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    Published on: November 15, 2022

    In the largest layoffs in Amazon's almost three decades of doing business, the company said yesterday it plans to cut about 10,000 jobs as it prepares for a possible recession and deals with a post-pandemic reduction in its e-commerce business.

    The 10,000 number - which is said to be "fluid" and dependent on final decisions - would be roughly three percent of the company's corporate headcount or less than one percent of its global workforce of more than 1.5 million.

    From Bloomberg:

    "The layoffs, which could begin as soon as this week, will likely target Amazon’s devices group, responsible for the Echo smart speakers and Alexa digital assistant, as well as Amazon’s retail divisions and human resources, according to people familiar with the matter.

    "Teams are making the decisions on where to reduce headcount as part of the company’s annual planning process, said the people, who requested anonymity to discuss a confidential matter.

    "Chief Executive Officer Andy Jassy has vowed to streamline operations amid slowing sales growth and economic uncertainty. Last month, the Seattle-based company predicted that the holiday sales period would be the slowest in its history, spooking Wall Street and tanking the shares.

    "Some longtime Amazon employees, also speaking on condition of anonymity to discuss an internal matter, said the cost-cutting in the last few months has been the most severe they’ve ever experienced."

    From the New York Times:

    "Amazon’s planned retrenchment during the critical holiday shopping season — when the company typically has valued stability — shows how quickly the souring global economy has put pressure on it to trim businesses that have been overstaffed or underdelivering for years.

    "Amazon would also become the latest technology company to lay off workers, which only recently it had been fighting to retain. Earlier this year, the e-commerce giant more than doubled the cap on cash compensation for its tech workers, citing 'a particularly competitive labor market.'

    "Changing business models and the precarious economy have set off layoffs across the tech industry. Elon Musk halved Twitter’s head count this month after buying the company, and last week, Meta, the parent company of Facebook and Instagram, announced it was laying off 11,000 employees, about 13 percent of its work force. Lyft, Stripe, Snap and other tech firms have also laid off workers in recent months."

    From the Wall Street Journal:

    "The latest plan by Amazon shows the extent to which the company is determined to rein in costs as it prepares for economic uncertainty, although it is also entering a holiday period that is typically when it makes most of its sales for the year.

    "While Amazon has hired at its warehouses to prepare for the fourth quarter, executives have warned that they would be cautious in how they hire. Chief Financial Officer Brian Olsavsky last month said Amazon has seen signs of consumers being affected by high inflation, and the company warned of a difficult fourth quarter financially … Amazon previously said it determined that there are some areas where certain roles are no longer necessary and has worked in those cases to help staff members find new roles. Amazon has reported a total of $3 billion in net losses for the first nine months of this year, after posting net income of about $33 billion in 2021 and $21 billion in 2020.

    "Amazon last underwent an extensive profitability push in 2017 under Mr. Bezos. Senior Amazon executives say Mr. Jassy’s review is much more extensive. Mr. Jassy has been focused on profits since taking over last year, and has presided over tough decisions."

    And from the Washington Post (which is owned in a private investment by Amazon's founder-chairman, Jeff Bezos):

    "After years of staggering growth, the tech sector — a favorite with investors — is on wobbly ground. The recent spate of layoffs follows months of warning signs, including tech start-ups finding it more difficult to raise capital … Amazon in particular has been in expansion mode for most of its history, from launching its Prime memberships to pioneering cloud computing to buying upscale grocery chain Whole Foods. The company, which brought in $469.8 billion in sales last year, said this summer it would buy health-care chain One Medical for $3.9 billion."

    The Post writes that the planned job cuts "represent a remarkable turnabout for Amazon, which has hungrily hired tens of thousands of employees in its warehouses and corporate offices in the past decade. The company had more than 1.5 million employees at the end of September, a 5 percent increase from the year before."

    The Post also has a chart that vividly puts the Amazon cuts in content:  one percent of its total global workforce, compared to Netflix's cuts of four percent of its workforce, Lyft's 13 percent cuts, Meta's 13 percent cuts, Snap's 20 percent cuts, and Twitter's 50 percent cuts.

    BREAKING NEWS: Ironically … even as Amazon announces the layoffs, it also is introducing a new program called Amazon Clinic, which it describes as "a message-based virtual care service that connects customers with affordable virtual care options when and how they need it - at home, after dinner, at the grocery store, or on the go - for more than 20 common health conditions, such as allergies, acne, and hair loss."  Amazon Clinic, the company says, will operate in 32 states and reflects its belief that "improving both the occasional and ongoing engagement experience is necessary to making care dramatically better. We also believe that customers should have the agency to choose what works best for them. Amazon Clinic is just one of the ways we’re working to empower people to take control of their health by providing access to convenient, affordable care in partnership with trusted providers."  It is, Amazon says, part of its health care continuum that includes Amazon Pharmacy and One Medical, "two key ways we’re working to make care more convenient and accessible." At the moment, however, it will not take insurance.

    KC's View:

    Let's keep the numbers in context.

    Amazon increased its total labor headcount by five percent over the past year, and now is reducing it by either three percent or less than one percent, depending on how you calculate the number.  In essence, then, Amazon is moving in the direction of getting back to pre-pandemic labor numbers, just as it has been reducing its physical footprint in terms of distribution centers as demand tails off in a post-Covid world.

    It will be interesting to see how this impacts Amazon's innovation initiatives.  (That's one of the things that Tom Furphy and I will be talking about in "The Innovation Conversation" tomorrow.)  My suspicion is that for the most part, it won't have an enormous impact on innovations to which Amazon is committed - sometimes leaner is better.  What may be revealed in the process is what innovations Amazon does not see as critical to its growth.

    Keep a couple of things in mind.  Amazon has to meet certain growth targets;  the markets demand it.  And Amazon will continue to invest in businesses that can deliver on those targets.  I would expect healthcare and food to be among the industries where Amazon believes that it can continue to disrupt and deliver on its customer-centric agenda.

    That said, is it possible that Amazon could sell Whole Foods?  Sure.  Anything is possible … and there weren't many of us who saw the Kroger-Albertsons deals coming.  But I actually think Amazon would be better off finding one great grocery executive who could find synergies in all its various food-oriented businesses, identify an across-the-board value proposition that is easily and effectively communicated to shoppers, and build morale and esprit de corps among employees.  (I keep saying that Andy Jassy should call me for some ideas, but he hasn't done it yet.  C'est la vie.)

    Published on: November 15, 2022

    Walmart this morning reported Q3 revenue of $152.8 billion, up 8.7 percent from the same period a year ago, on same store sales that were up 8.2 percent and 9.8 percent on a two-year stack.  Walmart U.S. comp sales, excluding fuel, were up 3.0 percent.

    Walmart also said that its e-commerce growth was 16% year-over-year, and 24% on a two-year stack. 

    Doug McMillon, Walmart's president-CEO, released a statement in which he said, "We had a good quarter with strong top-line growth globally led by Walmart and Sam’s Club U.S., along with Flipkart and Walmex. Walmart U.S. continued to gain market share in grocery, helped by unit growth in our food business. We significantly improved our inventory position in Q3, and we’ll continue to make progress as we end the year."

    Some context from the New York Times analysis:

    "Walmart said the overall number of transactions and the average amount a shopper spent per trip in the United States increased in the third quarter, suggesting high inflation did not deter consumers as much as some had feared.

    "Once a beneficiary of pandemic spending habits, Walmart has more recently looked to reset Wall Street expectations, initially slashing its forecast for annual earnings, only to upgrade it in recent earnings reports. The relatively robust earnings in its latest quarter led Walmart’s executives to raise the company’s full-year profit outlook, saying they now expect profit to fall less sharply and revenue to rise more strongly than before.

    "Analysts are examining the earnings results closely because they signal how Walmart, the nation’s largest retailer, may fare in the crucial fourth quarter, when holiday shopping kicks into high gear. Analysts are expecting that retailers, which enjoyed bumper profits over the course of the pandemic, will see their margins shrink over the next couple of months, as the cost of labor, transportation and materials continues to rise."

    KC's View:

    One prediction here: Walmart won't announce layoffs anytime soon.

    Published on: November 15, 2022

    The October Brick Meets Click/Mercatus Grocery Shopping Survey is out, concluding that "the US online grocery market finished October with $7.8 billion in total sales, down 3% compared to a year ago and flat versus the prior month … While October's year-over-year decline was similar to the prior month, October's results were driven by different factors, including changes in spending per order, order frequency, and monthly active users (MAUs), that were not evenly distributed across the leading retail formats like Mass and Grocery."

    More from the report:

    "During October, and unlike the prior month, all three segments (Pickup, Delivery, and Ship-to-Home) experienced slowdowns in spending per transaction, declining 5% in aggregate versus the same period last year. Ship-to-Home’s average order value (AOV) contracted the most, dropping nearly 11% versus a year ago; Delivery’s AOV slipped more than 7%, and Pickup’s dipped just over 3% during the comparable periods. This broad-based downturn in online grocery spending suggests that customers are either shifting some purchases offline and/or buying fewer items in general due to a challenging economic outlook combined with persistent price inflation.

    "Order frequency, defined as the number of orders received by MAUs during the period, was another area where October trends differed from those in September. The composite order frequency for October fell nearly 7% as all three segments slipped versus last year. For the specific segments, Ship-to-Home MAUs declined the most, receiving 12% fewer orders in October compared to last year, while Pickup contracted 7%, and Delivery was essentially flat, declining less than one-half of a percent. The softening of this metric indicates a subtle shift in how customers get groceries, with offline purchases gaining from more in-store trips."

    The report goes on:

    "The overall eGrocery MAU base, which encompasses users of Pickup, Delivery, and Ship-to-Home, grew by 10% in October on a year-over-year basis but slipped slightly versus last month.   Each segment experienced growth in its respective MAU base, driven by a 10% gain for Delivery, followed by an almost 8% lift for Pickup, and a nearly 6% bump in Ship-to-Home users.  Although the difference between the MAU base for October and September may reflect the impact of less-frequent customers who cycle in and out of online grocery shopping, the positive trends across the board highlight a larger customer base that retailers can nurture to unlock additional, latent demand."

    KC's View:

    I continue to believe that declines in e-grocery are more a function of accelerated growth propelled by the pandemic slamming into headwinds created by inflation and a recessionary mindset.  A certain amount of retrenchment is to be expected, but in the end, as the economy levels off, I would expect that e-grocery sales will be a lot higher than it was pre-pandemic, and will continue to grow.

    Published on: November 15, 2022

    Sifter, a technology that allows shoppers to literally "sift" through a store's product selection to easily access items relevant to their personal circumstances (and, perhaps more importantly, marginalize those that they cannot or will not eat), yesterday announced a partnership with FARE (Food Allergy Research & Education), described as "the nation’s leading non-profit organization engaged in food allergy advocacy and the largest private funder of food allergy research."

    Some context from the announcement:

    "Using Sifter’s robust, science-based shopping platform, food-allergic individuals and families can make better food decisions and save hours of time when grocery shopping. In addition, the platform is accurate and easy to use, giving peace of mind to those with even the most restrictive dietary challenges.

    "Specifically, the FARE-Sifter partnership recognizes that many individuals with food allergies are also challenged by other diet-related health conditions. The Sifter shopping platform, available on the FARE homepage, will allow a person with complex diet needs - for example, a dairy intolerance, a nut allergy, and diabetes - to discover a wider variety of suitable foods when shopping online or in-store. Built by a team of Sifter nutrition experts and software developers and powered by algorithms that support dietary standards of practice, the Sifter technology is designed to help the food allergy community make better food decisions and also take the fear out of grocery shopping."

    KC's View:

    Since the first time I learned about (and then reported on) Sifter, I've thought that it is one of the most interesting technology innovations available to an industry that needs to find ways to be more relevant and resonant to their shoppers.  This approach to allergens, an increasingly vexing problem for a lot of people, is just the latest example of how they're doing that.

    For some background, you can access my two-part interview with Sifter's founders - Andrew Parkinson and Thomas Parkinson, who in 1989 created Peapod, the world’s first online grocer - here and here.

    Published on: November 15, 2022

    Bloomberg reports that Amazon founder-chairman Jeff Bezos said yesterday that he plans to give away the bulk of his fortune to charity.

    Bezos is the world's fourth richest person, with a current net worth of about $123.9 billion - less than it was not that long ago, when Amazon's stock price was considerably higher.  Bezos made the comments just hours before Amazon announced that it will be eliminating some 10,000 jobs.

    Some context from the Bloomberg story:

    "This isn’t the first time Bezos has timed a big philanthropic announcement around a period of controversy. Last year, he sandwiched his 11-minute trip to the edge of space, which attracted criticism over his priorities, with news of hundreds of millions of dollars in gifts, including $200 million to the Smithsonian National Air and Space Museum. 

    "Bezos, 58, has focused more attention on his philanthropy in recent years as he’s also assumed a much larger public role, acquiring the Washington Post newspaper in 2013 as well as luxury homes in New York, Los Angeles and Hawaii. A $500 million yacht he commissioned is under construction in the Netherlands, and he’s among those interested in bidding for the NFL’s Washington Commanders, possibly with music mogul Jay-Z as an investor.

    "For years Bezos largely stayed on the philanthropy sidelines and drew criticism for not signing the Giving Pledge, a promise by many of the world’s richest people to donate the majority of their wealth to charitable causes. Instead he focused on Amazon and funded Blue Origin, his for-profit space-exploration company.

    "But Bezos has increased the pace of his giving after stepping down as Amazon’s chief executive officer last year. He set his attention on climate change with his $10 billion Earth Fund, which also aims to help restore nature and transform food systems. Bezos has said he plans to distribute the $10 billion by 2030."

    KC's View:

    Maybe Bezos is coming out what has seemed like the world's most public mid-life crisis … or maybe he's just a little embarrassed by his ex-wife's philanthropy.  MacKenzie Scott has given away some $14 billion to a variety of nonprofits since her 2019 divorce from Bezos, and she's done it in a unique way.  Her folks do their own due diligence, they send a check, they don't issue a press release, and they don't ask for anything in return.  The only way we find out about the donations, for the most part, is when the beneficiaries of her largesse make it public.

    Published on: November 15, 2022

    •  From Semafor:

    "TikTok quietly entered the United States e-commerce market this week, where it will compete with Amazon and other retail giants during the coming holiday shopping season.

    "Users can now make purchases directly through the app using a feature called TikTok Shop, which the company officially began testing in the U.S. this week. It was previously only available in the UK and seven countries in Southeast Asia.

    "TikTok is currently inviting select U.S. businesses to participate in the initiative, according to a person familiar with the matter. That means livestreamers from China and other places who sell goods on TikTok will need to continue directing shoppers to third-party websites.

    "TikTok, which is owned by the Chinese social media giant ByteDance, has told international merchants that they will eventually be allowed to start using TikTok Shop, the person said."

    Published on: November 15, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  VegNews reports that while there may only be one Blockbuster video rental store still operating in the US (in Bend, Oregon), "there is a new Blockbuster-themed pop-up in Los Angeles … where nostalgic cocktails and atmosphere will be the main draw. With their membership cards in hand (drink tickets), guests can relive the experience of browsing for movie titles in categories arranged along the walls at Blockbuster.

    "However, the movies here are actually drink orders organized by different cocktails, spirits, and beers, along with non-alcoholic choices. The drinks are inspired by movie releases from the ‘90s and 2000s, with a recipe on the back of the box where a film synopsis would typically be found. Guests pick out their selection and bring it to the Blockbuster checkout counter where a bartender creates their drinks … In addition to libations, the Blockbuster Speakeasy popup will offer a food menu with a variety of items. Here, the main vegan food attraction will be the Blockbuster Burger which can be ordered with a plant-based Beyond Meat patty topped with mustard, pickles, and diced onions. Tickets start at $29 per person with a throwback cocktail included."

    The story says that "the pop-up series is organized by media entertainment company New Gold Empire and Bucket Listers, a platform that connects adventure-seekers with inspiring experiences in 12 cities."

    This assumes that consumers have a fond memory of going to Blockbuster stores … which means, I think, that a) you have to be of a certain age, and b) have to have a short memory (which may be a function of being of a certain age).  On the other hand, maybe young people will gravitate to it, finding it interesting in the same way that they may be fascinated by rotary-dial phones, fax machines and laser disc players.

    Published on: November 15, 2022

    …will return.

    Published on: November 15, 2022

    In Monday Night Football, the Washington Commanders defeated the Philadelphia Eagles 32-21.