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    Published on: June 23, 2021

    Want to know how to compete with Amazon?  Netflix offered a lesson yesterday, and it was a classic case of not bringing a knife to a gunfight - it signed the ultimate "big gun" in the streaming wars - Steven Spielberg.  KC knows that it isn't an exact comparison, but thinks that the basic premise - finding a differential advantage - works, however big or small you happen to be.

    Published on: June 23, 2021

    Market research/data company Numerator is out with early analysis of Amazon Prime Day sales and traffic, saying that "nearly 1 in 5 shoppers (19%) say they bought Groceries from Amazon on Prime Day, a significant percentage on a day historically known for Consumer Electronics sales."

    Consumer Electronics, in fact, "was the fourth most purchased category (25% of Prime Day shoppers), down from its number one position during last year's Prime Day (32% of Prime Day 2020 shoppers) … Top categories that Prime Day buyers reported purchasing are Household Essentials (29% of respondents), Home & Garden (27%), and Apparel & Shoes (25%)."

    Meanwhile, CNBC reports that "the first day of Amazon’s 48-hour Prime Day event is expected to have driven the most online sales over a 24-hour period so far this year.

    "Sales during the first 24 hours of Amazon’s megasale, which kicked off at 3 a.m. ET on Monday, are set to surpass $5.6 billion, representing 8.7% growth year over year, according to an index tracked by Adobe Analytics."

    Indeed, the story notes that this was a rising tide that affected all boats - or at least all yachts:  "Adobe said that retailers that bring in more than $1 billion in revenue each year reported a 28% increase in e-commerce sales on Monday compared with the same day a year earlier, while smaller retailers doing less than $10 million in annual revenue saw a 22% lift."

    Other conclusions from Numerator:

    •  "More than half (54%) only considered Amazon for their purchase. A quarter (25%) considered Walmart/, 20% considered Target/, 9% considered Club retailers, and 7% considered Best Buy/Best, Grocery retailers, or Department stores."

    •  "Three-quarters (78%) of Prime Day buyers didn't compare Amazon prices with any other website or store, and nearly 3 in 5 Prime Day shoppers (59%) only made purchases from Amazon on Prime Day."

    •  "The average Prime Day 2021 spend per order is $47.14 (down from $54.64 on Prime Day 2020 and $58.91 on Prime Day 2019). So far, 44% of orders were placed for $20 or less, and nearly a quarter (24%) were for more than $100."

    •  "Nearly half (45%) of households shopping Prime Day have already placed 2+ orders, and 6% placed 5+ orders within the first 32 hours of Prime Day."

    •  "The average household spend is approximately $92, with 1 in 10 households (11%) spending more than $200."

    •  "The top five items sold on Prime Day so far are all Amazon branded: Amazon Photos Project, Amazon Gift Card Reload, Amazon Fire TV Stick, Echo Dot 4th Generation, and Amazon Fire Tablet."

    •  "The typical observed Prime Day shopper is a high income, suburban female, age 35-44."

    •  "More than 9 in 10 Prime Day shoppers (98%) said they were Amazon Prime members. The majority (83%) had joined Prime pre-COVID (before March 1, 2020), and 10% said they joined Prime after the start of the pandemic.  2% of these new pandemic Prime members joined yesterday during Prime Day 2021, down slightly from the 3% who joined on Prime Day 2020, and 8% who joined during Prime Day 2019."

    •  "Half of Prime Day shoppers (50%) said they bought items included in Prime Day deals, and nearly a quarter (24%) said they bought the same items they usually buy on Amazon."

    KC's View:

    It has been extraordinary how many Prime Day promotions I've gotten in my email over the past few days … almost none of them from Amazon, but rather from other retailers looking to get in on the action.

    Amazon is the most dangerous kind of alternative format, changing not just shoppers' behavior but how they fundamentally think about shopping.  It is like we're all some version of Pavlov's dog … the bell rings, and we shop.

    Published on: June 23, 2021

    Bloomberg writes that "grocery sales accelerated in late May and early June," confounding analysts " who expected robust grocery-store sales to diminish as the year progressed and as vaccinated Americans returned to offices, restaurants and travel. It can’t be explained by inflation, because grocers are also returning to their normal practice of discounting, which partially offsets the price hikes they’re taking elsewhere. Sales of groceries on a unit level, which exclude the effects of inflation, have held steady."

    Two reasons are cited in the Bloomberg piece.

    First, "online ordering has made it easier for shoppers to buy more, with curbside pickup and home delivery removing the hassle of lugging items through the store and checkout."

    And second, consumers have "a greater sense of preparedness instilled by last year’s lockdowns, when many essential items were hard to find."  Shoppers don't want to be caught unawares again.

    You can read the entire analysis here.

    Published on: June 23, 2021

    Fast Company has a story about how "by 2040, Target aims for 100% of its own products to be designed for a circular future."

    The goal, the article says, "is part of a larger sustainability strategy by the retailer called Target Forward, which has three main objectives: to design and elevate sustainable brands, to eliminate waste, and to push for equity and opportunity across the company and in its communities nationwide. Within that plan, Target aims to be zero waste in its U.S. operations and net zero in terms of scope 1, 2, and 3 emissions by 2040, and increase its Black team member representation across the company by 20% by 2023."

    Fast Company cites as examples, "At Target, you can buy compostable cutlery, cleaning products in glass bottles (easier to recycle than plastic), and shoes that can be sent back to the manufacturer to be recycled into new products - all examples of ways to avoid adding waste to landfills at the end of a product’s life. And in the future, the company hopes its customers don’t end up trashing anything they buy from a Target-owned brand."

    KC's View:

    The story notes that one of the things that these efforts will depend on is increased and more effective consumer communications - little of this stuff can be effective if shoppers are not part of the circular future.

    That's actually a good thing in all sorts of ways, because pretty much every retailer benefits from improved and expanded communications efforts, which demonstrate loyalty and establish connections that can be sustained and deepened over time.

    Which, go figure, is good for the bottom line.

    Published on: June 23, 2021

    The New York Times reports that in a post-pandemic world, rising beef prices are raising hackles among ranchers and eyebrows in Congress.

    According to the story, the supply chain that forms the US cattle industry "is dominated by just four meatpacking conglomerates, and their profits are raising tensions. While diners at restaurants and shoppers in grocery stores experience sticker shock from sharply higher prices for ground beef and prime steaks, ranchers say they are barely breaking even or, in some cases, losing money.

    "They point a finger at the Big Four companies, which account for more than 80 percent of the processed beef sold in the United States: Cargill, JBS, Tyson Foods and National Beef."

    The Times writes that today, "the Senate Committee on Agriculture, Nutrition and Forestry will hold a hearing on transparency and pricing in the cattle market. The hearing follows numerous lawsuits filed in recent years by grocery chains, ranchers and others that claim the meatpackers have colluded to increase the price of beef by limiting supply. Some of the lawsuits have been dismissed, while others remain active. The industry has denied the allegations."

    KC's View:

    I have to wonder if one of the things that high beef prices could do is help grow the market for alternative protein products.  There is a point at which consumers simply will shut down, and the companies throughout the supply chain that sell beef have to be concerned about the possibility.

    Published on: June 23, 2021

    The New York Times this morning reports that the International Brotherhood of Teamsters will vote on a resolution at its convention this week that, if passed, would "make it a priority to organize Amazon workers and help them win a union contract."

    According to the story, "The resolution states that the union will 'supply all resources necessary' and will eventually create an Amazon division to help organize workers at the company.

    "It does not elaborate on the timing for such a division or how much money or manpower the union will devote to the effort, and a union spokeswoman did not respond to a request for comment on those particulars. Last year the union had revenue of more than $200 million, according to Labor Department filings."

    KC's View:

    Y'know what Jeff Bezos calls $200 million?

    Petty cash.

    There are some estimates that he makes that much in a day.

    He's reportedly spending $175 million on a house in Beverly Hills.  He's said to be spending $500 million on a new boat.  (Okay, a super-yacht.  It's still a boat.  Though, admittedly, a really big boat.)

    But I digress.

    My larger point actually is that Amazon has the resources to make a Teamster effort irrelevant.  It just has to make the choice to do so.

    Published on: June 23, 2021

    In California, the Mercury News reports that chicken chain El Pollo Loco is testing drone deliveries of its fast food.

    According to the story, "Test flights will begin this week in Orange County, which is in the process of choosing as many as 10 restaurants to participate, representatives for the company wrote in an email. If the tests work out, El Pollo Loco hopes to provide the service at more locations, based on market demand and Federal Aviation Administration regulations."

    The drones are operated by an Israeli company called Flytrex, which "claims its drones are designed to operate in suburbs, with the ability to cruise at 32 miles per hour and fly at an altitude of 230 feet. They carry delivery boxes that weigh as much as 6.6 pounds that are lowered from 80 feet using a wire release mechanism."

    KC's View:

    If you missed it earlier this week, I did an MNB/In Conversation piece with Beth Flippo, Chief Technology Officer for Drone Express, which is doing drone deliveries for Kroger.  She lays out the case for incorporating drones into stores' business plans, and you can watch it here.

    Published on: June 23, 2021

    The Wall Street Journal reports that the Federal Trade Commission will review Amazon's proposed $8.45 billion acquisition of Hollywood studio MGM, "just as the commission gets a new chairwoman who has been critical of the online giant’s expansion.

    "Amazon last month announced its deal for MGM, which would boost its Prime Video streaming platform in a market that includes rivals such as Netflix Inc. and Walt Disney Co. … The MGM review could present an early test for new FTC Chairwoman Lina Khan, who made her name in antitrust circles in large part by criticizing Amazon. She wrote a widely read law-review article while at Yale Law School that argued U.S. antitrust law has failed to restrain the online retailer.

    "Ms. Khan more broadly has argued that antitrust enforcement needs far-reaching changes to better restrain dominant companies. She won Senate confirmation last week to be an FTC commissioner, and President Biden then immediately designated her as chairwoman."

    Published on: June 23, 2021

    •  The Wall Street Journal reports on the red-hot US warehouse market, where rents are growing "as companies jockey for scarce distribution space to meet surging e-commerce demand … Prices are rising at a particularly strong rate for logistics space near ports and cities, and for big-box warehouses such as those used in large online fulfillment operations."

    The growth also is coming as "businesses are pushing to deliver online orders faster to the homes of digital shoppers and responding to growing consumer spending that is helping drive an economic rebound."

    •  On the subject of a possible breakup of Amazon, Yahoo Finance has an interview with Brad Stone, author of “Amazon Unbound: Jeff Bezos and the Invention of Global Empire,” in which he says that he thinks it is "unlikely the e-commerce giant would face such extreme measures if and when regulators make a move against the company," and that it is likely to use the same strategy Microsoft used back in the 2001 to avoid being broken up.  Amazon is "competing in very large markets of retail and cloud computing and doesn’t have the same market dominance that Microsoft once did,” he says. “So I think the argument for breakup, even though some Amazon opponents are suggesting it, is difficult.”

    •  Bloomberg reports that Amazon has "won a Texas trial in which it was accused of incorporating an Israeli company’s patented 'smart kitchen' inventions for voice commands to shop for groceries online into the Alexa digital assistant.

    "Amazon didn’t infringe three patents owned by closely held Ikan Holdings LLC’s Freshub unit, the federal jury in Waco, Texas, said Tuesday.

    •  The Washington Post reports that "the European Union has launched an investigation to determine whether Google exerts too much control over the sprawling online marketing industry, in which advertisers can surveil, target and influence consumers through nearly any tech platform in which they engage."  The investigation, the story says, "will focus on whether Google’s many footholds in the video-advertising supply chain allow it to boost its own services and downgrade competing ones. The company’s data collection tools, which hoover up vast quantities of user information, could give it an unfair advantage … Because the tech giant is also one of the largest sellers of online advertising space, it has been accused by competitors of using its heft in the industry to push people to buy its own ads over others."

    Published on: June 23, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The New York Post reports on how an Atlanta Ikea store "sparked outrage with what employees are calling an intensely problematic menu curated to celebrate" Juneteenth - it promoted a special menu that included "fried chicken, watermelon, mac n cheese, potato salad, collard greens, candied yams.” 

    The Post notes that "the selection, including items that have historically been used to demean African-Americans through stereotyping, resulted in multiple employees calling out of work in protest."


    I'm going to choose to believe that ignorance is the problem here. Though ignorance is hardly a defense.

    Published on: June 23, 2021

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    •  From the New York Times this morning:

    "In the days after lawmakers introduced legislation that could break the dominance of tech companies, Apple’s chief executive, Tim Cook, called Speaker Nancy Pelosi and other members of Congress to deliver a warning.

    "The antitrust bills were rushed, he said. They would crimp innovation. And they would hurt consumers by disrupting the services that power Apple’s lucrative iPhone, Mr. Cook cautioned at various points, according to five people with knowledge of the conversations.

    "The calls by Mr. Cook are part of a forceful and wide-ranging pushback by the tech industry since the proposals were announced this month. Executives, lobbyists, and more than a dozen think tanks and advocacy groups paid by tech companies have swarmed Capitol offices, called and emailed lawmakers and their staff members, and written letters arguing there will be dire consequences for the industry and the country if the ideas become law."

    “In a way I’ve never seen before, they are fighting tooth and nail,” Gigi Sohn, a distinguished fellow at Georgetown University’s Institute for Technology Law and Policy, tells the Times.  “They consider these bills existential for them because they get at their business models.”

    KC's View:

    There's a pretty good rule when talking about this stuff.

    Never bet against the lobbyists.

    Not that this is good for democracy.  But it remains a pretty good rule.

    Published on: June 23, 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 34,434,803 total Covid-19 coronavirus cases, resulting in 617,875 deaths, and 28,817,134 reported recoveries.

    Globally, there have been 179,963,242 coronavirus cases, with 3,899,062 resultant fatalities, and 164,730,599 reported recoveries. (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 65.5 percent of the US population age 18 and older has received at least one dose of vaccine, with 56 percent being fully vaccinated.

    •  From the Wall Street Journal this morning:

    "The highly transmissible Delta variant of the Covid-19 virus is spreading so rapidly in the U.S. that it could become the dominant strain in the next two to three weeks, researchers said, adding urgency to the nationwide vaccination drive.

    "The Delta strain, which first emerged in India in late 2020 and is also known as B.1.617.2, will probably make up 50% of Covid-19 infections in the U.S. by early to mid-July, said William Lee, vice president of science at population genomics company Helix and an author of the new analysis.

    "The U.S. Centers for Disease Control and Prevention released data on Tuesday showing that the prevalence of the Delta strain more than doubled over the two weeks ended June 19 to 20.6% of positive Covid-19 test samples genetically sequenced, compared with 9.9% in the week ended June 5.

    "'The Delta variant is currently the greatest threat in the U.S. to our attempt to eliminate Covid-19,' Anthony Fauci, President Biden’s chief medical adviser, said at a briefing on Tuesday."

    The Journal goes on:  "Public-health officials say the Delta variant is particularly risky to people who are unvaccinated. Delta is about 50% more transmissible than the current dominant U.S. strain, called Alpha, they say, which itself is 50% more transmissible than the most commonly circulating strain last year."

    •  USA Today this morning reports that Walgreens "plans to give $25 in store credit to anyone who gets a COVID-19 vaccination there in the next several days.

    "The move comes amid a flurry of COVID-19 vaccine incentives nationwide, including giveaways at Walgreens archrival CVS, million-dollar sweepstakes in states like Ohio and free food or drinks from restaurants like Krispy Kreme.

    "Walgreens said it will provide its incentive in one of two forms: $25 in store credit loaded onto the customer's myWalgreens account or if they don't have one, a $25 Walgreens gift card … The offer is good from June 22-26, and it's not available in Arkansas, New Jersey or New York. See more details here."

    Published on: June 23, 2021

    A note from MNB reader Craig Espelien about Michael Sansolo's column yesterday:

    A somewhat fascinating thing (at least to me) that is being left out of the Electric Car conversation is the inefficiency of our current electrical grid. I am not an expert - but when we lived in San Diego I did a bit of research on how power moved (we had a serious blackout that is a somewhat funny story of poor timing, automation and monumental ignorance) from point of generation to substations to the consumer. In broad terms, what I found was that for every three units of power (sorry - I always thing in GigaWatts thanks to Doc Brown) only one actually is available to be used by the consumer. One is lost in moving from point of generation to substation and the other is lost through distribution from substation to the consumer.

    While I understand these figures may not be accurate, our power grid is not aging well and is also a bit vulnerable as my blackout story will identify. If we are hell bent on moving from fossil fuel cars to electric cars, I am okay with that. However, I would like to see two pieces of analysis…

    #1 - what is the real cost of recharging if the model I think I know is the actual distribution model?

    #2 - what is the cost of recycling all of those batteries once they no longer hold a charge?

    Perhaps a tertiary question here would be how can we prevent Apple from being the battery provider of choice (I have an older iPhone with a relatively new battery and I often make it until Noon before I have to recharge and I am not a mega-user of a smart phone).

    Be well - and thank Michael for a thoughtful piece!  

    On the subject of antitrust actions being considered against big tech companies, one MNB reader wrote:

    I know I'm in the minority on this one, but where is Walmart on this list? I could name many chains they've put out of business, and last time I checked they still lead Amazon in total retail sales.

    On the subject of Albertsons' new deal with DoorDash, one MNB reader wrote:

    If I were Albertsons I would not want this sentence in my announcement:

    "Consumers can shop right on the DoorDash app to fulfill all of their grocery needs … In addition, in select markets, customers can order groceries through their local Albertsons Cos. store’s website for same-day delivery powered through DoorDash Drive, DoorDash’s white-label fulfillment platform that powers direct delivery for any business."

    Because now the consumer associates their grocery shopping to be at DoorDash not Albertsons.

    Another email from an MNB reader about the cultural shifts taking place at Victoria's Secret:

    So Victoria’s Secret, a decades-old brand premised on sexy fun, is looking to deliberately destroying itself by appointing — lol — the humorless and brittle Megan Rapinoe as its new spokeswoman.

    The humorless and brittle Rapinoe will not be alone in what can only be a producers-style conspiracy to sabotage Victoria’s Secret from within. Among others, joining Rapinoe will be Valentina Sampaio, a male model who identifies as a woman, and plus-size model Paloma Elsesser.

    What you have here is not a corporate move meant to expand a thriving business, but one meant to smooch the backside of this country’s left-wing elite, to pander to the Woke Gestapo. Newsflash: These are not the people who purchase expensive lingerie. Instead, all their money goes towards narcotics, bail, rubber women, tattoos, video games, strap-ons, and D-batteries.

    There is no poll anywhere in the world, not even from the fake media, that backs up the idea the general public is anywhere close to embracing this anti-human nature woke horse&*@#. Outside of a tiny group of fetishists, no one finds obesity attractive, no one wants to see a guy in a dress, and no one wants to hear from Megan Rapinoe — whose only claim-to-fame is perfecting the art of sounding like your first wife as she Luxury Whines. And allow me to add this…

    NO ONE wants to think of any of this when they’re thinking about sex, and that’s what Victoria’s Secret is supposed to be about, SEX.

    Sex is supposed to be sexy! Sex is supposed to be fun! Sex is supposed to be carefree

    Is it Opposite Day at Victoria’s Secret? Because cross-dressing, obesity, bitterness, and humorless have as much to do with sexy and fun as CNNLOL does with the news.

    I have two responses to this.

    One is to quote from a recent Bloomberg story about Victoria's Secret, which, it said, "took plenty of gut punches over the past several years. There’s been ongoing criticism that its marketing objectified women. And then former Chief Executive Officer Les Wexner’s ties to convicted sex offender Jeffrey Epstein further damaged the brand.

    "But despite all that, the major issue for the biggest unit of L Brands Inc., which also owns Bath & Body Works, wasn’t big declines in revenue as its customers mostly stuck with it. The bigger problem proved to be relying on a lot of discounting to sell items. That weighed on profitability as its parent company’s overall gross margin narrowed by about 8 percentage points from 2016 to 2019."

    In other words, it wasn't a thriving brand.  Customers weren't really sticking with the brand if they required discounts to do so.  It was a troubled brand that needed to figure out a way to expand its reach and appeal - and re-establish a value proposition.

    To be sure, this change may not work.  But what it was doing wasn't working, either.

    My second response to this email is to note that the writer seems to have a problem with Megan Rapinoe (who I find to be a breath of fresh air), among other things and people … and has real chip on his shoulder, which he verbalizes in terms that I think are hardly uplifting.

    I sometimes struggle with whether or not I should post emails like this.

    On the one hand, I believe in the Brandeis principle, which is that sunlight is the best disinfectant.

    But on the other hand, sometimes sunlight allows certain things to grow, like weeds and poison ivy and hemlock.