Shelf Talk: Peapod at 30, Amazon Prime at 15, the raisin mafia, + 9 more
Some of what I've been reading since I was last in touch:
Grocery E-commerce
Grocery e-commerce dates to 1989, when Peapod started. Despite hitting a 30-year anniversary this year, very few people buy groceries online, despite the obvious proliferation of technology. The Atlantic’s article (Why People Still Don’t Buy Groceries Online) builds on my thesis that grocery e-commerce still isn’t a big factor and may not be for a while.
Some takeaways:
Nearly half of online grocery sales are click-and-collect (not delivery) (up from 18 percent in 2016)
"No one has made any great amount of money selling groceries online… In fact, there have been a lot more people losing money.”
More people buy groceries online elsewhere: South Korea: 20%, UK 7.5%, Japan: 7.5%
Unlike the United States, those countries have “just a few large population centers, which makes it easier for delivery companies to set up shop in a few big cities and access a huge amount of purchasing power.”
Some shoppers said “they liked picking out their own meat and produce, and that they don’t like planning their shopping ahead of time. Mike Kolodziej, 37, told me he actually likes going to the grocery store. ‘It’s my quiet time,’ he said. He has five kids at home." (Even though I only have two kids, I can relate!)
"And besides… going grocery shopping isn’t all that unpleasant. In the suburbs, people get in their car and drive to spacious stores where they can pick out the produce they like and also find out about new products on the shelves.”
Amazon
Next year marks Prime’s 15th anniversary. I take Amazon’s two-day shipping for granted now, as do more than half the households in the U.S. It’s hard to remember when it wasn't around.
“Back then there wasn’t a blind faith that every Jeff idea was going to be a home run. And so there was a lot of pushback. Very prominent people who are at Amazon today and in high positions told me, ‘You shouldn’t be allowing Jeff to do this,’ and, ‘This is setting a bad example for the company.’”
“The thing I remember very distinctly is this phrase: ‘I want to draw a moat around our best customers. We’re not going to take our best customers for granted.’”
He said something along the lines of: I’m going to change the psychology of people not looking at the pennies differences between buying on Amazon versus buying somewhere else.
And I think that completely changed the mentality. It was brilliant. It made Amazon the default.
Vijay Ravindran (former Amazon director of ordering)
The team was given 4 weeks to launch Prime, in time to hit the 2004 Q4 earnings call. That’s a crazy timeline.
Vox’s oral history of Amazon Prime
Amazon’s annual shareholder letter for 2019: “Third-party sellers are kicking our first party butt.”
Sales by Amazon directly: $117B (42% of sales)
Sales by third parties on Amazon: $160B (58%!)
(SEC)
Walmart
Walmart is planning a new home office campus in Bentonville, Arkansas, drawing inspiration from McDonald's new campus in Chicago. During my past visits there, I always marveled at how a $500B organization operates out of such modest quarters. This will be a change, though I suspect they will retain plenty of the modesty for which Sam Walton was famous. (CNBC)
Among the many retail innovations Walmart is experimenting with, recent job posts allude to a personal shopping service and cashier-free checkouts, ala Amazon Go. This all comes via its Store No. 8 incubator. (Techcrunch)
Brands
Beyond Meat had “...the biggest IPO pop for a company with a market cap larger than $200 million that Wall Street has seen since the year 2000. The company that made that last big debut 19 years ago? Palm." After IPOing at $25, share prices were more than 2x in the first day of trading. More than a month later, prices hit $138 (on June 10), more than 5.5X higher. (Fast Company)
Price-pack architecture is leading ConAgra to come up with a range of new products, cross-pollinating their large stable of brands with manufacturing capabilities, including many that came from their Pinnacle acquisition. Quotes from ConAgra’s COO allude to price-pack architecture research (similar to past work I’ve done) that presumably shows the brands have “permission” to play in these new spaces.
Some of the new products:
- Vlasic vacuum-fried pickle chips (shelf stable)
- Slim Jim pork rinds
- Bigs Vlasic dill sunflower seeds
- Duncan Hines single-serve cake cups
- Fries from three brands (Andy Capps, Bigs, and Slim Jim)
(Baking Business)
Craft brewers Boston Beer Company and Dogfish Head will merge (Shelby Report)
Related
There is a raisin mafia: “As he tried to make changes in the raisin industry and at his own company, Mr. Overly said he faced intimidation, harassing phone calls and multiple death threats. With his spouse in the last trimester of a pregnancy, Mr. Overly found a note shoved into a crack of his front door that warned: ‘you can’t run.’” Woah. (NYT)
CBD is in everything. Idaho scientists have figured out how to infuse it into potatoes (via NextDraft) (Boise Times)
Netflix plays a supporting role in your produce. “Long days of planting are also good for binge-watching ‘The Office’ from comfy tractor cabs” (via Benedict Evans) (WSJ)
Pea protein is hot as a key ingredient in some of the new plant-based proteins, like those from Beyond Meat, and it’s in short supply. (Bloomberg)
Unrelated (and useful)
A must read for summer time: What drowning really looks like: “Of the approximately 750 children who will drown next year, about 375 of them will do so within 25 yards of a parent or other adult. In 10 percent of those drownings, the adult will actually watch them do it, having no idea it is happening.” (via Benedict Evans) (Soundings)
With best regards,
Scott Sanders