Tag Archives: Amazon

Amazon Suspends All Shipments Other Than Medical Supplies, Household Staples

Update (1005ET): As we detailed below, Amazon was already struggling to meet delivery goals and having problems with stock, but now, in a blog post, Amazon told sellers on Tuesday that it’s suspending shipments of all non-essential products to its warehouses to deal with the increased workloads following the coronavirus outbreak.

We are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers,” the message said.

That means sellers who use Amazon’s storage and delivery network for a fixed fee, through a program called Fulfillment by Amazon, will no longer be able to ship their products to Amazon.

“We are seeing increased online shopping, and as a result some products such as household staples and medical supplies are out of stock.”

Additionally, Amazon claims it is trying top crack down on gouging…

We’re also working to ensure that no one artificially raises prices on basic need products during this pandemic and have blocked or removed tens of thousands of items, in line with our long-standing policy. We actively monitor our store and remove offers that violate our policy.”

So, we can’t leave our homes and all we can buy online is staples and medical supplies…

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The online retailer updated its blog post on Saturday and told customers that “we are currently out of stock on some popular brands and items, especially in household staples categories.”

It said that certain items could experience longer than normal delivery times.

“We are working around the clock with our selling partners to ensure availability on all of our products, and bring on additional capacity to deliver all of your orders,” the post added.

In the last two months, Prime members have noticed notifications saying “inventory and delivery may be temporarily unavailable due to increased demand” for certain products, such as 3M N-95 virus masks. More recently, the shortage of products has significantly expanded to bottled water, hand sanitizer, toilet paper, and vitamins. Amazon noted that it has worked extremely hard to crack down on price gouging, especially seen with third-party sellers selling masks and hand sanitizers for many folds over the suggested retail price. 

Social distancing has led to the max exodus of shoppers at brick and mortar stores, who have now gravitated to online shopping to prevent spreading.

“As COVID-19 has spread, we’ve recently seen an increase in people shopping online,” Amazon wrote. “In the short term, this is having an impact on how we serve our customers.”

Amazon is gearing up for increased online activity as the virus crisis is expected to worsen in the weeks ahead. A Wall Street Journal report on Monday said the online retailer is expected to add 100,000 workers to cope with the surge in new demand. 

The virus crisis will forever change how consumers shop. Social distancing will ensure more online shopping. But in the meantime, Amazon has been caught off guard by the rapid surge and will result in shortages of products and shipping delays. 

Source: ZeroHedge

Amazon Plows Into Real Estate Market With Realogy Pact To Transform Homebuying Process

Unhappy with its market share in the US real estate market, the largest online retailer in the world and global commercial monopolist, Amazon, announced a deal on Tuesday morning with the largest US residential real estate brokerage company, Realogy, in a strategy designed to boost sales for both.

As CNBC reports, Realogy – whose stock soared 25% on the news – and Amazon will now offer TurnKey, a horizontally and vertically integrated program meant to streamline and optimize the home- and furniture-buying process, by taking potential homebuyers through the Amazon portal and connects them to a Realogy agent. Once they purchase a home, they then get complimentary Amazon Home Services and products worth up to $5,000.

Realogy, which is the largest real estate broker in the US and which owns such brands as Coldwell Banker, Century 21, Sotheby’s International Realty, Corcoran, ERA and Better Homes and Gardens Real Estate, has been facing stiff online competition from newcomers like Compass and Redfin, which rely heavily on high-tech, online platforms. As CNBC’s Diana Olick writes, “partnering with Amazon gives Realogy a platform unlike any other, not to mention access to more buyer data.”

“We’re the market leaders in this industry and we like that position, but you always have to be innovating to stay ahead, you’ve got to be willing to cannibalize yourself, you’ve got to do all the things that a big successful company needs to do to stay on the forefront,” said Realogy CEO Ryan Schneider.

“In a world that is awash with low quality lead generation out there, where you can get real estate leads from millions of online websites, giving an agent and franchisees high-quality leads from a source like Amazon and Realogy together is a real differentiator that’s going to be very powerful for the group.”

The group’s simple strategy for success: Always Be Closing... and then get the buyer to purchase a whole lot of additional stuff as well.

Here’s how it will work: a potential buyer will go to the TurnKey portal on Amazon and put in information on the type of home they’d like to purchase, the location and price. Amazon then matches them with a Realogy agent. Once the buyer closes on the home, Amazon connects them with services and experts in the area. The buyer not only gets a selection of Amazon Home Services, like painting or hanging a large TV, but they also gain access to smart home products, like a Ring doorbell, to be installed by Amazon professionals. The value of the free products and services can range from $1,000 to $5,000 depending on the purchase price of the home.

“Customers can be overwhelmed when moving, and we’re excited to be working with Realogy to offer homebuyers a simplified way to settle into a new home,” said Pat Bigatel, director of Amazon Home Services. “The Amazon Move-In Benefit will enable homebuyers to adapt the offering to their needs — from help assembling furniture, to assisting with smart home device set up, to a deep clean, and more.”

As CNBC notes, one of the nation’s largest homebuilders, Lennar, previously partnered with Amazon in 2018, introducing smart-home “experience showrooms.” Amazon outfitted Lennar model homes with smart-home technology available for purchase on its site. In something of a show-and-sell strategy, Lennar then offered 90 days of free Amazon home services with the purchase of a home.

Amazon, Google, Apple, most of the technology-centric companies are starting to think about the home as a centerpiece for the way they think about the future of how their products work and how they interact with them, ” said Stuart Miller, executive chairman of Lennar, in an interview in May 2018. “Home automation is a point of attraction. It’s a proxy for a lot of other things.”

The new TurnKey service will first launch in 15 major metropolitan housing markets, including Seattle, San Francisco, Los Angeles, Atlanta, Dallas, Chicago and Washington, D.C., and will then expand into more markets. However Realogy CEO Ryan Schneider did not suggest that this is a stepping stone to putting Realogy brokerages’ listings on Amazon.

“We’ve never had that conversation with Amazon,” he said.

Of course, when Amazon decides to simply eliminate the middleman, it will do so without holding such a conversation in advance. For now, however, Realogy shares are enjoying the added exposure and the stock has soared over 25% this morning on the Amazon news.

Source: ZeroHedge

Amazon To Open 3,000 Cashierless Convenience Stores By 2021

Retail workers who are pushing for higher wages better take notice: Amazon is preparing to put their bosses out of business.

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Roughly nine months after opening its first Amazon Go store in Seattle, Amazon announced on Wednesday that it is planning a massive expansion of the franchise. The company has been notoriously tight-lipped about Amazon Go since it first started offering tours of its prototype Seattle location to select journalists back in 2017. After opening its third cashierless Amazon Go location in Chicago earlier this year, and is planning to open six more locations by the end of this year, before eventually scaling up to 3,000 locations by the end of 2021. If Amazon succeeds, Go will become the largest convenience store chain in the US, per Bloomberg.

So far, most of the extant Amazon Go locations offer only a small selection comprising mostly salads, sandwiches and snacks.

An Amazon spokeswoman declined to comment. The company unveiled its first cashierless store near its headquarters in Seattle in 2016 and has since announced two additional sites in Seattle and one in Chicago. Two of the new stores offer only a limited selection of salads, sandwiches and snacks, showing that Amazon is experimenting with the concept simply as a meal-on-the-run option. Two other stores, including the original AmazonGo, also have a small selection of groceries, making it more akin to a convenience store.

But as the company ramps up the logistical back-bone necessary to support the chain, it ultimately hopes to conquer the fast-casual market in dense urban areas where wealthy professionals who might be willing to spend a little more on a salad or a sandwich typically proliferate. Ultimately, the company hopes to compete by eliminate meal-time congestion with its grab-and-go automation. The initial market reaction to the news was muted, though shareholders probably aren’t thrilled about the massive capital investment that will eat away at operating profits.

Chief Executive Officer Jeff Bezos sees eliminating meal-time logjams in busy cities as the best way for Amazon to reinvent the brick-and-mortar shopping experience, where most spending still occurs. But he’s still experimenting with the best format: a convenience store that sells fresh prepared foods as well as a limited grocery selection similar to 7-Eleven franchises, or a place to simply pick up a quick bite to eat for people in a rush, similar to the U.K.-based chain Pret a Manger, one of the people said.

Shoppers use a smartphone app to enter the store. Once they scan their phones at a turnstile, they can grab what they want from a range of salads, sandwiches, drinks and snacks — and then walk out without stopping at a cash register. Sensors and computer-vision technology detect what shoppers take and bills them automatically, eliminating checkout lines.

One potential obstacle to expanding the chain is the high cost of opening each location due to the sensors and AI technology necessary to support its automatic-checkout system. The company’s other physical stores include about 20 bookstores and Whole Foods, which it bought last year.

The challenge to Amazon’s plan is the high cost of opening each location. The original AmazonGo in downtown Seattle required more than $1 million in hardware alone, according to a person familiar with the matter. Narrowing the focus to prepared food-to-go would reduce the upfront cost of opening each store, because it would require fewer cameras and sensors. Prepared foods also have wider profit margins than groceries, which would help decrease the time it takes for the stores to become profitable.

Amazon no doubt sees an opportunity to profit by grabbing a slice of the $233 billion convenience store market. After eating the initial capital expenditure, Amazon will easily be able to compete on operating costs. But to thrive in such a competitive market, location will be key, according to several analysts.

AmazonGo will be more of a threat to fast-casual restaurants if it is targeting cities, said Jeff, vice president of NACS. Shoppers rate location and a lack of lines as the most important factors when shopping for convenience, he said.

“AmazonGo already has no lines,” Lenard said. “The key to success will be convenient locations. If it’s a quarter mile from where people are walking and biking, the novelty of the technology won’t matter. It’s too far away.”

One unintended consequence of Amazon’s expansion could be a worsening row with President Trump, as Amazon Go could eliminate some of the food-service and retail jobs that have been among the fastest-growing sub-sectors of the US labor market. This could threaten the robust employment gains that President Trump has cited as evidence of his presidency’s success. And Trump has lashed out at Amazon in the past for being a job-killer. And the FTC has been quietly hiring staffers who are looking into how the agency can bring an anti-trust case against tech giants like Amazon. 

Going forward, we imagine investors will be on the lookout for signs that this expansion could be the final antagonism that finally provokes the government to take action against Bezos before Amazon truly does become “the Everything Store”.

Though there is one potential upside for all those displaced low-wage workers: The format will make looting during natural disasters that much easier.

Source: ZeroHedge

Amazon Tops Trillion-Dollar Market Cap, Bezos Extends Lead As World’s Richest Man

Jeff Bezos was already the richest man in world history, but thanks to the surge in Amazon’s share price today – becoming the third company in history to top $1 trillion market capitalization (after Apple and PetroChina) – his net worth is up almost $70 billion in 2018, nearing $170 billion.

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After a brief dip on its earnings, Amazon has not looked back, surging above the key $2050.27 briefly ($2050.50 highs) to become another trillion-dollar market cap company…

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Amazon reached this milestone almost exactly one month after Apple. Next up – Microsoft or Alphabet?

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Do not worry though – Amazon is not a bubble!

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Interestingly, few remember that Apple was not the first company globally to ever hit $1 trillion in market capitalization.

The feat was achieved momentarily by PetroChina in 2007, after a successful debut on the Shanghai Stock Exchange that same year.

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And as we noted previously, the $800 billion loss it experienced shortly after is also the largest the world has ever seen.

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This pushes Bezos’ dominance of the global wealth leagues even higher…

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Source: ZeroHedge

Amazon To Cut Whole Foods Prices, Escalating Grocery Turf War

(Reuters) – Amazon.com Inc (AMZN.O) said it will cut prices on a range of popular goods as it completes its acquisition of Whole Foods Market Inc (WFM.O), sending shares of rival grocers tumbling on fears that brutal market share battles will intensify.

Amazon’s $13.7 billion purchase of Whole Foods, which will be completed on Monday, has been hanging over a brick-and-mortar retail sector unsure of how to respond to the world’s biggest online retailer.

Shares of Kroger Co (KR.N), the biggest U.S. supermarket operator, closed down 8 percent, while Wal-Mart Stores Inc (WMT.N), the biggest U.S. food seller, closed down 2 percent.

Amazon also said it will start selling Whole Foods brand products on its website, a move that sent down shares of packaged food sellers including Kellogg Co (K.N).

The S&P 500 Food Retail index closed down almost 5 percent as more than $10 billion was wiped off the market value of big food sellers.

Amazon said members of its $99-per-year Prime shopping club would eventually be rolled into Whole Foods’ customer rewards program and be eligible for special offers and discounts.

“There was never any doubt that Amazon would lower prices, and even offer further discounts in-store to Prime members,” said Baird Equity Research analyst Colin Sebastian.

‘LAND GRAB’

Amazon said that starting on Monday it will cut prices on organic grocery staples such as bananas, avocados, brown eggs, farmed salmon and tilapia, baby kale and lettuce, some apples, butter and other products.

“It does not look like they will go kamikaze on pricing,” said Roger Davidson, president of consulting firm Oakton Advisory Group and a former retail executive. “They will lower prices on consequential items to drive traffic and sales but not do a whole store price reduction which could really damage gross margin and potentially wipe out operating margin.”

Lowering prices could stem defections by price-sensitive Whole Foods shoppers, and help the grocer shed its “Whole Paycheck” reputation for high prices that are generally 15 to 25 percent above rivals. It could also bring in new consumers who can then be urged to shop for food and other products online.

“It’s ultimately a nice land grab,” said Bill Bishop of retail consultancy Brick Meets Click, and a way to get customers “thinking about buying healthy food from Amazon.”

FAT PROFITS

The planned price cuts would have been a tough sell to Whole Foods’ investors, who had grown used to fat profits from the upscale chain, but are more in line with Amazon’s broader strategy of sacrificing short-term profit for long-term market dominance.

“Amazon is more focused on driving volume and improving service at the expense of profit margins,” said Sebastian. “Long-term, this strategy works because the absolute profit dollars can still be significant.”

Amazon’s willingness to take lower profit margins ups the ante in the increasingly costly grocery price war.

“In some cases grocery retailers have had to invest between $500 million to $1 billion in order to reduce prices to a level that retained customers and resulted in a net increase in customers,” said Brittain Ladd, who until earlier this year was a senior manager working to globally roll out AmazonFresh, Amazon’s grocery delivery service.

Adding Whole Foods benefits should help Amazon attract more shoppers to its successful Prime scheme, which features two-day shipping for eligible purchases and unlimited streaming of movies and TV shows. Amazon has more than 60 million Prime members, according to analyst estimates.

Whole Foods has rolled out a loyalty program at its smaller, lower-priced 365 by Whole Foods chain, which offers members 10 percent off more than 100 items in the stores. The program is still being tested in the main Whole Foods chain.

Beyond that, some Whole Foods stores will get Amazon Lockers, where customers can receive online orders and make returns.

John Mackey will remain chief executive of Whole Foods and the company will operate as a subsidiary and continue to be headquartered in Austin, Texas, the companies said on Thursday.

Meet Tally: The Grocery Stocking Robot About To Eradicate Tens of 1,000’s of Minimum Wage Jobs

Amazon wiped out billions of dollars worth of grocery store market cap last month when they announced plans to purchase Whole Foods.  The announcement sent shares of Kroger, Wal-Mart, Sprouts, and Target, among others, plunging… (WMT -4%, TGT -5.5%, SFM -7.6%, KR -12%).

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But, as we pointed out back in May, well before Amazon’s decision to buy Whole Foods, Amazon’s success in penetrating the traditional grocery market was always a matter of when, not if.  Concept stores, like Amazon Go, already exist that virtually eliminate the need for dozens of in-store employees which will allow them to generate higher returns at lower price points than traditional grocers.  And, with grocery margins averaging around 1-2% at best, if Amazon, or anyone for that matter, can truly create smart stores with no check outs and cut employees in half they can effectively destroy the traditional supermarket business model.

And while the demise of the traditional grocery store will undoubtedly take time (recall that people were calling for the demise of Blockbuster for nearly a decade before it finally happened), make no mistake that the retail grocery market 10-15 years from now will not look anything like the stores you visit today.

And while the demise of the traditional grocery store will undoubtedly take time (recall that people were calling for the demise of Blockbuster for nearly a decade before it finally happened), make no mistake that the retail grocery market 10-15 years from now will not look anything like the stores you visit today.

So, grocers have a choice: (i) adapt to the technological revolution that is about to transform their industry or (ii) face the same slow death that ultimately claimed the life of Blockbuster.

As such, as the the St. Louis Post-Dispatch points out today, the relatively small Midwest grocery store chain of Schnucks has decided to roll out the first of what could eventually be a large fleet of grocery stocking robots.

A slender robot named Tally soon will be roaming the aisles at select Schnucks groceries, on the lookout for out-of-stock items and verifying prices.

Maryland Heights-based Schnuck Markets, which operates 100 stores in five states, on Monday will begin testing its first Tally at its store at 6600 Clayton Road in Richmond Heights. The pilot test is expected to last six weeks. A second Tally will appear in coming weeks at Schnucks stores at 1060 Woods Mill Road in Town and Country and at 10233 Manchester Road in Kirkwood.

The robots are the first test of the technology in Missouri and could ultimately be expanded to more Schnucks stores.

Each 30-pound robot is equipped with sensors to help it navigate the store’s layout and avoid bumping into customers’ carts. When it detects product areas that aren’t fully stocked, the data is shared with store management staff so the retailer can make changes, said Dave Steck, Schnuck Markets’ vice president of IT and infrastructure.

Tally, created by a San Francisco-based company named Simbe, is also being tested at other mass merchants and dollar stores all across the country.

Founded in 2014, Simbe has placed Tally robots in mass merchants, dollar stores and groceries across the country, including some Target stores in San Francisco last year.

“The goal of Tally is to create more of a feedback mechanism,” Bogolea said. “Although most retailers have good supply chain intelligence, and point-of-sale data on what they’ve sold, what’s challenging for retailers is understanding the true state of merchandise on shelves. Everyone sees value in higher quality, more frequent information across the entire value chain.”

The robot does take breaks. When Tally senses it’s low on power, it finds its way to a charging dock. And, the robot is designed to stay out of the way of customers. If it detects a congested area, it’ll return to the aisle when it’s less busy. If a shopper approaches the robot, it’s programmed to stop moving.

Meanwhile, with nearly 40,000 grocery stores in the U.S. employing roughly 3.5mm people, most of whom work at or near minimum wage, Bernie’s “Fight for $15” agitators may want to take note of this development.

Source: ZeroHedge

What Amazon Did To Malls, It Will Now Do To Grocery Stores

Amazon bought Whole Foods today. Widespread carnage in the grocery stock prices followed. Jim Cramer called it a major deflationary disruption saying stores cannot compete.

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“If I was the Federal Reserve, I would have a meeting on this. Inflation is going to go down…. You have to rethink food … Costco knows how to compete. It will be in there tooth and nail with toilet paper and paper towels. … But Kroger, a crisis in Cincinnati, crisis.”

“Major Disruption of Society”

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SupplyChain247 reports Amazon’s Move to Purchase Whole Foods Is ‘Disruption of Society’

TheStreet’s Action Alerts PLUS Portfolio Manager Jim Cramer said Amazon’s move to acquire Whole Foods is a disruption of society, “this is what I regard to be a move by Amazon to destroy the margins and own the business of food and groceries in this country,” Cramer said.

With Amazon putting down $13.7 billion to buy Whole Foods, Bezos is sending a powerful message to his retail rivals;

  • Food suppliers will now be dealing with an even larger grocery store, meaning potentially pressured profit margins for organic players such as Hain Celestial.
  • Amazon officially shows intent to enter bricks-and-mortar retail in a larger way than just bookstores. Combine that with its unmatched digital presence, Walmart, Target and others have been put on notice.
  • Grocer stores like Kroger will now be in an even bigger price war.
  • Amazon Prime integrated into Whole Foods could hurt Costco over time. Many Costco members are also Prime members.

“What Amazon did to the mall, it will now do to grocery stores,” said Cramer.

Here is a Tweet to think about:

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By Mike “Mish” Shedlock