business news in context, analysis with attitude

Published on: December 16, 2020

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.

"Nothing vast enters the life of mortals without a curse," the philosopher Sophocles once said.  That's the premise of "The Social Dilemma," a new hybrid documentary-drama on Netflix that looks at the price being paid by the culture for the growth and monetization of social media platforms.  In their last Innovation Conversation of 2020, Tom and KC take a hard look at the film, the evolution that has sparked serious concerns among many of the technology's early proponents, and the backlash that may be taking place in the form of toughened regulations.  If you use social media - or even more importantly, if your kids use social media - this is a discussion that needs to continue in your own homes and with your own families.

Published on: December 16, 2020

by Michael Sansolo

A conversation with some retailers recently ended up on a not entirely unexpected note. The retailers questioned whether customers actually find any real value from the myriad frequent shopper programs long offered or whether they simply give them another key fob to carry around, another app to install on their smart phones, and more emails added to the deluge crowding their in-boxes.

In other words, do shoppers actually find any value in what you are offering them or are you finding a new way to annoy them?

MNB readers would be well served to return to Monday’s edition to find two very different articles that absolutely nail this issue.

In the first, Kevin’s Facetime video, he recounts an conversation with a checkout clerk at Stew Leonard’s. Two elements of that conversation make that short video an important addition to any training materials. First, the clerk asked Kevin to identify anything about the store that he found special both that day and in the past.

And when Kevin told a story about a former Stew Leonard's employee who had made numerous shopping trips special for his kids, the clerk reacted by observing that it is the "who," not the "what" that often matters most.

That story did more than stop Kevin in his tracks; it actually shined a light on a critical issue in retail. For the most part, the front end is the primary place where a staffer interacts with a shopper, but for the most part, nothing happens. That might partially explain why self-scanning is becoming increasingly popular.

For one moment, forget Covid and just focus on this. The one place in the store where staffers and shoppers can interact is, for the most part, a completely passive, if not negative interaction. A story like Kevin’s stands out because it is so unusual. If the checkout experience adds no value to the customer, it’s no surprise that same customer will opt for a self-scanners or whatever new device Amazon invents and rolls out next week.

But adding value goes much deeper as more aforementioned discussion with retailers suggest. If we enroll shoppers in loyalty programs that in no way seem to celebrate and reward loyalty (beyond small discounts and a stream of e-mail) value isn’t being added. Just annoyance.

That brings us to the second story that appeared Monday - the harsh reaction given Amazon’s new Halo system (including from the Washington Post, owned by Jeff Bezos), which was described by one tech writer as incredibly invasive and has already triggered talk of a limitations from Congress. Halo tracks a bevy of vital statistics and then goes a few miles further, such as grading the happiness of the user’s vocal tone. In the year of Covid, do we really need a device to tell us we are a little crabby?

Technology can do so much for and to us these days, but as businesses look to employ more they need to ask themselves the same question raised about the checkout experience. “How does this add value to the user experience”?

If the answer isn’t immediate, obvious and important, it’s possible that technology is being added just for technology’s sake, which won’t benefit anyone including the business itself. 

It’s one more reason to remember the incredibly important line from the original Jurassic Park movie, when Ian Malcolm points out that dinosaurs were cloned by scientists who pondered whether they could do something, without once asking if they should.

If you aren’t adding value, then you aren't improving the customer experience.

That's the bottom line.  Think about that as you move forward into 2021.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com.

His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

And, his book "Business Rules!" is available from Amazon here.

Published on: December 16, 2020

The Wall Street Journal reports that the European Union has proposed new legislation that would toughen its ability to regulate major technology companies such as Amazon, Apple, Facebook and Google - though none of these companies are mentioned by name in the proposal.

The two bills under consideration focus on illegal content and anticompetitive behavior and would "empower regulators in some cases to levy fines of up to 6% or 10% of annual world-wide revenue, or break up big tech companies to stop certain competitive abuses."

The story goes on:  "Together, the two strands of legislation amount to the biggest potential expansion of global tech regulation in years. They aim to update decades-old laws that have largely shielded tech companies from liability for their users’ activities. The measures would also create a new set of competition rules for a cadre of digital giants that have been accused of wielding their control of online marketplaces to entrench their own positions and snuff out competitors."

The Journal points out that the UK, which is leaving the EU, "is advancing similar legislation."

Published on: December 16, 2020

The Los Angeles Times reports that yesterday the Federal Deposit Insurance Corp. (FDIC) "approved a final rule governing 'industrial loan companies' that will allow major businesses to seek banking charters while escaping capital and liquidity demands faced by dedicated financial firms."

Businesses that, as it happens, could include familiar names such as Walmart, Amazon, and Facebook.  While the rule change does not allow these companies to launch full-service banks, it will allow them to get into the lending business.

The Times writes:

"The new rule formalizes years of agency practice with the industrial loan company charters, which were created to let commercial firms make small loans to workers but have become a back door into big-time banking.

"The proposal released earlier this year sparked alarm in the banking industry over the prospect of competition against giant companies that could leverage their huge customer bases and guaranteed consumer traffic to gain meaningful toeholds in banking. And they could offer customers financial services backed by the government - including FDIC deposit protections - with fewer regulatory demands."

It is a complicated issue, and you can read more about it here.

Published on: December 16, 2020

The Seattle Times reports on a new study from environmental activist group Oceana saying that "the huge amount of plastic waste generated by Amazon deliveries posed serious problems for global waterways, according to a report Tuesday from environmental nonprofit Oceana. The company has boosted the amount of plastic packaging it uses each of the last three years, the report said.

"Despite efforts to make its packaging more sustainable, Amazon produced enough plastic waste last year to encircle the globe 500 times in the form of its air pillows, the report estimated. Less than 1% of that waste makes its way into rivers, lakes and oceans - but that still amounts to the equivalent of dumping one delivery van worth of plastic into waterways every 70 minutes, according to the report."

The Times writes that Amazon disputes the Oceana study:

"Amazon said in a statement (that) Oceana 'has dramatically miscalculated Amazon’s use of plastic.'  The company said it uses only a quarter of the plastic packaging estimated by the environmental group’s report. Since 2015, Amazon has reduced the weight of outbound packaging by more than a third and eliminated almost 1 million tons of packaging material, according to the company."

However, according to the Times, "Oceana said it had confidence in its estimates, which were derived by applying Amazon’s e-commerce market share to the total amount of packaging used in the sector. Focusing on package weight, the group said, is moreover a red herring because plastics weigh less than more-recyclable paper products."

Published on: December 16, 2020

CNBC had an interview with Costco CEO Craig Jelinek, in which he said that "the company’s physical stores will remain critical going forward, even though the wholesale retailer saw a surge in e-commerce sales during the coronavirus pandemic … Costco had developed a reputation for its in-person shopping experience before the pandemic, with cheap items at its food court such as the hot-dog-and-soda combo for $1.50. But many Costco members have turned to its website this year, leading to strong online sales growth that many of its competitors also experienced."

“Our overall online business will continue to grow. Will we get tricky? No, we won’t,” Jelinek said.  “We’ll just continue to bring value on high-end goods and quality merchandise, and deliver either through the warehouses, brick-and-mortar, or through e-commerce.” 

Jelinek said that Costco would continue to invest in the online channel:  "In March, for example, Costco made a $1 billion acquisition of Innovel Solutions, which provides last-mile delivery services. It had been owned by the company that operates Sears and Kmart stores."

"“We see a big opportunity to build our last-mile business in big ticket items, bulk items," Jelinek said.

Published on: December 16, 2020

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, we've now had 17,143,942 confirmed cases of ther Covid-19 coronavirus, resulting in 311,073 deaths and 10,007,956 reported recoveries.

Globally, there have been 73,924,303 coronavirus cases … 1,644,449 fatalities … and 51,921,105 reported recoveries.  (Source.)

•  The Washington Post reports that "the United States could have two coronavirus vaccines by the time the week is over: Moderna’s vaccine was found 'highly effective' in a detailed review by Food and Drug Administration scientists and appears to be on track for approval by regulators."

The Post goes on:

"The FDA is likely to authorize the Moderna vaccine as soon as Friday, according to a person with knowledge of the situation who spoke on the condition of anonymity because they were not authorized to discuss the issue. Anticipating that decision shortly, Gen. Gustave Perna, who is overseeing the federal effort to distribute vaccines, said Monday that the United States was preparing to ship almost 6 million doses of the Moderna vaccines to 3,285 locations in the first week."

•  The Wall Street Journal reports that "there were 112,816 people hospitalized with the disease on Tuesday, according to the Covid Tracking Project, the 10th record-high day in a row. That included a record-high 21,897 in intensive care."  The story notes that even as vaccines start to be administered around the country, "states continue to grapple with rising numbers of patients and fatalities. California, which has logged more than 1.65 million cases in total, the most of any state, reported 33,249 for Tuesday, according to Johns Hopkins data. It reported its second-highest number of deaths in a day, with 276, just lower than the record-high 278 deaths reported for Aug. 14."

•  From the New York Times:

"The Food and Drug Administration on Tuesday issued an emergency authorization for the country’s first coronavirus test that can run from start to finish at home without the need for a prescription.

"People as young as 2 years old are cleared to use the test, which takes just 15 to 20 minutes to deliver a result. Unlike many similar products, which are only supposed to be used by people with symptoms of Covid-19, this test is authorized for people with or without symptoms."

The kit is expected to retail for about $30.

The Times writes:  "The test, developed by the Australian company Ellume, detects bits of coronavirus proteins called antigens. It’s slightly less accurate than gold standard laboratory tests designed to look for coronavirus genetic material with a technique called polymerase chain reaction, or P.C.R. But in a clinical study of nearly 200 people, Ellume’s product was able to detect 95 percent of the coronavirus infections found by P.C.R., regardless of whether the infected people felt sick."

The FDA says that "people without symptoms who test positive … should confirm their results with another test, especially if the coronavirus is scarce in their community."

•  Axios asks the question:  "Can employers force staff to take vaccines to return to work?"

The answer:  Yes.  But there is "wiggle room."

According to Axios,  "The law lets both public and private organizations require vaccinations, and schools, hospitals and a host of other institutions have long done so."  However, lawyers could argue that these laws do not include vaccines authorized for emergency use, as opposed to being fully approved, as the Covid-19 vaccines are.

We know that the coronavirus can't be defeated without at least 70 percent of the country being vaccinated, so, as the story points out, companies could play a "key role" in driving vaccination rates.  Which is somehow depressing - that there are so many people out there who do not trust the science.

•  The Washington Post quotes Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), as saying that he, like so many Americans, will be restricting who he sees during the Christmas holiday.  In other words, he's following his own advice, and won't be seeing his three adult daughters in-person on the holiday for the first time since they were born.

"I'm going to be with my wife — period," Fauci said.  "The Christmas holiday is a special holiday for us because Christmas Eve is my birthday. And Christmas Day is Christmas Day. And they are not going to come home … That's painful. We don't like that. But that's just one of the things you're going to have to accept as we go through this unprecedented challenging time.”

Fauci is turning 80 on Christmas Eve, the Post notes.

The story goes on:  "Fauci warns that Christmas celebrations could create an even more catastrophic spread of the virus than Thanksgiving, when millions traveled and gathered despite similar pleas to stay home. The country has seen record-breaking numbers of infections and hospitalizations as a result. Fauci says Americans cannot afford to 'run away from the data,' as painful as time spent without loved ones can be on the holidays."

•  The New York Times reports that "a wild mink in Utah has tested positive for the coronavirus. Mink on fur farms in the area have been infected with the virus, and the U.S. Agriculture Department, with other government agencies, was testing wild animals looking for potential infections spreading from those farms.

"The department notified the World Organization for Animal Health of the case, stating that this appeared to be the first wild animal to have naturally been infected with the virus, which has infected mink at a number of fur farms worldwide.

"The virus has spread from people to mink, and back again in a few instances. A mutated strain of the virus that jumped from mink back to people led Denmark to kill all its mink, wiping out a major industry. No further evidence has supported initial concerns that the mutated variant of the virus might affect the usefulness of vaccines, but scientists are still concerned about how easily the virus can spread on mink farms."

PETA probably is trying to figure out who to sue even as we speak…

•  The Points Guy website reports that "Delta will fly its first 'COVID-free' flight Tuesday, part of an effort to demonstrate that international travel can occur even at the height of the coronavirus crisis.

"Delta Flight 76 will depart Atlanta at 9:55 p.m. Tuesday and arrive Amsterdam at 12:10 p.m. Wednesday, all times local. Only a few dozen passengers will occupy the Airbus A330-300, but Delta sees the flight as 'just a first step,' said Perry Cantarutti, Delta senior vice president for alliances and international.

"Passengers must undergo three COVID tests: one three or four days before departure, one at Atlanta Hartsfield-Jackson International Airport and one on arrival at Schiphol Airport.  Negative results will enable passengers to avoid quarantine."

•  The New York Times reports on another time-honored tradition that seems to be falling victim to the pandemic.

The snow day.

The Times story notes that "as school districts adapt to the pandemic by moving classes online, the ability to teach and learn remotely could make the beloved snow day a thing of the past. In New York City, the season’s first big snowfall, which is expected to begin blanketing the streets on Wednesday, will simply mean another day of school in front of a screen for students."

Part of the logic is that students simply cannot afford to miss class time this year.  But, "The shift could be permanent. School leaders in several areas, including the city, are considering whether to continue the online approach to snow days even after most students fully return to in-person learning after the virus has been curbed."

We're going through that in our district, where it is fully expected that the blizzard predicted to be hitting the region tonight and tomorrow will close the schools but not education;  teachers and students are used to remote learning at this point, and so cancelling school seems like a 20th century construct.

Being the son of a teacher … a brother to several teachers … the husband of one teacher … and the father of another … I think I can say with a certain amount of confidence that it isn't just students who will miss snow days.  Teachers don't like too many of them because it extends the school year later into summer, but one or two, placed nicely in January and February, can be a welcome treat.

Published on: December 16, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  TechCrunch reports that Amazon is getting into the custom t-shirt business.

The new service is called "Made for You," the story says it "lets shoppers create a custom T-shirt to their exact measurements. But unlike some companies that use mobile technology to scan and measure your body from an app, Amazon Fashion’s Made for You service requires users to provide the company with their height, weight, body style and two photos of themselves to get measured for their custom fit.

"After users provide their data, they can then choose from a selection of eight colors, as well as preferred sleeve and shirt lengths, necklines and fabrics … The shirts can even include your name printed on the label, as a small perk.

When finished, customers can view the product they customized on a virtual body double before placing the order. The experience works both on web and inside the Amazon app.

"The custom shirts cost $25 and are available to all Amazon customers in the U.S., not just Prime members."

Sure, why not?  Amazon isn't disrupting enough businesses, so it might as well make t-shirts.

Published on: December 16, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Wall Street Journal reports that "U.S. consumers have pulled back on purchases and limited holiday shopping in recent weeks as the coronavirus pandemic triggered new business restrictions, potentially snapping a six-month stretch of retail sales growth.

"Economists surveyed by The Wall Street Journal forecast that retail sales decreased a seasonally adjusted 0.3% in November from a month earlier. The Commerce Department will release the November figures on Wednesday.

"That would mark the first month-over-month decline since April in the department’s measure of spending at stores, vehicle dealerships, restaurants and online."

The story goes on:  "U.S. shoppers spent less than last year over a five-day stretch including Black Friday and Cyber Monday as increased online shopping was offset by fewer people visiting physical stores during the pandemic. People spent an average of just under $312 on holiday-related purchases from Thanksgiving to Cyber Monday, down 14% from 2019 though on par with 2018, according to a survey by the National Retail Federation and Prosper Insights & Analytics."

•  From the Washington Post:

"A historic crush of e-commerce packages is threatening to overwhelm U.S. Postal Service operations just weeks before Christmas and runoff elections in Georgia that will decide control of the U.S. Senate, according to agency employees and postal industry tracking firms.

"As Americans increasingly shop online because of the coronavirus pandemic, private express carriers FedEx and UPS have cut off delivery service for some retailers, sending massive volumes of packages to the Postal Service.

"That has led to widespread delays and pushed the nation’s mail agency to the brink. Postal employees are reporting mail and package backlogs across the country, and working vast amounts of overtime hours that have depleted morale during another surge of coronavirus infections nationwide."

Not to pick on the USPS … but did anyone else notice that as the federal government formulated plans for shipping vaccines around the country, the Post Office never really entered the conversation?  

•  The Wall Street Journal reports that as FedEx and UPS "are holding a harder line by enforcing a preset limit on the daily number of packages they will pick up," hoping that this will stop the system from being clogged, "the policy is creating backlogs in some of the shippers’ warehouses, affecting retailers as large as Costco Wholesale Corp. down to small- and medium-size companies.

"For consumers, that means deliveries could arrive late, and anyone determined to get a gift delivered by Christmas needs to order it today without having to pay extra shipping fees."

In other words, finish your online holiday shopping today.  Just as soon as you finish reading MNB.

•  The New York Times has a story about why so many new varieties of Oreos have been released in just the last eight years - 65, including Blueberry Pie Oreos, Waffle & Syrup Oreos, and some that only were available outside the US, like the Hot Chicken Wing Oreos and Wasabi Oreos, which were only sold in China.

"Novelty Oreos sell reasonably well," the Times writes.  "According to Nielsen, sales of flavored, seasonal and other novelty Oreos were up over 12 percent over the last three years.

"But the sales are not the point. Novelty Oreos … play a much purer role: They help drive consumers back to milk’s alleged favorite, the 108-year-old paterfamilias, the plain old Oreo. In other words, the new flavors function as advertisements for the original."

Published on: December 16, 2020

We had an email yesterday from MNB reader Bob Hastings, who reminded me that people who read the site like to see the opinions of their fellow community members - and said he hated it when I said that Your Views…will return.

Referring to two other stories yesterday about autonomous vehicle technology being tested by Amazon and Walmart, another MNB reader wrote:

Perhaps Morning News Beat will be able to ensure that you provide “Your Views” daily when you hire the autonomous Content Guy?

I think I'm already an autonomous Content Guy.  As I've noted here from time to time, I tend to be dysfunctional when working for organizations.

I think what you're actually suggesting is a Content Robot.  As I said recently, when I hire someone to replace me, I want someone not like me … and a robot certain would fit the bill.

Another MNB reader found the criticism annoying:

The entitlement from these people who are receiving a free service never ceases to amaze me. They probably used to complain about the free samples they used to get at Costco (ah the good ol’ pre-pandemic days) as well. I guess my point of writing this is to say that the vast majority of your readers are grateful that you put in the consistent time and effort to create this publication and we understand that you are the chief, cook and bottle washer and also have to make a little bit of time for yourself and the missus once in a while. With Bob’s attitude, I can only imagine what a tough year he’s had dealing with all of the OOS items in stores over the past few months.

It's okay.  

One of the things that emails like Bob's reminds me is that there are a lot of MNB readers out there who think of MNB as their site.  Not just mine.  That's a good thing.  It doesn't mean I can meet everybody's expectations all the time, but I treasure the connections MNB has enabled me to make with all these folks over the years.

On the subject of Google's temporary outage on Monday, one MNB reader wrote:

Maybe someone at Google decided to download all ten million videos Porn Hub recently purged. 

Never thought of that.

And finally, yesterday MNB took note of as Axios report that "Amazon-backed Zoox unveiled on Monday its version of the future of transportation: an autonomous electric vehicle with no steering wheel that might one day be summoned with a ride-hailing app…"

One reader responded with a picture that made me laugh out loud: