business news in context, analysis with attitude

Regarding Amazon's bricks-and-mortar strategies, one MNB reader wrote:

It might be Amazon is pulling a sleight of hand, or it might be a last ditch effort to make something of Go technology.  According to a story a few months ago, Amazon originally envisioned a fully functioning grocery store but killed that idea because they couldn’t figure out a way to “Go” with variable weight and fresh items.

Then there was an article that shows the blue print for this new “grocery store” (as the helpful Bloomberg author called it in the title of the article you wrote about today).  Notice there still is no fresh or produce section, this is just a 7k sq foot Go, not a 10k sq foot “grocery store.”  Even a neophyte like myself knows grocers are increasing the perimeter to drive traffic, not eliminating it!

Add in the other articles talking about how much more modest the growth in store count has been, as well some speculation about shrink still being too high, and the commentary in this latest article about the fact they “might” start to license the tech in a couple months strikes me as 100% marketing of a future offering.
Get a friendly reporter to call a 3x bigger Go store a grocery store, make sure he includes Amazon going to get to 35k sq feet eventually, have him write the costs have come down despite not giving any more detail on that, and then give them the hook of “or we might license it to the industry.”  In other words, this was a very long “We’re coming after your business, but if you want to do business with us, at least you stand a shot.”  Grocers in the 1950s dealt with this issue too.  It was called Mob protection.  “Nice store, would be a shame if something happens to it.”
For a litany of reasons, Go can’t handle fresh and variable weight.  It might not even handle packaged goods that well.  And it for sure doesn’t do it cheaply.  And don’t take my word for it, Amazon isn’t even using itself in its new stores (if it were close, why would they not wait to start this roll out, what’s the rush?).
And if you think grocers that outsource delivery to Instacart should have their heads examined, any grocer that would allow Amazon cameras into their stores and Amazon hooks into their apps and customer data and transaction data, should have their whole bodies examined to make sure their heads are actually still attached.
Go is a cool tech that isn’t yet anywhere ready for prime time and might very well never be.  For the foreseeable future, it can solve not really pressing problems for a lot of money.  Which explains why Amazon has been rolling these out so much slower than originally planned. 
Now to be clear, like you, I admire the company’s prowess and think failing is a wonderful outcome, it’s the only way to move forward.  And I don’t think this should give grocers a sense of complacency overall, they still need to innovate and remove friction from their ops at an ever increasing pace to survive. 
But this whole “grab and go” paranoia is misplaced, and this specific article reeks to me of a shake-down, written in part by a compliant author. It stinks.  As you’ve written about in other recent examples, Amazon really has a different mentality these days then always do right by the customer.  It seems more like it’s “how can we rip off our (current and potential future) customers.”
And by the way, for all the Amazon Go wannabes?  This article doesn’t “validate their opportunity.”  It should scare the living daylights out of them.  Amazon has spent over $1 billion on salaries for Go employees alone.  Good luck beating Amazon with that $7 million you just raised.

Responding to our piece about disruptor Warby Parker getting into the contact lens business, one MNB reader wrote:

I got a chuckle from your comment, “Warby Parker is a fashion business, and contact lenses by their very nature are not a fashion accessory.”

I think you’ll find many of us consider contact lenses just that, a fashion accessory.  Most of my friends and I turned to contact lenses as soon as our parents would allow, because we felt we looked more glamorous without glasses hanging on our noses.  And I admit, I still wear them decades later because I like how I look without glasses.  I remember wanting to make an even bigger fashion statement by using green lenses for a while to change the color of my eyes.  And these days, you can acquire such exotic looks as vampire eyes in an array of colors and styles, the ultimate Goth accessory.

Wow. I had no idea. I'll have to think about that next time I am looking to Goth accessorize.

On another subject, package delivery, MNB reader Brian Packert wrote:
Something not mentioned in The Whole Package article was the new Amazon Key feature. I just signed up for it and had my first delivery this week. Amazon links to my garage door and the driver puts the package in my secured garage – not leaving it prone to the world of my front porch.
Huge win for me and my family!

MNB reader John Rand wrote:

Re: your comments on the interview with Tim Armstrong and the idea that brands may want to go direct to consumer —

My own experience is, to say the least, erratic. For many items I rely on Amazon, and it is often where I seek a new item I have not previously bought online.

But it is also a pain in some categories, for a variety of reasons. Small items, such as hardware parts are often poorly described or insufficiently displayed. A total lack of a way to ask a question before purchase and get a reliable and timely answer often sends me elsewhere (crowdsourced answers are not always pertinent, accurate, or prompt). It is a mixed bag.

In several cases (one example was a humidifier filter) there are tons of choice but a range of prices for a supposedly identical item  that creates hesitation. From experience I know some of those listings are imitative knock-offs, poorly made or of questionable provenance. It may have “fallen off a truck” as we used to talk about gray or black market items, but it was the wrong truck.

In that particular case, after a poor Amazon experience, I searched for and easily found the manufacturer’s website, offering the correct item, at a fully competitive price, and it is the easies thing in the world to bookmark that site and return there every season  when it is time to stock up. They have been fairly reasonable about marketing to me (certainly no worse and no more irrelevant than Amazon, whose marketing to me is driven by algorithms that are less intelligent than a small dog if no less persistent. The shipping is free, if not quite as prompt as Prime, but I order a dozen filters at a time and the cold dry heating season is pretty predictable.

That brand is a keeper. They did all the right things.

Amazon is good, but it is not perfect. And personally, if I were a branded manufacturer, I would never ignore that consumer who might well want to look me up and deal with me direct. It may not have all the potential volume of an Amazon or a Walmart, but why would any brand NOT want to be directly available to their ultimate customer?

I continue to get nice notes about MNB's 18th birthday earlier this week.

Like this one from MNB reader Rich Heiland:

Congrats on 18 years! I am constantly sharing MNB with former clients, friends.

And this one from my friend and longtime MNB reader Marv Imus:

Happy Anniversary from one “dinosaur “ to another!

The "dinosaur" reference goes back a long time, to a 2004 story that I wrote for a magazine that the Food Marketing Institute (FMI) used to publish and that was reprinted with permission here on MNB.

The story was about a dinner that I shared with Al Lees Jr. and Marv, at the time two independent grocers, at Greystone, the restaurant located at the Culinary Institute of America. It was one of the most memorable meals I've ever had - not just because the food was great, but because the conversation was candid and focused on whether the independent grocer would be able to survive. (We talked a lot about Walmart. Amazon never even came up. Go figure.)

How they saw themselves was reflected in the story's title: "Dining With Dinosaurs."

I love those guys, the education they gave me and the time we spent together.

You can read the story here.
KC's View: