Feb 25, 2020 Amazon opens a cashier-less supermarket — but it's more interested in the tech than the groceries Read More Literally "grab-and-go"... Amazon opened a checkout-free grocery in Seattle Tuesday, its biggest "Go" store yet. As you cruise the aisles and squeeze-test avocados, shelf-sensors and cameras stalk your every move (no more "sampling" the nuts section). You grab your favorite rosé, walk out, and see the $10 charge on your Amazon app:
Go Big: Amazon has opened 25 Go stores over the past 2 years — but this supermarket is 5x bigger than its largest Go store.
Or Go Home: Go's VP said this improved tech can be deployed on an even larger scale — "There's no real upper bound."
But: Sales at the first batch of Go stores actually declined in 2019 from the year before.
Go's true ambitions lie beyond grocery... Amazon is using this huge Go store as a showcase for its customer-stalking, product-tracking tech, which it will likely start selling to other businesses. It's reportedly talked already with potential partners like airport convenience stores (snatch that Kind Bar while sprinting to Gate E14) and sports arenas (grab the Cracker Jack without missing an at bat).
"Go as a Service": Amazon might offer GaaS (not actually called that) to retail companies that want Amazon's tech in their own stores.
Question is: Will Amazon's retail competitors be down to partner with their #1 rival? Walmart almost certainly won't.The Takeaway:Amazon's real money lies in its tech and services infrastructure... Besides acquisitions like Ring and products like Alexa or Amazon Basics, Amazon doesn't really sell its own physical goods. The company is most known for its ecommerce platform, where other companies sell their stuff. It actually made 63% of its profit from its Amazon Web Services cloud — that's twice as much as its core ecommerce biz. Now it's positioning Go as a 2nd potential software profit puppy. Feb 19, 2020 Walmart's online grocery is thriving Read More XL-sized cart full of "meh"... Walmart's disappointing earnings. Physical store sales for the world's largest brick-and-mortar retailer rose barely 2% (a slowdown from last year's 4.2% growth). But there's light at the end of the aisle: ecommerce sales popped 37% for the year. The star? Walmart's online grocery biz.
Milking it: With its 265M weekly global customers, 11.5K physical stores globally, and reputation for the lowest prices (outside Amazon), Walmart has the loyalty and locations to scale online grocery.
Lettuce rejoice: So Walmart's speedily expanded online grocery — 3.2K locations will bag your groceries ahead so you can just pickup curbside, while another 1.6K spots will cruise the aisles, bag, and deliver to your door. But...
Walmart's overall ecommerce biz is still unprofitable... E-sigh. It's leaning into online grocery — which it thinks has profit puppy potential — while leaning out of its e-acquisitions:
Like an Innovation Vampire, Walmart scooped up hip ecommerce startups to compete with Amazon, sucked the valuable digital lifeblood out of them, and threw them to the curb when they didn't live up to expectations. It's the Twilight Saga, but for retail.
After splurging on innovative companies since 2015, Walmart's recently sold off ModCloth, laid off hundreds at Bonobos, ended Jet.com's grocery biz, and just announced it's shutting down shopping service JetBlack.
The Takeaway:Cash in the (e-grocery) bag... Grocery shopping is a habit. And owning habits means $$$ — Over 1/2 of Walmart's US sales are from food. The US online grocery market is still in toddler stage, but it's predicted to take 20% of all grocery sales by 2025. Since 90% of Americans live within 10 miles of a Walmart, its curbside/delivery grocery game boasts a critical foundation. That's how it can stay ahead of Amazon, Instacart, and Target. Jan 7, 2020 SmileDirectClub snags a spot at Walmart — but not with its core product Read More Prime real estate... Walmart is Earth's biggest retailer — Now SmileDirectClub will sell its mouth-flattering goods exclusively on Walmart's website and across its 3,800+ US stores. One of the worst IPOs of 2019, SDC shares popped 25% on news of the partnership. The awkward part? The partnership doesn't even include their core product.
Before: SDC is a direct-to-consumer brand, selling its clear braces-replacing aligners from its own website (like DIY Invisalign).
After: SDC-branded electric toothbrushes, tooth-whitening kits, dental device cleaners — they're all new, and will now be sold at Walmart.
MIA: Its go-to clear aligners will stay exclusively on SDC's website and its SmileShop locations.
More like Smile InDirect... SDC's strategic move to go off its own website and into another retailer isn't totally fresh — its online-first, direct-to-consumer cousins made similar moves: Casper mattress, Harry's razors, and Quip toothbrush all now sell in Target stores. But SmileDirect's the only one to keep its core product to itself.
Side note: Walmart will see how SDC's products do with its lower-income customers before possibly setting up full SDC shops within its stores.The Takeaway:This is SDC's top-of-funnel strategy... How do you warm people up for a bigger commitment, more expensive core product? Offer them gateway goods instead. SDC's main teeth-straightener costs nearly $2,000. An SDC electric toothbrush in color "blurple" costs just $25.
First date: SDC earns your trust through its cheaper, low-commitment options at Walmart.
Marriage: Then, after months of keeping your teeth white with SDC products, maybe you'll feel ready to put a ring (or an aligner) on it. Oct 8, 2019 Walmart starts pulling the plug on its most innovative (and unprofitable) acquisitions Read More The brick-and-mortar store that wanted to become an ecommerce startup... Sounds like a lovely children's book. It's also the story of Walmart in the face of Amazon's growing domination. The historic retailer wanted to prove to itself and investors that it could fend off competition from ecommerce companies by beefing up its own online muscles.
If you haven't removed the tag, can you return it?... Walmart acquired a few key ecommerce startups the past few years (because that's easier than innovating itself) — but in the past couple weeks, it's trying to reverse those moves. Almost all of them.
2016: Jet.com is Walmart's 1st ecommerce pet, a purebred that cost $3.3B. But this summer, Walmart folded up all the Jet employees into Walmart corporate.
2017: Dude chino legend Bonobos was bought by Walmart for $310M. Yesterday it went slim-fit and announced dozens of layoffs.
2017: Extra faux vintage women's wear website Modcloth was acquired by Walmart just 2 years ago. Walmart already sold it last Friday.
Not sure when: Walmart incubated a fabulously unprofitable text concierge service for busy, high-end shoppers: Jetblack. Now it's looking for outside investors for the startup that loses $15K on every customer.The Takeaway:The reckoning for unprofitable companies just extended beyond IPOs... Ruthlessly efficient, Arkansas-based Walmart has a short patience. The old guard is annoyed that Walmart's ecommerce moves get all the media attention — those investments lose a reported $1B per year, while the old school stores quietly crank out profits. And profits are Walmart's north star. Sep 4, 2019 Walmart's new arithmetic: add dentists/therapists, subtract guns/ammo Read More Toothpaste or teeth-whitening?... Both. Last week, Walmart sneakily updated its website to reveal it wants to be a doctor when it grows up: Starting September 13th, a Georgia location will add medical services. This week, Earth's biggest retailer is taking a fresh stand: guns. Big one. Here's what's in and what's out:
Out: Walmart will stop selling handgun ammunition nationwide or any handguns in Alaska (the last state where it still does that). And it's politely requesting shoppers not openly-carry guns in its 4,700 stores.
In: Walmart's still selling deer rifles and shotguns.
"The status quo is unacceptable..." — Walmart CEO Doug McMillon. Both he and Walmart's founder were avid hunters. Plus, the chain enjoys 20% of all US ammo sales. Now he's expecting these policies to drop that market share to 6%. Two recent shootings within Walmart stores pushed these moves — here's how they fit in:
1990s: Walmart stops selling handguns south of Alaska.
2015: Stops selling assault-style rifles.
2018: Raises minimum gun-buying age to 21.
Last month: Yanks violent video game displays.The Takeaway:Corporate policies > Government policies... (lately). Investors have been rewarding companies that jump into political issues where consumers crave government action, but aren't getting it. Picture Nike with social issues, Starbucks with employee pay, or private Patagonia on the environment. Walmart saw gun standards as its "responsibility" — now it's even sending letters to Congress to follow. Aug 21, 2019 Tesla solar panels continue big week of news (bad and bad-er) Read More Every youngest sibling knows the feeling... Tesla sells electric cars, batteries, and "finally" (that's how Tesla puts it) solar panels. Elon acquired his cousins' startup SolarCity in 2016, but it's just 7% of Tesla's sales. Now Tesla will offer up SolarCity's rooftop solar panels to rent for only $50/month since sales have fallen for 3-straight years.
Burn me once, shame on me — Burn me 7 times... shame on Tesla. Walmart sued Tesla on Tuesday (not a typo). The megachain installed SolarCity panels to power some stores. The owner's manual didn't say anything about fires that Walmart claims they caused at 7 locations. Apparently Tesla didn't right the wrong, and now its shares are down 2% on the lawsuit.The Takeaway:Solar panels complete Tesla... Tesla's official mission is to accelerate sustainable energy. Electric cars are only truly clean if the electricity they drink comes from clean sources. Powering a Tesla with coal-powered juice is still dirty driving. Elon wants Tesla drivers to charge up with Tesla battery packs, powered by Tesla rooftop solar panels. Aug 16, 2019 Walmart becomes Wall Street's white knight Read More Needed that... Trade war drama has been hitting markets. Then Walmart reported earnings and dropped a mic — it's still the #1 company by sales in America (by almost 2x as much as #2).
You can shop for just about anything in this report... Investors took it as a signal that the tariff-palooza worries might not be as impactful as feared.
Revenue and profits beat expectations: They came in at $130B and $3.6B.
Ecommerce is Walmart's favorite child: The chain's epic 1-day shipping promise for 75% of the US population helped boost online sales up 37% (that's pretty good).
Offline shopping's not too shabby, either: Every store was cranking out sales numbers about 2.8% bigger than the same time last year. Plus, the white collars at Walmart think the next quarter will have equally strong growth.The Takeaway:Houston, we have no demand problem (yet)... We've got a paradox right now: economists and bond investors predict an economic recession, but you're seeing awesome econ stats like 3.7% unemployment and growing GDP. Because Walmart's so engrained nationwide, its numbers are another reading from the economic thermometer that things are healthy-ish in the economy. Aug 13, 2019 Nike unveils its 1st kids kicks subscription box: "4 pairs/year for $20/month" Read More If baby Jordan went back-to-school... he'd subscribe. A stealthy sneaker club startup called Easy Kicks has been delivering shoes to 10K member families. Turns out it was Nike all along. Easy Kicks just got rebranded as "Nike Adventure Club" for kids 2-10, and it's Nike's 1st-ever subscription service:
The tiers: 3 options — Get 4 pairs of sneakers per year for $20/month, 6 pairs for $30/month, or 12 pairs for $50/month.
The feel-good: Send back the kicks and Nike donates or recycles them.
The asterisk: Pediatricians say that's way too many shoes for even fast-growing kids.
Subscriptions — so hot right now... From Dollar Shave Club razors to Lola tampons, subscriptions guarantee recurring revenues for the biz and build brand loyalty (plus, customers don't have to shop/think anymore). Now, Kid-scriptions are gaining traction because they grow so fast (😭) they constantly need new stuff. Here's who else has boxes for size "24 months" up to "16 husky":
Walmart partnered up with kids' clothing startup Kidbox.
Foot Locker invested in Kidbox rival Rockets of Awesome.
Algorithm-powered fashion subscription Stitch Fix launched a kids version last year.The Takeaway:It's all about the upgrade... The biggest surprise for Nike was how offering different price tiers let users test it — and then commit. Intensely. Most began at the cheap $20/month option, craving more adorably small kicks. And then they paid up for the fancier tier ("just $10 more for 2 more pairs!"). Nike's pricing strategy was the real winner. Jul 4, 2019 Walmart vs. Jet.com: The old guard is now clashing with its ecommerce newbies Read More The "Sam Walton College of Business"... That's where Walmart CEO Doug McMillon got his BA. It's named after Walmart's founder, and the dress code is business pleated, not Silicon Valley untucked. And deep reporting by Recode has revealed that profit-focused retail types at Walmart are annoyed with its new ecommerce darlings.
Jet.com got acquired in 2016 for $3.3B... and it's appeared to put up big results. But it turns out many at Walmart resent Jet.com and the new techies on the block.
The positive PR spin: Walmart's got its mojo back. It's putting up a legit fight against Amazon and is even beating Bezos in some spots (it was first to offer free 1-day shipping).
The stone cold sober truth: Walmart's ecommerce efforts lose $1B per year. And Walmart only owns 5% of total online shopping in the US, behind Amazon's 38% (according to Recode).
The latest: CEO McMillan is telling Jet.com's Marc Lore to cut costs. But Jet.com founder-turned-Walmart-ecommerce-guru says they must actually increase spending if Walmart's serious about beating Amazon.The Takeaway:Growth vs. Profit... With tech changing so many industries, you find situations where companies have old-and-profitable divisions squabbling with new-and-growing ones. Managers need the profits now to fuel growth for tomorrow. But the clash of culture can kill morale (and make the old guard feel un-loved). That tension is playing out in plenty of places:
Walmart: Its physical stores made nearly $7B in profit last year, but we all know the future is online and omni-channel commerce (a combo of online and in-store).
Automotive: Gas-guzzling trucks/SUVs are making all the money, but management loves to talk about self-driving tech and electric cars.
News: Fox News and CNN are making bank on TV (political ads are their profit puppies), but the growth is in digital and mobile. Apr 17, 2019 Walmart's first subscription box: it's for kids Read More Fancy new onesie... Got it from Walmart, which just partnered with KidBox to launch its 1st subscription box for clothes. But it's for kids and "borrows" heavily from Stitch Fix's core business model: Fill out online personality/style quiz, then Walmart's human/algorithm stylists choose/send you clothing.
The price: 4-5 items per box, $48 per box (Walmart says that's 1/2 the retail price of the bundle).
The "Kid Quiz": Awkwardly select if your toddler is "City Cool," "Modern Casual," or one of their other kid types.
Your kids' dept. was this tall the last time I saw you!... The $203B kids clothing industry is growing faster than adult-wear. And the opportunity is even bigger because Gymboree and Toys 'R' Us recently went bankrupt, leaving toddlers with no fashion direction. It's not just Walmart jumping in:
Target's new kids line did $2B in sales in its first year.
Rent-The-Runway announced a kids line this month, and Stitch Fix's began last year.
Gap just tried a kids subscription box, but failed 😰.The Takeaway:"Subscription" isn't a defensible advantage... Birchbox created the subscription box concept 9 years ago. Blue Apron ran with it in meal kits. Both are now struggling as competitors jump in because launching subscription services doesn't require a major investment. Now Walmart (and even Amazon) boast algorithm-focused fashion subscriptions. Stitch Fix is on notice. Apr 9, 2019 CBD-focused New Age Beverage surges 39% on Walmart hookup Read More Sparkling water wasn't mindful enough... So New Age Beverage happened. It's leading the wellness beverage space with exotic kombucha-esque drinks. New Age shares surged 39% Monday as it signed a Walmart distribution deal — three low-sugar/carb/calorie Bob Marley-branded energy teas will hit shelves of Earth's biggest retailer.
The deal smelled of CBD... (but it was technically CBD-free). New Age bought the Marley brand in 2017. With the blessing of Bob's family and a partnership with a cannabis investment fund, New Age turned to CBD: The relaxing, psychoactive-less pot extract you see everywhere.
In January, New Age announced plans for a CBD-enhanced "Marley Mellow Mood" flavor within the next year.
Those 15.5-ounce cans would be filled with 25mg of "pharmacy-grade" CBD.
The CEO already projected $30M in sales nationwide in the first year of CBD Mellow's launch.
And you can already find Mellow on Amazon — But it's got no CBD. And there's a reason.
The Takeaway:One main factor affects New Age's CBD future... The federal government. While cannabis is legal in some US states, it's still not legal federally. That's an issue if you're distributing nationwide with, say, Walmart. May 31st is the FDA's public hearing on CBD foods, so New Age has its calendar circled. Until legalization, only CBD-free New Age drinks are included in the Walmart deal.