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    Published on: March 27, 2023

    Today, a quick update on a story we did a couple of years ago about the nascent practice of turning human remains into compost.  The practice has caught on, with six states currently allowing it, and one funeral home that specializes in the practice having raised millions to grow its business.  Me, I have my own thoughts about where I'd like at least some of my composted remains to be scattered.  (You won't be surprised.)

    "For dust you are and unto dust you shall return.”  - The Book of Genesis

    Published on: March 27, 2023

    The Washington Post - which, it should be noted, is owned in a personal investment by Amazon founder Jeff Bezos - has an excellent piece this morning  entitled "Amazon grew relentlessly. Now it’s getting lean."  The subhead:

    "After two decades of expansion, the company known for doing it all is trying to find focus."

    The Post frames the story by pointing out that less than five years ago, Amazon "was in rapid expansion and experimental mode, building its delivery network to get packages to people in two days or less, reshaping the internet with its cloud services business and reinventing grocery in part through its acquisition of Whole Foods.

    "But now the company is closing offices, cutting business lines and laying off 27,000 corporate workers, including those in core areas like cloud computing and advertising: all signs the era of uninhibited growth at the company famous for doing it all is at an end … In the three decades since it was founded, Amazon has grown from an online bookseller to a behemoth that not only sells everything, but also delivers it, and sometimes produces it. It has roughly 1.3 million employees, brought in over half a trillion dollars in annual revenue in 2022, and has bought or built businesses in grocery, transportation, finance and health care.

    "Cracks started to appear last summer, however, when Amazon announced that it had over hired and overextended its logistics operation during the coronavirus pandemic and would be reducing head count and slowing growth."

    From there, the Post looks at some of the areas in which Amazon is cutting back, changing its strategies and tactics, prioritizing margins, and flirting - in the minds of some - with changes in its core values, even as its leaders and spokespersons say that the company remains primarily focused on the customer experience.

    Examples cited:

    •  "As consumer spending has dipped — particularly following the explosion of online shopping during the pandemic — customers have also returned to physical stores, and multiple observers have noted that the experience of shopping on Amazon’s website has steadily gotten worse.

    "Rather than curate or recommend products to make the experience better for the customer, Amazon has turned most of its site over to advertising, said Juozas Kaziukėnas from e-commerce research site Marketplace Pulse. That’s been incredibly lucrative for Amazon — its advertising business is now growing faster than Amazon Web Services — but isn’t particularly appealing for customers."

    •  "Amazon Pharmacy, which grew out of Amazon’s acquisition of Pillpack, has struggled to gain traction, a former employee who spoke on the condition of anonymity said. Amazon has tried to increase interest by offering discounted subscriptions like RxPass.

    "But the pharmacy team still hasn’t launched some of the features that made Pillpack popular, like prescriptions conveniently shipped in daily packets. The logistics of running a medical business have been tricky — for example, Amazon can’t ship drugs through its existing logistics network, a second former employee said. And integrating Pillpack’s technology into Amazon’s complex and clunky back end software was a long and arduous process, three former employees said. Overall, former employees said the company underestimated how complex running a health care business would be."

    •  "In the last year, Amazon has cut jobs in its Alexa smart speaker division, killed projects in its secretive incubator Grand Challenge, pulled back on self-driving robots and delivery drones, and closed its brick and mortar shops. But it's also pressing for profitability in its core business areas.

    Elaine Kwon, a co-founder and managing partner at Kwontified who consults with brands that sell to Amazon wholesale, said Amazon has drastically reduced the size of its orders while simultaneously increasing the percentage of sales it takes as a fee.

    "Amazon is 'trying to squeeze as much margin out of every source' that it can, said Kwon."

    •  "While Amazon’s appetite for new business has always been enormous, its cost saving mind-set set it apart from other tech companies — frugality has long been a core company principle. Where employers like Google and Facebook became known for cushy workplaces and generous salaries, Amazon is an infamously competitive and sometimes bruising workplace where employees were rewarded thriftiness.

    "Sometimes, that corner cutting culture went too far, as in the expansion of its warehousing and logistics network, where speed has often taken precedence over safety, according to investigations by Reveal, ProPublica and BuzzFeed News."

    KC's View:

    First, it has to be stipulated that Amazon remains an enormous company and significant competitor.  As the Post writes, "Amazon isn’t shrinking, and remains the second largest private employer in the United States."

    But whether necessary or not, it is clear that the company has moved away from its origins, in which Bezos "famously had the idea that the company didn’t need to be profitable and could instead become enormously valuable by burning cash to grow quickly."  Things have changed, though, and the Post writes that now "Amazon is a mature company under different leadership — and shareholders expect real profits. After soaring to a nearly $2 trillion market valuation during the pandemic, Amazon plummeted to below $900 billion in November."

    Which explains current CEO Andy Jassy's statement that "the overriding tenet of our annual planning this year was to be leaner.”  The question is whether "leaner" means less customer-focused, and whether ther company's approach has diminished its "today is day one" ethic.

    To some degree, Amazon may not pay too big a price in the short term because it doesn't have a ton of competition.  The biggest threat to its online dominance is Walmart, which reportedly has begun to make inroads with high net worth customers;  I still think that a sizable percentage of Amazon's customers are not inclined to be Walmart shoppers, and value the various offerings that Prime membership makes available to them.  But as we we often say here on MNB, there is no such thing as an unassailable business model.

    It seems to me that in some ways, what Amazon lacks at the moment is balance - it has swung so far in the direction of getting lean that the customer experience is not what it used to be.  That's dangerous.  I'm a pretty big Amazon user, and have been for most of the company's existence, and I've noticed the change.  It isn't so bad that I've changed my online shopping habits.  Yet.

    Published on: March 27, 2023

    Reuters has a story about a number of online retailers that have used "free shipping" as a tool to generate sales and loyalty now "are scrambling to keep it from draining profits as costs climb and e-commerce contracts.

    "They are adding fees for faster service, raising minimum purchase requirements and making other changes that shift more costs to consumers who are struggling with financial issues of their own."

    It is, the story says, "an open secret that most retailers raise product prices to subsidize free shipping. Still, product inflation and soaring shipping costs are making the service unsustainable as the prospect of recession threatens to wallop already-flagging online spending."

    "The days of free delivery are numbered," Ken Morris, managing partner at Cambridge Retail Advisors, said of the fast-changing retail marketing tool, arguing that "retailers are beginning to look more like some airlines, which charge for better seating, transporting luggage and also restrict use of frequent flyer points."

    KC's View:

    I think it makes perfect sense for retailers to give the best terms and service to their best customers.  It was understandable that in the gold rush early days of e-commerce, it was a land grab as much as anything else, with less attention paid to profitability.  That, e-tailers thought, would come later, with volume.  Many were wrong, and the post-pandemic economic headwinds only served to underline that fact.

    Still, it is hard to take away a benefit to which so many customers have become addicted.  Expectations are high, and shopper relationships can be fragile.

    If it were me, I'd be surgical and data-centric about my approach.  Look at deciles of customer groups, and clearly establish the lines for where specific benefits are offered.  Be transparent.  Provide some runway so people don't get whiplash.  Be especially generous about benefits to longtime and high-volume shoppers.  Give people a reason to spend more.

    Published on: March 27, 2023

    Axios writes about a new study saying that "improving 3D-printed food is a matter of following a certain best-practices 'recipe'."

    According to the study, "Optimizing processes that influence the quality and complexity of 3D-printed food can offer better results, control and speed, the researchers found.  They identified extrusion-based 3D printing — wherein food paste is forced out of a syringe nozzle by direct or indirect pressure — as the 'most applicable technique'."

    The study also suggests that the researchers see "3D-printed food as a potential solution to disruptions in global food production that drive food insecurity — and as a tool 'that will make the food system more efficient' and generate less waste."

    Axios notes that "across Europe, several restaurants and butchers offer 3D-printed "meat" cuts made from soy protein and chickpeas by food startup Redefine Meat.  In the U.S., a Los Angeles digital bakery is 3D-printing candy, and a Columbia University lab just revealed a seven-ingredient 3D slice of cheesecake."

    But, Axios writes, "3D-printed food presents big ethical and cultural considerations.  Synthetic steak, for instance, has been made from the muscle stem cells of a cow embryo — which may violate some belief systems."

    KC's View:

    Will supermarkets have their own 3D Food sections at some point?

    Never say never.  

    This does sound to me like one or two steps away from the food replicators installed on the various starships in "Star Trek."

    Published on: March 27, 2023

    •  Kroger said last week that it has opened its Aurora, Colorado, Customer Fulfillment Center (CFC), a 300,000 square foot, Ocado-powered facility that will "will deliver groceries and home essentials to customers up to 90 minutes away."

    The announcement notes that "The expansion to the Denver area represents an extension of a collaboration between Kroger and Ocado Group, a world leader in technology for grocery e-commerce … The delivery network relies on highly automated fulfillment centers. At the hub sites, more than 1,000 bots move around giant 3D grids, orchestrated by proprietary control systems. The grid, known as The Hive, contains totes filled with products and ready-to-deliver customer orders. Kroger Delivery offers the highest in-stock levels, best on-time delivery, and one-of-a-kind, white-glove experience with industry-leading customer loyalty and satisfaction scores - driving value, convenience and more choices directly to customers, saving them time and money."

    Kroger currently operates customer fulfillment centers in Monroe, OH, Groveland, FL, Forest Park, GA (Atlanta), Pleasant Prairie, WI, Dallas, TX, Romulus, MI (Detroit) and Aurora, CO and Frederick, MD, with additional customer fulfillment centers slated for California, Phoenix, AZ, Cleveland, OH, Charlotte, NC, as well as South Florida and the Northeast.

    •  From the Wall Street Journal:

    "Uber Eats is taking thousands of online-only brands off its app this week out of concern that the platform is getting clogged by restaurants listing multiple delivery options with different names but the same menu.

    "So-called virtual brands - delivery businesses without physical storefronts - mushroomed on delivery apps during the pandemic, becoming a lifeline for eateries who used their empty kitchens and idle staff to test new ideas and make up for lost sales … The explosion of online storefronts combined with the lack of rules around them led to too many eateries competing for real estate on apps, creating a 'Wild West, anything goes kind of situation,' said John Mullenholz, who oversees the business at Uber Eats.

    "Diners are 'effectively seeing 12 versions of the same menu' on the app, he said. 'It’s fair to say that kind of erodes consumer confidence.'

    "Uber Eats plans to remove 5,000 online storefronts, covering about 13% of virtual brands in North America. Among those scheduled to be removed: 12 virtual brands selling identical breakfast burritos from a Colorado sports bar; 14 brands serving the same sandwiches from a New York City deli; and online-only options from a San Francisco-based Pakistani restaurant that, at one point, replicated its menu 20 times. Uber Eats declined to share names."

    •  Business Insider reports that "Amazon's top HR executive, Beth Galetti, sent employees a message officially rejecting an internal petition they had drafted against the company's new return-to-office policy. 

    "The petition, which was shared with CEO Andy Jassy's leadership team last week according to Galetti's note, was signed by roughly 30,000 employees. The petition followed the RTO mandate that Jassy outlined last month, which asks employees to come into the office three times a week beginning in May."

    In her response, Galetti wrote, in part, "Over the last three years, we have been continually assessing the strengths and shortcomings of different working models, listening to public health guidance on safety standards to bring employees back, and considering what's most compatible for our unique culture.

    "As mentioned in Andy's update, the guiding principle used in our decision making was to prioritize what would enable us to make our customers' lives better and easier every day, and relentlessly invent to do so. Given the large size of our workforce and our wide range of businesses and customers, we recognize this transition may take time, but we are confident it will result in long-term benefits to increasing our ability to deliver for our customers, bolstering our culture, and growing and developing employees."

    •  Fox News reports that recent "updates to the Blockbuster Video website have fueled speculation among the movie-rental chain’s fans about a potential comeback."

    The story says that "according to the Internet Archive, the website was initially updated in late July 2022 to feature the Blockbuster logo and a message that said, 'We are working on rewinding your movie.'  It also included a pop-up GIF of actor Wayne Knight. An update to the page in August featured a GIF of John Travolta from 'Pulp Fiction' superimposed over an aisle of movie rentals at a Blockbuster. The latest update to the Blockbuster website features the brand’s logo and a message stating, 'Please be kind while we rewind'."

    Blockbuster's IP was acquired by Dish Network in 2011.  At the moment, there is only one Blockbuster operating in the US, in Bend, Oregon.  At its height, in 2004, the retailer had more than 9.000 locations in the US.

    Dish Network has not commented on the website's updates.

    Published on: March 27, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Financial Times has a story about how the collapse of Silicon Valley Bank (SVB) is having an impact on the wine business because the lender was a "crucial pillar to vintners" in Napa and Sonoma, so much so that SVB had a wine division focused on the industry.

    "When it collapsed, SVB was sitting on $1.2 billion of winery loans," FT writes.  "Now its clients worry about where their funding will come from as they grapple with higher costs of doing business and the worsening impacts of climate change. Their worries are well-founded. The wine business is notoriously risky, low-margin and painstakingly slow. One reason it worked for SVB was the prestige it conferred."

    The question is whether the acquisition of SVB will alleviate these concerns.  CNBC reports this morning that the U.S. Federal Deposit Insurance Corporation (FDIC) has announced that First Citizens Bank will buy Silicon Valley Bank’s deposits and loans."  That may resolve worries about current loans, but it remains to be seen whether First Citizens Bank will be as willing to be a lender in the future.

    Published on: March 27, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  United Natural Foods, Inc. (UNFI) announced that  Erin Horvath, the company Chief Supply Chain Transformation Officer, has been promoted to the role of COO.

    And, UNFI said, Louis Martin, the company's Chief Strategy and Transformation Officer, has been named President of Wholesale.

    Published on: March 27, 2023

    •  Gordon E. Moore, who originated what became known as Moore's Law - saying that the number of transistors that could be placed on a silicon chip would double every two years for the foreseeable future, and therefore would increase the data-processing power of computers exponentially - has passed away.  He was 94.

    The New York Times writes that Moore was "a co-founder and former chairman of Intel Corporation, the California semiconductor chip maker that helped give Silicon Valley its name, achieving the kind of industrial dominance once held by the giant American railroad or steel companies of another age … Along with a handful of colleagues, Mr. Moore could claim credit for bringing laptop computers to hundreds of millions of people and embedding microprocessors into everything from bathroom scales, toasters and toy fire engines to cellphones, cars and jets."

    The Times also writes that "as his wealth grew, Mr. Moore also became a major figure in philanthropy. In 2001, he and his wife created the Gordon and Betty Moore Foundation with a donation of 175 million Intel shares. In 2001, they donated $600 million to the California Institute of Technology, the largest single gift to an institution of higher learning at the time. The foundation’s assets currently exceed $8 billion, and it has given away more than $5 billion since its founding."