business news in context, analysis with attitude

Published on: April 5, 2017

Content Guy's Note: The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

Content Guy's Note: I was unable to attend the recent Shoptalk "next gen commerce" conference in Las Vegas, but Tom Furphy was there, along with his business partner Justin Leigh, who is the co-founder and CEO of IdeoClick.

And so ... I asked them to cover Shoptalk for MNB. This week, Tom Furphy takes over the "Conversation" with a report and commentary from Shoptalk, and then, in the next "Conversation," we'll feature a dialogue between Tom and Justin in which they consider the implications of what they saw and heard.

Enjoy.

On March 19 – 22, Justin Leigh I attended the Shoptalk 2017 conference at the Aria in Las Vegas NV. Justin and I work together at Consumer Equity Partners, and on the Ideoclick and Replenium businesses within our portfolio. We worked together for a number of years at Amazon building out the CPG business there. As our lead Product Manager, he has a unique inside perspective on how e-commerce works, from the data out through fulfillment to the customer. This will be our second year sharing our observations from the conference.

ShopTalk US and its European counterpart are billed as “unprecedented gatherings of individuals and companies reshaping how consumers discover, shop and buy.” Their aim is that “each event provides a platform for large retailers and brand manufacturers, startups, tech companies, investors, media and analysts to learn, network, collaborate and evolve.”

Not only does the event bring together innovators and entrepreneurs, the event itself is an entrepreneurial endeavor. It was founded by Anil Aggarwal and Jonathan Weiner who built and sold the Money 2020 conference for over $100 million to London-based i2i Events Group. They set out to build another blockbuster conference with Shoptalk, and they have done so. I assume their goal is to eventually sell the Shoptalk conference.

E-commerce and the changing consumer is clearly a hot topic. In only the second year of the conference, almost 6,000 attendees from over 2,200 companies came together. The event featured hundreds of exhibitors from large companies such as eBay, Amex and Amazon down to about 100 exhibiting startups. All of the networking receptions occurred on the exhibit floor, so it prompted lots of engagement among the attendees and exhibitors, with a great balance of social versus business interaction. There were roughly 1000 startups in total in attendance, 400 direct-to-consumer business and 600 technology companies. Of course, many of these will fail, but it demonstrated the scope of innovation that the conference was able to bring together.

Of all the events that we attend over the course of a year, this one seems to be the best at balancing education, inspiration, business, networking and social. The conference did experience some growing pains this year. It was at maximum capacity for the Aria, which meant that flow from one session to the next was one traffic jam after another. And many of the good sessions filled quickly and spilled into overflow rooms. These are high class problems to have, and I’d say that the organizers handled them well. Next year Shoptalk is moving to the Venetian and will be able to handle a larger crowd, which it undoubtedly will have.

Like most conferences, Shoptalk featured general sessions as well as topic-specific breakouts. The general sessions featured power players such as Target’s Brian Cornell, Amazon Marketplace’s Peter Faricy, Jet / Walmart’s Marc Lore, Alibabas’ Lee McCabe, Amazon PrimeNow’s Stephenie Landry, Google Shopping’s Jonathan Alferness and eBay’s Devin Wenig.

The breakouts were long on talent as well, including folks from companies such as Alex Lee, Best Buy, Boxed Wholesale, Lowe’s, Apple, Instacart, Deliv, Dick’s Sporting Goods, Macys, Sam’s, Postmates, NatureBox, Plated, UPS, KC, Nordstrom, Amazon, Google, Instagram, Pinterest, Birchbox, Casper, Facebook and Walmart Labs.

Basically, anybody that is anybody in e-commerce was there. And e-commerce is front and center at Shoptalk. Unlike typical industry conferences, there is not discussion of if e-commerce will work or if retailers and brands should participate. Shoptalk recognizes that e-commerce is moving at breakneck pace and is designed to help all of the attendees to figure out how to navigate and contribute to the growth.

Outside of the structured sessions, there were plenty of opportunities for deep conversation. We had several great meetings with retailers, brands, tech companies, analysts and investors. I feel that the focus on e-commerce and serving customers has never been better. Perhaps it’s the imminent threat posed by Amazon. But the energy from brands, retailers and startups is as strong as it’s ever been.

In addition to hundreds of exhibiting tech companies, investors turned out in droves. There were plenty of Venture Capitalists there, both to promote their current investments and to find new ones. Many sat on panels or attended speed-dating session where startups pitched them.

I was struck by the number of equity analysts that attended, who seemed to share a common belief that because Amazon has been in a heavy investment mode over the past couple of years, it should be hitting another period of accelerated growth upcoming. The heaviest Amazon growth is expected in Grocery & Consumables, Apparel and Private Label. The analysts were grappling with which retailers will be hit the hardest by this growth and which retailers are best positioned to counterattack. I’m not going to sugarcoat it. Most felt that Amazon is poised to steal significant share in the coming years and that many retailers we know today will not respond adequately. Said one analyst “Frankly, it doesn’t look good for them.”

In her keynote interview, Stephenie Landry, Global VP of Amazon PrimeNow reminded the group that her business went from concept to launch in 111 days. She also spoke about the speed of rollout and that the service was at 46 markets as of the conference, adding a couple markets per week.

If I were a retailer, I would ask myself what I’ve done for my customers in the time Amazon has developed the business and rolled out to 50 markets. Also, during that span they’ve also announced Amazon Go and the Amazon Fresh pickup depots.

A simple question, then, if I may:

In the short time that Amazon has rolled out these services, how many innovations have occurred elsewhere in the industry?

The Conversation will continue...

Published on: April 5, 2017

by Kevin Coupe

Amazon's ecosystem just got a little bigger. About 100 yards bigger.

Variety reports that Amazon is spending an estimated $50 million to live stream 10 National Football League Thursday night games during the 2017 season, with the expectation that the games will be available only to Amazon Prime members.

The NFL sold streaming rights to 10 games last season to Twitter, but the amount Amazon is paying is said to be about five times what Twitter paid. The broadcast rights to the Thursday night NFL games are split between CBS and NBC, with the NFL Network also holding rights to all Thursday night games; last year, Twitter picked up the play-by-play feed from NBC and CBS, but it is unknown at this point whether Amazon will do the same thing, or fund its own broadcast crew.

Variety writes that "the new streaming rights pact comes as the NFL and its TV partners are looking to overhaul the on-air presentation of games, the placement of commercial breaks and aspects of game play designed to speed up the action on the gridiron ... Amazon already is in business with the NFL on “All or Nothing,” an unscripted series chronicling the return of the Rams NFL franchise to Los Angeles after 20-plus years in St. Louis."

What this all means is that Amazon's ecosystem, much like the universe, seems to be expanding an an accelerated rate. It seems obvious that Amazon will use the NFL games as a way of attracting more customers and making it easier for them to buy more stuff. It'll be interesting to see the degree to which Amazon will use the games to sell NFL gear and clothes .... and that'll just be the obvious stuff.

It will be an Eye-Opener.

Published on: April 5, 2017

The New York Times reports that the Beiersdorf-owned Nivea skin care brand has had to withdraw a Facebook advertisement for its Invisible For Black & White deodorant, which featured the phrase "White is Purity." Nivea, the story says, found itself "accused of racial insensitivity over a campaign that seemed to be embraced by white supremacists."

Indeed, in one social media thread Nivea was referred to as being the official brand of the alt-right.

The ad portrayed a woman clad in white, with long dark hair, sitting in a brightly lighted room; the copy also included the language, "“Keep it clean, keep bright. Don’t let anything ruin it."

The company released a statement saying, "“We are deeply sorry to anyone who may take offense to this specific post. Diversity and equal opportunity are crucial values of Nivea.”

The Times writes that "Nivea’s decision to remove the ad on Tuesday, which was posted on its Facebook page for two days, and stop the entire campaign is another sign of how sensitive companies have become to negative reactions on social media.

"At a time when online conversations can snowball, companies have learned to respond quickly to opinions on social media. This has created an environment where Google has had to train its ad placement computers to be aware of offensive content because brands are wanting more distance between their marketing material and derogatory messaging or terrorist propaganda."

Published on: April 5, 2017

Bloomberg reports that United Parcel Service (UPS) has announced that it will shortly begin making Saturday ground deliveries, "one of the biggest shipping-time changes in its 109-year history in response to rising demand from online shoppers."

According to the story, "Deliveries to residences are expected to account for more than half of UPS’s total by 2019. Saturday operations will help the world’s largest package-delivery company defend against FedEx Corp., which already drops off ground-shipped items at homes that day, and the U.S. Postal Service, which also makes Sunday deliveries in some markets for Amazon."

The story points out that even as UPS expands service, it is embarking on "a series of initiatives designed to curtail the costs of home deliveries, which generate less profit because drivers drop off an average of 1.1 packages to residential stops but more than three to businesses."

Published on: April 5, 2017

The Wall Street Journal reports that Staples is exploring the possibility of a sale of the company, possibly to one of several private equity groups with which it is in preliminary discussions.

The move comes less than a year after federal regulators scotched its proposed acquisition of Office Depot on the grounds that it was bad for competition; both Staples and Office Depot said as merger was necessary to remain viable against online competitors such as Amazon.

The story notes that "Staples has previously had private-equity ownership. Bain Capital was an early backer of the company and took Staples public in 1989, making multiple times its money."

Published on: April 5, 2017

The Atlantic has a story pointing out that "Walmart is one of six companies in the United States that run digital-forensics laboratories accredited by the American Society of Crime Laboratory Directors."

Walmart isn't alone. American Express has one. Target has two.

According to the story, "Those companies—and many others that operate labs without formal accreditation—have built up digital-forensics capabilities once limited to law enforcement. They have the tools and the know-how to investigate corporate theft and online fraud, or track a data breach to its source. That might involve extracting information from a locked, encrypted smartphone, or a damaged computer hard drive. Or it could entail analyzing network activity to figure out which employee, for example, is siphoning off sensitive data to sell on the black market ... Those companies—and many others that operate labs without formal accreditation—have built up digital-forensics capabilities once limited to law enforcement. They have the tools and the know-how to investigate corporate theft and online fraud, or track a data breach to its source. That might involve extracting information from a locked, encrypted smartphone, or a damaged computer hard drive. Or it could entail analyzing network activity to figure out which employee, for example, is siphoning off sensitive data to sell on the black market."

Published on: April 5, 2017

...with brief, occasional, italicized and sometimes gratuitous commentary…

• CNBC has a follow-up story about the decision by Amazon to shut down its Quidsi unit, focusing on the reasons that Jeff Bezos decided to close it.

According to the piece, "Behind the scenes, the winding down of Quidsi had been quietly underway for over a year. Unlike shoe seller Zappos, which Amazon acquired in 2009 and has flourished as an established independent brand, Quidsi's commodity products play right into Amazon's core business ... Furthermore, from a customer perspective, Amazon preferred to keep buyers on its own website rather than on Quidsi's network of sites like Diapers.com and Soap.com. With its inventory fleeing to Amazon's warehouses and the Quidsi sites being de-emphasized, there was no longer a strategic reason to have a separate Quidsi operation."

And, of course, there was the fact that Amazon bought Quidsi from Marc Lore, who eventually left the company and, once his noncompete was done, started up another e-commerce company, Jet, which he sold to Walmart.


• The New York Times reports that Verizon, which owns AOL and is in the process of acquiring Yahoo, plans to combine the two units under a single brand name - Oath.

According to the story, "The brand will apply to the digital media division of Verizon after it buys Yahoo’s internet assets for $4.48 billion, a deal that is expected to close by the end of June. But do not count the legacy brands out just yet: Yahoo, AOL and The Huffington Post will continue to exist and operate with their own names — under the Oath umbrella."

The choice of name has gotten a lot of criticism, and I agree with it ... because "Oath" is only marginally better than "Tronc," which was the brand name chosen when the Tribune Company, owner of the Chicago Tribune and Los Angeles Times, decided to rebrand itself last year. Oath? Tronc? Give me a break...

Published on: April 5, 2017

• Wind Power Monthly reports that 7-Eleven "has signed an agreement with utility TXU Energy that will see 425 of its stores in the state 100% powered by electricity generated from Texan wind farms. The agreement starts on 1 June 2018 and will run for eight years."


• The National Grocers Association (NGA) said yesterday that "300 independent supermarket companies and state trade associations sent a letter urging Members of Congress to preserve the debit card swipe fee reforms, also known as the Durbin Amendment, passed as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In the letter, independent grocers and state trade associations voiced concern over the negative impact that a repeal of the Durbin Amendment would have on their day-to-day operations and their company’s bottom line."

Legislation is expected to be introduced shortly that would repeal the Durbin Amendment, which, NGA said, "successfully reformed anti-competitive price fixing in the debit marketplace."

Published on: April 5, 2017

• The Wall Street Journal reports that Deborah Wahl, chief marketing officer at McDonald's US, is leaving the company "as part of another management shake-up aimed at reviving the burger chain’s fortunes." She will be replaced by Morgan Flatley, formerly CMO of Global Nutrition at PepsiCo.

That's not the only change taking place at McDonald's. The story says that "in addition, two other top U.S. executives will leave. Lance Richards, head of U.S. menu, will be replaced by Linda VanGosen, a former Starbucks Corp. vice president. Julia Vander Ploeg, head of U.S. digital, will be replaced by Farhan Siddiqi, who most recently served as vice president of global digital experience at McDonald’s."

Published on: April 5, 2017

...will return.