business news in context, analysis with attitude

One MNB reader emailed me with some personal experience connected to our story about Amazon dipping its beak deeper and deeper into third parties' marketplace sales:

If you’re a Fulfilled by Amazon seller like we are, Amazon takes between 66% = 70% of the selling price since we have chosen them to handle their inbound freight.

That includes deductions for:

•  Orders not received by customer (why should we pay for that)?

•  Orders damaged in transit (same question as above)

I am sure they feel that since they are a monopoly, they feel can charge what they want.  And since the duopoly of UPS and FedEx charge smaller merchants close to $20, just to ship a 12” square empty box to a consumer…they probably feel that small vendors have no alternative. However, nature abhors a vacuum, and someone may come along to challenge parts of their monopoly. 

I wrote a piece the other say suggesting ways in which Amazon need to improve, which prompted one MNB reader to write:

THANK YOU for calling out Amazon! My feeble voice has no chance of being heard or cared about but perhaps yours will.

My issue??  I’ll keep it short with only 2:

The deliveries have gotten terrible and are consistently slow.  Specifically, the 2 day delivery for Amazon Prime is now a “slogan” versus a reality.  A PAID reality I may add.  I live in Charleston, SC.   While not a major city, a city that at least Amazon should have no issues with 2 days deliveries.  My deliveries are consistently 3-4 days.  While perfectly acceptable from me with other vendors, NOT acceptable to me from Amazon BECAUSE I pay you for Prime and YOU tell me 2 day delivery.

Fed’Ex/UPS used to make the Amazon deliveries to me in Charleston. What a smooth machine these two were!  NEVER had an issue.  I order from other websites such as Columbia, Saucony, North Face and Wal-Mart.  These items are delivered sooooo very smooth with UPS and/or Fed’Ex.  Amazon about a year ago changed to THEIR OWN drivers.  What a mess from day 1.  I have MANY examples but I’ll share one that happened Thursday. I’ll be brief:

Amazon tracker says “10 stops away” followed a bit later with “You are the next stop.

The tracker then shows the driver not even close to my house.

Then 1 hour later, message to me is “Driver on the way”.

I went to bed at 10:05pm, woke up with no delivery.

REMEMBER, AMAZON messaged me 1) I was 10 stops away, 2) I was next stop, 3) Driver on the way.

The delivery took place 2 days later.

True story and I have screen shots of the messages.

This is a CONSISTENT event. With Amazon.

Keep the fire on them Kevin!

From another MNB reader:

This story reminds me of two things: first, that Bezos mantra for the longest time was about a laser focus on adding value to the customer relationship, which always came first – even above and beyond the investors. What happens if you lose sight of what got you to the big show because you’re just so big and pervasive you acquire a belief you can’t fail. That is the beginning of the “decline of the Roman empire” so to speak.

Second, Jay Chiat, founder of Apple’s ad agency back in the Steve Jobs era, famously said – “I wonder how big we can get before we get bad.” Customers come first. Period.

I suggested the other day that Andy Jassy needs to send an email to every Amazon Prime member, explaining the shortcomings and issues, and being as transparent as possible about what Amazon is going through.

MNB reader Michael J. Schillo responded:

Instead, Andy J will be let go in 6 weeks and Jeff Bezos will send just the email you are recommending and be a hero.

And then he and Howard S will compete for biggest ego in Seattle.

I'd prefer to miss that showdown, if you don't mind.  Yikes.

Another MNB reader wrote:

Totally agree with your thoughts about the email “explainer”. However, maybe another idea is to realign customer expectations. What is the Prime core value proposition? For me personally. it’s cost free shipping and access to Prime Video. At the end of the day, who REALLY needs same day/next day delivery. This next day delivery promise is may not be as big a customer value as thought? I may be wrong, but it’s an easily testable proposition.

Another MNB reader wrote:

Attn: Doug McMillon at Wal Mart – Tighten the screws on your operation.  This COULD BE your golden opportunity!  Clean-up your on-line “Marketplace” and make it more attractive for consumers and your vendors.   Amazon is faltering - step up your game.

On the subject of Walmart closing pickup-only depots, MNB reader Todd Hudgens wrote:

The closure of the Depots are a sign of eComm slowing, but I believe more so because BOPIS has been institutionalized at Supercenters and Neighborhood Markets, The Depots were designed to test grocery pick up and was a brilliant move by Walmart. They worked out the kinks and tested to ensure they would work, not knowing how visionary pick up would be with an unknown pandemic appearing. I loved the Depot in Bentonville but have since moved to our local Neighborhood Market. I suspect many have done the same and more will just move their weekly pickup to a nearby location.

Thank you and love your column to start my day.

From another reader:

I was a pickup customer at the Illinois test unit from the start,  nearly 3 years ago, until it closed last week. This week I tried a pickup at their Supercenter, which is less than a mile away from the test. It seems that they learned nothing from their 3-year test. Pickup typically took a couple of minutes at the test store. At the Supercenter, 12 minutes. I’ll be revisiting Jewel to see if their pickup service has improved since I last tried it in 2020.

And, regarding Walmart's decision to close some of its technology hubs, one MNB reader wrote:

Your WSJ excerpt and commentary on WalMart’s IT hubs closing is misleading.   The full WSJ article notes that “Before the closures, [Walmart] had 11 tech hubs in the U.S. and six abroad, according to its website.”   So, closing 3 locations is not a wholesale mandate to centralize and gather around the water cooler.  WalMart also has 20,000 IT staff worldwide – I don’t believe they could all fit in Bentonville.   With today’s far-flung organizations with offices and people around the globe, why should certain groups have to go into one location just to hop on the video call that they can have just as easily from home? 

Secondly, I believe this idea of “networking and pollination of ideas and innovation” is a corporate myth for most organizations.   Maybe the innovation lab works in small, localized groups and departments, but for the vast majority of modern companies, it is not desirable or even physically possible for everyone to be in a room “spitballing” all day.   Not only are key people located literally everywhere, but the available office space is too small for “everyone” to be in the office at the same time.   Someone has to mind the store and get some work done; not everyone is a budding Steve Jobs.    

I asked the other day if whatever FTC agreement might be reached with Kroger and Albertsons would have an impact on Kroger's stated plans for a pure-play e-grocery entry into the northeastern US.  One MNB reader responded:

KC my guess is if Kroger is starting e-grocery in the Northeast now, before buying Shaw's, then it probably wouldn't matter if they decide to sell Shaw's and continue e-grocery. I can't imagine they will hold onto Shaw's, they haven't opened a new store in years, and only do a few remodels a year. Not to mention Shaw's is fourth at best in the market areas they serve, behind Market Basket, Hannaford, and Stop and Shop. 

I recently expressed some level of skepticism about whether CVS would be able to live up to its ambitions when it comes to the health care business, prompting MNB reader Donna Brockway to write:

I have the same concerns about CVS biting off more than they can chew.  Their out of stocks, particularly in Pharmacy and Health and Beauty Care continue to be extremely high - I get my prescriptions at a CVS pharmacy inside a Target store, thereby being convenient for me to shop for other items while there.  Not only are there high out of stocks on the above-named areas, but in the last couple of months, several of my prescriptions have been out of stock.  This shocks me as you would think they would have a better handle on it than that.  And only two weeks ago, they announced that the Pharmacy will not be open Sunday or Monday, most likely due to labor shortage.

I'm watching them closely, as I don't think they can pull off everything they are trying to become.

On the subject of what's been driving egg prices, one MNB reader wrote:

As a former dairy category manager for over 30 years at two highly successful retailers I can tell you eggs are priced weekly from the wholesaler and we changed retail prices immediately.  Take pride in being the slowest to rise and the quickest to go back down. Some retailers may be interested in taking some extra profit but the best retailers think about their customers first. 

Commenting the other day about a lawsuit against Walmart because its mint fudge cookies didn't actually have either, I wrote:

I know not everybody agrees with me on this, but I think that if you are going to say that something has fudge in it, it ought not be necessary to play word games to win the argument - it ought to have actual fudge.  And actual mint, not artificial flavoring.  I understand that packaging language, often tiny print, can serve as a defense, but it really is about the lowering of standards.

One MNB reader responded: 

I have over 50 years experience in matters relating to food labeling and advertising.  The federal Food Drug and Cosmetic Act states that a food is deemed to be misbranded if its labeling is false or misleading in any particular.  Most states have an identical law.   Unfortunately FDA (and state) enforcement of this provision is all but non-existent.  In recent years the class action lawyers have been the only ones responsible for ensuring some degree of compliance.  Most of the cases are filed in federal court.  The federal judges are busy and many consider these consumer product cases not worthy of their attention.  Over 35 years ago I was involved in a suit regarding a claim of "5 oz of milk in every slice" being made on the label and in advertising for the leading brand of single wrapped processed cheese food slices.  One day the judge came into the courtroom and said something like  "I just came from a hearing involving a complicated criminal case involving multiple defendants and now I have to hear about cheese slices."  When he said that, in spite of all our factual evidence, I knew we were doomed. 

While there is no federal or state standard for "fudge" a Google search will show that it is generally understood to be made of sugar, milk and butter (milk fat).  An unqualified claim of "Mint" where the mint flavor is in whole or in part artificial requires the qualifier "artificially flavored" by FDA regulation found at 21 CFR 101.22.  By my observation a third of domestic food products do not comply with FDA labeling requirements.  For imported foods it is probably 80%.  A large portion of the foods offered for sale at major retailers such as Marshalls, TJ Maxx, Old World Market and even Macy's do not comply.  Jungle Jim's in Cincinnati has a huge amount of imported foods segregated by country.  I have not been there in over 10 years but my estimate then was 90% plus of those food items did not comply.  FDA has a District Office in Cincinnati.  It truly is a "Jungle" out there." 

In a 1924 case involving alleged APPLE CIDER VINEGAR the US Supreme Court said "The statute is plain and direct.  Its comprehensive terms condemn every statement, design and device which may mislead or deceive,  Deception may result from the use of statements not technically false or which maybe literally true.  The aim of the statute is to prevent that resulting from indirection and ambiguity, as well as from statements which are false.  It is not difficult to choose statements, designs and devices which will not deceive.   Those which are ambiguous and liable to mislead should be read favorably to the accomplishment of the purpose of the Act.  The statute applies to foods, and the ingredients and substances contained therein.  It was enacted to enable purchasers to buy food for what it really is."

FDA often cites that case and language on the very rare occasion that they allege a food label is false or misleading.

That should be the standard.  The problem is, without any enforcement even the good guys are forced to do likewise to remain competitive.  

On the subject of Amazon's bricks-and-mortar intentions, one MNB reader wrote:

I live in Torrance CA.  About 2 years ago, Amazon took over this empty grocery store.  It was making it into  an Amazon Prime store.  Now it does not appear that any work is being done.  Has Amazon stopped working on Amazon Prime stores?

Not completely.  But they're clearly taking a deep breath.

And, on another subject, one MNB reader wrote:

I will confess that I somehow missed that Zappos was acquired by Amazon. But that explains why the service has dropped. I thought they were using Amazon to help with shipping. I HATE getting my order in individual boxes on random days, much slower than ever before. I miss Zappos. Much like Whole Foods now, it’s been dumbed down and isn’t special anymore. And I can’t believe any business would believe that Amazon wouldn’t drastically change things when they got their hands on it. 

Responding to yesterday's FaceTime about Stew Leonard's new swimming school and related charity efforts, one MNB reader wrote:

Thanks for your wonderful Facetime video today.  It certainly struck a chord with our family.   58 years ago, my in-laws were young newlyweds with an 18 month- old son living in a remote farmhouse in Western Illinois.    My mother-in-law, pregnant with my wife, had a small, fenced-in area behind the house where she could allow her son a chance to be outside under her watchful eye.  One morning, she had her son and their dog in the play area when she was distracted by something that had occurred in the house.   During the few moments she was in the house, the dog unlatched the gate to the play area and her son slipped through, wandering down to a nearby farm pond where he drowned.  

As a remembrance of her older brother whom she never knew, my wife has made numerous named and anonymous contributions to YMCAs where we have lived, stipulating that the intent of the funds was to provide discounted or free swimming lessons to any child whose family couldn’t afford it.    She often wishes she could do more to prevent the same tragedy from occurring in any other family.   You can be certain that both of our sons learned to swim at an early age as well.  

And finally, we had this response to our story about the fellows who fell into a vat of chocolate:

I believe there is only one person fully qualified to provide the proper context on Monday’s story regarding Mars Wrigley’s chocolate safety-related fine….Tom Smothers.

It sort of breaks my heart that there are generations of people who have no idea who the Smothers Brothers are.