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    Published on: April 28, 2021

    From Bloomberg:

    "Amazon.com Inc. will supplant Walmart Inc. as the biggest U.S. retailer by 2025, according to a new report, suggesting the e-commerce giant has too much momentum for Walmart to stop despite big investments in its own e-commerce offerings.

    "By 2025, U.S. shoppers will buy $632 billion worth of products at Amazon and retail affiliates including Whole Foods Market, surpassing Walmart’s $523 billion, according to the report by Edge by Ascential, which measured the value of all goods sold by each company online and in stores with the exception of gasoline."

    KC's View:

    Amazon has been on this trajectory for a long time, although the timing isn't exactly a a sure thing - after all, Walmart also is continuing to grow its marketplace business.

    But Amazon also continues to grow, and it is hard to know exactly how big its total business will be, especially as it opens its new bricks-and-mortar stores.

    Published on: April 28, 2021

    Pymnts has done a survey and concluded that Walmart+, in just seven months, has grown a subscription base of more than 60 million US consumers .

    The story goes on:  "Although the total gap between Walmart+ and rival Amazon Prime is still a formidable 100 million members wide, the upstart entry from Arkansas has been trending higher in the first quarter of 2021, at a time when the dominant digital leader has experienced a few months of slippage in its overall share of the category … By the end of the first quarter, approximately two-thirds of respondents said they had access to Prime versus 24 percent who said they had access to Walmart+. However, from a December peak of 75 percent of consumers having Prime access, the total tally slid 10 percentage points over the past few months to the current 65 percent."

    Pymnts writes that "one of the key drivers of new subscriptions to Walmart+ is its leadership in groceries, and the convenience that comes with running over 5,000 U.S. stores. In short, the new data shows that when it comes to just grocery purchases, Walmart’s pricing advantage - combined with its in-store and curbside pickup options - are clearly attracting people to its membership program and getting them to shift their behavior. Twenty-eight percent of Walmart+ customers said they made the shift in their grocery-buying during the pandemic compared to about 19 percent of Amazon customers who did."

    The story continues:  "Walmart+ had a slight 5:3 bias toward male subscribers — 30 percent of men and 18 percent of women said they subscribed to the new service, whereas Amazon’s member base was evenly split, with about two-thirds of men and women having a Prime account.  In both cases, Baby Boomers and seniors were the least likely to subscribe, the survey showed — but while Amazon’s demographic range was more consistently clustered with a 55 to 75 percent share of all age groups, Walmart’s bracket-leading millennial subscriber base was about twice as large as its Gen X and Gen Z customers."

    KC's View:

    The interesting thing about this story is that we just had one the other day, from Bloomberg, saying that "Walmart+ customers, who are paying $98 a year to belong to a program positioned to compete with Amazon Prime, are largely not using a number of the benefits that Walmart built into the program, instead seeing the appeal largely as being free shipping."

    Whatever … it appears that Walmart is making progress and that they must be generally satisfied - maybe even thrilled - by how well this program is doing.

    Published on: April 28, 2021

    The San Francisco Chronicle reports that the Second District Court of Appeal in Los Angeles has ruled that Amazon "may be sued for injuries caused by defects in products sold on its website … since the tech giant controls much of the sales process and can pressure manufacturers to make their products safer."

    The ruling concluded that since "Amazon advertises the products, controls all communications with customers, charges a fee for each sale — 15% on toys such as skating hoverboards — imposes price limits and insurance requirements," not to mention guaranteeing the products it sells," the company should be held liable when they are defective.

    The Chronicle writes that "California law already makes companies 'strictly liable' for injuries caused by defective products they make or sell, allowing victims to sue for damages without having to prove the manufacturer or retailer was negligent."  The court said "the same standard applies to a company that is a 'direct link' between buyers and sellers."

    Amazon has not said whether it plans to appeal the ruling.

    Published on: April 28, 2021

    Mother Jones has a story suggesting that one way the restaurant industry may be able to rescue itself from pandemic-induced difficulties is by adopting a co-op approach.

    Here's how it frames the subject:

    "Most Americans have never eaten at a cooperatively run restaurant, much less shared in the ownership of one. Co-ops are more popular in countries like Italy or Spain, says Alison Lingane, co-founder of Project Equity, a consulting firm that helps companies transition to employee ownership. Lingane never heard a peep about cooperatives while studying at UC Berkeley’s Haas School of Business, which isn’t surprising: Few B-schools include the model in their curriculum. Lingane suspects there’s a cultural component to America’s allergy to co-ops. 'We have this hero love of the solo entrepreneur,' she says.

    "But the economic tumult of the last 12-plus years has people searching for alternatives …  A 2016 meta-analysis of more than 100 studies across several countries linked employee ownership to better productivity, organizational stability, and business survival. In times of crisis, co-ops have been shown to be more resilient than traditional enterprises and less likely to lay off workers."

    Mother Jones points out that "enjoying a share of revenue entices many workers to this plan. Business ownership is among the most productive assets for building wealth, and co-ops give a wider range of people access to that engine: The majority of co-op owners are women, and nearly 38 percent are Latino."

    KC's View:

    I have no idea whether this would work or not, and restaurant owners are a famously autocratic bunch.  But I've always believed in employee ownership, and so I'll be curious if the few examples cited in the story end up being the precursor of something larger.

    Published on: April 28, 2021

    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, there now have been 32,927,091 total cases of the Covid-19 coronavirus, resulting in 587,384 deaths, and 25,521,913 reported recoveries.

    Globally, there have been 149,335,227 cases, with 3,148,855 resultant fatalities and 126,986,727 reported recoveries.  (Source.)


    •  The Centers for Disease Control and Prevention (CDC) reports that 54.2 percent of people in the US 18 years of age or older have been vaccinated at least once, with 37.3 percent having been fully vaccinated.


    •  Axios reports that the CDC has updated its guidance on mask wearing, saying that "fully vaccinated people can venture outdoors" without them.

    According to the story, "Vaccinated people can unmask while:  Doing physical activities outdoors alone or with members of your household like walking, running, hiking or biking … Attending a small outdoor gathering either with fully vaccinated people or a mixture of vaccinated and unvaccinated people … Dining at an outdoor restaurant with friends from multiple households."

    "CDC cannot provide the specific risk level for every activity in every community, so it is important to consider your own personal situation and the risk to you, your family and your community before venturing out without a mask," CDC director Rochelle Walensky said in prepared remarks.

    Previous guidance for "vaccinated people indoors and traveling still applies."

    Published on: April 28, 2021

    •  The Wall Street Journal reports that Google's parent company, Alphabet, "shattered sales records for the first quarter, fueled by a surge in digital ad spending that has strengthened the tech heavyweight even as regulators try to curtail its power."

    The story says that "the pandemic provided a jolt to Alphabet Inc.’s advertising business as more people shifted their lives online during a stay-at-home year, turning to Google search to find takeout meals and grocery-delivery options while clicking through videos on the company’s YouTube platform. Brands responded by shifting ad spending from print, television and in-store promotions to find customers across the Google universe.

    Total profits reached almost $18 billion, soaring 162% from the previous year."

    The Journal notes that "the digital-spending surge has helped Google continue to deliver sales growth even as its share of the American search advertising market slips. The company’s market share of search last year fell to 57% from 61% a year earlier, while rival Amazon.com Inc. increased its share to 19% from 13% over the same period, according to eMarketer, a research firm."

    Interestingly, Ad Exchanger reports that "advertisers are spending $5 billion annually on non-Amazon retail media platforms, according to Forrester Research. Meanwhile, Amazon’s ad business is four to five times that number … According to eMarketer, Amazon’s advertising business grew by 52.5% during the onset of the COVID-19 pandemic last year, pushing its share of the United States digital ad market past 10% for the first time and fortifying its position as the No. 3 ad publisher, behind Google and Facebook."

    Published on: April 28, 2021

    •  Reuters reports that the Conference Board is out with its regular assessment of consumer confidence, saying that it " jumped to a 14-month high in April as increased vaccinations against COVID-19 and additional fiscal stimulus allowed for more services businesses to reopen, boosting demand and hiring by companies … The Conference Board’s consumer confidence index raced to a reading of 121.7 this month. That was the highest level since February 2020, just before the onset of the COVID-19 pandemic, and followed a reading of 109.0 in March. It was the fourth straight monthly increase in the index."


    •  The New York Times reports that Epicurious, "the popular online recipe bank where home cooks have gone to hone their skills for a quarter of a century," has decided to no longer feature any beef recipes.


    "'We know that some people might assume that this decision signals some sort of vendetta against cows — or the people who eat them,' Maggie Hoffman, a senior editor, and David Tamarkin, a former digital director, wrote in an article published on Monday.  'But this decision was not made because we hate hamburgers (we don’t!).'

    "The shift was 'solely about sustainability, about not giving airtime to one of the world’s worst climate offenders,' they said. 'We think of this decision as not anti-beef but rather pro-planet'."


    •  The Boston Globe reports that BJ's Wholesale Club is shrinking its headquarters footprint - moving from a 280,000 square foot space in Westborough, Massachusetts, to a 190,000 square foot space in nearby Marlborough.

    The reason:  BJ's is counting on "a greater mix of remote work, known as a 'hybrid' model, after the pandemic ends."


    •  From the New York Times:

    "Seeing signs that customers are eager to gather and put the dark days of the pandemic behind them, the coffee giant Starbucks said that its sales in the United States made a 'full recovery' in the first three months of the year.

    "Same-store sales in the U.S. climbed 9 percent in the company’s second quarter compared with the same period last year, while global revenues climbed 11 percent to $6.7 billion … Starbucks made a profit of $659 million in the quarter, up significantly from $328 million a year earlier, when many of its stores were closed because of the quarantine restrictions around the world."


    •  The Los Angeles Times reports that what Dodger sportscaster Vin Scully used to promote as " Farmer John Dodger Dogs" are no more.

    For a half-century, Dodger Stadium would sell the Farmer John Dodger Dogs, which also were available in area supermarkets.  "The Dodgers have regularly sold 3 million of these hot dogs per season, and fans have relished them (pun intended) at the stadium since Sandy Koufax and Don Drysdale pitched for the home team," the Times writes.

    But now, while the Dodger Dogs will continue to be available, Farmer John no longer will be the supplier.

    The Times writes that "Smithfield Foods, the parent company of Farmer John, issued a statement to the Times that read in part:  'Farmer John had a long-standing and valued relationship with the Dodgers. After the 2019 season, Farmer John made the difficult business decision not to renew its contract with the Dodgers. … Unfortunately, through the latest contract negotiations, we were unable to come to an agreement that was beneficial for both parties'."

    A new supplier of Dodger Dogs will be named shortly, the team says.

    Published on: April 28, 2021

    I've always been intrigued by the ways in which Amazon has utilized its third-party Marketplace to grow its retail footprint, using it to extend its already rather long tail to one of considerably greater scope and depth - to the point where its Marketplace represents more than half its total retail sales.

    Now, with Amazon having provided proof of concept, there are a number of companies in various stages of developing their own Marketplace offerings - Walmart, Kroger, and Albertsons among them.

    This prompts questions.  Does it make sense for other retailers to do the same?  Should size be the determining factor in whether a retailer decides to open and link to a Marketplace on its website?  And what's the ROI on such a strategic move?

    All good questions, I think … which is why I was pleased to be asked to host/moderate an online session next week on the subject of "The Business Case For An Online Marketplace."  Setting the table will be Scott Compton, Senior Analyst, Digital Commerce, with Forrester, who will lay out the challenges and opportunities.

    The session is set for tomorrow, Apr 29, 2021 at 2 pm EDT/ 11 am PDT.

    I hope you'll join us for this complimentary webinar, sponsored by VTEX.  My goal is to make sure the session is both illuminating and entertaining, while asking the questions that you'll want answered.  And if I don't - you'll be able to.

    For information about how to register for this session, click here.

    Published on: April 28, 2021

    Got the following email from an MNB reader reacting to the Hubert Joly piece in the Wall Street Journal  about how he worked in a Best Buy stores and paid attention to employees when he took over as CEO:

    I believe ALL CEO candidates should undergo this type of training.  Those who work in the trenches know the high and low points of a company.  It should be the direction of upper management to engage your “team” and truly listen to what they have to say. 

    Yes,  you will you get griping, but you will also get ideas and uncover issues that you and your management team do not see.  Then the CEO’s of the world can use that broad focus of many, vs the narrow sight of few, to drive the business.  Really good piece.


    On the subject of auto-replenishment, one MNB reader wrote:

    I’ll tell you what is on my mind.  The concept of auto replenishment / subscribe and save, etc. is not only a risk to retailers, but also to the consumer!  A parallel to this story was your earlier story deconstructing Jeff Bezos final letter to shareholders.  In that letter, he reviewed the human ROI that was mathematically derived from an average 15 minute shopping trip.

    Now imagine if a retailer had the same Amazon “infinite” choices in a brick and mortar facility.  How long would that shop take?  My interpretation of all of this emerging data is that the ecommerce shopper is likely to become significantly more brand loyal.  Whereas multiple components of decision making is relatively easy in brick and mortar (size / flavor options / prices of competing brands), a rapid ecommerce shop is consumer selected elimination of choice.  At what point does the scale tip to the opportunity to margin up those purchasers for whom convenience has trumped choice? 

    I agree that auto-replenishment is the victory of convenience over choice.  I'm just not sure that is bad for consumers.


    Regarding Albertsons' assertion that going forward it will be able to better serve its customers using things like its loyalty marketing program, one MNB reader wrote:

    If I am identified as a loyal/frequent shopper, how am I rewarded? I’m still waiting after years of loyalty cards…

    Good question, and one that Albertsons may need to answer.