In the race for the consumer’s whole paycheck, Amazon was the busier runner this week with a host of announcements on quarterly earnings, upgraded shipping options and its ongoing push into the healthcare industry. Less out of Walmart this week, by comparison, though the in-store upgrades that have been a theme in this tracker for the last several weeks continued this week — and seem to have expanded as well. The world also heard from Walmart CEO Doug McMillon in his annual investor letter.
Though he didn’t have any Bezos-esque challenges for his competition, he did focus on all the way the firm is both tech centered and “people led,” noting this “makes investing in our associates a strategic priority.”
And as it turned out, strategic priorities ended up being a theme this week, particularly the ways they are shifting and adapting.
Amazon
The Big Play of the Week: One-Day Shipping is Coming
While there was a lot of process in Amazon’s quarterly earnings — recording-breaking profits, slowing ad revenues — the most attention-getting piece of information was Amazon’s plan to invest $800 million during Q2 to increase delivery speed for Prime members to one day from two.
“We have been offering, obviously, faster than two-day shipping for Prime members for years (one-day, same-day, even down to two-hour delivery for Prime Now), so we’re going to continue to offer same-day and Prime Now, morphing into — or evolving into — a free one-day offer,” Chief Financial Officer Brian Olsavsky said in response to an analyst question.
The one-day shipping news came as a piece with a series of investments and updates Amazon is making to its shipping logistics. Earlier this week Amazon announced it has expanded its Key In-Garage delivery service to 50 U.S. cities. The service is available for Amazon customers with a myQ smart garage door opener. Users can transfer temporary access to their garage, via the smartphone app, to couriers who can then place the packages inside. Once the delivery is complete and the door is closed, and users will get a final notification that the delivery has happened. They can even watch a video if they also have a CloudCam.
“In-Garage deliveries are carried out by some of the same professional drivers who you know and trust to deliver your Amazon orders today,” the company noted. “These individuals are thoroughly vetted, with comprehensive background checks and motor vehicle records reviews.”
Expansion Watch: PillPack is Readying to Launch
About a year after Amazon acquired online pharmacy PillPack for $1 billion, it seems its debut on Amazon’s marketplace is imminent. A page for the pharmacy has been added to the Amazon site — with sign-up instructions and a video about how it works. The pharmacy will sort and ship medications all across the country.
When exactly it will be open for business remains an open question.
The moves comes as one of many expansions into healthcare Amazon has made in recent months. Most recently, the eCommerce giant added HIPAA-compliant skills to Alexa. The company has also partnered with Berkshire-Hathaway and JPMorgan on a healthcare initiative called Haven.
“We want to change the way people experience healthcare so that it is simpler, better and lower-cost,” Dr. Atul Gawande, Haven’s CEO, said in a statement in March, according to CNBC. “We’ll start small, learn from the experience of patients and continue to expand to meet their needs.”
Walmart
Big Play of the Week: The Store of the Future Opens in the Present
Walmart rolled out its answer to Amazon Go this week with its version of the “store of the future” for customers. The store, which is officially called the Intelligent Retail Lab — or “IRL” for short — operates out of a Walmart Neighborhood Market in Levittown, N.Y.
Like a Go store, the IRL store has cameras mounted in the ceiling — but for a different purpose. Walmart’s IRL spans 50,000 square feet, and is far from an unmanned retail location as it is staffed by more than 100 employees. The cameras are not there to determine what customers are picking up in order to allow them to skip the checkout — IRL has standard checkout stations. Instead, the cameras are intended to keep inventory fresh and stocked. According to Walmart the cameras and other sensors in the store pump out 1.6 TB of data per second, or the equivalent of three years’ worth of music, which necessitates a big data center on site.
The IRL store is glass-encased, bathed in blue light and on display to the public. That might sound cool to some, and a bit intimidating to others. To make it less so, Walmart has also created a an interactive wall that lets customers play with the artificial intelligence (AI), but standing in funny positions and letting the AI model them.
“Technology enables us to understand so much more — in real time — about our business,” says Mike Hanrahan, CEO of IRL. “When you combine all the information we’re gathering in IRL with Walmart’s 50-plus years of expertise in running stores, you can create really powerful experiences that improve the lives of both our customers and associates.”
Hanrahan also noted that the goal for Walmart’s AI and computer visioning efforts in its store of the future are designed to be practical — even if it costs them some of the wow factor other (unnamed) players tap into when rolling out these types of updates.
“You can’t be overly enamored with the shiny object element of AI,” Hanrahan said. “There are a lot of shiny objects out there that are doing things we think are unrealistic to scale and probably, long-term, not beneficial for the consumer.”
Investor Letter Clapback: CEO McMillon On Why Walmart is Powered by People
Amazon CEO Jeff Bezos got some attention last week with his suggestion that Amazon’s rivals raise their employees’ pay as Amazon has moved to do in the last year.
“Today, I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone,” Bezos wrote.
There were a lot of reactions to that. Walmart Executive Vice president of Corporate Affairs Dan Bartlett offered one of the more biting remarks on Twitter: “Hey retail competitors out there (you know who you are) how about paying your taxes?”
In his annual letter to investors, however, CEO Doug McMillon didn’t offer a direct response or throw down any new gauntlets. But he focused a lot on Walmart’s relationship with its associates.
“On any given day, our associates may be attending one of our new training academies in the U.S. or entering our new fast-track leadership program for Walmart International,” McMillion wrote.
“They may be benefiting from our expanded parental-leave policies or beginning their careers at Walmart with a starting wage 50 percent higher than it was four years ago. And they may be extending their education with a $1-a-day college degree through our Live Better U program. We’ve made a lot of changes with respect to opportunities for our associates, and there’s more to come.”
Whether those opportunities to come will involve making $15 an hour remains to be seen.
But new opportunities — and new chances to surprise and delight the consumer — were the theme of the week. Whether that is in the form of faster packages, smarter stores or a more effective way to deter porch pirates.
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