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.
Jul 18, 2019
Amazon's (record) Prime Day highlights its defining strategy: the "flywheel" Read More Even Siri knows it... Sales on Amazon's Prime Day surpassed both its Black Friday and Cyber Monday. Combined. A record 175M items were snagged — up 75% from last year. Some of that's thanks to T-Swift's kick-off concert, most is from the 18 countries now taking part. Here are your worldwide best-selling items (straight from Amazon's brag sheet):
US: Personal water filter straw, 23andMe ancestry kits.
UK: Sony PlayStation (FYI, Mexico loved Nintendo Switch, while Australia's top-seller was Mario Kart 8 Deluxe).
China: Dove exfoliating scrub.
Italy: Nescafé espresso (classic).
Germany: Some very, very practical stainless steel pans.
Add "Halo Effect" to the shopping cart... That's the impact Amazon's mid-summer splurge-fest had on the rest of retail as everyone launched their own mini-sales.
The positive: Sales surged 68% at big non-Amazon retailers and 28% at small ones.
The negative: Discounts drove those sales — retailers desperately race to the bottom on prices on Prime Day. Great for us, not really great for the companies.The Takeaway:"Flywheel effect" is bigger than "halo effect"... The flywheel is what Amazon biographer Brad Stone called the company's "secret sauce" — the self-reinforcing wheel that Prime Day is now a spoke in. Here's the cycle: Prime members shop big on Prime Day (to justify the $119/yr membership) and they bought Alexa products for their homes — Echo Dot and other voice assistant products were the top sellers this week. Now those primers will do even more with Amazon, thanks to Alexa's help.
Jun 13, 2019
CrowdStrike surges 71% on IPO day Read More When the DNC was hacked by Russia pre-election 2016... CrowdStrike was there. The cybersecurity company that protects against hacks discovered the breach, told the FBI, and then snagged a lot of PR. Now it's earning attention for its IPO — Shares surged 71% in their first day of trading and CrowdStrike is worth almost $12B (aka 2/3 as much as Lyft).
Who ya gonna call?... Probably one of these companies. The attention on CrowdSource reveals how packed the competitive landscape is for securing your digital stuff (work and home):
Personal: LogMeIn owns LastPass, keeping your "!-2-3-4" passcode less obvious.
Home: ADT, Brinks, and Alarm.com are all on guard.
Business: Palo Alto Networks and FireEye are always at work (competing with CrowdStrike).
Side-hustlers: Their core biz isn't security, but Google's Nest covers your kitchen, while Amazon's Ring doorbell has the front porch.
The Takeaway:Bikes need bike helmets... As internet adoption grows, so does the data generated along with it — And each bit of data probably needs protecting. The rise of tech is driving the cybersecurity industry that guards it. CrowdStrike (and its 5X revenue growth since 2017 to $250M) is happily caught in that trend.
Jun 28, 2019
Data shows Amazon ships almost half its packages ITSELF Read More When you track every Amazon package for 2.5 years... you learn juicy details. Data-obsessed company Rakuten found that the percent of Amazon packages delivered by Amazon rose from 16% in 2017 to 48% today — The US Postal Service ships 33%, UPS has 17%, and FedEx covers under 2%. All of Amazon's gains over that span were at the expense of the Postal Service (just as Trump started demanding Amazon pay more for mail).
How'd it happen so fast?... A combo of strategic under-the-radar and high-profile shipping fleets:
Amazon Flex: Lets gig workers deliver packages in their own Honda Civic delivery coupe à la Uber/Lyft, making $18-$25/hour.
Amazon Delivery Partners: Amazon entices local entrepreneurs to start micro-delivery companies to handle last-mile delivery of packages to stoops across their hometowns.
Amazon Now: Those Amazon-branded vans that can deliver to a bar within an hour.
Amazon Locker, Amazon Counter: Deliver a bunch of things to 1 spot, like a student center or a Rite Aid (that partnership was announced yesterday), letting customers carry their stuff home.
Planes (Amazon just leased 15 at the Paris Air Show), drones (arriving "within months"), and a $1.5B air hub in Kentucky.The Takeaway:Let the competition give you data, then beat them with it... Amazon's relationship with a bunch of partners shifted from friends to frenemies to enemies — It partnered up at first, but eventually used partnership data to do it better itself. Amazon's done that with physical stores (Amazon Go) and even video (Amazon Original films). And according to Rakuten, Amazon-delivered packages take 3.2 days on average. Everyone else takes 6.
Jun 12, 2019
Amazon shuts down "Amazon Restaurants" — Grubhub celebrates with 8% jump Read More Apparently Amazon fails at some things... The company's restaurant delivery service, uncreatively-named Amazon Restaurants, will end on June 24th — The 1-hour meal delivery for Prime members is over. Now "Restaurants" gets to join the rarely-discussed club of Amazon un-successes:
Amazon Fire: A smartphone. 2014-2015. RIP.
Destinations: An attempt to get into the travel bookings game. Shut down the year it launched.
Dash Buttons: $5 gadgets you press to auto-order more things, like Tide. Barking at Alexa turned out to be easier.
And now, Amazon Restaurants: It was tiny — Just 20 cities and 2% of the overall market.
90% of the food delivery market... is devoured by 4 companies: Grubhub, Uber Eats, DoorDash, and Postmates. Word that Amazon canceled its delivery plans popped Grubhub shares 8% Tuesday (shares of the others are either private or complicated by Uber's ride-share majority business). Amazon's not completely out, though — Last month it led a $575M investment in UK-based deliverer Deliveroo.The Takeaway:Amazon clearly didn’t promote Restaurants enough... And we found a key example that highlights that: Fast food partnerships. Uber Eats delivers for McDonald's, DoorDash has Wendy's, and Grubhub handles Taco Bell. Amazon didn't invest in driving growth to its own service, so it'll invest in startups to do that instead.
Sep 17, 2019
A secretive Amazon team reportedly tweaked its core algorithm (and violated Amazon's #1 principle) Read More The greatest digital real estate on Earth... is Amazon's search results. And a WSJ investigation alleges that Amazon tweaked its core search algorithm last year to boost sales of its own products. These stats about Amazon's subtle-yet-powerful search feature humbled our souls and scream the key context:
Nearly half of all online purchases in the US are on Amazon.
66% of all purchases on Amazon are from items in the 1st page of Amazon search results.
20% of Amazon purchases are whatever was #1 in the search results.
Does the name “A9” mean anything to you?... Stands for "Algorithm" (and there are "9" letters in it). A9 is the Amazon division responsible for Amazon Search — and because that valuable search tool is ripe for corruption, Amazon keeps the team away from the Seattle HQ in Silicon Valley as a subsidiary company with a separate CEO. Here's what the WSJ discovered:
A9's core mission is to "get the best results for our users."
But Amazon's retail arm back home in Seattle wanted to push more profitable products to the top of search results — not necessarily the best products for customers.
So they pressured A9 to tweak the algorithm to increase sales of its own products and 3rd party ones it can make more money off.The Takeaway:This breaks Amazon's core rule: "Customer Obsession"... And could be unlawful since Amazon should be an unbiased marketplace, not a retailer pushing its own brands. But Amazon may have ignored its own laws: Its 14 leadership principles — this story violates the very first one. If Amazon tweaks search results to benefit Amazon, it's not benefiting you and us as customers.
Fun SnackFact: After the WSJ published the report, the A9 website was taken down. Awkward.
Aug 29, 2019
Amazon's Ring security cameras team up with 400 police departments Read More Pranks just got harder... Over 400 police departments (these ones) can now ask Ring security camera owners for help cracking a crime. Amazon acquired Ring last year for $800M, then connected the doorbell-camera security startup to its own Neighbors app — Now Ring shows you, or the police, who's knocking.
Don't panic... You've got to opt in first. But here's how it goes down. The Neighbors app lets Ring-owners open up the video feed of their front stoop for all to see. Then "neighbors" (as Amazon calls the users) could get this request from local police: "There was a burglary this morning on 240 Spruce Street — you got video footage?" Got Ring? You might.The Takeaway:Nearly every new tech product has a privacy issue... Amazon made phone-connected home security a scalable thing — Ring became a Prime Day bestseller. Now catching package thieves in the act is the next reality TV hit. But Ring's relentlessly un-blinking 24/7 footage is just another front in the tech privacy battles:
The customer benefit: Protect your home, your neighborhood, and help the police catch "the Wet Bandits."
The social downside: Record your unwitting neighbors, potentially start over-reporting unsuspicious activity, and possibly get your feed hacked into.
Oct 1, 2019
Amazon's targeting airports, baseball stadiums, and movie theaters with cashier-less "Go" tech Read More 1 bucket of popcorn, 1 large DP, and don't miss the previews... CNBC reported that Amazon is in talks with airport convenience stores (CIBO Markets), movie theaters (Regal Theaters), and stadiums to license its Amazon Go cashier-less tech. Scan your phone when you enter, take what you want, leave — your Prime account gets charged, you don't miss the touchdown.
Amazon is the master of customer adoption... This tech is freaky (we've tried it). Cameras and sensors are all up in your space (and humans aren't). But Amazon's rolling this out to customers thoughtfully and gradually, first to those most-likely to adopt:
Early adopters: Amazon's got 16 of its own "Go" stores, visited by city-dwellers eager to brag to friends about the lack of lines.
People in a rush: If your flight already started boarding, you'll love not waiting 10 minutes in line for a pack of gum.
Mainstream: Amazon could add thousands of "No-Go" stores (that's what we're calling non-Amazon stores using Amazon Go tech), making friends out of would-be retail competitors. Amazon wants hundreds of these by 2020.The Takeaway:Software is way more profitable than physical stuff... Amazon's ecommerce operation ships a massive 10B products per year. But its way-smaller Amazon Web Services is the profit puppy, making over 50% of company profits through cloud services. Two tech companies in today's Snacks are following similar strategies:
Driver brains: Waymo is selling its self-driving software to carmakers (but not actually making cars itself).
Cashier brains: Amazon could sell human-less cashier and payment software to retailers (but not actually making stores itself).
Sep 20, 2019
Amazon commits to carbon neutrality — then orders 100K electric delivery vans Read More If you're on time, you're late... If you're 10 years early, you're on time. Amazon CEO Jeff Bezos took Amazon from loser to leader in the fight against Climate Change, the day before the Global Climate Strike (which is today).
Loser: Amazon transports 10B packages/year with fuel-burning planes and trucks in way-bigger-than-necessary boxes-within-boxes (plus packing peanuts).
Leader: It just co-founded "The Climate Pledge," to achieve the ambitious goals of the Paris Climate Accord 10 years ahead of its 2050 deadline. (FYI — The US is the only country in the world not in on the global pact to save the planet).
2 goals: Carbon neutral by 2040 and 100% renewable by 2030... Here's how Amazon's planning to un-do all its carbon footprints:
Keep investing in renewable: Jeff offered up a map of Amazon's solar and wind facilities (it's already 40% renewable).
Reforest the forests: Plant millions of trees, which inhale CO2 and exhale oxygen. #bio101
Buy 100K electric delivery vans: Amazon's an investor in Rivian (based in Plymouth, MI), which will deliver Amazon its first all-electric cargo van in 2021 (pic here).The Takeaway:The purpose of a corporation has changed... Until this year, companies were officially supposed to look after profits only. But the Business Roundtable changed this summer to become less narrow-minded — Amazon is taking care of other stakeholders besides shareholders with this move. Like the planet, and those who live on it.
Sep 26, 2019
Amazon challenges rivals with Alexa-infused everything (and a 1-mile-radius tech cloud) Read More So. Many. Connected. Gadgets... Another Alexa-palooza arrived yesterday from Amazon HQ in Seattle. Bezos & Co. whipped up 15 Alexa-fluent devices. Some totally new, some just improved:
Echo Studio: A $199 smart speaker, challenging Apple HomePod and Sonos (the speaker icon's stock fell 5%).
Amazon Sidewalk: Basically extends your wifi signal 1-mile for low connectivity devices, like a dog tag (aka "Echo Fetch").
New voices: Samuel L. Jackson is voicing over Alexa, with more celebs to fill the airwaves (each costs $0.99).
Apple & Google have 1 advantage in the voice assistant wars... Smartphones — you've probably got Siri (iPhone) or Google Assistant (Android) in your pocket. Now you can take Alexa to-go:
In the car: GM announced all models will support an Alexa app.
In your ears: Echo Buds — The AirPod knockoffs are cheaper ($129), but don't look as sharp.
On your face and on your finger: Echo Frames and Echo Loop let you ask Alexa questions and listen for her responses through glasses and a finger ring (these last two are so new they're available by invitation only).The Takeaway:Alexa's goal = make you 1% more Amazon... These devices might not make Amazon money at first. Long-term, Amazon's putting Alexa everywhere so you're that much more likely to be loyal to Amazon or even order through Alexa via voice (aka "v-commerce"). If the percent of your paycheck going to Amazon rises from 20% to 21% because of Alexa, that's a win.
Aug 30, 2019
Disney sells YES Network to the Yankees, Sinclair, and *Amazon* Read More Now batting, for the New York Yankees... Jeff Bezos. In one of the final chapters of the Disney-acquires-Fox saga, Disney officially sold the YES Network Thursday to the NY Yankees, Sinclair Broadcast Group, Amazon, and some other investors. Here's what they're buying:
YES is the TV channel with rights to broadcast the Yankees, Brooklyn Nets, NY Liberty, and NYC FC teams.
And it's worth $3.7B because New York sports have global appeal despite local frustration.
This Disney & Fox deal goes way back to 2017... That's when Mickey started a bidding war against Comcast to acquire 21st Century Fox, which included X-Men, Fantastic Four, The Simpsons, Avatar, 22 regional sports networks, and the YES Network. The Justice Department allowed the merger on 1 big condition:
The requirement: Disney can add all those big names, but only if it sells the sports channels and YES — otherwise it would have too much media power.
Sports translation: LeBron and Kobe can be on the same team, but only if they trade away Steph to another one.The Takeaway:Amazon's now the proud 15% owner of YES Network... It hasn't said what it will do with that — But we're all hoping for the Yankees to be a #PrimePerk. Amazon Prime Video has already done deals with the NFL's Thursday Night Football and the Premier League. CEO Bezos won't offer up details yet, but it's already generating HQ2-style speculation. 
