Topic: Retail
Xiaomi To Build Retail Stores and Smartphone Chips – Bloomberg / WSJ (Feb 10, 2017)
There’s a certain irony in a company which was a pioneer in its use of online retail falling back on brick and mortar stores as a way to shore up its business, but that’s what Xiaomi appears to be doing. It apparently wants to build 1000 stores in the next three years – roughly twice as many as Apple has globally, and 25 times as many as Apple has in China, by way of context. That’s a huge investment at a time when Xiaomi seems to be struggling, but physical retail is a good fit for the ecosystem of devices Xiaomi sells including both its own and its ecosystem devices for the home. Building its own chips is another big investment, and one that will likely take years to pay off – though it might establish some independence from current suppliers Qualcomm and MediaTek in the short term, the quality likely won’t be there from day one, so it’ll be interesting to see which of Xiaomi’s devices run its own chips – I’m guessing it’ll start by replacing MediaTek’s and work up from there. But it takes years to get really good in smartphone chips, and without an acquisition of existing talent here, I’m skeptical Xiaomi will do well anytime soon. Though Huawei is the local exemplar of this strategy, Apple and Samsung are still the gold standard for the make-your-own-chips strategy, and they’ve both been at it for years.
via Bloomberg (retail) and WSJ (chips)
Facebook closing 200 Oculus VR Best Buy pop-ups due to poor store performance – Business Insider (Feb 8, 2017)
One of the biggest challenges VR faces at this point is suggestions that it’s somehow failing to take off despite a big push into the mainstream, and that’s a narrative Business Insider has pushed before. This is where narratives are dangerous – the fact here is that VR is that VR is still in its infancy as a mainstream technology – other than the mobile flavors, it’s expensive, requires other expensive hardware, and there’s not a ton of content there beyond gaming. But if the narrative instead becomes that it’s fizzling as it attempts to break into the mainstream, that is a lot more damaging than merely talking about a technology that has small but growing adoption. VR can, however, already be fairly compelling as a demo, which is why it’s a blow that Facebook is closing these Oculus demo stations, because VR is really impossible to grok without trying it in person. But those trying to sell VR have to be very careful not to oversell it to mainstream users – it still has quite a long way to go before it crosses the chasm, and making it seem bigger than it is feeds this dangerous narrative.
via Business Insider
Netflix Plans New Toys, Merchandise Based on Hit TV Shows – Bloomberg (Feb 7, 2017)
This is an interesting but totally logical move from Netflix – I just listened to Disney’s earnings call earlier this afternoon, and was reminded once again of how big a chunk of revenue the company derives from merchandising (not to mention theme parks and other businesses which piggyback off characters from its movies and TV shows). I’ve already seen smaller tie-ins like King Julien showing up on my kids’ yogurt, and it sounds like Netflix has done some more direct merchandising with Hot Topic already too. So this is a very natural evolution, but it’s interesting to see Netflix describe this as mostly about marketing rather than driving a big new revenue stream. In time, it could certainly achieve both, and that’s another helpful way to offset some of the big spending on original content.
via Bloomberg
Target has stunned its employees by suddenly shutting down two big innovation projects – Recode (Feb 2, 2017)
Amazon got lots of attention around its Amazon Go store concept a few weeks back, though it’s still an extremely limited pilot program. Target, on the other hand, seems to have just killed off its own similar initiative out of nowhere. It’s obviously tempting to view this as some kind of response to Amazon’s moves, but given Amazon’s tiny presence in physical retail it seems far more likely Target simply felt the project wasn’t delivering meaningful results and its innovation budget was best spent elsewhere. Having said that, if physical retailers can’t at least attempt to compete with Amazon in innovating on their home turf, it doesn’t bode well for their ability to stand up to it more broadly.
via Recode
Snapchat NYC Spectacles store is mostly empty – CNBC (Jan 26, 2017)
Snap’s foray into hardware coincided with its new company name, and the marketing strategy for the Spectacles was genius – very short supply combined with a sales model that made availability even narrow by focusing it on single vending machines that moved around, combined with a single permanent store in New York City. However, it’s becoming apparent now (if it wasn’t obvious from the start) that Spectacles aren’t going to be massive sellers. Yes, hundreds of people lined up early on to buy them, but the crowds have now disappeared. I’m somewhat surprised Snap hasn’t put Spectacles up for sale anywhere else yet – it’s still basically impossible to buy a brand new pair at list price unless you live in or visit NYC or happen to be in one of the other places where the moving machines have turned up. That suggests, though, that this move into hardware was more experimental than strategic, and raises the question of whether we’ll see more of this from Snap in future. There’s certainly potential for some interesting new functionality around AR in future versions, but there are few indications at this point that Snap has any big plans.
via CNBC
Target plans to introduce its own smartphone payment service in stores later this year – Recode (Jan 24, 2017)
The fragmentation of mobile payments continues – following in the footsteps of other big retailers, Target is going to roll out yet another proprietary mobile payment system in its stores, rather than merely supporting the two or three store-agnostic mobile payments systems that already have decent traction. The motivations are obvious – control the user experience, capture the data, and drive loyalty – but the user benefits are always minimal, and uptake has generally been minimal too. We’re still at an early stage in mobile payments with no obvious winners yet, but it’s already fairly clear that this kind of store-specific approach isn’t going to be part of the eventual solution.
via Recode
Target Announces November/December Comparable Store Sales Down 3% – Target (Jan 18, 2017)
This is Target’s preliminary press release for fourth quarter sales, which provides November/December comparable sales data in percentage growth terms, and the picture isn’t great. Comparable store sales were down 3% year on year for the last two months, and even though digital (online) sales were up 30%, that couldn’t make up the difference, and total transactions were flat while fourth quarter revenue will be down. The reason is that digital sales still make up only a tiny minority of Target’s overall sales – 5% in the 2015 holiday season, so a lower share than e-commerce’s overall share of US retail sales. That number will certainly be higher for 2016, but it highlights the challenge all big brick and mortar retailers have to face in Amazon: even if they’re able to match its strong growth in online sales, their physical retail operations still take an even bigger hit.
via Target 2016 Holiday Sales Press Release
To take on Amazon, Walmart is streamlining its retail and web teams – Recode (Jan 13, 2017)
Every story about Walmart (or any other brick and mortar retailer) rejigging its e-commerce arm is bound to be seen in the context of Amazon’s dominance of the space, and Walmart has famously struggled in e-commerce despite its massive scale. At least two of these moves are about consolidating leadership of online and offline retail domains, which is a logical step (and one that Apple, for example, took a couple of years ago). Others reflect ongoing hiring from outside Walmart to strengthen its leadership team, and it looks like Jet is also being further integrated into the company, which was inevitable. Walmart won’t report its December quarter earnings until February 21st, but it will be well worth watching what impact, if any, Jet is said to have had on its performance.
via To take on Amazon, Walmart is streamlining its retail and web teams – Recode
Amazon to Launch Credit Card for Prime Members – WSJ (Jan 11, 2017)
This is yet another example of Amazon pursuing its flywheel strategy of reducing friction and providing incentives for people to spend more time and money on Amazon. The 5% cash back feature for Amazon purchases will be compelling for many people, since it’s basically free money for things many of them would already buy there, but since it’s a higher percentage than for purchases made elsewhere, it may also shift some buying to Amazon. This is a smart move and I’m curious to see how many people sign up for this (something we will of course have to rely on third parties to tell us).
via Amazon to Launch Credit Card for Prime Members – WSJ
Best Buy launches cord-cutting campaign with website & how-to video – Rich Greenfield (Jan 10, 2017)
This move by Best Buy is both notable and clever – notable because it swings one of the biggest consumer electronics retail brands behind cord-cutting, and clever because Best Buy is selling far more than just online subscriptions here. It’s using the cord-cutting umbrella to sell lots of gear too, from wireless routers to antennas, and even offering to help with installation through Geek Squad and how-to videos. Stuff like this is just going to accelerate cord-cutting even further, pushing it closer to a tipping point where it will cause enormous disruption in the TV industry.
via Rich Greenfield on Twitter
Amazon Prime membership approaching 50% of US households, says Baird – Twitter (Jan 6, 2017)
This report from Baird’s retail analysts cites its own survey on several points around selection and Prime. It estimates that there are 55-60 million Prime households in the US, out of around 125m total households. Some of the biggest expansion categories in selection are apparel, office/industrial, and home/kitchen, where Amazon has historically been weaker. There are tons of other data points in the linked report, which is well worth a read.
via Carl Quintanilla on Twitter
Walmart has acquired a Zappos competitor to boost Jet.com’s shoe business – Recode (Jan 5, 2017)
Walmart has been hard hit by Amazon’s success and dominance of e-commerce, but has lately been taking more proactive steps to fill gaps in its own e-commerce portfolio, using its Jet acquisition to make further buys. Given the sheer number of small- to medium-sized e-commerce plays out there, Walmart can easily snap up these focused providers and roll them up into its broader e-commerce offering, accelerating its efforts to become more competitive with Amazon.
via Walmart has acquired a Zappos competitor to boost Jet.com’s shoe business – Recode
Fulfillment by Amazon Delivered More than 2 Billion Items for Sellers Worldwide in 2016 – Amazon (Jan 4, 2017)
This is one of those Amazon press releases with very few real numbers and lots of relative ones, but those numbers are still impressive. Fulfillment by Amazon (FBA) is about half of third party seller units on Amazon, which in turn are about half of total unit shipments, so Amazon likely sold around 8 billion total units in 2016. Growth rates for FBA and seller units are higher than overall growth rates, because both are growing as a percentage of total sales, but this still suggests very high growth for Amazon overall in Q4. We’ll know more in a few weeks, of course, when Amazon reports earnings.
via Amazon – Press Room – Press Release
Amazon plans to sell its own line of workout clothes – Recode (Jan 4, 2017)
Taken together with the news that Amazon is one of the potential bidders for American Apparel, this is yet more evidence that it’s very serious about the clothing space. Activewear is one of those categories where some people definitely care about brands and are willing to pay for them, but others just want functional clothing at a decent price, and Amazon could do very well among the latter segment. The rise of activewear at stores like Gap and sister company Old Navy over the last several years is a great illustration of this opportunity, and Amazon is smart to try to tap into it.
via Amazon plans to sell its own line of workout clothes – Recode
Flipkart salaries: Documents reveal high pay of employees at bleeding Indian startup — Quartz (Jan 4, 2017)
In case you’re not familiar with it, Flipkart is the big homegrown competitor to Amazon in India, where the two companies are going head to head in an aggressive fashion, paying (according to this article) high salaries, but more broadly losing lots of money in the process. Amazon, of course, has deep pockets filled by its businesses elsewhere and more recently by AWS, whereas the Indian business makes up most of Flipkart, so if this becomes a game of chicken, Amazon may well come out on top.
via Flipkart salaries: Documents reveal high pay of employees at bleeding Indian startup — Quartz
Amazon India is letting users sell their old products – Mashable (Jan 2, 2017)
This is an interesting new angle from Amazon as it tries to compete with homegrown competitor Flipkart in India. It’s a good example of Amazon’s flexibility in responding to local conditions in markets outside the US – unlike some other big tech companies, it’s not rigid about a particular business model, and instead experiments as necessary to find the right products and strategies to make each market work. It’s still an uphill battle, however, in many of these markets, notably China, while it does seem to be making progress in India.
via Amazon India is letting users sell their old products – Mashable
Amazon beat competitors in a new way this holiday season: Money spent on TV ads – Recode (Dec 29, 2016)
Most of the big online companies have eschewed traditional advertising in the past, and yet that’ starting to change – Google now spends money promoting its hardware, among other things. And Amazon is now spending increasing amounts – and more than Walmart or Target – during the holiday period. That can be read as a sign of confidence, but more likely it’s a sign that Amazon feels the need to reach out to new users (the 17%) to drive growth, which in turn may be a sign of a user base reaching saturation point.
via Amazon beat competitors in a new way this holiday season: Money spent on TV ads – Recode
Amazon patent reveals its drone-deploying flying warehouse plan (Dec 29, 2016)
With the usual caveat about not assuming a patent filing implies immediate (or even any) intention to build something, this is another fascinating step in the evolution of Amazon’s logistics operation. Logistics are vital to Amazon’s ability to do what it does, and a small competitive edge driven by innovation pays off in big ways. Definitely looks like a better use for a barge than Google’s ill-fated Glass showroom.
via Amazon patent reveals its drone-deploying flying warehouse plan
Not Everyone Wants to Shop on Amazon – WSJ (Dec 29, 2016)
Though the thrust of this piece is that there are lots of people who don’t shop on Amazon, for a host of interesting reasons, the flip side is that 83% of shoppers do use the site at least annually, while over half use it at least monthly. That’s an amazing reach for a single retailer, and Prime of course is intended to drive people from occasional to regular use. That 17% holdout rate is down from the high 20s just five years ago.
via Not Everyone Wants to Shop on Amazon – WSJ
Big Growth in Tiny Businesses – WSJ (Dec 28, 2016)
Online retail is creating opportunities for new kinds of businesses – very small ones, often with a single employee who’s also the owner, across all kinds of fields, including food, manufacturing, and chemicals (including soap and perfume).
via Big Growth in Tiny Businesses – WSJ