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    Published on: March 21, 2019

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. Today’s video, in fact, is much less detailed than the text version. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy … reporting this week from Fort Lauderdale, Florida - specifically from the Bahia Mar marina there.

    It is, for me, a kind of pilgrimage, because Bahia Mar has a certain cultural and literary significance for people like me. It is where writer John D. MacDonald anchored all of his Travis McGee novels, and where McGee’s houseboat, the Busted Flush, was tied up at Slip F18, waiting for some mystery to present itself, often in the form of a damsel in distress.

    This was a long time ago. Times have changed, and the public consciousness about certain things has been raised. MacDonald and McGee probably would never be accused of being “woke.”

    This location has changed a lot, too … Bahia Mar is a lot more upscale than in McGee’s day. Many of the boats tied up here look like office buildings and even skyscrapers that have been turned on their side, the very definition of a kind of conspicuous consumption that McGee - and many of his literary brethren, ranging from Philip Marlowe to Lew Archer, from Harry Bosch to Spenser - would find distasteful, if not outright offensive.

    I found myself thinking about the literary tradition represented by McGee and Marlowe and Archer and Bosch and Spenser - the classic American detective novel - not just because I was motoring through the Bahia Mar marina, but also because that tradition can serve as a metaphor and business lesson. You know how I feel about business lessons.

    The German philosopher Nicolai Hartmann once wrote that the fundamental question that must be asked in determining ethical behavior is, “What ought we do?” I’m not sure that our modern society is very good at answering that question. I’m pretty sure we don’t ask it often enough.

    I would argue that the classic American detective novel often serves as a collision between expediency and “ought,” confronting Hartmann’s question, with the protagonist - Spenser and Bosch and Marlowe and Archer and McGee - charged (sometimes by a client, sometimes by fate) with putting things right, with aligning what is with what ought to be.

    I’m not treading on new critical ground here. In 1902, G.K. Chesterton, in an essay entitled “In Defence of Detective Stories,” wrote that detective fiction is “the earliest and only form of popular literature in which is expressed some sense of the poetry of modern life.”

    It still does, I think, though modern life these days often doesn’t seem very poetic. Quite frankly, neither does modern business, which is replete with examples of companies taking shortcuts, valuing the short term more than the long term, thinking about reward more than consequences, not valuing the front line people who make profit possible, exploiting and harassing the vulnerable, and seeing only the bottom line without concern for ethical and moral lines crossed.

    Too few people ask the Hartmann question - “What ought we do?” - within any sort of ethical context.

    The good news is that the real world is catching up with at least some of the people who are not considering what ought to be. Hardly a week seems to go by without some senior executive - almost always a middle aged white male, though I’m sure that this demographic does not have an exclusive on bad behavior - being the subject of unsavory headlines, losing his job and being publicly shamed (though often with a severance check that probably makes it all a little more bearable, though I suspect - and hope - that many of these checks will have to be split with departing and disgusted spouses).

    I came to Bahia Mar searching for Travis McGee, but found myself searching for something else. Maybe simpler days when literary knights errant would focus on putting things the way they ought to be.

    And I thought that we all would do well to think more about ethical behavior, and learn business lessons from the likes of Raymond Chandler, Ross Macdonald, Robert B. Parker, Ace Atkins, Michael Connelly, and yes, John D. MacDonald, who gave us Travis McGee.

    That’s what is on my mind this morning, and as always, I want to hear what is on your mind.

    KC's View:

    Published on: March 21, 2019

    Nielsen is out with new research suggesting that “Amazon’s dominance in digital retail, specifically for CPG products, is slipping. In fact, over the past two years, established brick-and-mortar stores have taken share back and closed the competitive gap.”

    The report goes on:

    “While it's no secret that traditional brick-and-mortar retailers have ensured e-commerce is part of their overall strategy, Nielsen data shows that some of the biggest brick-and-mortar players have turned strategy into reality, and have posted incredible growth along the way. In fact, key retail players like Walmart, Kroger and Target have grown their online customer base - all by at least 90% more than Amazon - over the past two years … These merchants have succeeded, in part, because they’ve embraced the click-and-carry model where consumers buy an item online and pick it up at a physical store. In fact, we estimate that the share of click-and-carry sales grew from 4% to 11% of all CPG e-commerce sales in just two years.”
    KC's View:
    While I think this is a good perspective on how the competitive landscape may be shifting a bit, it really shouldn’t strike anyone as a surprise that companies like Walmart, Kroger and Target have gotten better at e-commerce, reclaiming some market share. It always was going to happen … and certainly Amazon was prepared for these companies getting better.

    Remember - none of this is static. As these companies continue to improve, Amazon also will continue to innovate. The question becomes, which company innovates the fastest and the most successfully in ways that matter most to the shopper?

    To some degree, our next editorial story - about another study - poses at least one answer to that question.

    Published on: March 21, 2019

    A study from brand consultancy Feedvisor, cited by CNBC says that “when consumers are ready to buy a specific product, nearly three-quarters of them, or 74 percent, are going straight to Amazon to do it.”

    The story goes on: “Fifty-eight percent of Amazon Prime members shop online at least once a week, Feedvisor said. Meanwhile, 45 percent of Prime members are buying something from Amazon at least once a week. Five percent of consumers are buying something there daily.”

    The story says that “consumer loyalty to Amazon is at an ‘all-time high,’ with 48 percent of people visiting Amazon at least a few times a week, and 89 percent of people visiting Amazon at least once a month.”

    The apparently inevitable conclusion: “Amazon has deeply integrated itself into consumers' daily lives.”
    KC's View:

    One of the things that Amazon continually demonstrates is that, unlike most of its competition, it has the capacity and desire to deepen its relationship with shoppers. That’s evident from the results of this study, and from some of the stories seen below in “E-conomy Beat.”

    I think it can be argued that Amazon isn’t interested in stealing customers’ transactions, but rather is focused on capturing customers’ hearts, mind, and souls, knowing that their business will follow. That’s a high risk game, and Amazon will make mistakes, but it also is a high-reward approach that has worked out pretty well so far.

    Published on: March 21, 2019

    Reuters reports that Jeremy King, who since 2011 has helped oversee remarkable growth in Walmart’s e-commerce capabilities as the company’s CTO, is resigning.

    King reportedly will leave at the end of the month for an undisclosed “new venture.”

    Reuters writes that “Under King, Walmart integrated its massive stores and online systems and began offering shoppers services such as in-store pickup of online orders, easy returns and online grocery pickup, among other benefits.  

    “King also led the company's technology arm, Walmart Labs, through more than 10 acquisitions and was key in moving the company's operations to the cloud, which gave the retailer more resources to compete with Amazon. He also oversaw the opening of four new tech offices.”

    The company said that while a search for a replacement is conducted, King’s responsibilities will be handled by Fiona Tan, senior vice president of customer technology.
    KC's View:

    Published on: March 21, 2019

    Eater reports that New Jersey Gov. Phil Murphy has signed into law a ban on cashless stores and restaurants, which goes into effect immediately and imposes fines of up to $2500 on violators.

    The story notes that some retailers, such as airport vendors, are exempt. But, in addition to requiring most retailers to take cash, the bill essentially would prevent Amazon from opening one of its Amazon Go checkout-free stores in the state.
    KC's View:
    I can’t confirm this, but I’d be willing to bet that violators hit with a $2500 fine won’t be able to pay it in cash - official government agencies almost always want a check or credit card.

    Published on: March 21, 2019

    The Los Angeles Times reports that European Union antitrust regulators have fined Google $1.7 billion for “thwarting advertising rivals.”

    According to the story, “Wednesday’s fine stemmed from Google’s role as an ad broker for websites, targeting exclusivity agreements for online ads with its AdSense for Search product. That service places text advertising on websites … For instance, the commission found that Google restricted third parties from displaying advertisers from rival services altogether in some cases. Other times, third parties were required to reserve a premium spot for Google advertisers as well as allow the company to alter the way that rivals' advertisements were displayed.”

    These demands apparently were dropped in 2016, when the Eu began its probe.

    Google has been fined on antitrust grounds three times by the EU over the past decade, for a total of $9.4 billion.
    KC's View:
    The Times notes in its story that beyond the size of the check Google has to write, this fine comes at a “politically sensitive time” for the company, since it is one of the tech giants that Sen. Elizabeth Warren (D-Massachusetts) has proposed breaking up as part of her campaign for the Democratic presidential nomination.

    Even if that proposal is not realized - and I have my doubts about its wisdom and practicality - it does seem likely that companies like Google, Facebook and Amazon are likely to face a lot closer legislative scrutiny in coming months.

    Published on: March 21, 2019

    The Puget Sound Business Journal reports that Starbucks is investing $100 million in a new venture capital fund that it says is “focused on new ideas and technologies that will be good for both customers and business … The fund will identify and invest in companies that are developing technologies, products and solutions relating to food or retail, which Starbucks says are increasingly relevant to the company as it seeks to accelerate its innovation through external relationships.”

    The fund will be managed by private equity firm Valor Equity Partners, which is seeking another $300 million from other potential partners.

    CEO Kevin Johnson says that “with an eye toward accelerating our innovation agenda, we are inspired by, and want to support the creative, entrepreneurial businesses of tomorrow with whom we may explore commercial relationships down the road.” And in the announcement, Starbucks says that the investment “will serve as a growth driver for the next generation of food and retail start-up companies.”

    The Business Journal notes that the announcement comes as Starbucks prepares for its annual shareholders meeting, at which two additional initiatives are expected to be revealed:

    • A reimagining of the company’s “third place” approach to its stores that COO Roz Brewer says will go beyond a simple renovation and will focus on “convenience, comfort and connection.”

    • New environmental moves that include recyclable and compostable cups that will be tested in a number of markets, and a recyclable straw-less lid that immediately will be rolled out to all stores in the United States and Canada.
    KC's View:
    I like it when businesses do things like this - with an understanding that if you want to grow new approaches to business you have to adequately seed the land, they invest in venture capital funds that can expand their yield.

    Published on: March 21, 2019

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

    • Statistics analysis firm Statista is out with a study projecting that online grocery shopping in the US - tracked at $14.2 billion in 2017 - are likely to reach $29.7 billion by 2021.

    Grocery sales through online platforms, the story points out, “represent a very small part of the overall grocery retail market, but are amongst the fastest growing segment.”

    • Amazon yesterday announced that MLB.TV will now be available via Prime Video, “allowing Prime members to subscribe to MLB.TV and stream regular season out-of-market baseball games live and on-demand, all from the Prime Video service.”

    The announcement notes that “MLB.TV joins an expanding, top tier selection of live and on-demand sports content available on Prime Video, including NFL Thursday Night Football games, AVP Pro Beach Volleyball tournaments, and the Laver Cup tennis tournament available to Prime members around the world, and English Premier League matches, the US Open, and the men’s ATP World Tour available in the UK.”

    it is interesting that Amazon took a swing at this pitch as the same time as it reportedly is negotiating to acquire a minority share in the YES Network, which would team it up with the New York Yankees in the ownership of the regional sports network that features Yankees games. The presumption has been that Amazon probably would like to feature Yankees games on Prime Video; the MLB deal illustrates yet again the degree to which Amazon wants to expand its ecosystem.

    • Amazon yesterday announced that it is launching a new line of “quality skin care products” called Belei, which it says offers “solutions for various skin types and feature ingredients with proven effectiveness. The collection has 12 different items, including everything from retinol moisturizer to vitamin C serums, to help customers address common skincare concerns like acne, the appearance of fine lines and wrinkles, dark spots, dehydration, dullness and more.”

    “Our goal is to help customers spend less time and money searching for the right skincare solutions,” said Kara Trousdale, Amazon’s Head of Beauty for Private Brands, in a prepared statement. “We took a simple, no-nonsense approach when creating Belei, developing products with ingredients that are both proven to deliver results and also offer customers great value for the quality.”

    CNBC reports that there seems to be some evidence that Amazon “is aggressively blocking money-losing products from advertising on its site … telling more vendors, or brand owners who sell their goods wholesale, that if Amazon can't sell those products to consumers at a profit, it won't let them pay to promote the items. For example, if a $5 water bottle costs Amazon that amount to store, pack and ship, the maker of the water bottle won't be allowed to advertise it.”

    The story notes that this approach “reflects a broader push to squeeze earnings out of a historically low-margin business.”

    An Amazon spokesperson tells CNBC that “the company is doing what retailers have done for decades. ‘Like all retailers, Amazon decides which products to market and promote in our stores based on a variety of factors, such as relevancy, availability, profitability and other factors,’ the spokesperson said.”
    KC's View:

    Published on: March 21, 2019

    PC Gamer reports that Walmart is in discussions “with developers and publishers about its own game streaming service … While no further concrete details are currently available, it's in keeping with the retailer's ongoing move into the digital space, offering web-integrated services in a bid to compete with the Amazon behemoth.”
    KC's View:

    Published on: March 21, 2019

    • Kroger-owned QFC announced that as of April 1, it “will no longer be offering single-use plastic bags in any of its stores. Throughout the month of April, the company will be donating $1 for each reusable bag sold at its stores to The Nature Conservancy, a nonprofit committed to protecting our local lands and water.”

    QFC notes that parent company Kroger “announced last August a plan to eliminate single-use plastic bags in all its stores by 2025 … As part of that announcement, QFC committed to be the company’s first market to make the complete transition by the end of 2019.”

    • Matthew Wadiak, founder and former COO of meal kit pioneer Blue Apron, announced this week the launch of Cooks Venture, described as “a next generation food company rooted in regenerative agriculture and transparency.”

    The announcement says that Cooks Venture has “acquired an 800-acre farm in Arkansas and two large processing facilities in Oklahoma. Starting today, Cooks Venture begins pre-sale of their pasture-raised, heirloom, slow growth chickens, offering distribution both direct-to-consumer and in-store starting July 2019.”

    The company says that “Cooks Venture is founded on the well-documented scientific principle that sequestering 1% more carbon in the soil on agricultural lands can reverse climate change. Wadiak aims to improve the agricultural supply chain, while promoting regenerative agriculture at all levels, and provide consumers with food choices that are exceptional in quality, taste and completely transparent in process.”
    KC's View:

    Published on: March 21, 2019

    …will return.
    KC's View: