic thinking, and I respect the views of those who feel that that biotech companies may be running roughshod over the natural order of things.)
From another reader:
Two things…1. I would not be opposed to eating GMO foods IF they were proven, with correctly approved scientific rigor, under longitudinal studies, to be harmless to human consumption. 2. In the U.S. alone we have 19 million acres of lawn (front and back) growing green grass, taking huge amounts of chemicals and oil to maintain. If we are concerned about food…why don’t we convert yards to mini farms? If we are concerned about food…why are we so determined to eradicate the small farmer? Why do we concentrate so much of our resources to produce expensive, proprietary and questionable food? The path we are taking to future food sources concerns me and befuddles me! What’s wrong with natural food? Just saying!
Regarding my rave review of the new Price Chopper limited small-store format, MNB user Joe Axford wrote:
I couldn't agree with you more, especially on Price Chopper, where a smaller format is a sure winner in that particular location. I believe the big chains are missing out on this opportunity as I see more and more empty retail space under 30,000 sq. feet that would be ideal in my neck of the woods(southern NH, Northern MA). Most local towns have 2-3 Market Baskets with at least one smaller one out of the bunch which the elderly and those of us who wish to run in for a few things and run out love. However, while they beat everybody on price by a large margin -IMO- one does have to wonder if their new super stores will continue to be as sharp on price as they look more and more like the big three in the Northeast format wise. They still beat all three in checkout efficiency as they do get you in and out very quickly.
Last week we took note of a Washington Post column by Katherine Tallmadge, author and registered dietician, in which she talked about seven foods often described as bad for you that actually have health benefits. Included in the list was gluten and wheat, which she said "are vital for good health, and are associated with a reduced risk of diabetes, heart disease, cancer and excess weight."
Which prompted one MNB user to write:
Thanks for the laughable list and your view. My wife has Celiac Disease, an autoimmune condition caused by gluten. Even consuming minute amounts result in side effects that can last for several days. Her mother was diagnosed with it much too late before the gluten caused irreversible damage. She died a slow and agonizing death from complications from Celiac Disease. No sense in expounding any further. We continue to run into people with similar viewpoints. We’ve discovered it’s a waste of time to attempt convince otherwise…like writing this note.
Actually, I don't think your note was a waste of time.
First, my condolences on the passing of your mother-in-law, and best wishes as you and your wife deal with her medical issues. I have relatives who suffer from Celiac Disease, and I know how tough it can be.
But to be clear, I don't think that Katherine Tallmadge was suggesting that gluten and wheat are good for everyone - just that people should not have a knee-jerk negative reaction to them. Of course, if you are allergic to gluten you should not eat it. Just as if you are lactose-intolerant you should not consume dairy, or if you are an alcoholic you should not have a glass of red wine.
Gluten is not bad. But it can be bad for you if it causes medical issues. There is a difference.
The enemy here is not Katherine Tallmadge, who I thought was making a legitimate point about moderation and contextual thinking. Or even MNB. (I sense a certain resentment in your email.) The enemy is absolutism, which is sort of like ideology ... practicing it can become a substitute for actual thinking.
Dario Franchitti won his third Indianapolis 500 over the weekend, though, as the Los Angeles Times describes it, "the outcome was in doubt until the final lap Sunday, when Franchitti prevailed only after a thrilling spree of lead changes among several drivers, the likes of which the legendary race hadn't seen for more than half a century."
Three Indy 500 wins and he's married to Ashley Judd? Talk about winning the lottery...
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