Spooky Season Treats

Happy Halloween y’all!

In the spirit of Halloween, instead of giving out candy (because covid), I’ll be giving out quick headlines that I found interesting over the past week or so. It’s pretty much a ICYMI, treat or trick edition.

1. Nestle is acquiring Freshly, the NYC based meal kit startup for $1.5B ($950M plus potential earnouts of up to $550M based on future growth). I haven’t followed the meal kit market since Blue Apron went public but I do remember there was a lot of competition in the space. Between Freshly, Blue Apron, HelloFresh, it felt like there were more and more meal kit startups every other day. It’s good that Freshly got acquired – if they went public they will likely go through what Blue Apron is facing right now.
   
   
2. A week ago, ThredUp filed for an IPO and is aiming to get listed early next year. ThredUp is an online retailer that sells second-hand clothing. Poshmark, a competitor is also aiming to going pubic. The digital resale market is hot, expected to grow 27% this year to ~$9B in sales and could quadruple by 2024.
   
   
3. Amazon launched a program that pays consumers for information when they purchase outside of Amazon.com. Participants in the program will be able to use the newly launched Amazon Shopper Panel mobile app to take pictures of paper receipts or forward emailed receipts to earn $10 rewards that can be applied to their Amazon Balance. Users will also be able to earn additional rewards each month for completing surveys or give feedback on what they think of an ad.
   
   Definitely an interesting way for Amazon to collect data on consumers and I can see a lot of consumers okay with sharing information with them because they get something in return. Of course, Amazon will likely use the data to improve product selection on their site, build models about which groups of customers are interested in certain products, etc.
   
   Right now, the program is opt-in and invite only in the US. Sign me up! (so I build up my Amazon balance).
   
   
4. While retail stores are closing down because of the pandemic, Spirit Halloween is back and they opened more than 1,400 stores nationwide – more than last year! Even with Halloween being a bit different this year, it’s crazy that Spirit has seen “encouraging initial results”. Steven Silverstein, a Spirit chief executive anticipates Halloween to be on par as last year.
   
   Ending the list with a Halloween related treat. Hope everyone has a safe Halloween this year!

Amazon’s Palm Recognition Tech

I had to hold myself back from writing about watches again this week. Maybe it’ll just be part of my blog moving forward.

Remember when tapping your credit card to pay or Apple pay was such a revolutionary thing? Guess what, no one cares about that now – the future of contactless payments is arriving sooner than you think.

Earlier this week, Amazon introduced Amazon One, a checkout experience that allows shoppers to pay by scanning their palms. Amazon has already introduced its palm recognition technology in two of its cashierless convenience stores in the Seattle area.

How it works:

1. The first time a shopper goes to an Amazon One terminal, they’ll scan their palm and enter their credit card info
   
   
2. Every trip after that, it’s a one palm pay (couldn’t think of a clever way to give a nod to Amazon’s 1-click order)
   

Apparently, Amazon chose palm recognition because it’s more private than other biometric technology. Every palm is unique like the human fingerprint. I guess it’s easy for a machine to read a palm that’s being flashed vs a fingerprint where you have to press your finger down? No idea.

With its new technology, Amazon sees a broad use of its palm recognition technology. Imagine it being deployed to offices, stadiums, and even the MTA? No need to carry any cards around anymore. Which I strongly prefer because I can recall a couple of scenarios where I forgot my wallet at home.

Of course, Amazon will start using its technology in their own stores first, but they will eventually sell the tech to third party retailers – which is a great way to add another revenue stream. With COVID, it sped up the adoption of contactless payment and now 67% of retailers accept some form of no-touch payments.

We’re one step closer to the future! Playing devil’s advocate with myself, does this mean that there will be even less privacy for consumers? Amazon said that palm scans are safer than other forms of biometrics because a photo of a handprint can’t identify a person like a selfie can, but what if that information leaks? Even if it doesn’t… that would mean that Amazon will be able to collect even more data of shoppers from retailers that choose to use Amazon’s technology.

In an ideal world, all of this new technology is amazing. Sadly, there’s always drawbacks in some form or another.

Walmart Testing Drone Deliveries

What’s one good thing about living in the suburbs? No it’s not having a pool or having waaaaaay more space. It’s being able to get your package delivered by drones. Walmart has launched a small pilot program in Fayetteville, NC and started making its first deliveries by drone.

Walmart is joining a cohort of retailers that are testing drone deliveries and there’s no better time to test as there are more online orders and people preferring contactless delivery. Let’s see:

• Walmart is partnering with Flytrex for its on-demand drone delivery
  
  
• Amazon has its own autonomous drone service, Prime Air
  
  
• Walgreens is working with Alphabet’s Wing
  
  
• To my surprise, UPS and CVS are teaming up to deliver prescriptions in Florida

If you live in Fayetteville, NC – you can now have drones deliver select grocery items and household items from Walmart. You’ll be surprised at how fast these drones are. Flytrex’s drones can fly up to 32 MPH, traveling up to 6.2 miles round trip and carry up to 6.6 lbs. Can you imagine a future where there are millions of packages being delivered by drones?

I highly doubt that that future is coming soon. Before retailers can even think of testing and deploying drone delivery services, they need the thumbs up from the Federal Aviation Administration. Once they get approval, they are limited to less populated areas because of consumer safety.

There’s going to be some time before we get drone delivery in cities like NY and if you want furniture delivered, there’s no drone that can carry that for you.

Microsoft + Walmart for TikTok?

This week, Walmart confirmed that they are partnering up with Microsoft in a bid for TikTok. What a great way get a bump on that $WMT.

So you might wonder why does Walmart want an app full for cringe-worthy content? (Okay, some of the content can be addicting to watch).

• TikTok’s integration of ecommerce and advertising via shoppable ads for influencers. Social shopping has been on the rise and for Walmart, having partial control of TikTok means a slice of that advertising revenue and first dibs on shopper insights.
  
  
• A scenario where TikTok could be part of Walmart+, its subscription service that will compete against Amazon Prime
  
  
• TikTok’s 100M monthly active users in the US for Walmart to tap into to grow its advertising business (WMG).

We could also be seeing a scenario where Microsoft & Walmart using TikTok to go head to head with Instagram.

ByteDance hasn’t chosen a buyer yet – will it be Microsoft/Walmart or Oracle? Would it be someone else? Either way, $20-$30B for TikTok’s operations in the US, Canada, Australia and New Zealand is a lot of money and the news of the finalize deal is coming.

DoorDash launches DashMart

Back in April, DoorDash announced that it was going to deliver from convenience stores like 7-Eleven, Wawa, etc. DoorDash has partnered with more than 1,800 convenience store locations across the U.S to provide easy household essentials like toilet paper, cleaning supplies, snacks and everything else you can think of that they have in a 7-Eleven. This new service came at the perfect time, when the pandemic was sweeping the nation and everyone was quarantined at home – fighting for bulk orders of lysol and toilet paper.

Earlier this week, DoorDash launched its own convenience chain, DashMart. DashMart will be selling snacks, groceries and other food-related products from partner restaurants online. Yup, you heard it right – it’s an on convenience store with no brick and mortar presence. It only exists on the DoorDash app, kind of like all the ghost kitchens you hear about in food delivery apps.

DashMart is only available in 8 cities in the US and is planning to expand to more locations starting with a broader expansion in California. We all know that DoorDash is great at food delivery and now the company has eyes on another opportunity – being a logistical partner and provider for more than just fresh-kitchen food delivery. This new offering will give it an edge among its competitors like UberEats. Grubhub and Postmates.

We might start seeing rival delivery services in do something similar in the future. I can imagine InstaCart or UberEats opening up their own version of a DashMart.

Launching Competing Products 101

You probably heard about how Amazon have used data from independent sellers who sell on the platform to develop and create competing products for their own private label business.

Two days ago, WSJ wrote an article of how Amazon’s venture-capital fund (Amazon Alexa Fund) made investments in startups and then launched competing products as they gained access to the confidential information.

According to some entrepreneurs and investors interviewed by WSJ, Amazon would take advantage of the investment and deal-making process by:

1. Launching a competing product against a company that it invested in
   
   
2. Meeting with startups about potential takeovers, sought to understand how their technology works, not invest and introduce similar Amazon-branded products

There were a couple of examples that the Journal wrote about, but the one that stood out to me was when the Alexa Fund bought a stake in Nucleus in 2016. Nucleus made home-video communication devices that were integrated with the Alexa voice assistant. After the deal was made, the Alexa Fund got access to Nucleus’s financials, strategic plans and other proprietary information.

8 months later, Amazon announced its Echo Show device which pretty much did the same things that Nucleus’s product did. Some of the investors and people involved in the deal said that Amazon assured them and Nucleus’s leadership that the company wasn’t working on a competing product and that there was a firewall between the Alexa Fund and Amazon itself – which clearly wasn’t the case.

Once the Amazon Echo began to sell, Nucleus devices pretty much declined into oblivion. They were sold at major retailers such as Home Depot and Best Buy, and retailers stopped placing orders once the Echo was released. The crazy thing was that Nucleus threatened to sue and it was all settled for $5M without Amazon admitting wrongdoing.

The highly anticipated antitrust hearing that Jeff Bezos will be testifying (along with other big tech CEOs) have been postponed. I wonder what’s going to come out of it.

Move Aside Amazon Prime, There’s a New Membership in Town.

This week, Recode reported that Walmart will be launching a subscription service called Walmart+ later this month to compete with Amazon Prime. Walmart+ will cost $98/year and will include same-day delivery (for groceries as well), early access to product deals and more.

Apparently more than half of Walmart’s top spending families also have Amazon Prime memberships which is probably one of the main reasons for the launch of Walmart+.

Here’s what we know about Walmart+ so far:

• $98/year membership vs Amazon’s $119/year
  
  
• Unlimited same day delivery for groceries and general merchandise
  
  
• Reserved delivery slots and open-slot notifications
  
  
• Access to Walmart’s new Express 2-hour delivery offering (not unlimited)
  
  
• Perks like discount on fuel at Walmart gas stations, early access to deals, Scan & Go service that allows shoppers to check out in-store without waiting in line.
  
  
• Potential video entertainment component… which makes sense because Amazon Prime gives you Amazon Video. Not sure how this would play out as Walmart was selling Vudu.

My initial thought: there’s a lot of potential for Walmart+ to be successful. Online grocery delivery has been booming during this pandemic and Walmart happens to have a huge advantage over Amazon on the grocery front. Most consumers also think that Amazon has the best deals but thats not necessary true. That might explain the reason why Prime users do less price comparisons across different sites. Personally I often find better deals on Walmart than Amazon when it comes to big purchases like laptops and TVs.

What I’m concern about is how Walmart+ membership perks would differ across different regions of the US. In New York City for example, there aren’t any Walmarts nearby. Would NYC Walmart+ members be able to reap the benefits of same day delivery for Walmart groceries? I tried to order groceries from Walmart and it just wasn’t available to me.

Amazon may have a 15 year head start on Walmart, but in this on-going retailer battle we need Walmart to continue to apply pressure. We can’t let Bezos take over the world.

Lululemon Acquires Mirror

Lululemon has announced that they are acquiring the in-home fitness startup Mirror for $500M yesterday. The company has invested $1M in Mirror last year. For those who are not familiar with Mirror, the startup makes wall-mounted interactive mirrors that allow you to access live workout classes and on-demand workouts.

The Mirror itself costs $1,495 plus a $39/month subscription for the workout classes. (Slightly cheaper than Peloton’s $2,245 bike while the monthly subscription is on par with Peloton’s higher tier subscription ($39/month while the lower tier subscription is $13/month).

This is Lululemon’s first acquisition and it makes a lot of sense as the company is making athleisure into a lifestyle. We all know about the Lululemon’s cult following – from yoga pants for women and ABC pants for men. If you haven’t tried Lululemon’s ABC pants, it’s a game changer… I’m guilty of having six pairs… Last year Lululemon even launched personal care products so you know that they want to be more than just the clothes that you wear when you work out.

It’s a good time for Lululemon and Mirror as gyms remain close across the nation because of the pandemic. Peloton’s latest quarter earnings was strong with sales surging 66% YoY to $524.6M and subscribers up 96% YoY. While Mirror only has “tens of thousands” of users there’s a lot of opportunity for growth in the space. Even though at-home fitness was around for quite some time now, all this new tech is relatively new.

Wall Street thinks this acquisition is a good idea, Lululemon stock is looking good DoD and still up 6% as of this writing. Excited to see what happens next for Mirror… I hope I start to see more than just their ads on the subway.

Self Driving Amazon Cars?

On Friday, news broke that Amazon is looking to acquire the self driving car startup Zoox for more than $1.2B (it’s less than Zoox’s valuation of $3.2B). According to FT, this is Amazon’s biggest investment into the autonomous vehicle sector as the company has bought smaller stakes in Rivian (electric truck maker) and Aurora (startup that develops self driving tech).

Two things that come to mind for this acquisition:

1. Amazon will be able to compete against Google’s Waymo and eventually compete against Uber and Lyft. Imagine a fleet of Amazon self driving taxis… low overhead costs and giving Prime members incentives to use the service. It’s already a tough competition between Uber and Lyft.
   
   
2. The potential of self driving Amazon delivery trucks that can greatly impact and improve the company’s last mile delivery. Allied Market Research estimates that the global autonomous last mile delivery market is expected to value $11.13B in 2021 and $75.65B by 2030.

Don’t forget about Cruise (General Motor) and Argo (Ford). They are sweating along with Uber, Lyft, Google and Tesla if this acquisition is approved. I think the acquisition is a good one for Amazon but it’ll make the company even bigger and no one wants Amazon to get bigger.

What does Elon Musk think? He’s calling Bezo a copy cat on Twitter. SpaceX vs Blue Origin, Zoox vs Tesla?

Hyper Real Showrooms?

Happy Friday y’all! It kinda feels good to post only 3x a week. I been working on my tan with all this “free” time I have now.

Before I get into today’s topic, Brandless finally has an update on their site… they are only selling bundles right now which is kind of lame.

OTB group a fashion retailer that owns Diesel, Margiela, Marni and Viktor and Rolf is launching what they call “hyper real” showrooms. These “hyper real” showrooms are essentially digital/virtual showrooms that mimic physical stores and OTB will be selling its spring/summer collection in these digital spaces. The goal is to have these realistic virtual showrooms to allow the “emotional experience of viewing and ordering high end collections online”. I’m not sure what the virtual experience would be but it does sound like a great step forward for the future of retail.

OTB isn’t the only one getting on this, apparently there are startups like BrandLab which offer virtual showroom tech, which has seen significant growth during this pandemic. I’m assuming it’s going to be a clunky experience at first but I do hope it catches on.

This all goes back to my fascination of Virtual Reality. Imagine the future of retail? Online shopping will become a whole experience rather than just the typical add to cart button. Think about all the data a retailer can collect digitally vs traditional physical stores.