business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 1, 2016

    by Kevin Coupe

    SEATTLE, APRIL 1, 2016 -- Amazon this morning plans to announce what arguably could be called its most audacious effort to extend its tentacles into the shipping business, building on established intentions to find ways to compete with establishing delivery mechanisms through drones, trucking, air freight and ocean shipping.

    While an official launch date has not yet been set, Amazon insiders tell MNB that Jeff Bezos plans to unveil his new AmazonTruckBot initiative, which he will say is designed to bring together many of the disparate innovations in which the e-commerce pioneer has invested.

    Essentially, Amazon has designed a self-driving truck that it believes has more sophisticated technology than the self-driving cars developed by rival Google, and it will populate each truck in the fleet with a robot equipped with artificial intelligence. "While we still believe that drones will have a role in the Amazon universe," Bezos will say, according to a copy of prepared remarks, "the TruckBot initiative will allow us to venture into places that they cannot go. And, the robots will allow us to avoid all the issues that come with actual human drivers. There will be no meal breaks, no sick time, no stopping to use the bathroom. It will be all efficiency, all the time. And because they're robots, we don't have to worry about those silly uniforms that FedEx, UPS and the Post Office make their people wear."

    And, Bezos will add, "When the robots leave the vehicle in urban areas to make deliveries, the self-driving trucks will be able to circle the block - no worrying about parking tickets. We figure that this alone will save us a million dollars a year in New York City alone."

    The top of the AmazonTruck Bots will serve as landing/takeoff pads for Amazon drones, sources tell MNB, allowing the company to effectively and efficiently extend its delivery reach.

    "Between you and me, this isn't just a way to compete with FedEx and UPS," one Amazon insider told MNB. "When they see this down in Bentonville, their heads are gonna explode, which will make the entire investment worthwhile."

    Plans for the AmazonTruck Bot initiative also include a newspaper delivery feature, which will use futuristic propulsion technology to actually get newspapers onto front porches and to front doors of homes still getting the paper; while this may be an option with a short life span because of the inevitable demise of the newspaper business, Bezos reportedly feels that it will help justify his investment in the Washington Post. "Besides," he is said to have told a board meeting, "we developed this propulsion technology in my rocket ship business, and we just have to shrink it down for newspapers. I love synergies."

    In addition, Bezos will say today that Amazon has been working with Microsoft on the artificial intelligence part of the project. According to the prepared remarks, while most of the world saw the attitudinal corruption of "Tay," - an A.I. "bot" that was designed to go on Twitter and engage with users in casual conversation, using content-neutral algorithms to evolve its language and sensibility skills, only to be lured by negative social media influences into casual racism, sexism and an easy use of vulgarities - as a problem, Amazon saw it as a solution to a problem.

    "We've known all along that if we were going to send the AmazonTruckBots into urban areas they were going to have to be programmed differently than when sent into more pastoral American settings," Bezos will say. "When we saw how easily Tay could respond to a hostile environment, we realized that the problem has been solved. Not only will each robot on an AmazonTruckBot have installed a vocal amplifier that can spew loud and appropriate epithets on city streets, but each one also will be equipped with a middle finger. Just in case."
    KC's View:

    Published on: April 1, 2016

    Bloomberg has a long and detailed story noting that Walmart has crossed into new territory - "for the first time ever -- or at least since the company went public some 45 years ago -- Walmart's revenues shrank from the year before."

    The event suggests that Walmart "is clearly having trouble adapting its gigantic stores to the Internet age," and even that "Walmart might have just hit its growth limit." And even Walmart concedes that it "may not be able to deliver the kind of steady net sales and profit growth investors have grown accustomed to seeing."

    Is this the end of Walmart as we know it? Or is it positioning itself for another half-century of retail dominance? To find out, click here.
    KC's View:
    The fact is that both may be true. Walmart can still be dominant for the next 50 years, and indeed, that may actually depend on it not being the company as we know it. It can be argued that Walmart's success or failure will be determined by its ability to adapt to radically changing times and not do things the same way it always has.

    Published on: April 1, 2016

    Bloomberg reports that "on-demand delivery startup Postmates is taking a page out of's book and offering a subscription service it hopes will hook customers by charging a monthly fee for free delivery."

    Postmates Plus Unlimited, as it is called, will cost subscribers $9.99 a month, which will get them "free same-day delivery on orders of $30 or more from Postmates's stable of partners - some 3,000 stores and services in the U.S. Subscribers also avoid paying the 9 percent service fee that Postmates usually charges customers on each order."

    According to the story, "The company hopes its subscription service will create a virtuous cycle in which customers order more often, luring in new merchant partners." While it may cut into margins in the short terms, Bloomberg writes, Postmates believes that it will in the long term help it negotiate better, more profitable deals with the merchants it represents in the marketplace.

    "The great thing about Amazon Prime is it centers everyone's default e-commerce to Amazon, and on Amazon, you default to products on Prime," Sean Plaice, co-founder and chief technical officer at Postmates, tells Bloomberg. "That's the same thing we're looking to have here. Why use any service but Postmates to get your food delivered? You have a subscription. It gives you the best, most affordable delivery."

    Postmates currently operates in 40 US markets, with a merchant community that includes 7-Eleven, Chipotle and Walgreens.
    KC's View:
    It may be imitative, but it is smart ... Postmates is trying to create its own ecosystem, hoping consumers will see its merchant network as the first best choice. You can't compete just by doing things the same old way...

    Published on: April 1, 2016

    Amazon yesterday announced that it is dramatically scaling up its Dash Button program, more than tripling the number of brands available to more than 100. Amazon said that one year after the program began, it has reached the point where "Dash Button orders have grown by more than 75% in the last three months and now take place more than once a minute."

    Dash Buttons are available to Prime members for $4.99 each, and they're essentially free - with the first order through a Dash Button, members receive a $4.99 credit to their Amazon account. When a customer is running low on one of their everyday essentials, they can press the appropriate Dash Button to automatically reorder the item at the same prices they would have paid if they were sitting at a computer, with two-day Prime shipping. Customers receive a notification with every order and can change the product purchased through their Dash Button anytime.

    The original brands involved with the Amazon Dash Button program included Gillette, Tide, Gatorade and Huggies; among the new brands joining up are L'Oreal, Purina, Doritos, Quaker, Starbucks, and Trojan.
    KC's View:
    Trojan? I think this is an example of a brand for which they should offer one-hour delivery as an option, and just charge more.

    But seriously, the apparent success of this program ought to give traditional retailers pause, since it is designed for one essential purpose - to keep people from ever having to go to the store. Which is why it is critical for the competition to design and develop compelling reasons for people to go to the store beyond the fact that they have the same stuff that everybody else carries.

    These kinds of programs are an enormous threat to anyone competing with Amazon in these categories.

    Published on: April 1, 2016

    GeekWire has a story about how Starbucks has worked with Microsoft to design a new feature for its Outlook email client that "will let Outlook users quickly schedule meetings at nearby Starbucks locations, and purchase and send Starbucks gift cards without leaving the email program. It will be accessible from the ribbon in Outlook to people who install the Starbucks add-in, once it’s available."

    The feature was demonstrated at a recent Microsoft Build developer conference, and is described by GeekWire as "part of Microsoft’s effort to further position its Office software as a platform for other companies and developers. Microsoft has been expanding the reach of Office through the Office 365 subscription service —which counted more than 20.6 million consumer subscribers as of the end of 2015 — and by making the Office apps available for free on Android and iOS."
    KC's View:
    This strikes me as a natural complement to Starbucks' successful mobile program that allows customers to order and pay for products before getting to the store, not to mention compile points that can be used for free drinks. Again, this is all about keeping people inside the bubble, and not letting them outside.

    Published on: April 1, 2016

    The US Food and Drug Administration (FDA) is being sued by what is called "a broad coalition of environmental, consumer, and commercial and recreational fishing organizations" that is challenging the government's approval of genetically engineered salmon for commercial sale and human consumption.

    The coalition objects to FDA's decision not to require labeling of the GE fish "to let consumers know what they are buying, which led Congress to call for labeling in the 2016 omnibus spending bill. FDA’s approval also ignored comments from nearly 2 million people opposed to the approval because the agency failed to analyze and prevent the risks to wild salmon and the environment, as well as fishing communities, including the risk that GE salmon could escape and threaten endangered wild salmon stocks."

    The plaintiff coalition, represented by legal counsel from Center for Food Safety and Earthjustice, includes Pacific Coast Federation of Fishermen’s Associations, Institute for Fisheries Resources, Golden Gate Salmon Association, Kennebec Reborn, Friends of Merrymeeting Bay, Ecology Action Centre, Food & Water Watch, Center for Biological Diversity, Friends of the Earth, Cascadia Wildlands, and Center for Food Safety.
    KC's View:
    The question is, what are people and companies afraid of when they refuse to tell people stuff? Information isn't just a potentially powerful sales tool, but it also is an inevitable component in conducting business in the 21st century.

    Published on: April 1, 2016

    • The Seattle Times reports that Sprint is offering its customers the ability "to enroll in Amazon Prime on a month-to-month basis through an add-on charge to their cellphone bill. Normally, one has to pay $99 a year for Prime, which offers two-day shipping, a streaming video service, online photo storage and other perks. But Sprint users can pay $10.99 a month, sans tax, which is more expensive in the long run but provides some flexibility."

    It is said to be the first time Amazon has offered Prime on the month-to-month basis.
    KC's View:
    Amazon has been very public about the fact that its Prime customers are its most frequent and profitable shoppers, and so baiting a different hook to get more of them into the fold makes perfect sense. These people just become part of an ever-expanding group that is being given multiple reasons never to have to go to the store.

    Sensing a trend here? I'm trying to draw you a map that actually cuts across a number of our stories today...

    Published on: April 1, 2016

    • Reports out of the UK say that Tesco has begun the process of a national rollout of its PayQwiq mobile payments service, which allows people to both pay for items and collect loyalty points on their smartphones.

    Marketing reports that "customers must sign into the PayQwiq app and choose the relevant card. A QR code will then be displayed for the cashier to scan. Clubcard points will automatically be added at the same time. Customers can spend a maximum of £400 per transaction."

    • The Associated Press reports that McDonald's "plans to open 1,500 new restaurants in China, South Korea and Hong Kong as it looks to faster-growing markets to help drive a global turnaround. McDonald's said it is looking for partners to help finance that expansion. The company said it also will give local managers more decision-making power to respond to Asian customers."

    McDonald's currently has 2,800 restaurants in China, South Korea and Hong Kong, most of them company-owned, not franchised.
    KC's View:

    Published on: April 1, 2016

    Got the following email from MNB reader Dave Parker responding to a story on MNB:

    Nice to see that Walmart will donate $1.5 million upfront to Feeding America to help America's poor, and will match contributions from certain suppliers based on per-item sales up to $3 million. Should we be impressed? reports that the poverty rate in the U.S. in 2014 equalled 14.8% of our 321.4 million population, or 47.57 million poor people. Walmart's upfront commitment of $1.5 million equates to a donation to each poor person of $ 0.03. If the suppliers pitch in $1.5 million and Walmart matches, the total contribution to Feeding America will still fall short of a dime per person.

    Robert Reich notes in his 2015 book, Saving Capitalism, that the Walton family heirs held more wealth than the bottom 42% of Americans combined in 2014. Since the average Walmart Associate falls well below the 2014 Federal Poverty Level ($23,850 for a family of 4), Walmart would serve America's poor much better by raising the wages of their own employees. To put all this in clearer perspective, Arkansas Business reported in April 2014 that Walmart's new CEO Doug McMillon received a pay package of $25.6 million.

    That certainly is an alternative perspective.

    We continue to get email about the problems Stater Bros. may face as Aldi expands in Southern California. One MNB user wrote:

    Stater’s success seems to have been due to lower pricing, medium quality, and geographical domination.  Aldi will beat them on numbers one and two and have the money and expertise to erode number 3.  Jack Brown is not stupid but he better be prepared for a harsh reality.  He is not facing a large chain with a by and large different demographic target.  I think customer loyalty and location are his best attributes to concentrate his efforts.  Fresh and Easy and Haggen’s are not even in the same league as Aldi in almost every respect.  Aldi is almost like lava flowing from a volcano, relentless slow advance until it covers a large area.  Just my opinion based on years in the market.

    Kate McMahon mentioned in her column this week that a number of Facebook users criticized a product, to which one MNB user responded:

    It was such a less-contentious world when people "criticized" products in the discreet old-fashioned way: By not buying them.

    Those "discreet" days are gone forever. Get used to it.

    On another subject, from MNB reader John Rand:

    I saw the reader comment on your recent remarks about the atmosphere of bullying in America, as the reader noted this is not new and may be difficult to change.

    True. But  I have a more hopeful perspective (call me a cockeyed optimist, if you want to cite a REALLY old movie soundtrack!)

    American runs on a slow, grudging but steady process of creating consensus.

    I remember when kids jumped around loose in cars and seat belts were an option you paid extra for. A bunch of people advocated for safety belts and particularly for child safety and after a couple of decades it gained steam. Eventually it became law, but not before it was already socially accepted as the right thing to do by a majority of people. When the laws were passed there were still objectors – but they no longer had the majority behind them, and the resistance largely faded.
    The same thing happened with smoking inside buildings. What was normal became questionable. What was questionable became unacceptable. What was unacceptable became law. It happened with drinking and driving. It has happened with divorce, It has happened with sexual preferences, and most recently with marriage rights.

    And of course it happened, with great strife and angst, to human rights and civil rights in the 60s. And like many of the above, it is still progressing, slowly, in fits and starts sometimes, but the direction slowly coalesces around a new social understanding, followed by law, followed by a long period of consolidation.

    I suspect bullying, both the mental and physical forms, will be like that. You can see the awareness rising, organizations forming, dismay at certain behaviors being focused, as a sense of  what is missing from public and private discourse begins to move toward a new definition of what is no longer acceptable.
    It is not new. But it is not immutable. It will change when a large enough number of people are willing to call it out, to hold up a hand and say “that is not acceptable behavior”. When enough people stand up to be counted on an issue, it changes society, because society is US, every one of us, and we have a vote every day, not just every four years. I have witnessed it and see no reason for it not to happen many more times.

    If it doesn't happen again and again, we won't be making progress. We stop making progress, and that'll be the end.

    Another MNB reader chimed in:

    As the US continues to move away from God, we will continue to see more scenes like Pez Candy experienced and experience cruel/crude conduct. Watch the news, watch face book, watch outside your window at peak traffic times, watch how people act on subways – it’s happening everywhere and yes it is disturbing but from what I understand and have been told from folks who travel overseas, it’s worse in other countries that have moved away from God more than the United States.

    You can blame it on anything you want to blame it on, but God’s word predicts it. What is really scary is that God destroyed evil societies in the old testament because they were so evil.  I hate to think what those societies were like but know we are headed there again, just not sure how bad it will have to get.

    At the risk of getting myself in trouble with some folks, I'd suggest that while I completely understand the point you are making, it is important to remember that even people who do not believe in God or organized religion are capable of behaving like good and decent people, and not being cruel or crude.

    At the same time, there are people out there who do believe in God and religion, though probably not yours, and they have corrupted those beliefs into a conviction that barbarism and violence and intolerance will cure all the world's ills.

    I'm not worried about any deity destroying our planet because it is so evil. I figure we're doing a pretty good job of it ourselves.

    Now, on to more weighty matters...

    In writing about how Major League Baseball is finally going to allow the use if iPads in dugouts, I made a gratuitous reference to the National league Champion New York Mets.

    Prompting MNB reader Jimmy Ducey to write:

    Like any good Braves fan, I hate your Mets. What I do like is your old school loyalty and how you root for them win or lose. Unfortunately my Braves remind me of a business that’s making a big change in how it goes to market.

    Sometimes there is some short term pain. So let me be the 1st to say, “Wait ‘til next year”.
    Remember, the better the Mets staff pitches the harder it will be to keep them together. Winning is expensive!

    Hey, losing is expensive, too. Sometimes more so.

    In your case, you quite literally will be waiting until next year, because then you'll have a new stadium.  I'm looking forward to coming down next spring to see it … I've been to almost every MLB ballpark (including Fulton County and Turner Field in Atlanta … it has been a long project!).

    Nothing better than a great baseball rivalry.  I've always hated the Braves, but mostly because Chipper would always demolish the Mets, especially at Shea.

    From another reader:

    I look forward to the day when baseball managers call their bullpens with a cell phone to bring in relief pitchers, instead of picking up the land-line phone in the dugout.

    Amazing that this hasn't happened yet.

    From MNB reader Kevin Hollenbeck:

    I have loved baseball all my life and read your article about technology coming to the dugout.
    I have coached my son through little league and them had the pleasure to watch him play in college. So while I consider myself somewhat of a purist, I love this idea and think it is about time.
    In fact I think they should make some of this information available to the fans during the games. It would be great to pull up a spray chart of a hitter that a manager is looking at and see how they are pitching that batter or positioning the defense for that particular batter. Or be able to pull up the pitcher match ups against the reserves on the bench to see who you would bring up to bat as a pinch hitter?
    One of the criticisms of baseball has been it is a slow game, while defenders of the game will talk about the beauty of the cerebral side of the game. I say baseball should embrace that is a more of a cerebral game but use this technology to allow the average fan to partake in all of the strategy and decision making that happens, pitch to pitch.
    Hopefully they will use this to grow their fan base and not just keep it in the dugout.

    Of course, if they tell the fans too much, the opposition will have access to it as well. This may be one of the places where too much transparency would not be a good thing...
    KC's View:

    Published on: April 1, 2016

    I've now had a week to think about Batman v. Superman: Down of Justice, which in some ways is way too long to think about one of the most cumbersomely titled movies, not to mention extravagantly overproduced and overthought films, that I've ever seen.

    I didn't like it all that much when I saw BSDJ, and I found that the more I thought about it, the less I liked it. Not that I have a problem with two of our most iconic superheroes fighting it out; I actually think there's a pretty good movie in the idea that one is darkness and one is light, and that their world views eventually would come into conflict, only to discover that they need each other. (It isn't an original notion - it has been exploited numerous times in comic books.)

    What I have a problem with is that this version of the conflict isn't so much about light vs. dark, as really dark vs. somewhat less dark. There is a humorlessness about the whole enterprise that I find to be disturbing - BSDJ is so pessimistic about humanity that the movie becomes depressing instead of uplifting. That's a problem for a film that is, at its core, a comic book movie; it is okay to give such a movie a serious context, but for me, it has to end with the audience feeling good about where they've been.

    There are some good things about BSDJ. Ben Affleck's turn as Batman/Bruce Wayne is authoritative and world weary, and I'd love to see him in a standalone movie. I thought Jeremy Irons was great as Alfred, his butler and aide. And whenever Henry Cavill, who plays Superman/Clark Kent is in a scene with Lois Lane (Amy Adams) or his mother, Martha Kent (Diane Lane), it brings out a tenderness that is otherwise missing from his performance.

    So, I think I've made it clear that I didn't like BSDJ much. But I also have to concede that as I write this, the movie has made $500 million worldwide, thrilling the folks at Warner Bros., who built this movie as a launching pad for a whole series of movies featuring heroes from the DC Comics universe. Considering that BSDJ was almost universally reviled by critics, they have to be sighing with relief that audiences don't seem to care.

    It is hard to argue with success. And I have to concede that when they made BSDJ, they weren't doing it for a 61-year-old guy who started reading Superman and Batman comic books more than a half-century ago. It also ends up that they weren't making it for my 29-year-old and 26-year-old sons, who may have disliked it more than I did; then again, I raised them right, and they were watching old movies and good movies in early childhood.

    But I think I'm worried about the mindset of a generation of moviegoers who find the darkness and humorlessness of BSDJ to be attractive and entertaining. On the other hand, BSDJ is only half as humorless and dark as some of the political campaigning I've been watching lately.

    So maybe it actually is a movie for our time. Which makes me shudder.

    A far less costly movie, and yet one that is far more interesting and tension-filled, is Eye In The Sky, which stars Helen Mirren and (in his last role) Alan Rickman and is about the ethical and moral decisions that go into drone warfare and the fight against terrorism.

    This is a really good movie, as it focuses both on drone technology as well as the political and military chains of command that go into its use. From beginning to end, it sets up a morally ambiguous scenario in a way that will have audiences discussing it long after they leave the theatre. It isn't big or showy, but it is ambitious and specific ... and I heartily recommend it.

    I finally saw Steve Jobs last weekend, and ended up kicking myself for not making more of an effort to see it when it originally was in theaters late last year. Written by Aaron Sorkin to look at three specific product launches by Jobs, the movie got mixed reviews from critics and audiences alike; a lot of people felt that Sorkin picked the wrong three product launches, that it took too many liberties with real life, and was insufficiently comprehensive in its depiction of Jobs' life and personality.

    All of that may, in fact, be true. But I really loved it anyway, in part because it was so theatrical and never seemed terribly concerned about being accurate. What I think Jobs does do, in its own way, is get at some of the truths of Jobs' obsessive persona and belief that his "reality distortion field" could alter space and time to meet his own needs and desires.

    Accuracy and truth are not the same thing, especially when it comes to art. I'm totally comfortable with that.

    For me, the best scenes in the movie are between Michael Fassbender as Jobs and Jeff Daniels as John Scully, the former Pepsi exec who Jobs enticed to run Apple, not knowing that Scully eventually would engineer his departure from the company he founded. None of those scenes may have happened in the way that Sorkin writes them, but that's the nature of dramatization ... Jobs is a movie, not real life. I suspect there will be plenty of other movies about him, and that's okay. They're all pieces of a human puzzle that could be maddening, but that changed the world.

    Finally, I would suggest that you track down the HBO documentary Everything is Copy: Nora Ephron - Scripted & Unscripted, which offers an affectionate look at one of the most distinctive journalistic and artistic voices of our generation. It is filled with great stuff - how Ephron successfully challenged the male-dominated field of magazine journalism, and eventually moved into writing and directing movies (When Harry Met Sally, Sleepless in Seattle, You've Got Mail) while living an absolutely fascinating life. I'm a big Ephron fan, but I don't think one has to be in order to enjoy Everything Is Copy ... I'd suggest you check it out.

    I have a couple of wines to recommend this week ... the 2013 Pipoli Aglianico del Vulture, which is a terrific and nuanced red wine that is great with Italian food ... and the 2014 Carlton Cellars Sauvignon Blanc Yamhill-Carlton, which was great the other day when the weather got warm and simply demanded a bright, fresh white wine.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: