business news in context, analysis with attitude

Published on: October 4, 2016

by Kevin Coupe

The Sacramento Bee has a story about how Amazon lockers are being added to a number of Safeway store lobbies, in addition to the 7-Eleven and Circle K convenience stores where they more traditionally have been placed since the Amazon locker program began in 2011.

There are a couple of interesting pieces of information within the story, as well as another question unstated in the piece, worth noting.

First, Amazon seems to have adopted a new approach to the lockers, actually giving them names - like Bram, Dottie, Amanda and Delaney - instead of the numbers that it traditionally has used. That would seem to be a page out of the Zipcar playbook; the disruptive car rental service has always named its cars. I'm not sure of this means that Amazon did some research suggesting that names instead of numbers make the enterprise more user-friendly, or if this is just a test to see if names work better. But it'll be instructive to see if Amazon continues the practice down the road.

Second, there is note in the story that "the number of deliveries could surpass the capacity of the lockers at a given site, a situation that Amazon said it will monitor closely during the holiday shopping season." I have no idea of this is a real concern, or just a bit of hyperbole designed to hype the offering. But let's see if Amazon starts sending out press releases in a couple of months talking about a locker availability shortage.

Finally, the question. I cannot help but wonder about the advisability of Safeway providing easy access - not to mention the free advertising that comes from just having the lockers highly visible in the store lobbies - to an installation operated by a major competitor.

I'm sure Safeway wouldn't put Kroger lockers in its stores. Or Bristol Farms lockers. So why Amazon?

I'm sure they've done a risk-reward analysis. But if there could be an intangible benefit to Amazon from having such positioning and accessibility.

It'll be interesting to see if Safeway has made a short-term decision here that ends up having a negative long-term impact.

In other words, this could end up being an Eye-Opener.

One other thing ... I was in Lubbock, Texas, last week giving a speech just a couple of blocks from the campus of Texas Tech. And while walking over to pick up a cup of coffee at a nearby Starbucks, I noticed a store with an Amazon banner ... and it ended up being one of the locker stores that it has been opening near college campuses around the country in an effort to get students locked into behavior that will persist into middle age and sustain Amazon's growth. (Pictures below.)

I asked the young woman working at the counter, and she told me that the store only had been open for a couple of weeks ... and that they'd never had a day so far in which they had fewer than 100 deliveries and customers.

Which is another sort of Eye-Opener.

Published on: October 4, 2016

Blue Apron, the meal kit service that ships pre-measured ingredients and recipes to consumers around the country, reportedly is considering an initial public offering (IPO) that it believes could bring it as much as $3 billion.

Bloomberg writes that Blue Apron "is holding what’s known as a bakeoff, in which bankers will pitch their IPO strategies in hopes of working on the deal." The $3 billion valuation would be justified by the company's profitability, Bloomberg writes.

The story notes that Blue Apron is not alone: "Plated, which also started in 2012, has a similar ingredient-delivery model. German startup HelloFresh started in the U.S. later that year and Purple Carrot began its vegan options in fall 2014." But Blue Apron would be the first of the group to go through an IPO.

Published on: October 4, 2016

Columbus Business First reports that Amazon "is laying the groundwork to add alcohol delivery to its Prime Now service in Columbus and Cincinnati," having filed for permits "to sell carryout beer, wine and pre-packaged low-proof mixed drinks in Franklin and Hamilton counties, according to applications with the Ohio Department of Commerce. Carryout licenses allow delivery."

The move, according to the story, seems to be part of a broader alcohol-oriented strategy.

"Prime Now came to Columbus in May, with free two-hour delivery of groceries and consumer goods for Prime members and one-hour delivery for a fee ... Amazon's hometown of Seattle had alcohol as a product offering from the start, but beer and wine didn't roll out in other markets until Manhattan in December, and more cities over the summer.

"Now it's going next-level, with a deal to deliver to numbered parking spots for tailgaters at Levi's Stadium, home of the NFL's San Francisco 49ers."

Published on: October 4, 2016

The New York Business Journal reports that "a federal jury has ordered Costco to pay Tiffany & Co. $5.5 million as part of a trademark lawsuit in which the jeweler sued the warehouse club retailer for selling “Tiffany” diamond engagement rings that had no affiliation with the well-known jewelry brand itself.

The number was determined by calculating Costco's profit from selling about 2,500 of the rings, the story says. The judge in the case still has to issue a final decision on punitive damages.

The Journal notes that "Costco contended that the word 'Tiffany' is a generic term for a pronged, solitaire-style ring setting. In September 2015, a judge disagreed, and ordered Costco to stop using the Tiffany name and logo in its marketing and merchandising of the jewelry."

Published on: October 4, 2016

Forbes reports that Sears chairman/CEO Eddie Lampert is pushing back against speculation that the company's Kmart chain could be shut down because of persistently declining sales and profits.

“I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way,” Lampert said to Forbes in an email. “To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.”

Lampert went on: "“First, Kmart continues to operate over 700 stores. Second, a significant number of these stores are profitable and have been profitable for many years. Third, we have been clear that we are intent on improving the performance of our unprofitable stores and, if we cannot, we will close them. Actions to improve our store productivity, including reducing inventory stored in the stockrooms, are designed to make our stores easier to operate and to eliminate unproductive inventory and processes. Decisions to close stores are never easy, but we recognize that the way people are shopping is changing significantly."

Published on: October 4, 2016

Tech Crunch reports that Instacart, the grocery delivery service, "is facing a boycott" from contract laborers who shop its clients' stores. The reason? These contractors "are unhappy about the company’s decision to eliminate tips in favor of raising guaranteed delivery rates. Although Instacart positioned the move as a way to smooth out the earnings curve" for its contractors, "some of those affected by the change say it will instead reduce their incomes dramatically. In the case of top shoppers, some expect to lose up to 50% of their earnings, they claim."

Instacart justified the policy change by saying that 20 percent of customers don;t tip. which it felt was unfair to the contractors. But the contractors accuse Instacart of trying to "muddy the waters" in a way that will hurt them financially.

According to the story, "Hundreds of shoppers are now preparing a nationwide boycott on October 16th through 17th, when the new pay structure goes into effect. The hope is that enough will join in to impact the workload and delivery times, in order to force Instacart to reconsider the changes. It could be difficult to have a sizable impact, however, given that there are tens of thousands of shoppers working across the U.S., and they have no real way to organize outside of social media and word-of-mouth."

Published on: October 4, 2016

The Seattle Times reports that Amazon is instituting a new policy on user reviews, "prohibiting most reviews made in exchange for free or discounted products." These so-called "incentivized reviews" have been tolerated in the past as long as the incentives were disclosed, but that no longer will be the case.

The story notes that "books are also an exception, with merchants and publishers still allowed to send out advance copies of books.

"The move highlights how customer reviews have become a major currency on Amazon’s site, as they are a big guide in purchasing decisions — and how the company endeavors to ensure these reviews remain trustworthy." And the Times writes that Amazon has developed "a new algorithm that gives preference to 'newer, more helpful' reviews."

Published on: October 4, 2016

• The Advocate reports that Rouses Markets is acquiring the nine locations of LeBlanc's Food Stores. Terms of the deal were not disclosed. The LeBlanc's stores will be rebranded as Rouses by the end of the month.

The deal gives Rouses a total of 54 locations, including 10 in the Baton Rouge metro area.


• The Associated Press reports this morning that outdoor gear superstore chain Bass Pro Shops is acquiring rival Cabela's for $4.5 billion.


• The Financial Post reports that Costco "is aggressively stepping up its expansion in Canada," with plans to open seven new stores there in 2017, which will be on top of the 91 stores it currently has there with sales of $21 billion.

Published on: October 4, 2016

...will return next week.

Published on: October 4, 2016

Got the following email from MNB reader Mike Griswold responding to my coverage yesterday of the weekend in Major League Baseball and the National Football League:

Love your stuff, but no Ryder Cup mention? US finally ended the drought with some amazing golf. Fantastic crowds (~50,000) on Sunday, a great venue, and a very exciting 3 days even for the non-golf fan.

Finally, some business lessons: If something doesn’t work, blow it up and start over; involve the people (players in this case) in the process as it creates a sense of shared ownership and accountability. Lastly, it helps to make some putts.

Point taken.

Also, responding to my baseball reveries, one MNB user wrote:

When I was a high schooler in Toledo back in the sixties, I got to go to a few games with my Dad.  I remember how scary it was on the Cabot Lodge expressway with everyone going 75 mph. I remember that parking near the stadium was in small lots in front yards of houses nearby and a great peanut roaster on the way in.

But, once we got there early enough to watch batting practice.  The Tigers were playing the Twins.  During practice, Twin's first baseman, Harmon Killebrew, hit a ball out of the stadium, over the lights in Center Field... 800 foot shot???

Wow!

I love memories like these.

From MNB reader Dean Balsamo:

Reading through the baseball comments and I saw Vin Scully’s name come up. I grew up in Los Angeles and Vince’s voice and calling of the games still’s the best in my book.

I actually lived right next to do a Dodger- Wally Moon. This was when he was still hitting those homers to left field because the coliseum was like 296’ or something like that down the left field line.   It was like magic. One time he gave a party and all the Dodgers of the time came…Maury Wills, Johnny Padres, Don Drysdale and….Sandy Koufax!

Koufax  stopped at the foot of the drive way said hi to us kids and then tossed the cigarette he was smoking off to the side-we picked it up and took a drag.

Nat King Cole also came to that party and we spoke with him for a minute as well.  We lived in Encino from 61- to 69.

One time Wally Moon even came and played some ball with us on an empty lot we used nearby.
 
My dad was general sales manager for Channel 9 in Los Angeles and we used to get box tickets a few rows behind the Dodger dugout. We saw a 63’ World Series game with the Yankees among other games Saw Koufax pitch a number of times. . Also  with some friends (we were 12 years old ) we were able to sneak down to the Dodger dressing room and actually saw Vin himself down there in front of the door-then we split.
 
Those years were golden. Was another world another time for sure.

Published on: October 4, 2016

In Monday Night Football, the Minnesota Vikings beat the New York Giants 24-10.