I had a FaceTime piece the other day about how how, while Instacart is looking out for their customers and its own relationship with them, they may not be looking out for its retailer/client's best interests.
One MNB reader responded:
If you substitute you (KC), for the Instacart shopper, and that you really wanted a NY strip steak, so you decided to go to store B to get it. In that scenario Instacart has nothing to do with it. It has to do with store A not having what you wanted. Store A didn't lose the business to you (KC), they lost it to store B which had what you were looking for.
The point is that in my real-life example, Instacart is facilitating the loss of business by its retailer-client. Which is good for Instacart's relationship with the shopper, but not exactly what the client is playing for, methinks.
Another MNB reader weighed in on my commentary about probes into Amazon's private label policies. In this case, I wrote:
I would continue to argue that when it comes to private label, Amazon is doing what every retailer does - when it sees a brand that is particularly successful, it decides to knock it off and undercut it on price. Amazon may do this better than anyone else - with more robust data and greater effectiveness - but this is the way the game is played.
The reader wrote:
First off, I am a big fan of MNB and have been an almost daily reader the past couple years.
Something I noticed when reading through was that your pro-Amazon anti-Instacart views may be coming through here and resulting in a little bit of hypocrisy. You have repeatedly stated how you think Instacart is bad for retailers with the main reason being they can turn around and use their data against them but in this article mentioned how Amazon is doing the same thing with their third party sellers you seem to brush it off as okay since "everyone does that".
In my opinion, the difference in what Amazon is doing using their third party seller data could actually be seen as worse (or more harmful) than what Instacart is doing. The people who Amazon could be harming likely do not have the means to survive if Amazon "steals" their information and uses it against them. Meanwhile, the companies that Instacart may be doing something like this to are mostly massive corporations with tons of money and resources to compete even if Instacart does end up putting them in a tough e-commerce situation. I guess the way I see it is the basics of what each company is doing by using someone else's data to benefit themselves is similar, they are just targeting different people. Amazon is taking from the poor while Instacart is taking from the rich.
Interesting point. Hadn't thought of it that way.
I want to give it some more thought - it could reshape my views of Amazon and/or Instacart.
But … I guess my first reaction is that the main difference is one of roles. If we think of Amazon as a retailer, then creating private label alternatives to brands being sold on its site (store) is a time-honored tradition.
Instacart doesn't position itself as a store. It positions itself as a service provider … though my argument is that over time, it is perceived as a store by consumers.
Plus … it may be that some brands have to think about whether they want to be on Amazon, in the same way that some companies have decided not to sell to Walmart.
But you make a good point. As I said, I will cogitate on it.
Responding to the questions I raised yesterday about Wegmans' new distribution deal with UNFI, one MNB reader wrote:
Don't knock success.
Good point. Though I sort of make a living knocking success when I think there are questions to be raised.
From another reader:
UNFI is far from perfect , but they specialize on “the tough work that no one else wants to handle”.
Specialty Food assortment importantly allows retailers to appeal to the upscale crowd and differentiate versus Walmart, Costco, Dollar channel etc.
However, the average specialty food item sells only 1 unit per store per week versus a typical grocery item moving 10 units per store per week.
Retailers need to organize their warehouses to efficiently move truckloads and pallets quickly to stores. Outsourcing specialty food distribution to UNFI (or Kehe, DPI) solves a problem by keeping slow movers out of the central warehouse. Managing inventory, stocking, and logistics of more than 100,000 niche items is an enormous challenge, that supermarkets do not want to manage.
I am Wegmans fan, they are a global all star. However, their over reliance on grocery private label (at the expense of national brands) drives their shoppers to visit other supermarkets for their favorite brands instead of using Wegmans as a “one stop shop”.
And from MNB reader Bob Wheaton:
I have been a faithful Wegman Richmond, VA from their arrival and like many recognize the areas they excel in and there are many. The pandemic exacerbated, in my opinion, exposed their distribution in stock weakness in core dry grocery, frozen food, household items and dairy and they are still struggling. The out of stock positions in national brands may be altered with this distribution move, but that will do nothing to cure the private label shortfalls which is another issue altogether. Meat items were a separate altogether out of stock situation.
They know their business much better than anyone else, however I believe Wegmans currently has out-stored their distribution capability. The planned Virginia distribution center will go a long way to solve that problem but that is years away. I truly hope that succeed. I also trust they will.
I think I was very careful yesterday, whenever I asked questions about Wegmans, to say, "I could be wrong."
Regarding another subject, from another rteader:
Having spent quite a bit of my career in the Beauty Industry I see a problem with Costco trying to get into the cosmetics business. The beauty industry manages channels better than any industry I am aware of. And the most profitable channel is the professional channel – barbers, spas, salons, beauty stores such as Sally’s and a bunch of small independent stores that sell professional products to professionals. I worked for a subsidiary of Shisedo (located near you in Darien, CT) who freaked out every time one of their professional shampoos showed up in a CVS or Walgreens. Distributors were fired for diversion. When you go into a Sephora you will see a salon in the back of the store. That is so they qualify for professional products but even those are limited by the manufacturers.
Beauty companies are just as channel conscious in the International Markets. You can go into a Costco and find a Wahl clipper or a Remington clipper but they are not the professional clippers being sold. Once a professional product hits the retail market professionals drop the product and sometimes the company making it.
So Costco will be selling products that are available at other retailers or available to other retailers. What would probably be best for them is to bring in their own brand of cosmetics and base the line on quality.
Chiming in on the Black Lives Matter discussion, one MNB reader wrote:
Quick point on one of the potential pitfalls here. There is a big difference between black lives matter, and Black Lives Matter. The former is exactly as you described; the desire to bring awareness to issues concerning race. Black Lives Matter is an organization that has many other goals that are outside these specific issues (e,g,, socialized medicine), so the distinction is important. Also, BLM is a loosely organized group, so each chapter may have its own take on things.
Those distinctions may be irrelevant at the moment … especially if being in favor of socialized medicine isn't seen as so bad in an environment where people of color have been far harder hit by the pandemic than other demographics.
On another subject, from another reader:
The issue with MLB is that there’s too much money, not enough – between the owners and players.
In my opinion, make the players a final offer and those that don’t / wont accept, they can sit the rest of the year out. Owners can then bring in replacement players on a 44 game contract. Then, depending upon the collective bargaining agreement in ‘21, the “scabs” may or not have to deal with potential fallout in future seasons. The stars who want to sit out can watch their merchandise sales fall along with their personal brand recognition.
Ticket takers, parking lot attendants, beer man, popcorn lady, vendors (who paid distribution rights) and countless others do not be compromised (by a cancelled season) in making some money. The fans who like baseball can enjoy it, even if every other seat is blocked off.
It is time both the owners and players understand who really signs their paychecks – it’s the fans.
Plus Kevin, what a great time to trial the designated hitter rule in both leagues.
It is that last line that really bothers me. Suddenly, the National League won't be playing real baseball. Oy.
From another reader:
Hi Kevin, regarding baseball’s potential start, you said:
If the owners originally agreed to prorate the players salaries based on the number of games played, I'm not sure why they get to renegotiate now and argue that they should only pay a percentage of those prorated salaries.
I’m pretty sure the reason the owners are pushing back is that at the time of the agreement the assumption from all sides was that there would be fans in the stands, and thus significant revenue from tickets, food, etc. No argument that the owners are very wealthy, as are many players. Years of animosity have finally come home to roost, and now we all get to witness this greedy struggle. Both sides lose, as do we fans.
And from MNB reader Keith Hamden:
The reason the owners are looking to reduce the salary proration from what was agreed upon in March is that when the agreement was made in March, it was assumed that there would be fans in the stands, concession and souvenir sales, etc.
I read somewhere that 40% of revenue came from in-stadium activity. Not stating this as fact, just what I read but it is a significant revenue source that will not be there for the foreseeable future.
Either way, MLB (players and owners) better get their act together . Plenty of people won’t have much sympathy for either side based on the current economic condition of our country.
Here's the deal. As I understand it, the owners and commissioner could set a start date, season schedule and whatever else needs to be established today. They can pay the players prorated salaries … and all the players are saying is that they want the right to file as grievance and go to arbitration. Which is their right - they want the owners to live up to the agreement they signed … even if the owners now think it wasn't such a great deal.
Why would they want to give uyp their right to go to arbitration? If the positions were reversed, do you think the owners would give that up?
You should check out Tom Boswell's excellent analysis in the Washington Post, in which he writes that "the average MLB team has increased in value by more than $1 billion in just the past six years, from $811 million to $1.852 billion … As a frame of reference for who is getting richer faster - owners or players - over the past four off seasons, player salaries have increased by 1%."
It is, Boswell writes, "time for a basic lesson in baseball arithmetic and the incredible, shameless greed of major league owners. The bosses are - again - on the verge of bashing their sport to maximize their profits in an industry that pours vast increases in wealth on them each year as they whine."
The piece can be read here.