September Two

We now share an additional midweek Fix, going deeper on core topics. Today Merchant and we alternate with newTV. I would love your thoughts on how we make this better  - hit reply.

Iconic Merchants; This is Schwabs on Sunset Strip in 1976 - an Ed Ruscha shot

TL/DR - if you read just one thing - make it this (long) paper on the 10 key ecommerce trends. Written by the smart people at Common Thread it’s a must read on what is next for Merchants. 

The roll out of Amazon stores is much slower than we were led to believe but they are getting there. There are around 25 Amazon Go stores - with cashierless shopping in a smaller store ( typically 7000 sq ft - similar to a Tesco express store in the UK). Now Woodland Hills in California is their new Amazon Fresh grocery store. At 35000 sq ft it is much bigger and whilst it doesn't offer the cashierless experience of the Go stores, it does offer  a way to avoid queuing at the checkout with the Dash Cart.
Originally scheduled to open in February it has been used as a dark store with pickers fulfilling online orders but it is now the flagship - described well in the Amazon blog post and you can get a better idea of the store through this Amazon page for customers.
It’s also worth reading this summary of the 7 different stores formats Amazon is trialling
An Amazon native brand has gone public in China. Designed to be sold on Amazon Anker is now more widely distributed but Amazon remains hugely important to them. It's another version of a DTC brand - the entire business is designed to complement the channel to market. (I have one of the bluetooth speakers and it's as good as our Bose one)
A worry many have over this strategy is whether Amazon could copy you. Well yes, but no more than any other retailer looks for 'inspiration'. Just look at how good DTC brands are now competing with dozens of lookalikes. 
The new Halo device from Amazon competes with the Apple watch and the (Google?) Fitbit  and looks interesting but accusations over plagiarism continue
Another area where Amazon continue to push is payments. We see Amazon Pay as an option more frequently these days and they are now using Voice to extend their reach, with an option to pay using Alexa at US gas stations.
The online grocery growth spurt looks set to stay in place but there is going to be some turbulence over market share. Tesco more than doubled online orders - from 600k a week to 1.5m and are hiring the people needed to achieve this. Ocado have to manage the shift from their 20 year partnership with Waitrose to the new M&S one - and are taking a pop at Waitrose;
…..they don’t have the technology, the infrastructure or the systems. To put it bluntly, they don’t understand the online market like we do.”
I have made the switch to Waitrose and it’s actually fine. Just like Tesco they have thrown people at the problem and it works. But as the FT reminds us, picking, packing and delivering is expensive and the move to online will hit the margins for retailers.

But there is a bigger picture. In all markets we are seeing collaboration between retailers and delivery firms. Waitrose are testing a partnership with Deliveroo and Morrisons are working with Amazon Prime. Delivery Hero is buying up rivals - InstaShop in Dubai and Baemin in  South Korea - with the ambition of taking on Korean ecommerce leader Coupang.
Food deliveries have the advantage of being regular and the consequent high utilisation means the costs of the extra infrastructure are paid for. It’s why Amazon has to be a player in grocery - their food delivery can easily add more parcels to be delivered along their route.
And as Asda comes up for sale, the ecommerce potential complicates the valuation that PE firms may consider paying
If you want to go deeper there is a good Sifted report on On Demand Food Delivery
Action? - it’s now critical that CPG brands are optimised for and included on these new services - it is likely many will have a limited range and if you are not part of that range ….
Acquiring customers through ads is both a defining factor in DTC and one of the most familiar business model in the world. It’s not easy, but get it right and your business can soar..
For a long time now I have ended my talks with a chart saying It’s time to experiment - which was inspired by a 2005 McKinsey paper on Boosting returns on marketing investment
The paper argued that marketers should be investing 20 to 25% of spending to finance well-structured experiments. Much of what the article says still makes lots of sense today;
One of the best ways to diagnose a marketing organization's ROI discipline is to assess the extent and quality of the media and messaging tests in progress at any given time. Some will be simple, such as testing higher levels of expenditure or new media for a proven message, reducing the frequency of mailings to see if response rates change, and testing a new advertising message in a particular region. Others, such as a simultaneous test of a new message and new media for a growing segment of profitable customers, are bigger departures from the routine. Marketers who skimp on experimentation, however, may be overtaken by changing media patterns or forced to assume large risks by rolling the dice on unproven programs when markets shift.
Google have shared some great examples of experimentation by a selection of brands. The Guardian looks at the small brands experimenting with TV as the costs plummeted - hopefully they have good methodologies for measuring the impact. Essence have shared some smart thinking on how the user experience of advertising needs to be improved.
Pinterest Tests Product Ratings, “Best Seller” Labels
Action? How much of your adspend is experimental? Do you have a process to measure impact and adjust your core strategy accordingly?
Brand Stories 
Damian Soong tells us how he started his company Form Nutrition - from the Orlebar Brown site
Costco on their super successful private brand Kirkland Signature. 
Emerging Business Models
The next great consumer companies won’t be exclusive clubs. They will be inclusive cults.
Market Networks: Dissecting ‘The Business Model Of The Decade’
Chinese Consumers Wholeheartedly Embrace Chinese Valentine's Day “Qixi”
GQ is another publisher making a success of ecommerce for their community
A Playbook to Store Design Driven by The Package Journey - from Curbside pickup to buy online pick up in store and returns
How the cult of Brandy Melville took over the internet - and Depop.
'We have to be open to failure': Why Ocean Spray launched a brand incubator for the DTC era
Why retailers are seeing app downloads surge
Walmart Introduces Walmart+ - their answer to Amazon Prime?
Retail and tech group The Hut to reveal £4.5bn float plan
Do Online retailers collude to hike prices? Economists think so
CVS now stocks groceries from DTC site Public Goods
Move over e-commerce, here comes ‘headless commerce’
TikTok creators can soon sell merch directly in the app with new Teespring integration
Facebook has abandoned the IDFA and may kill FAN for iOS. What’s next for mobile measurement? Lots of implications for customer acquisition and I will be talking about this at the POQ App Commerce festival next week. If you are in the retail space, get your free ticket here
Action? There is so much opportunity for smart Merchants right now - I have expertise, experience and an extensive network. Lets talk about how I might help you - hit reply
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