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.
It’s not Black Friday yet — it’s not even November yet — but that apparently isn’t stopping the likes of Amazon, Best Buy, Costco, Target, and Walmart from launching their holiday deals. While this is likely a response to the shortened holiday season this year — there’s one less shopping weekend between Thanksgiving and Christmas this year — one can’t help but think this is a sign of things to come.
Traditionally, the focus in retail has been on two types of holiday shoppers: the Deal Seekers (i.e., Black Friday through Cyber Monday) and the Last Minute Shoppers (i.e., December 15-25). But should retailers and etailers start thinking more broadly? In particular, should they be thinking about the increasing numbers of Early Bird and Evergreen shoppers? A recent Google study suggests that they should. Here’s the key infographic from the Google study, for our TL;DR readers:
This shift will certainly be one to monitor, but for brands, the implication is clear: Q4 preparation MUST start in Q3. That means inventory planning, promotional strategies, digital content, and on and on.
Amazon is spending a lot on shipping this year. As Jay Greene in the Washington Post reports:
Amazon said it plans to spend about $1.5 billion more in the current quarter to get packages from its warehouses to its top customers in one day, rather than two. That’s on top of massive spending to boost shipping speeds in the second and third quarters.
Should this scare away investors? It depends on how consumer react. Surely, Amazon is expecting that this move will build “stickiness” by getting more customers to join its Prime program and, in turn, deliver greater lifetime value.
Should this scare away first-party vendors and third-party sellers? Maybe. In past “investment cycles” for Amazon, Amazon absorbed the costs in the short term but passed them along to brands and resellers in the medium term through increased referral fees and fulfillment fees. It’s unlikely that Amazon will adopt a different playbook this time around.
Yesterday, Amazon announced that they’re raising the bar in the grocery eCommerce game by giving Prime members free and fast grocery delivery from Amazon Fresh and Whole Foods Market. In other words, Amazon Fresh, which was previously $14.99/month, is now a free benefit for Prime members.
Analysts predicted some version of this strategic move years back when Amazon acquired Whole Foods. Now that it has happened, there are two interesting questions: why is Amazon doing this, and who will bear the cost in the long term?
Why is Amazon doing this? In our estimation, this is a customer acquisition play. Add another huge benefit to Prime membership, and customers will join Prime. After Amazon announced that it had 100 million Prime members in the US last year, many analysts speculated that the Prime member well was tapped. This move is a sign by Amazon that they don’t believe that to be the case.
In terms of the long term consequences, over at Forbes, Kiri Masters speculates that grocery brands will ultimately end up funding this Prime member benefit. We tend to agree with this and, if history is any indication, it’s probably a pretty accurate forecast.