Shelf Talk: 15 blurbs on Amazon, Whole Foods, and CBD

  Amazon & Whole Foods

On August 28, it will be two years since Amazon closed on its acquisition of Whole Foods. Since then, Amazon hasn’t had any huge grocery breakthroughs. “It has expanded grocery delivery and online ordering into dozens of Whole Foods stores, cut prices on select items and offered discounts for Prime members.” Consumers’ value perception has improved, but the chain still has a small fraction of U.S. grocery revenue. If nothing else, I figured Amazon would be well on its way to in-sourcing its supply chain, largely handled by UNFI, but that’s been status quo. (Bloomberg)

Well, maybe Amazon’s grocery ambitions aren’t exclusively tied to Whole Foods. Another report points to Amazon planning to open grocery stores under the Amazon name -- possibly 2,000-3,000 stores, rivaling Kroger and Albertsons in footprint. NYT talked to 15 current and former Amazon employees to get details. (NYT, previous reporting by WSJ $ / Techcrunch summary)

Perhaps there’s another way to think about the Whole Foods strategy. Two years ago, Whole Foods instantly became Amazon’s best customer for the grocery services it has been developing for years. Amazon’s strategy in general is to develop services for which it can become its own best customer. I first heard this from a very smart colleague and subsequently saw a related blog post from Ben Thompson’s Stratechery. “Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.” (Stratechery)

Meanwhile, Amazon has spent seven years working on getting rid of cashiers. A good write up on the development of Amazon Go, the cashier-less stores where you pick your items from the shelf and just walk out. (Bloomberg) (via Benedict Evans)

And Amazon applied for a retail liquor license for a 200 square foot store in San Francisco. It will be open from 8am to 4pm and offer deliveries from 8am to midnight. (BI)

Amazon’s profit streak ends. Yes, they have been profitable -- surprising to many who assume tech companies all operate at a loss -- and setting records each quarter at that.  It earned $2.6B in the latest quarter, down from $3.6B in the prior quarter. Some 80% of that income, or $2.1B, comes from Amazon’s AWS cloud computing unit. Growing competition from Google and Microsoft has been slowing AWS growth. (WSJ $)

Then there’s the potential for government antitrust intervention. U.S. Treasury Secretary Steven Mnuchin said that Amazon “destroyed the retail industry across the United States,” some strong words for a company that’s owned by the publisher of the Washington Post, which has been critical of the administration. It’s worth remembering that Amazon’s share of overall U.S. retail is about 4%. (Bloomberg)

 CBD

Many brands I work with are looking to see if there’s a way to incorporate CBD into their products, allowing them to create higher-priced offerings.

What is CBD anyway? Most consumers who use it turn to it for help with managing pain and anxiety, and the only FDA-approved use is for treatment of two types of epilepsy. (CStore Decisions)

CBD has been gaining popularity -- but it’s probably illegal, at the federal level at least. A tobacco shop outside Dallas was raided, and there are bans in CA, GA, and NYC. Sellers have been arrested in TX, OH, NE and other states. Meanwhile, CO has no restrictions and MO even allows CBD to be served in alcohol. The strict federal rule: CBD is legal but only with a prescription and if it contains less than 0.3% THC. States and cities have regulated it differently. Odds are that this will change, given the sheer number of companies getting involved, but for now... it's complicated. (Please don’t hold me to any of this; I am not a lawyer and don’t even play one on TV.) (NYT)

NYC’s health department has ordered restaurants and bars to stop selling CBD-infused food and beverage products. Any such products will be embargoed. (Gothamist)

FDA held a CBD hearing in May, with advocates arguing for FDA to establish rules ASAP to allow consumers to know more accurately and clearly what they’re buying and level the playing field for brands in the space. (WaPo)

Meanwhile, in July, FDA issued a warning letter to Curaleaf for “illegally selling” CBD products with “unsubstantiated claims.” (CNBC)

Online grocer Thrive Market temporarily stopped selling CBD and hemp-based products in June after a demand from their payment processor. Last week, those sales restarted. (Grocery Dive, Media Post)

None of this has stopped many brands from developing products that contain CBD. For example, the maker of Arizona Iced Tea is licensing its brand to cannabis company, Dixie Brands, for vape pens, gummies, and more. (BI)

Then there’s the mall. Ohio cannabis company Green Growth Brands will be opening 108 stores in Simon Malls and more than 70 stores in Brookfield Properties’ malls. Hopefully this will help ease the angst mall operators are feeling as more and more traditional mall stores close. (Retail Brew)
 

🎲 Unrelated but useful

Every day, the U.S. Postal Service emails me scans of the mail I'll receive later that day. I like seeing whether there's something I need to pay attention to when I get home. It's free: USPS Informed Delivery.
 

Until next time,
Scott Sanders