Shopping in the early 20th century was not a terribly efficient experience for the consumer. Buying meat was one market, seafood another, produce yet another — and bread or dessert required a trip to the baker. The concept of one-stop shopping had not entered the public consciousness, which meant that running errands 100 years ago meant literally running.
A leisurely pace was not going to be sufficient to get all those chores done.
With the A&P and the rise of the grocery store, customer expectations and preferences changed throughout the 20th century so that a consumer’s expectation no longer involved visiting five or six merchants for all their household goods. Then Walmart introduced the Supercenter in the late ’80s and early ’90s, and consumers began to expect to buy everything from cabbages to car parts under one roof. The 2000s brought Amazon — and the ability to click through an even wider assortment of everything and have it shipped to your front door.
And while some wax nostalgic about the good old days of butchers, bakers and candlestick makers, most consumers are much happier to take a less circuitous path through purchases — and would rather hand a larger share of their paycheck off to one player than have to run around (again, literally) spreading it out among five. And, of course, both Amazon and Walmart want to be the player that collects the biggest share.
But this week, it seemed that both players were also thinking about efficiency, as well — and not just how to grab up a bigger share of the consumer’s paycheck, but also how to hold on to a larger part of it as profit when the transaction is done.
And yes, it has been a very busy week.
Amazon
Big Play of The Week: Video Ads Are Coming To Mobile
In its ongoing efforts to break the Facebook-Google duopoly when it comes to digital advertising, reports emerged this week that Amazon will be selling video ad spots on its mobile app. The move has been beta testing on Apple’s iOS platform, with plans to bring it to Android later in the year. The spots will appear after a user searches for something on the shopping app, the rationale being that people who search for products within the app tend to purchase more often than those who are perusing Facebook or YouTube.
Amazon’s advertising space currently sells space for brand logos, photos and descriptions of products, which are basically the equivalent of static billboards. Video adds had been avoided until now for fear they would interrupt the shopping experience for consumers. Amazon will require a $35,000 ad budget to run spots at five cents per view for about two months, though prices can vary by category, one unnamed source told Bloomberg.
Amazon has been steadily growing its footprint in the digital advertising space. The company’s digital ad market share is expected to go up 2 percent this year, from 6.8 to 8.8 percent, according to EMarketer. Google is expected to lose share and drop to 37.2 percent from 38.2 percent.
Logistics Lay-Up: Turning Whole Foods Into Delivery Hubs
In yet another use for Whole Foods, Amazon announced this week it will be providing pickup and drop-off services for packages at select Whole Foods locations in the Dallas-Fort Worth area. Reports indicate shoppers can either visit a staffed help desk, or use self-service kiosks to access the service.
The new delivery service is different from the Amazon lockers that are also offered at certain Whole Foods locations. Stores will hold packages for up to 15 days, as opposed to only three. In addition, packages can be returned there without a box, and employees will pack it up and send it out. Amazon Prime members will receive free same-day delivery to a store without a minimum order.
“Strategic investments to improve Whole Foods will only increase the already intense competitiveness in the grocery space,” Bob Goldin, co-founder of consulting group Pentallect, said in December.
Pushing For Profit: Amazon Just Says No To Unprofitable Advertising
Amazon is not only expanding its ads this week in terms of type offered — it is also getting more selective about what ads can run. This week it came out that Amazon will no longer allow products that don’t turn a profit to advertise on its site.
Reports indicate that Amazon vendors, as well as brand owners who sell their products wholesale, are getting a message from the eCommerce giant that if they can’t sell their items at a profit, they also can’t pay to promote them on the platform.
“Amazon is trying to be much more profitable than they were in the past,” said Joe Hansen, CEO of Buy Box Experts. “But this policy shows there’s bias in Amazon’s ad service, even though it says it’s an open advertising platform.”
An Amazon spokesperson defended the move, noting that it isn’t new and has actually been in place for over a decade.
“Like all retailers, Amazon decides which products to market and promote in our stores based on a variety of factors, such as relevancy, availability, profitability and other factors,” the spokesperson said.
The move to get unprofitable products off the site is yet another issue vendors have with Amazon, of late, as it has been accused of using its eCommerce market power to change its policies suddenly.
Private Label Push: New Products And New Problems
Amazon this week is jumping into the skincare market — a rapidly growing vertical that experts think will be worth $183 billion by 2025 — with the launch of line of skincare products called Belei.
The new lines comes packed in post-consumer recycled resin bottles and offers 12 different items, which range from vitamin C serums to retinol moisturizer.
“Our goal is to help customers spend less time and money searching for the right skincare solutions,” Amazon.com Head of Beauty for Private Brands Kara Trousdale said in the announcement. “We took a simple, no-nonsense approach when creating Belei, developing products with ingredients that are both proven to deliver results and also offer customers great value for the quality.
The line’s products include a charcoal balancing mask along with micellar facial wipes, which the company says remove dirt and makeup as well as “complexion-dulling” impurities. It also includes a blemish-control spot treatment, which is “a lightweight, acne-fighting formula to help fight blemishes” along with an oil-free face moisturizer SPF 50.
Overall, the company said the line is eligible for free shipping — including Amazon Prime — and has the company’s satisfaction guarantee.
It is Amazon’s latest private label push, and one it hopes will finds some traction, given the overwhelming popularity of skincare products among millennials consumers entering their late ’40s and seeing their first wrinkles appear in the mirror. It is a boost the firm apparently needs, since a new study out this week indicates that despite the concerns, Amazon’s private label products are not dominating the market.
New York-based eCommerce research firm Marketplace Pulse found shoppers aren’t any more inclined to buy the Amazon brands, even when the company highlights them in search results.
Analysis of over 23,000 products launched by Amazon under more than 400 different brands — some private label, some Amazon exclusive built by third parties — indicated that while Amazon products do well, they generally do not dominate the market in the vast majority of cases.
“This idea that Amazon can introduce a product and magically use data to dominate a category is just a conspiracy theory,” said Juozas Kaziukenas, founder of Marketplace Pulse. “There are a couple of successful examples everyone uses, but most of their products aren’t successful at all, and many other companies continue to outsell Amazon even after it introduces its own competing brands.”
Apparently, even for Amazon, building it is not a guarantee that anyone will come. Kaziukenas noted there are areas where Amazon is very successful — batteries jump to mind — but that building brands is complex, and the immediate assumption that Amazon can build a brand in every vertical and dominate it is … perhaps overblown.
Walmart
Big Play Of The Week: The Concierge As Secret Weapon
Walmart’s Jetblack service isn’t exactly a household name — which makes sense, as the service was not exactly rolled out to serve every household. Jetblack, Walmart’s personal shopping company targeted at mothers, launched last summer in New York City. As of today, a few hundred shoppers pay $600 a year to order anything by text message except for fresh food. Membership was invite only, or via referral from an invited member — and one’s building must have a doorman to participate.
The text requests are filtered back to HQ, where dozens of agents field deliver requests and send back helpful suggestions like how to assemble a crib — or what the best organic paper plates on the market today are.
“When I’m lying in bed at night and I’m thinking about something, rather than going to Amazon and searching, I just text,” said member Julia LeClair, co-founder of a high-end fashion eCommerce site and mother of a 1-year-old.”
It is labor intensive — and as of today, not profitable. It also, according to reports out this week, might be Walmart’s secret weapon in the war for consumer spend. Because, according to the reports, Jetblack today serves as a research hub on AI and voice shopping. As it is sending human agents to cater to same-day shopping needs on the frontend, Jetblack’s software is learning to make agents more efficient and learning how to directly work with human customers on the backend. The goal over time, through these manned human interactions, is to develop the AI systems to the point where they can respond to requests in a convincingly human manner that is still robotically efficient. Today, for the majority of interactions, a human agent has to press send on a text message or research a product. Tomorrow, that will more likely be the machine’s job.
Walmart, notably, has not given itself an easy climb with this project. Text-based AI systems that answer consumer questions — and delivery on demand startups based on text-messaging — have tried and failed many, many times in the last two decades. And it’s not always small startups that wash out — Facebook’s M test-based personal assistant lasted less than a year.
“I know a full cemetery of companies that have tried to do that and failed,” said Alex Lebrun, former head of engineering for Facebook Artificial Intelligence Research who recently started his own Paris-based firm to build an AI system that integrates human agents but doesn’t totally replace them.
But as consumer habits have already shifted online — and are already shifting to voice — Walmart is moving to capture the trend of consumer behavior, particularly if it can tie it to a service for more affluent, higher-spending customers who historically have not been their core demographic. And, of course, Walmart has the truly unique amount of size, scale and access to goods to make this project work where others could not have.
Plus, early reports indicate they are seeing results. One former Walmart executive said Jetblack is “the first thing that we’ve tried that will unwind you” consistently from Amazon Prime, reports the WSJ.
“The early indication is that it has legs,” the exec noted.
That sentiment was echoed by Walmart’s head of eCommerce Marc Lore, who told media last September that Jetblack members are spending an average of $300 a week for products because the ease of the service encourages more frequent purchases. “We are ramping it up gradually,” he said.
Rumor of the Week: Walmart Goes After Gaming?
It looks like tablets aren’t the only new digital arena Walmart is considering stepping into. The company is reported to be considering its own video game streaming platform, according to a report Wednesday from USgamer. How far along that project is remains a question mark, though Walmart has been reportedly speaking with game developers and publishers since earlier this year, according to multiple unnamed sources.
Walmart didn’t immediately respond to a request for comment.
The move comes shortly after Google announced the launch of its Stadia gaming platform in 2019, designed to let users play on a wide variety of internet-connected devices, similar to how you can stream movies and shows on Netflix.
The rumors are that Walmart is looking into something similar, largely pushed by competition from Amazon.
Surprise Of The Week: Savings Catcher Says Sayonara
After a nearly five-year run, Walmart is officially saying goodbye to the Savings Catcher feature in its mobile app.
Founded in 2014, the program will officially sign off on May 14th. Customer with Walmart Pay e- receipts may submit through that date.
Walmart noted that, after five years of offering the program, they saw it “resulted in our prices winning the vast majority of the time when you submit receipts to Savings Catcher. This tells us that the program’s intent has been met, which was to provide you upfront with everyday low prices.”
The move has not been widely praised.
“Walmart just killed a great way to engage with customers,” wrote Robert Hetu, retail director at Gartner’s retail industry services, in a blog post Monday. He further noted that this move “seems so out of touch.”
Spokeswoman Anne Hatfield noted Walmart will still price-match — but it will no longer be an embedded feature. Instead, store managers are “empowered to take care of their customers and serve them the way they think is best.”
So will Walmart really enter the gaming fray, will Amazon be the biggest thing in skin care since K-Beauty hit the scene? Will customers be able to shop happy without the Savings Catcher feature — and will it affect how much of their paycheck goes to Walmart?
For the answer to these questions, stay tuned – we’ll be back again next Friday with the latest updates.
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