Welcome to 3PM Snacks, a mid-week (and mid-day!) rundown of what’s going on in the worlds of eCommerce, big data, and artificial intelligence. We hope you find it informative and easy to digest.
Amazon is in the midst of a BIG capital investment cycle, announcing earlier this year that it would spend $800 million to expand its fulfillment network and offer free 1-day delivery to tens of millions of Prime members. In its 2nd quarter earnings call in July, Amazon said that 1-day delivery is costing more than expected, but it isn’t worried:
It does create a shock to the system. We are working through that now and we expect we’ll be working through that for a number of quarters. But when the dust settles, we will regain our cost efficiency over time.
The dust may not be settling yet though. On Tuesday, the Wall Street Journal reported that Amazon leased 500,000 square feet in a three-story warehouse developed by Prologis in Seattle’s Georgetown neighborhood. This is a first-of-its-kind, urban warehouse project for the eCommerce giant, aimed at bringing inventory closer to customers in dense metropolitan areas. If this warehouse produces step-change efficiencies, expect to see Amazon ramp up its investments in them (and perhaps some underwater warehouses as well).
Well, sort of. It’s actually investing in devices that plug into point-of-sale systems for brick-and-mortar retailers, offering these retailers a way to have their inventory visible in Google searches, on Google Maps, and Google’s See What’s In Store pages, to customers nearby who are searching for those items. In other words, Pointy brings online traffic into stores.
Critics are skeptical of Pointy, arguing that Pointy is “investing in buggy whips when the car is coming.” But Pointy co-founder Mark Cummins disagrees:
There are a lot of people who believe Amazon will kill local retail and everything will come in a drone and we will just sit at home and order on our smartphones. I don’t share that vision of the future.
Pointy isn’t yet profitable, but it is playing in a space — i.e., mom and pop shops — that has been neglected by the tech industry. Perhaps, with time, your casual mobile product searches while at the bus stop while lead you to the local retailer around the corner, rather than to Amazon.
Shopify, the “anti-Amazon,” continues to punch above its weight in the fight for eCommerce dominance, taking (another) big swing at Amazon by acquiring 6 River Systems, a warehouse automation and management technology developer. The acquisition brings the best and brightest in the field of robotics to Shopify which, like Amazon, is looking to automate its warehouses.