Announcing Deer Hollow ParkYou’ve been to Deer Hollow for many arts events, and we are pleased to announce it is now officially Deer Hollow Park and will be placed into conservation in perpetuity. Entry is by foot via the trail network and Selborne Lane, just beyond the crosswalk at Gainey Lane, and it is open from Dawn to Dusk. The land has a long history, with seven acres owned for the last decade by John & Karen Flanders Reid. This land has now been combined with approx. the same acreage from Serenbe, forming Deer Hollow Park, a wonderful new open space that all Serenbe residents can enjoy. You can read how it’s changed hands multiple times and came to be Deer Hollow Park at our Life at Serenbe blog, along with more details about current and upcoming events, and a permanent art installation
NATURE & WELLNESS
Preserving Land & History
SEPTEMBER 28, 2022
Introducing Serenbe’s first passive park, Deer Hollow Park.
Residents and visitors to Serenbe may be familiar with the greenspace known as Deer Hollow located just inside the main Atlanta-Newnan Road entrance to the community. Some have wandered through the trails, attended ballet performances by Terminus Modern Ballet Theatre or maybe thrown a frisbee or walked their dog. What they may not be familiar with is the area’s long and storied history prior to this month’s official opening and new landscaping.
Thomas Jefferson Barfield was the first owner of the land in the late 1800s. He lived in a small cabin and added to it as his family grew until he eventually sold the land and house to James “Jimmy” Shell and then moved into Palmetto. Jimmy and his second wife Frances, remodeled a one room log school house on the property to be their family home, building onto it as the family grew. The little cabin found itself surrounded by rooms until it became the hallway of a very beautiful Victorian cottage. Jimmy had three children from a previous marriage, and he and Frances Ann had another 17 children. Their oldest child, Homer, was born October 19, 1888, and their youngest, Hattie Edison, lives within walking distance on Rico Road. Their youngest son, Andrew, lived at the family home after their deaths. A recent family reunion on the land hosted over 200 people and family members still live in Chatt Hills.
A few years after the Nygren’s purchased the original farm property in the early 1990s, now The Inn at Serenbe, they purchased an adjoining 60 acres, which included what remained of the original Shell homestead – the chimney foundation. Long before Steve imagined a community, he sold 10 acres to friends Smith Hanes and Alyssa Berry of Bella Cucina, who were planning to build a home, gardens, test kitchen, and cooking school. The years passed, Serenbe was conceived, and in the first years of success Smith and Alyssa’s plans changed, resulting in the sale to mutual friends and early Serenbe residents John and Karen-Flanders Reid.
The Reids also had a dream to build on the property, yet once they found a home on Hearn Road and saw their land sitting unused, they graciously opened it up to arts programming and private events including those magical Terminus ballet performances.They fell in love with the historic cabin and fireplace foundation on the property and over the years have lit it up during the holidays and opened it up to friends on Christmas Eve.
After 10 years of ownership, John and Karen came to an agreement with Serenbe to incorporate the acreage into the community, creating five estate lots and leaving the remaining acres in permanent conservation per the Chatt Hills 70/30 land overlay plan. The land was combined with matching acreage from Serenbe to extend the greenspace to Selborne Lane creating Deer Hollow Park.
They contracted with Land Plus Associates, owned by Serenbe residents Alec Michaelides and Kenneth Lemm, to design an effortless and rural landscape plan to further organize the space. This area was named Deer Hollow by Karen because this is where the deer gather, and it will be a passive natural greenspace, meaning it won’t be for organized sports or other similar activities. Rather, it is a tranquil open space for people to relax in or meander through the trails. There will be an open green and seating area, plus beautiful trails surrounding it that will showcase temporary and permanent public art installations, that will continue The Reid’s legacy of hosting the arts. The historic structures the Reids loved so much will remain on the property, but will not be accessible to visitors so that they may be preserved.
The first art installation at Deer Hollow Park is funded by a community organization that came together during the summer of 2020, with a vision to curate and install a welcoming sculpture. Their hard work and determination has resulted in a permanent installation by internationally acclaimed sculptor Curtis Patterson. His piece, “Serenity for Shango,” pays homage to the lineage of African American culture. Shango is a deity of the Yoruba people of Nigeria and his traditional double-ax figurehead is believed to imbue both power and energy. In this piece, the double iron is an analog to the double ax meant to recognize those who served as domestic laborers for hundreds of years in this region. The sculpture celebrates the iconography of African art and the profound impact it has had on modern and contemporary art. The surrounding gathering space provides an opportunity to connect with others and the serene wonder of nature. Curtis Patterson’s piece has been installed and is available for all to view and enjoy. Art Farm at Serenbe will be responsible for the sculpture as part of the Public Art & Special Projects Council.
Art Farm is also bringing a temporary installation to Deer Hollow Park. Artist Kristine Mays’ “Rich Soil” exhibition will be on display, with a public opening October 1, 2022. RSVP HERE. Kristine is an artist currently living and working in San Francisco, California. Independently trained and a self-described “maker”, she began creating with wire in 1993, after years of drawing, sketching, sewing, and bead work. Of her current work, Mays says, “I am honored and humbled that I can spend my life creating artwork and sharing it with the world.” Kristine’s pieces were recently on view at The Atlanta Botanical Gardens and will be on view at Deer Hollow through 2023.
Visit Deer Hollow, available from dawn to dust, to relax or enjoy the art installations. Entry is by foot via the trail network and Selborne Lane just beyond the crosswalk at Gainey Lane.
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The Deer Hollow greenspace landscape work and the first permanent public sculpture has been installed. The land has a long history and you can read how it’s changed hands multiple times and came to be Deer Hollow, as well as, learn about current and upcoming art installations HERE. Entry is by foot via the trail network and Selborne Lane just beyond the crosswalk at Gainey Lane and is open from dawn to dust.
Two kinds of fiber can aid your gut: soluble fiber — the gummy fibers we get from foods like oatmeal and apple skins — and insoluble fiber, which serves as a laxative that helps push food through the digestive system. Nuts, whole grains, beans and legumes can be good sources of insoluble fiber, Ms. Czerwony said.
Dr. Sonnenburg published a study in August showing that fermented foods like yogurt, kimchi, kefir, sauerkraut and kombucha can increase the diversity of bacteria in the gut. His research found that people who ate six servings of fermented foods each day saw these benefits — the equivalent of consuming one cup of yogurt, one 16-ounce bottle of kombucha and one cup of kimchi in a day.
Past research has linked high levels of diversity in your gut microbiome to lower rates of obesity, diabetes and other health conditions.
An enormous new analysis of the wiring of the fruit fly brain is a milestone for the young field of modern connectomics, scientists say.
By Emily Anthes
Oct. 26, 2021
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The brain of a fruit fly is the size of a poppy seed and about as easy to overlook.
“Most people, I think, don’t even think of the fly as having a brain,” said Vivek Jayaraman, a neuroscientist at the Janelia Research Campus of the Howard Hughes Medical Institute in Virginia. “But, of course, flies lead quite rich lives.”
Flies are capable of sophisticated behaviors, including navigating diverse landscapes, tussling with rivals and serenading potential mates. And their speck-size brains are tremendously complex, containing some 100,000 neurons and tens of millions of connections, or synapses, between them.
Since 2014, a team of scientists at Janelia, in collaboration with researchers at Google, have been mapping these neurons and synapses in an effort to create a comprehensive wiring diagram, also known as a connectome, of the fruit fly brain.
The work, which is continuing, is time-consuming and expensive, even with the help of state-of-the-art machine-learning algorithms. But the data they have released so far is stunning in its detail, composing an atlas of tens of thousands of gnarled neurons in many crucial areas of the fly brain.
Not to be confused with co-working, co-ops, or condos, co-housing is its own cultural phenomenon.
This is a major article in the NYT describing a decades-old phenomenon of co-housing, and updating the phenomenon with present day facts:
Co-housing
20211024
CREDIT:
The most recent manifestation of the communalist impulse is the postvaccine nostalgia for the pandemic pod. People are now telling reporters that they miss the camaraderie of those pared-down social networks, as well as the frequent physical company of the same group of friends, the “transformative power of proximity,” as the psychologist Susan Pinker calls it.
I was late to find out about co-housing, a species of intentional community that dates back 30 years, in the United States, anyway. (It emerged in Denmark in the 1970s.) Forced to characterize co-housing in a phrase, you might say “living together, separately.” Those living together have built a community based on, well, belief in community. But they live separately, in that they own their homes, condo-style.
Co-housing sounds confusingly similar to co-living but has a whole different vibe. Co-housers aren’t transient. They have a much stickier idea of social affiliation, and they’re not about to rent a bedroom in some random complex. To draw even finer distinctions: Co-housing communities are not communes. Residents do not give up financial privacy any more than they give up domestic privacy. They have their own bank accounts and commute to ordinary jobs. If you were lucky enough to grow up on a friendly cul-de-sac, you’re in range of the idea, except that you don’t have to worry about your child being hit by a car as she plays in the street. A core principle of co-housing is that cars should be parked on a community’s periphery.
This, I thought, was an idea with promise. Co-living accommodates precarity; co-housing seeks stability. Podding is a byproduct of the collapse of society; co-housing builds society.
The most recent manifestation of the communalist impulse is the postvaccine nostalgia for the pandemic pod. People are now telling reporters that they miss the camaraderie of those pared-down social networks, as well as the frequent physical company of the same group of friends, the “transformative power of proximity,” as the psychologist Susan Pinker calls it.
I was late to find out about co-housing, a species of intentional community that dates back 30 years, in the United States, anyway. (It emerged in Denmark in the 1970s.) Forced to characterize co-housing in a phrase, you might say “living together, separately.” Those living together have built a community based on, well, belief in community. But they live separately, in that they own their homes, condo-style.
Co-housing sounds confusingly similar to co-living but has a whole different vibe. Co-housers aren’t transient. They have a much stickier idea of social affiliation, and they’re not about to rent a bedroom in some random complex. To draw even finer distinctions: Co-housing communities are not communes. Residents do not give up financial privacy any more than they give up domestic privacy. They have their own bank accounts and commute to ordinary jobs. If you were lucky enough to grow up on a friendly cul-de-sac, you’re in range of the idea, except that you don’t have to worry about your child being hit by a car as she plays in the street. A core principle of co-housing is that cars should be parked on a community’s periphery.
This, I thought, was an idea with promise. Co-living accommodates precarity; co-housing seeks stability. Podding is a byproduct of the collapse of society; co-housing builds society
Out of the 165 co-housing communities around the country, Eastern Village interested me because it’s urban and vertical, while the majority are suburban or at least suburbanish. I wondered whether co-housing could survive the claustrophobia of city living and the resulting need for personal space. My cheeks still get hot with embarrassment when I remember a remark in an elevator: It was a few years after my son was born, and I’d moved back to Manhattan, hoping to find the something I missed in the suburbs. “You’re not from around here, are you?” a man said, after I tried to start a conversation. Oh, right, I thought. People crammed into a box don’t want to talk to a chirpy lady they might have to edge away from. I never did get to know the other families in the building.
There are other, better-known urban co-housing communities around the country, but Eastern Village has the virtue of not being exemplary. For one thing, it was built from the top down rather than the bottom up. Model co-housing tends to be grass-roots: First the group meets to explore its wants and needs, then it finds an architect who designs a community just right for them, and finally it builds. From the time a group of would-be co-housers forms to the time it moves in, two to five years can pass. The idea for Eastern Village, on the other hand, came from a developer. He undertook the daunting task of retrofitting the building, then asked someone better versed in co-housing to go out, put together a group and teach participants how to live together.
The process still took two and a half years, but it struck me as a more replicable model. If co-housing didn’t have to be handcrafted, I thought, maybe it could be scaled up. And this seems the moment to think about how.
Americans may be about to experience three once-in-a-lifetime opportunities to reconsider how they house themselves. The first is the two big spending bills working their way through Congress. If they pass, they could provide billions of dollars to alleviate homelessness and increase affordable housing. The second opportunity proceeds from the shift to working from home: Record numbers of office buildings stand empty and ready for the refurbishing, and they won’t all be refilled
The third force that could push us to change our way of life is a heightened awareness of isolation. In a 2020 survey by the Harvard Graduate School of Education, one-third of Americans described themselves as seriously lonely — up from one-fifth before the Covid pandemic. Loneliness is now understood as a public health crisis, ranking as high among risk factors for mortality as heavy smoking, drinking and obesity.
Contrary to what one might think, the loneliest people in America aren’t the elderly. They’re young adults (close to two-thirds of them, according to the Harvard survey) and mothers of small children (about half). This makes sense: Young people tend to lead migratory lives, leading to weak social ties. Mothers have their children, although almost a quarter of them are raising those children without a partner; the United States has the highest rate in the world of children living with only one parent. With or without a partner, a mother may still have a hard time finding a fulfilling social life, since paid work and unpaid maternal labor take up so much of her time.
The pandemic lockdown exposed women’s solitude, in particular, as a function not just of time but also of space. Afraid to go out into the public domain, all caregivers — the newly full-time ones as well as those who had already put care at the center of their lives — became painfully aware that the private domain can be a very lonely and demanding place.
Under the circumstances, co-housing has the potential, if nothing else, to furnish ideas of how to build for community. After all, you’d never get away with snubbing people in the elevator at Eastern Village
If there is an adage that informs life in co-housing, it’s treat thy neighbor as thy family. Thy extended family, that is, assuming it’s a happy one. And what do happy families do? For one thing, they share stuff. As Rabbi Kimelman-Block led me through what felt like a labyrinth, he opened several overstuffed “sharing closets.” One was full of expensive, space-hogging items like travel cribs and skis. Another was for things being given away.
What else do families do? Well, chores, preferably cheerfully and collaboratively. And indeed, co-housers are expected to sign up for maintenance and cleanup days. Families also look out for one another. In co-housing that means, among other things, helping keep an eye on all the children. Many communities pay for formal day care. Most important, co-housers eat together. Breaking bread is probably the most effective bonding ritual society has ever come up with, and co-housers take turns cooking for and serving meals to other members. Some communities offer meals as often as six times a week. (Attendance is never mandatory.)
Most co-housing communities are anchored by a large, shared kitchen. It forms the heart of the common house, which may also offer pools, carpentry workshops, dance studios or meeting rooms — you name it, some community has it. In Eastern Village, common spaces have been cleverly tucked around the complex. Wending our way from basement to roof, Rabbi Kimelman-Block and I went through a dining room, a room for table tennis and foosball, a living room with a fireplace and fat leather chairs, a children’s playroom, a lamp-lit quiet room, a game room, a laundry room, an exercise room, a small lending library. The kitchen, though, is a problem. It’s not set up to cook communitywide dinners, in part because the fire marshal insisted that it install a crushingly expensive commercial range, and it went instead with a “warm-up kitchen,” as architect and developer Don Tucker calls it. So Eastern Village is more or less stuck with potluck.
But then again, as my mother liked to say, the perfect is the enemy of the good. We have to make do if we want to make change.
Today, the detached single-family house — the lonesome cowboy model of domestic architecture — dominates the American landscape so thoroughly that it feels as if it were inevitable. As of 2019, there were about 100 million single-family homes in the United States (including mobile and prefab homes), compared to about 40 million multifamily ones. But it didn’t have to turn out this way. Although the home on the farm had been the American ideal since Thomas Jefferson popularized pastoralism, as the country urbanized after the Civil War, many visionaries saw opportunities for a less atomized, more female-friendly lifestyle.
The landscape designer Frederick Law Olmsted, for one, imagined Emerald City-like metropolises with public laundries, bakeries and kitchens, taking some of the burden off housewives. Amenities like sewers, gutters and sidewalks would make streets more appealing for women. Women’s rights activists such as Charlotte Perkins Gilmanand a now-forgotten feminist named Melusina Fay Peirce envisioned Eastern Village-like cooperatives in apartment complexes, complete with communal laundries, sewing rooms, kitchens and dining rooms. Peirce called it “cooperative housekeeping” and thought women should make money at it.
During the early part of the 20th century, however, those reveries retreated into science fiction novels. Many forces converged to rob them of reality, not least the Red Scare, when politicians developed an allergy to anything that seemed to have a flavor of socialism or feminism. Along with builders, they began to promote the single-family dream house, with its Harry Homeowner and his happy housewife.
Today, roughly three-quarters of the residential land in metro areas is set aside for such houses and yards. Hub-and-spoke roads and commuter railways have grown up around them. Elaborate exclusionary zoning codes were written to protect them from the taint of commerce and industry — as well as to keep white, wealthy neighborhoods away from Black and poorer ones. The distance between home and everything else imposed by these laws is the reason most Americans need to drive to shop or work.
Back when the majority of breadwinners were male and made the journey downtown unburdened by domestic concerns, a long commute wasn’t a big logistical challenge. Today, mothers are also making those commutes, but they still have domestic burdens. Working from home improves the situation only if child care is available.
Co-housing arose, in part, as a solution to the work-life problem. In 1969, Hildur Jackson — just one among many co-housing pioneers, but an eloquent one — was living in a house in Copenhagen, a law school graduate unsure whether she should stay home with her two little boys or embark on a law career. “There was no apparent third option,” she wrote in a remembrance. Then she read an article titled “Children Need 100 Parents.”
Ms. Jackson decided to start a six-family community on an old farm in a Copenhagen suburb. The families built homes around two giant lawns, which were used largely for games, particularly soccer. The barn was turned into a common house, and three Icelandic horses were bought for the stables. “We chose to have no borders between our gardens,” she wrote. “We raised chickens, tended a large common vegetable garden and had fruit trees and berry bushes.” Days were set aside for community maintenance. When her husband traveled on business, which he did often, “I never felt isolated,” she wrote. When she had her third child, she had 11 other parents to help.
Co-housing (called “living communities” in Denmark) soon spread throughout Scandinavia and to the Netherlands and Germany; communities are now found all over Europe, as well as in Canada, Australia and New Zealand. In the 1980s, the architects Charles Durrett and Kathryn McCamant, who were married and business partners at the time, began importing co-housing to the United States. (Between the two of them, they have built or been consultants on many of the co-housing communities in the country.) The two got involved in the movement because they wanted children but their lives seemed too hectic: “We would come home from work exhausted and hungry, only to find the refrigerator empty,” Mr. Durrett has written. So they went to Denmark to study another way to build for parenting.
Co-housing is the nonthreatening heir of America’s far more radical communitarian past. And during my many years of self-education, I discovered that communitarianism has often had a feminist face.
Early socialists avowed an egalitarianism so radical that it included housewives. Nineteenth-century progressives, male as well as female, understood wives’ solitary and unremunerated duties as central to their oppression. Socialists set up model villages and touted them as a way to inspire workers to abandon cities, factories and industrial bosses. But they also promised to enfranchise women and free them from the shackles of domestic drudgery.
Robert Owen, the most famous British socialist of his day, and his French counterpart, Charles Fourier, envisioned the collectivization of women’s work in communal kitchens, dining rooms and nurseries, although they seemed to think this would require the construction of vast, ornate (and unrealistic) palaces. Owen’s and Fourier’s followers, known as Cooperators, established close to 50 socialist communities in rural areas in the Northeastern and Midwestern United States in the 1820s to 1840s. The leaders, who were almost always men, rarely put theory into practice when it came to women. As Carol A. Kolmerten, a historian and the author of “Women in Utopia,” a study of American Owenite communities, wrote, it fell to female Cooperators to prepare the food, wash the clothes and teach the little ones. Or, if the women toiled in fields and workshops, they would still cook and clean in the evenings. Wives who had arrived full of hope left, taking their husbands with them.
Male obtuseness was not the main reason these settlements failed. Other realities proved more damaging. Some settlements couldn’t generate enough cash to pay off the loans that paid for the land. Life in the wilderness wasn’t palatial; it involved log cabins and mosquitoes. Refugees from cities didn’t know how to farm. Class differences among members reasserted themselves, leading to factionalism. But the alienation of one-half of the population (the “woman problem,” Owen came to call it) didn’t help.
On the other hand, secular socialists accounted for only a small fraction of America’s intentional communities. Millenarian Christians — Shakers, Mormons, the Oneida Community and Anabaptist offshoots like the Amish and the Hutterites — built many more, and theirs tended to last longer, as Lawrence Foster writes in “Women, Family and Utopia.” Perhaps that’s because when their leaders broke down the walls of nuclear families to create communal ones, they did so to strengthen their members’ attachment to God and commitment to building his kingdom on earth.
What is remarkable about some of these religious communes is the degree to which they defied the gender norms of their day, in some cases going further than the socialists. The Shakers weren’t feminist in a way contemporary Americans would recognize. They didn’t question the gendered division of labor: Women worked in the kitchens and did the weaving, while men did the farm labor. But women’s work wasn’t seen as inferior to men’s. Both helped sustain the community; therefore both were equal in God’s eyes. More important, Shaker leaders were as likely to be female as male.
In the Oneida Community, a sect that eschewed what its leader called the gloominess of “the little man-and-wife circle” and replaced it with nonmonogamy, women were able to participate without restriction in every aspect of life — religious, economic and social.
Collectivizing domestic labor gave groups incentives to come up with labor-saving household devices. The Shakers patented a water-powered washing machine that cleaned clothes by churning them, an improvement on previous devices. Oneidans may or may not have invented the lazy susan (the point is debated); in any case, they used it to reduce the labor required to serve food in a communal dining hall. With the same goal in mind, they came up with, among other things, an industrial potato peeler and a mop wringer.
These old-time religious communes hold lessons for us moderns. “From a feminist viewpoint the major achievement of most communitarian experiments was ending the isolation of the housewife,” wrote Dolores Hayden in her classic study of feminist communalism, “The Grand Domestic Revolution.” “A second achievement was the division and specialization of household labor.”
A
fter the tour, Rabbi Kimelman-Block roped in whoever was around to talk to me. We gathered on Eastern Village’s xeriscaped roof, its communal green space. Most people brought drinks. I ate Ethiopian takeout. Professions ranged from Realtor to social-justice activist. Eastern Village has 110 residents, 30 of them college age or younger. The ones I met were mostly middle-aged, though one couple bought in when they were in their 70s.
Parenting was the leading answer to my question about why they’d chosen co-housing: Kids aren’t stuck in their apartments; they can run downstairs. Neighbors’ kids or older members were almost always around to babysit, and for a while, there was a somewhat more formal day care arrangement. Adults benefit from the ad hoc interaction, too. Instead of planning dinner or drinks weeks in advance, on any Wednesday or Saturday, a sociable soul can find a neighbor to share a snack or a beer with.
One unexpected comment came from Adrienne Torrey, a curly-haired middle-aged woman with a relaxed manner. “Co-housing attracts a lot of introverts,” she said. That hadn’t occurred to me, but inclined to introversion myself, I immediately saw the logic. Who needs a community more than those who have a hard time spontaneously cobbling one together? Or — my next thought — than new parents stranded by their change of circumstance? By contrast, as soon as you show up in co-housing, you are swept into a round robin of meals and festivities and cleanup days.
The most controversial topic that evening was meetings. Almost all co-housing communities make big decisions by consensus. One member complained that arriving at unanimity is cumbersome and unnecessary. The rest disagreed. However long consensus takes, everyone feels heard and learns the art of compromise. That, I’m told, may be the most important key to successful group living.
I
f co-housing offers solutions for so many of the problems from which America’s mothers suffer, if we are now uniquely positioned to put at least some of its lessons into effect — thanks to the pandemic’s unintentional consciousness-raising and the possibility that Congress will pass the Biden administration’s plans to rebuild the economy — what’s stopping us?
During one of my several conversations with Charles Durrett, I asked what he would identify as the biggest obstacle to building co-housing in the United States. “Our culture,” he said promptly. “We tend to think of ourselves as independent pioneers. We’re not a cooperative kind of culture.” But he grew up in a tight-knit neighborhood, he said, and his neighbors “played a huge role in my well-being.”
But planning departments, regional as well as municipal, don’t help. Typical American zoning laws frown on multifamily complexes unless they’ve been exiled to poorer parts of town. Even accessory dwelling units, such as mother-in-law apartments, are unpopular, lest they be rented to “undesirables.” Those are the most notorious restrictions; they’re not the only ones Mr. Durrett has had to fight as he tried to build co-housing.
City planning laws simply don’t envision communities focused on residents’ helping one other and keeping children safe. One city demanded two-car driveways for each unit, a waste of space and money in a community that keeps cars far from houses. When a town insisted that to accommodate the number of people in a proposed community, it would have to pay for a $1 million fire truck, Mr. Durrett asked the officials what the fire department’s most common call was. “Pick up and put back,” they told him, meaning putting seniors who have fallen out of their beds back into them. “We can do that for ourselves,” he said. Finding people who can put other people back in bed is precisely what co-housing is good at.
The other challenge, of course, is that not all people want to share their lives. People have to be willing to sacrifice time (all those meetings, the grounds maintenance) and the luxury of self-absorption (the small talk expected from those on their way to the mailroom). Co-housing may consume emotional energy that would otherwise go to keeping other social circles — work colleagues, college buddies, fellow parents at our children’s schools — spinning in the air. “Living in co-housing is not easy,” said Ann Zabaldo, the person hired by Eastern Village’s developer to recruit and educate its future occupants about the art of co-housing. But, she added, “it is so much richer, like drinking deeply from the well.”
Communal living by itself will never solve any one major social problem, be it loneliness or sexism or anything else. Although much more communal architecture can (and should) be built, you can’t mass-produce community. People have to be able to see the benefits before they’ll make the necessary commitments.
But life is changing in ways that may make collaborative coexistence more attractive. Rents are on the rise. People are getting used to the sharing economy. And then there’s that bottom-line truth exposed by the pandemic: Take away child care, and women stop working for pay and don’t start again, like the nearly two million of them who have dropped out of the labor force since February 2020. Something must be done.
In the past few years, states and cities around the country have started reconsidering single-family zoning or dared to vote to put an end to it. Last month, Gov. Gavin Newsom of California signed into lawbills to limit single-family zoning and permit construction of buildings with up to 10 units near public transit.
A wholesale revision of zoning codes could lead to a new built environment, one that would nudge us toward a new mind-set. We should build co-housing on a large scale. But even if we don’t, we could start reshaping the contours of our hyperindividualist and antimaternalist landscapes so as to encourage solidarity and fellow feeling rather than aloofness: Co-housing communities are centered on their greenswards; we need more parks. Co-housing puts people before cars; towns and cities should do the same. Co-housers live together, meaning they are around in case of need; the least inspiration we can take from that is to make our housing stock more varied, less focused on the nuclear family, so that members of extended families and groups of friends can be there for one another, too.
If this sounds not unlike the best-designed urban neighborhoods in America, well, maybe it’s not. But the pandemic has sparked a flight from cities and a demand for more suburban housing, and the boom in the market right now is in exurbia — low-density, lower-cost suburbs on the outer edges of metropolitan areas. As these neighborhoods are built, in all likelihood old design habits will prevail. But there’s no harm in imagining, and fighting for, a land-use philosophy focused on making life more pleasant for parents and children — and for the introvert in all of us.
I
n the 19 years since I had my first child, I have spent a lot of time thinking about how my life might have been different if I’d known about Hildur Jackson’s “third option.” What if there had been tens of thousands of co-housing communities in America instead of a couple hundred? Maybe I would have moved into one rather than back to unfriendly Manhattan.
If I had to single out one feature of cooperative living I find particularly attractive, it would be regular, spontaneous contact with people of all ages. I had my children later in life, and my parents weren’t healthy enough to spend as much time with their grandchildren as all of us wanted, and then, as happens, they died. I’m nostalgic for an intergenerational experience I never had.
A few weeks ago, I watched my teenage daughter spend an entire meal talking conspiratorially to two of my best friends. How often do American teenagers open up to their parents’ friends? What would it have been like for her to be able to do that throughout her childhood with surrogate aunts and uncles and grandparents? The three of them sat just out of earshot, making it hard for me to eavesdrop, which I’m sure was the point. But the sight of them gossiping made me think that maybe, despite the blank suburban streets and the chilly city elevators and my never quite figuring out where we should live, I’d done something right.
Judith Shulevitz (@JudithShulevitz) is a cultural critic and the author of “The Sabbath World: Glimpses of a Different Order of Time.” She still lives in New York City.
The secret to successful aging may lie in part in your gut, according to a new report. The study found that it may be possible to predict your likelihood of living a long and healthy life by analyzing the trillions of bacteria, viruses and fungi that inhabit your intestinal tract.
The new research, published in the journal Nature Metabolism, found that as people get older, the composition of this complex community of microbes, collectively known as the gut microbiome, tends to change. And the greater the change, the better, it appears.
In healthy people, the kinds of microbes that dominate the gut in early adulthood make up a smaller and smaller proportion of the microbiome over the ensuing decades, while the percentage of other, less prevalent species rises. But in people who are less healthy, the study found, the opposite occurs: The composition of their microbiomes remains relatively static and they tend to die earlier.
The new findings suggest that a gut microbiome that continually transforms as you get older is a sign of healthy aging, said a co-author of the study, Sean Gibbons, a microbiome specialist and assistant professor at the Institute for Systems Biology in Seattle, a nonprofit biomedical research.
“A lot of aging research is obsessed with returning people to a younger state or turning back the clock,” he said. “But here the conclusion is very different. Maybe a microbiome that’s healthy for a 20-year-old is not at all healthy for an 80-year-old. It seems that it’s good to have a changing microbiome when you’re old. It means that the bugs that are in your system are adjusting appropriately to an aging body.”
The researchers could not be certain whether changes in the gut microbiome helped to drive healthy aging or vice versa. But they did see signs that what happens in people’s guts may directly improve their health. They found, for example, that people whose microbiomes shifted toward a unique profile as they aged also had higher levels of health-promoting compounds in their blood, including compounds produced by gut microbes that fight chronic disease.
Scientists have suspected for some time that the microbiome plays a role in aging. Studies have found, for example, that people 65 and older who are relatively lean and physically active have a higher abundance of certain microbes in their guts compared to seniors who are less fit and healthy. People who develop early signs of frailty also have less microbial diversity in their guts. By studying the microbiomes of people of all ages, scientists have found patterns that extend across the entire life span. The microbiome undergoes rapid changes as it develops in the first three years of life. Then it remains relatively stable for decades, before gradually undergoing changes in its makeup as people reach midlife, which accelerates into old age in those who are healthy but slows or remains static in people who are less healthy.
Although no two microbiomes are identical, people on average share about 30 percent of their gut bacterial species. A few species that are particularly common and abundant make up a “core” set of gut microbes in all of us, along with smaller amounts of a wide variety of other species that are found in different combinations in every person.
To get a better understanding of what happens in the gut as people age, Dr. Gibbons and his colleagues, including Dr. Tomasz Wilmanski, the lead author of the new study, looked at data on over 9,000 adults who had their microbiomes sequenced. They ranged in age from 18 to 101.
About 900 of these people were seniors who underwent regular checkups at medical clinics to assess their health. Dr. Gibbons and his colleagues found that in midlife, starting at around age 40, people started to show distinct changes in their microbiomes. The strains that were most dominant in their guts tended to decline, while other, less common strains became more prevalent, causing their microbiomes to diverge and look more and more different from others in the population.
“What we found is that over the different decades of life, individuals drift apart — their microbiomes become more and more unique from one another,” said Dr. Gibbons.
People who had the most changes in their microbial compositions tended to have better health and longer life spans. They had higher vitamin D levels and lower levels of LDL cholesterol and triglycerides, a type of fat in the blood. They needed fewer medications, and they had better physical health, with faster walking speeds and greater mobility.
The researchers found that these “unique” individuals also had higher levels of several metabolites in their blood that are produced by gut microbes, including indoles, which have been shown to reduce inflammation and maintain the integrity of the barrier that lines and protects the gut. In some studies, scientists have found that giving indoles to mice and other animals helps them stay youthful, allowing them to be more physically active, mobile and resistant to sickness, injuries and other stresses in old age. Another one of the metabolites identified in the new study was phenylacetylglutamine. It is not clear exactly what this compound does. But some experts believe it promotes longevity because research has shown that centenarians in northern Italy tend to have very high levels of it.
Dr. Wilmanski found that people whose gut microbiomes did not undergo much change as they got older were in poorer health. They had higher cholesterol and triglycerides and lower levels of vitamin D. They were less active and could not walk as fast. They used more medications, and they were nearly twice as likely to die during the study period.
The researchers speculated that some gut bugs that might be innocuous or perhaps even beneficial in early adulthood could turn harmful in old age. The study found, for example, that in healthy people who saw the most dramatic shifts in their microbiome compositions there was a steep decline in the prevalence of bacteria called Bacteroides, which are more common in developed countries where people eat a lot of processed foods full of fat, sugar and salt, and less prevalent in developing countries where people tend to eat a higher-fiber diet. When fiber is not available, Dr. Gibbons said, Bacteroides like to “munch on mucus,” including the protective mucus layer that lines the gut.
“Maybe that’s good when you’re 20 or 30 and producing a lot of mucus in your gut,” he said. “But as we get older, our mucus layer thins, and maybe we may need to suppress these bugs.”
If those microbes chew through the barrier that keeps them safely in the gut, it is possible they could trigger an immune system response.
“When that happens, the immune system goes nuts,” Dr. Gibbons said. “Having that mucus layer is like having a barrier that maintains a détente that allows us to live happily with our gut microbes, and if that goes away it starts a war” and could set off chronic inflammation. Increasingly, chronic inflammation is thought to underlie a wide range of age-related ailments, from heart disease and diabetes to cancer and arthritis.
One way to prevent these microbes from destroying the lining of the gut is to give them something else to snack on, such as fiber from nutritious whole foods like beans, nuts and seeds and fruits and vegetables.
“It may be possible to preserve the aging mucus layer in the gut by increasing the amount of fiber in the diet,” Dr. Gibbons said. “Or we might identify other ways to reduce Bacteroides abundance or increase indole production through diet. These are not-too-distant future interventions that we hope to test.”
In the meantime, he said, his advice for people is to try to stay physically active, which can have a beneficial effect on the gut microbiome, and eat more fiber and fish and fewer highly processed foods.
“I have started eating a lot more fiber since I began studying the microbiome,” he said. “Whole foods like fresh fruits and veggies have all the complex carbohydrates that our microbes like to eat. So, when you’re feeding yourself, think about your microbes too.”
Anahad O’Connor is a staff reporter covering health, science, nutrition and other topics. He is also a bestselling author of consumer health books such as “Never Shower in a Thunderstorm” and “The 10 Things You Need to Eat.”
The mother lode: a commercial-grade solid state battery, replacing liquid.
Needed: cheaper, longer-lasting.
Article below:
Batteries
Feb. 16, 2021, 5:00 a.m. ET
As automakers like General Motors, Volkswagen and Ford Motor make bold promises about transitioning to an electrified, emission-free future, one thing is becoming obvious: They will need a lot of batteries.
Demand for this indispensable component already outstrips supply, prompting a global gold rush that has investors, established companies and start-ups racing to develop the technology and build the factories needed to churn out millions of electric cars.
Long considered one of the least interesting car components, batteries may now be one of the most exciting parts of the auto industry. Car manufacturing hasn’t fundamentally changed in 50 years and is barely profitable, but the battery industry is still ripe for innovation. Technology is evolving at a pace that is reminiscent of the early days of personal computers, mobile phones or even automobiles and an influx of capital has the potential to mint the next Steve Jobs or Henry Ford.
Wood Mackenzie, an energy research and consulting firm, estimates that electric vehicles will make up about 18 percent of new car sales by 2030. That would increase the demand for batteries by about eight times as much as factories can currently produce. And that is a conservative estimate. Some analysts expect electric vehicle sales to grow much faster.
Carmakers are engaged in an intense race to acquire the chemical recipe that will deliver the most energy at the lowest price and in the smallest package. G.M.’s announcement last month that it would go all electric by 2035was widely considered a landmark moment by policymakers and environmentalists. But to many people in the battery industry, the company was stating the obvious.
“This was the last in a wave of big announcements that very clearly signaled that electric vehicles are here,” said Venkat Viswanathan, an associate professor at Carnegie Mellon University who researches battery technology.
Battery manufacturing is dominated by companies like Tesla, Panasonic, LG Chem, BYD China and SK Innovation — nearly all of them based in China, Japan or South Korea. But there are also many new players getting into the game. And investors, sensing the vast profits at stake, are hurling money at start-ups that they believe are close to breakthroughs.
“I think we’re in the infancy stage,” said Andy Palmer, the former chief executive of Aston Martin and now the nonexecutive vice chairman of InoBat Auto, a battery start-up. “There is more money than there are ideas.”
QuantumScape, a Silicon Valley start-up whose investors include Volkswagen and Bill Gates, is working on a technology that could make batteries cheaper, more reliable and quicker to recharge. But it has no substantial sales and it could fail to produce and sell batteries. Yet, stock market investors consider the company to be more valuable than the French carmaker.
China and the European Union are injecting government funds into battery technology. China sees batteries as crucial to its ambition to dominate the electric vehicle industry. In response, the Chinese government helped Contemporary Amperex Technology, which is partly state-owned, become one of the world’s biggest battery suppliers seemingly overnight.
The European Union is subsidizing battery production to avoid becoming dependent on Asian suppliers and to preserve auto industry jobs. Last month, the European Commission, the bloc’s administrative arm, announced a 2.9 billion euro, or $3.5 billion, fund to support battery manufacturing and research. That was on top of the more than €60 billion that European governments and automakers had already committed to electric vehicles and batteries, according to the consulting firm Accenture. Some of the government money will go to Tesla as a reward for the company’s decision to build a factory near Berlin.
The United States is also expected to promote the industry in accordance with President Biden’s focus on climate change and his embrace of electric cars. In a campaign ad last year, Mr. Biden, who owns a 1967 Chevrolet Corvette, said he was looking forward to driving an electric version of the sports car if G.M. decides to make one.
Several battery factories are in the planning or construction phase in the United States, including a factory G.M. is building in Ohio with LG, but analysts said federal incentives for electric car and battery production would be crucial to creating a thriving industry in the United States. So will technological advances by government-funded researchers and domestic companies like QuantumScape and Tesla, which last fall outlined its plans to lower the cost and improve the performance of batteries.
“There’s no secret that China strongly promotes manufacturing and new development,” said Margaret Mann, a group manager in the Center for Integrated Mobility Sciences at the National Renewable Energy Laboratory, a unit of the U.S. Energy Department. “I am not pessimistic,” she said of the United States’ ability to gain ground in battery production. “But I don’t think all of the problems have been solved yet.”
Entrepreneurs working in this area said these were early days and U.S. companies could still leapfrog the Asian producers that dominate the industry.
“Today’s batteries are not competitive,” said Jagdeep Singh, chief executive of QuantumScape, which is based in San Jose, Calif. “Batteries have enormous potential and are critical for a renewable energy economy, but they have to get better.”
For the most part, all of the money pouring into battery technology is good news. It puts capitalism to work on solving a global problem. But this reordering of the auto industry will also claim some victims, like the companies that build parts for internal combustion engine cars and trucks, or automakers and investors that bet on the wrong technology.
“Battery innovations are not overnight,” said Venkat Srinivasan, director of the Argonne National Laboratory’s Collaborative Center for Energy Storage Science. “It can take you many years. All sorts of things can happen.”
Most experts are certain that demand for batteries will empower China, which refines most of the metals used in batteries and produces more than 70 percent of all battery cells. And China’s grip on battery production will slip only marginally during the next decade despite ambitious plans to expand production in Europe and the United States, according to projections by Roland Berger, a German management consulting firm.
Battery production has “deep geopolitical ramifications,” said Tom Einar Jensen, the chief executive of Freyr, which is building a battery factory in northern Norway to take advantage of the region’s abundant wind and hydropower. “The European auto industry doesn’t want to rely too much on imports from Asia in general and China in particular,” he added.
Freyr plans to raise $850 million as part of a proposed merger with Alussa Energy Acquisition Corporation, a shell company that sold shares before it had any assets. The deal, announced in January, would give Freyr a listing on the New York Stock Exchange. The company plans to make batteries using technology developed by 24M Technologies in Cambridge, Mass.
The first priority for the industry is to make batteries cheaper. Electric car batteries for a midsize vehicle cost about $15,000, or roughly double the price they need to be for electric cars to achieve mass acceptance, Mr. Srinivasan said.
Those savings can be achieved by making dozens of small improvements — like producing batteries close to car factories to avoid shipping costs — and by reducing waste, according to Roland Berger. About 10 percent of the materials that go into making a battery are wasted because of inefficient production methods.
But, in a recent study, Roland Berger also warned that growing demand could push up prices for raw materials like lithium, cobalt and nickel and cancel out some of those efficiency gains. The auto industry is competing for batteries with electric utilities and other energy companies that need them to store intermittent wind and solar power, further driving up demand.
“We are getting rumbles there may be a supply crunch this year,” said Jason Burwen, interim chief executive for the United States Energy Storage Association.
An entire genre of companies has sprung up to replace expensive minerals used in batteries with materials that are cheaper and more common. OneD Material, based in San Jose, Calif., makes a substance that looks like used coffee grounds for use in anodes, the electrode through which power leaves batteries when a vehicle is underway. The material is made from silicon, which is abundant and inexpensive, to reduce the need for graphite, which is scarcer and more expensive.
Longer term, the industry holy grail is solid state batteries, which will replace the liquid lithium solution at the core of most batteries with solid layers of a lithium compound. Solid state batteries would be more stable and less prone to overheating, allowing faster charging times. They would also weigh less.
Toyota Motor and other companies have invested heavily in the technology, and have already succeeded in building some solid state batteries. The hard part is mass producing them at a reasonable cost. Much of the excitement around QuantumScape stems from the company’s assertion that it has found a material that solves one of the main impediments to mass production of solid state batteries, namely their tendency to short circuit if there are any imperfections.
Still, most people in the industry don’t expect solid state batteries to be widely available until around 2030. Mass producing batteries is “the hardest thing in the world,” Elon Musk, Tesla’s chief executive, said on a recent conference call with analysts. “Prototypes are easy. Scaling production is very hard.”
One thing is certain: It’s a great time to have a degree in electrochemistry. Those who understand the properties of lithium, nickel, cobalt and other materials are to batteries what software coders are to computers. Jakub Reiter, for example, has been fascinated with battery chemistry since he was a teenager growing up in the 1990s in Prague, long before that seemed like a hot career choice.
Mr. Reiter was doing graduate research in Germany in 2011 when a headhunter recruited him to work at BMW, which wanted to understand the underlying science of batteries. Last year, InoBat poached him to help set up a factory in Slovakia, where Volkswagen, Kia, Peugeot and Jaguar Land Rover produce cars.
Mr. Reiter is now head of science at InoBat, whose technology allows customers to quickly develop batteries for different uses, like a low-cost battery for a commuter car or a high-performance version for a roadster.
“Twenty years ago, nobody cared much about batteries,” Mr. Reiter said. Now, he said, there is intense competition and “it’s a big fight.”
Jack Ewing writes about business, banking, economics and monetary policy from Frankfurt, and contributes to breaking news coverage. Previously he worked for a decade at BusinessWeek magazine in Frankfurt, where he was European regional editor. @JackEwingNYT • Facebook
Ivan Penn is a Los Angeles-based reporter covering alternative energy. Before coming to The Times in 2018 he covered utility and energy issues at The Tampa Bay Times and The Los Angeles Times. @ivanlpenn
“George P. Shultz is a former U.S. secretary of labor, treasury and state, and was director of the Office of Management and Budget. He is a distinguished fellow at Stanford University’s Hoover Institution.
Dec. 13 marks my turning 100 years young. I’ve learned much over that time, but looking back, I’m struck that there is one lesson I learned early and then relearned over and over: Trust is the coin of the realm. When trust was in the room, whatever room that was — the family room, the schoolroom, the locker room, the office room, the government room or the military room — good things happened. When trust was not in the room, good things did not happen. Everything else is details.”
After dozens of early setbacks, COVID may well be the booster shot that the industry needs. Covid increases the demand for vehicle safety, but this time the demand is different: People don’t want a taxi with a driver who can potentially infect them.
Add Amazon’s purchase of Zoox to the mix, and the next five years is looking brighter.
At $281 billion revenue in 2019, Amazon is a juggernaut, crushing everything in its path. And the tragedy of the coronavirus will undoubtedly boost every aspect of Amazon’s business going forward, because more and more consumers will develop the habit of shopping on-line.
Amazon has surprised everyone, as shown in this remarkable chart of revenue growth, topping off at $281 billion in 2019.
2019 $281 billion
2018 233
2017 177
2016 136
2015 107
2014 89
2013 74
2012 61
2011 48
2010 34
My old forecast that Amazon will exceed $250 billion in sales by 2020 now looks like an antique – they are already at $281 billion! People are now saying Amazon is headed to $500 billion. I believe them.
Amazon has posted consistent year-over-year (YOY) quarterly revenue growth between 17.0% and 42.3% every quarter for nearly four years. In Q1, 2020, the company’s $75.4 billion revenue for Q1 2020 grew 26.3%. Q1 2020 is roughly double that of just three years prior, in Q1 2017.
In Q4 2019, revenue grew 20.8% to $87.4 billion.
With the acquisition in Whole Foods, Amazon now claims “physical and on-line stores” and “hundreds of millions of unique products” in its 10K:
“We serve consumers through our online and physical stores and focus on selection, price, and convenience. We design our stores to enable hundreds of millions of unique products to be sold by us and by third parties across dozens of product categories. Customers access our offerings through our websites, mobile apps, Alexa, and physically visiting our stores. We also manufacture and sell electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo devices, and we develop and produce media content…. In addition, we offer Amazon Prime, a membership program that includes unlimited free shipping on over 100 million items, access to unlimited streaming of thousands of movies and TV episodes, and other benefits.”
In their 2019 10K, they report over 20,000 physical stores, up from 179 in their 2018 !0K. They obviously are betting on a hybrid model.
They report $38.5 billion in net cash provided by operating activities – doubling in just two years. The key to this amazing cash is this statement:
“Because of our model we are able to turn our inventory quickly and have a cash-generating operating cycle3. On average, our high inventory velocity means we generally collect from consumers before our payments to suppliers come due.”
This next statement is totally believable, and make their future very bright:
“We believe that advances in technology, specifically the speed and reduced cost of processing power, the advances of wireless connectivity, and the practical applications of artificial intelligence and machine learning, will continue to improve the consumer experience on the Internet and increase its ubiquity in people’s lives.”
The growth is North America and AWS is clearly the engine for overall growth (with AWS up 47% in 2018 and 37% in 2019:
Growth:
2018
2019
North America
33
%
21
%
International
21
13
AWS
47
37
Consolidated
31
20
The growth in operating income is less impressive than net revenue growth. This is classic Bezos – investing in growth and suppressing earnings:
Operating Income (Loss):
2018
2019
North America
$
7,267
$
7,033
International
(2,142)
)
(1,693)
)
AWS
7,296
9,201
Consolidated
$
12,421
$
14,541
The chart below speaks to free cash flow. It grew from $19 billion to $26 billion in 2019.
Free cash flow
19,400
25,825
Principal repayments of finance leases (1)
(7,449)
)
(9,628)
)
Principal repayments of financing obligations (1)
(337)
)
(27)
)
Free cash flow less principal repayments of finance leases and financing obligations
$
11,614
$
16,170
Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
Year Ended December 31,
2017
2018
2019
Net Sales:
Online stores (1)
$
108,354
$
122,987
$
141,247
Physical stores (2)
5,798
17,224
17,192
Third-party seller services (3)
31,881
42,745
53,762
Subscription services (4)
9,721
14,168
19,210
AWS
17,459
25,655
35,026
Other (5)
4,653
10,108
14,085
Consolidated
$
177,866
$
232,887
$
280,522
___________________
(1)
Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, music, videos, games, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”
(2)
Includes product sales where our customers physically select items in a store. Sales from customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”
(3)
Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.
(4)
Includes annual and monthly fees associated with Amazon Prime memberships, as well as audiobook, digital video, digital music, e-book, and other non-AWS subscription services.
(5)
Primarily includes sales of advertising services, as well as sales related to our other service offerings.
At $233 billion revenue in 2018, Amazon is a juggernaut, crushing everything in their line of sight. And – importantly – Bezos is minting money: they report net income of $10 billion, and yet their 2018 cash flow is $30 billion – up from $18 billion in 2017! And their free cash flow is just as spectacular: $19 billion in 2018, up from $8 billion in 2017.
This sentence of this customer-obsessed online retailer is key: “We generally collect from our customers before our payments to suppliers come due.”
The August, 2017 acquisition of Whole Foods puts a whole new face on Amazon Fresh, a real threat to the grocery industry reported below.
Their fulfillment centers make this miracle possible. They report 253 million square feet of space in their 10K!
They breakout North America, International, and Amazon Web Services. Anyone looking for a slowdown in North America will be disappointed: they grew sales 33% in NA, 21% in International, and a whopping 47% in AWS – Amazon Web Services. With $26 billion in revenue being generated in AWS alone, this web-enabling division is looking more and more like a juggernaut in its own right!
Revenue
Amazon Crush continues unabated.
It seems like only yesterday that I was posting that Amazon was going to pass $100 billion in sales!
Amazon has surprised everyone, as shown in this remarkable chart of revenue growth, topping off at $233 billion in 2018.
2018
233 billion
2017
177 billion
2016
136 billion
2015
107,010
2014
88,988
2013
74,452
2012
61,093
2011
48,077
2010
34,204
The old forecast that Amazon will exceed $250 billion in sales by 2020 is looking very conservative! People are now saying Amazon is headed to $500 billion. I believe them.
“The e-retailer generated $177.9 billion in revenue in 2017, up 30.8% from $136.00 billion in 2016. Its net income also climbed 27.8% to $3.03 billion from $2.37 billion in 2016.”
Each subject is discussed below, but one stands out for me: Amazon Fresh has been replaced by Whole Foods. Here is how Bezos says it:
“When we closed our acquisition of Whole Foods Market last year, we announced our commitment to making high-quality, natural and organic food available for everyone, then immediately lowered prices on a selection of best-selling grocery staples, including avocados, organic brown eggs, and responsibly-farmed salmon. We followed this with a second round of price reductions in November, and our Prime member exclusive promotion broke Whole Foods’ all-time record for turkeys sold during the Thanksgiving season. In February, we introduced free two-hour delivery on orders over $35 for Prime members in select cities, followed by additional cities in March and April, and plan continued expansion across the U.S. throughout this year. We also expanded the benefits of the Amazon Prime Rewards Visa Card, enabling Prime members to get 5% back when shopping at Whole Foods Market. Beyond that, customers can purchase Whole Foods’ private label products like 365 Everyday Value on Amazon, purchase Echo and other Amazon devices in over a hundred Whole Foods stores, and pick-up or return Amazon packages at Amazon Lockers in hundreds of Whole Foods stores. We’ve also begun the technical work needed to recognize Prime members at the point of sale and look forward to offering more Prime benefits to Whole Foods shoppers once that work is completed.”
+++++++++++ PAST AMAZON CRUSH posts ++++++++++
Amazon Crush Sept 2017 Edition
===Amazon Crush Sept 2017 Edition===
Amazon now has the world’s attention. It just landed the cover story of The Economist, printed in its entirety below (together with a YouTube video and a Bloomberg article cited below).
A quick scan of this blog reminds me that I began tracking Amazon in early 2014 with multiple posts, copied here.
I speculated in EARLY 2014 (see post below) that Amazon revenue in 2015 would exceed $100 billion. They finished 2015 at $107 billion – up $11 billion vs 2014. I forecast $130 billion in 2016. They closed at $136 billion. Look at this remarkable growth curve!
2016
136 billion
2015
107,010
2014
88,988
2013
74,452
2012
61,093
2011
48,077
2010
34,204
The old forecast that Amazon will exceed $250 billion in sales by 2020 is looking about right. People are now saying Amazon is headed to $500 billion. I believe them.
Salient points from the article below:
The former bookseller accounts for more than half of every new dollar spent online in America.
Since the beginning of 2015 its share price has jumped by 173%, seven times quicker than in the two previous years (and 12 times faster than the S&P 500 index).
With a market capitalisation of some $400bn, it is the fifth-most-valuable firm in the world.
Last year cashflow (before investment) was $16bn, more than quadruple the level five years ago.
It continues to struggle with grocery, and yet Amazon is moving aggressively to learn from their mistakes. Their purchase of Whole Foods signals their learning that many consumers want to touch their groceries before buying, and they frequently enjoy the buying experience. A recent article in
Amazon, the world’s most remarkable firm, is just getting started
Amazon has the potential to meet the expectations of investors. But success will bring a big problem
Mar 25th 2017
AMAZON is an extraordinary company. The former bookseller accounts for more than half of every new dollar spent online in America. It is the world’s leading provider of cloud computing. This year Amazon will probably spend twice as much on television as HBO, a cable channel. Its own-brand physical products include batteries, almonds, suits and speakers linked to a virtual voice-activated assistant that can control, among other things, your lamps and sprinkler.
Yet Amazon’s shareholders are working on the premise that it is just getting started. Since the beginning of 2015 its share price has jumped by 173%, seven times quicker than in the two previous years (and 12 times faster than the S&P 500 index). With a market capitalisation of some $400bn, it is the fifth-most-valuable firm in the world. Never before has a company been worth so much for so long while making so little money: 92% of its value is due to profits expected after 2020.
That is because investors anticipate both an extraordinary rise in revenue, from sales of $136bn last year to half a trillion over the next decade, and a jump in profits. The hopes invested in it imply that it will probably become more profitable than any other firm in America. Ground for scepticism does not come much more fertile than this: Amazon will have to grow faster than almost any big company in modern history to justify its valuation. Can it possibly do so?
It is easy to tick off some of the pitfalls. Rivals will not stand still. Microsoft has cloud-computing ambitions; Walmart already has revenues nudging $500bn and is beefing up online. If anything happened to Jeff Bezos, Amazon’s founder and boss, the gap would be exceptionally hard to fill. But the striking thing about the company is how much of a chance it has of achieving such unprecedented goals (see article).
A new sort of basket-case
This is largely due to the firm’s unusual approach to two dimensions of corporate life. The first of these is time. In an era when executives routinely whine about pressure to produce short-term results, Amazon is resolutely focused on the distant horizon. Mr Bezos emphasizes continual investment to propel its two principal businesses, e-commerce and Amazon Web Services (AWS), its cloud-computing arm.
In e-commerce, the more shoppers Amazon lures, the more retailers and manufacturers want to sell their goods on Amazon. That gives Amazon more cash for new services—such as two-hour shipping and streaming video and music—which entice more shoppers. Similarly, the more customers use AWS, the more Amazon can invest in new services, which attract more customers. A third virtuous circle is starting to whirl around Alexa, the firm’s voice-activated assistant: as developers build services for Alexa, it becomes more useful to consumers, giving developers reason to create yet more services.
So long as shareholders retain their faith in this model, Amazon’s heady valuation resembles a self-fulfilling prophecy. The company will be able to keep spending, and its spending will keep making it more powerful. Their faith is sustained by Amazon’s record. It has had its failures—its attempt to make a smartphone was a debacle. But the business is starting to crank out cash. Last year cashflow (before investment) was $16bn, more than quadruple the level five years ago.
If Amazon’s approach to time-frames is unusual, so too is the sheer breadth of its activities. The company’s list of current and possible competitors, as described in its annual filings, includes logistics firms, search engines, social networks, food manufacturers and producers of “physical, digital and interactive media of all types”. A wingspan this large is more reminiscent of a conglomerate than a retailer, which makes Amazon’s share price seem even more bloated: stockmarkets typically apply a “conglomerate discount” to reflect their inefficiencies.
Many of these services support Amazon’s own expansion and that of other companies. The obvious example is AWS, which powers Amazon’s operations as well as those of other firms. But Amazon also rents warehouse space to other sellers. It is building a $1.5bn air-freight hub in Kentucky. It is testing technology in stores to let consumers skip the cash register altogether, and experimenting with drone deliveries to the home. Such tools could presumably serve other customers, too. Some think that Amazon could become a new kind of utility: one that provides the infrastructure of commerce, from computing power to payments to logistics.
A giant cannot hide
And here lies the real problem with the expectations surrounding Amazon. If it gets anywhere close to fulfilling them, it will attract the attention of regulators. For now, Amazon is unlikely to trigger antitrust action. It is not yet the biggest retailer in America, its most mature market. America’s antitrust enforcers look mainly at a firm’s effect on consumers and pricing. Seen through this lens, Amazon appears pristine. Consumers applaud it; it is the most well-regarded company in America, according to a Harris poll. (AWS is a boon to startups, too.)
But as it grows, so will concerns about its power. Even on standard antitrust grounds, that may pose a problem: if it makes as much money as investors hope, a rough calculation suggests its earnings could be worth the equivalent of 25% of the combined profits of listed Western retail and media firms. But regulators are also changing the way they think about technology. In Europe, Google stands accused of using its clout as a search engine to extend its power to adjacent businesses. The comparative immunity from legal liability of digital platforms—for the posting of inflammatory content on Facebook, say, or the vetting of drivers on Uber—is being chipped away.
Amazon’s business model will also encourage regulators to think differently. Investors value Amazon’s growth over profits; that makes predatory pricing more tempting. In future, firms could increasingly depend on tools provided by their biggest rival. If Amazon does become a utility for commerce, the calls will grow for it to be regulated as one. Shareholders are right to believe in Amazon’s potential. But success will bring it into conflict with an even stronger beast: government.
This article appeared in the Leaders section of the print edition under the headline “Amazon’s empire”
===Amazon Crush Apr 2017 Edition===
Incredible 18 months for Amazon, but the new phrase is “retail apocalypse”.
Inside Amazon’s Battle to Break Into the $800 Billion Grocery Market
After almost a decade of food retail experiments with little success online, the e-commerce giant is embracing the physical stores it once shunned.
By Spencer Soper and Olivia Zaleski
March 20, 2017, 6:00 AM EDT
“Very wasteful” isn’t a phrase usually associated with Amazon.com Inc., which is so cost-conscious it once removed the light bulbs from its cafeteria’s vending machines. But after spending several months analyzing the online retailer’s grocery-shipping hubs back in 2014, that’s exactly how a mechanical engineering student described its approach to selling bananas.
Workers at Amazon Fresh, the company’s grocery-delivery business, threw away about a third of the bananas it purchased because the service only sold the fruit in bunches of five, the student concluded. Employees trimmed each bunch down to size and chucked the excess.
The research paper by Vrajesh Modi, who now works for Boston Consulting Group, highlighted other problems: Poorly trained employees often stood around with nothing to do. Moldy strawberries were frequently returned by disappointed customers. Amazon’s inspectors believed their corporate bosses didn’t care much about the quality of the food.
Such challenges linger for Amazon. Despite several attempts to break into the $800 billion grocery industry and almost a decade in the business, the company has struggled to entice shoppers en masse to buy eggs, steaks and berries online the same way they’ve flocked to buy books, tablets and toys.
“Online grocery is failing,” said Kurt Jetta, chief executive officer of TABS Analytics, a consumer products research firm. Only 4.5 percent of shoppers made frequent online grocery purchases in 2016, up just slightly from 4.2 percent four years earlier despite big investments from companies such as Amazon, according to the firm’s annual surveys. “There’s just not a lot of demand there. The whole premise is that you’re saving people a trip to the store, but people actually like going to the store to buy groceries.”
Amazon CEO Jeff Bezos now seems to understand that he can’t win the grocery game with websites, warehouses and trucks alone. The world’s biggest online retailer sees brick-and-mortar stores playing a key role in a renewed grocery push, documents reviewed by Bloomberg show. And like it did with Amazon Fresh, the company is launching its newest projects in Seattle, its home town.
Last Tuesday, men in cherry pickers worked through driving rain to affix “Amazon Fresh” signs to a drive-in grocery location in Seattle’s Ballard neighborhood, where shoppers can stop and have online orders loaded into their cars. Crews were busy on a similar site south of downtown, readying canopies over parking spaces to protect customers from the elements as they pick up their shopping bags. The secretive company has yet to announce the projects, and crews have covered the Amazon signs in black fabric and paper.
Late last year, Amazon purchased supply-chain software from LLamasoft Inc.– a major departure for a company known for its logistics prowess, and defying an internal mantra of “we don’t buy, we build.” And it more recently restructured how various grocery teams were managed to narrow their focus and set clear priorities, according to people familiar with the company’s business.
These changes come as Amazon breaks from its standard formula of shipping products in boxes out of jam-packed warehouses. Instead, it will invite shoppers inside its own grocery stores to smell the oranges, see the tomatoes and tap the watermelons. Ahead of a national rollout next year, Amazon is testing three brick-and-mortar grocery formats in Seattle — convenience stores called Amazon Go, the drive-in grocery kiosks, and a hybrid supermarket that mixes the best of online and in-store shopping. The company may open as many as 2,000 stores, according to internal documents.
The company has said little about its grocery-store plans, aside from a video about Amazon Go’s no-checkout format that has racked up more than 8.7 million views on YouTube. An Amazon spokeswoman declined to comment for this story. Reports on its moves have dribbled out over the past several months, prompting occasional denials and retorts from the company. Seattle technology site Geekwire in August uncovered Amazon’s mysterious drive-in grocery kiosk in Ballard. The New York Post in February said Amazon aimed to create “robot-run supermarkets” that would operate with only a few people. Bezos responded by tweeting to the Post: “Whoever your anonymous sources are on this story — they’ve mixed up their meds!”
Amazon’s goal is to become a Top 5 grocery retailer by 2025, according to a person familiar with the matter. That would require more than $30 billion in annual food and beverage spending through its sites, up from $8.7 billion — including Amazon Fresh and all other food and drink sales — in 2016, according to Cowen & Co.
Reaching that milestone would require a new wave of store and warehouse investments around the country, costing billions of dollars. That’s an existential change for Amazon, which initially stayed away from perishable goods and has mostly avoided the overhead of physical stores since it started in 1994.
“A bunch of smart people at Amazon have been thinking about re-imagining the next phase of physical retail,” said Scott Jacobson, a former Amazon executive who is now a managing director at Madrona Venture Group. “They want more share of the wallet, and habitual, frequent use of Amazon for groceries is the ultimate goal.”
For Amazon shoppers interested in buying groceries online, the company’s current offerings can be confusing. Amazon Fresh is available in about 20 U.S. cities for those paying $14.99 a month. Amazon Pantry lets shoppers buy crackers, cookies, chips, coffee and other non-perishables for a delivery fee of $5.99 per box. Amazon’s speedy drop-off service, Prime Now, offers items from local grocers in some cities, but no major chains. Its stick-on Dash Buttons let people order many household products — including some groceries, but not fresh food — with a finger tap. And Subscribe & Save offers discounts to Amazon customers who sign up for periodic delivery of laundry detergent, toothpaste, diapers, paper towels and other items frequently purchased in grocery stores.
The various initiatives have been a source of increasing internal tension as employees on different projects compete to sell the same things, according to a person familiar with the matter.
One problem saddling Amazon Fresh is the high cost of losses caused by food going bad, an issue it’s never faced with books and toys. For conventional grocery sellers, browning bananas can be sold at a discount to smoothie-makers and bread bakers. Chicken breasts nearing their expiration dates can be marked down. With Amazon Fresh, such items must be discarded or are returned by frustrated customers, according to a person familiar with the matter. That has meant Amazon Fresh has lost money from spoilage at more than double the rate for a typical supermarket, said the person, who asked not to be identified discussing internal operations. The main reason Amazon began delivering groceries through Prime Now was to hand that risk back to the local grocers to lower Amazon’s costs. The company didn’t originally anticipate the scope or difficulty of these problems because so few people working on its grocery push have experience in the industry.
“Grocery is the most alluring and treacherous category,” said Nadia Shouraboura, a former Amazon executive whose company, Hointer, has been working on redefining in-store grocery shopping for the past 18 months. “It lures inventors and retailers with shopping volume and frequency, and then sinks them with low margin.”
Beyond grocery, Amazon executives have also discussed opening consumer electronics stores to showcase its gadgets and better compete with Best Buy Co., according to three people familiar with the plan. For years, Amazon executives have discussed the downside of an online-only strategy, mostly with regard to a lack of places for shoppers to try out Kindle electronic readers, the voice-activated Echo speaker and its defunct Fire smartphone. Amazon considered holding events similar to Tupperware parties when it introduced its first Kindle in 2007, fearing the products would languish unseen, Jacobson said. The handful of bookstores Amazon has opened around the country double as gadget showrooms, similar to the Apple Store.
Long term, a stronger grocery business could position Amazon to become a wholesale food-distribution business serving supermarkets, convenience stores, restaurants, hotels, hospitals and schools. But first the company has to find a way to get more people to think of Amazon when stocking their refrigerators and pantries.
Photographer: David Ryder/Bloomberg
A group of Amazon executives met late last year to discuss the disadvantage Amazon faced compared with grocery competitors such as Wal-Mart and Kroger because of its lack of physical stores and customer apprehension about buying fresh foods online. They decided they needed something more to jump-start Amazon’s grocery push beyond plans already under way for the Amazon Go convenience store, modeled for urban areas, and drive-in grocery pick-up stations suited for the suburbs.
They worked out plans for a third approach: grocery stores closer in size to a Trader Joe’s than a Wal-Mart to offer easy access to milk, eggs and produce. Other items like paper towels, cereal, canned goods and dish detergent would be stocked on-site in a warehouse where they could be easily packed and delivered to shoppers at the location, according to documents reviewed by Bloomberg. It would also serve as a delivery hub for online orders.
Brittain Ladd, a supply chain consultant who joined Amazon in 2015 and most recently worked on its Amazon Fresh and Pantry expansions, wrote about such a store prior to joining Amazon in an academic paper called “A Beautiful Way to Save Woolworths.”
Ladd envisioned two-story buildings where shoppers browse produce, bread and other fresh items on the ground level while their orders for paper towels, canned goods and cereal are packed in a warehouse above. “The stores will have the capability to fulfill online orders placed by customers within a specific radius of the store,” he wrote. “Amazon drivers and/or contractors will be assigned to deliver groceries.”
The executives decided such a store would be worth pursuing for Amazon Fresh and ordered further research about ideal locations, how to integrate the stores with grocery delivery, and the use of automation to reduce overhead. Site selection for this store’s first model is happening now in Seattle, according to a person familiar with the plan.
Meanwhile, the first wave of its new grocery experiment, Amazon Go, was unveiled in December and for now is only open to employees while the systems are tested. Cameras and sensors monitor shoppers who scan their smartphones upon entering, allowing them to grab items like sandwiches, yogurt, drinks and snacks and automatically pay for them without a checkout kiosk. Products are embedded with tracking devices that pair with customers’ phones to charge their accounts. Weight-sensitive shelves tell Amazon when to restock. A patent filed by Amazon in 2014 suggests it could use facial-recognition technology to identify and then automatically charge in-store shoppers.
In its video touting Amazon Go, the company said it was aiming to open the site to the public in “early 2017,” and it hasn’t provided an update to that timing. But the technology has been crashing in tests when the store gets too crowded and requires human quality control, people watching video images to make sure customers are charged for the right things, according to a person familiar with the plan.
Beyond letting customers skip lines, the technology gives Amazon valuable data, said Guru Hariharan, founder of Boomerang Commerce Inc., which designs software for large retailers. Even if customers don’t purchase everything they touch, there’s value in understanding what shoppers consider but don’t ultimately buy, he said. That makes it worthwhile for Amazon to work through the kinks in the technology.
“It takes a lot of time and experimentation to work through unpredictable scenarios like a child picking up an item or a person wearing sunglasses or a face muffler,” he said.
At the same time, recent work and construction permits indicate the new drive-in grocery kiosk in Ballard could open any day.
===Amazon Crush Nov 2016 Edition===
I began tracking Amazon in early 2014 with multiple posts, copied here.
I speculated in EARLY 2014 (see post below) that Amazon revenue in 2015 would exceed $100 billion.
They finished 2015 at $107 billion – up $11 billion vs 2014:
2015
107,010
2014
88,988
2013
74,452
2012
61,093
2011
48,077
2010
34,204
Revenue is up 21% for the first 9 months of 2016. So my bet is that 2016 will be about $130 billion. The old forecast that Amazon will exceed $250 billion in sales by 2020 is looking about right.
Cash for the latest 12 months is way up – they have $13 billion on hand in cash and cash equivalents.
Their stock price is at an all-time high: $767.
Reminders of earlier posts about moves by Amazon:
ECHO: The Echo is a stout, plain-looking cylinder, about the height of a toaster, that you can park just about anywhere you have Wi-Fi access, though it seems most useful in the kitchen. You can ask it anything, beginning with the word “ALEXA….”
TWITCH: video streaming …. has 40% of all internet video streaming bandwidth????
AMAZONFRESH: lets customers purchase groceries online, including perishable items like dairy, meat, and fish, which are delivered within a day.
They tested in Seattle for years, and then rolled out in 2014 to most of California, New Jersey, New York City, Philadelphia, and Washington. They then took an 18 month expansion hiatus. They will expand to Boston and UK this year. This is slower than expected.
As for its progression into other markets, there are more hurdles associated with AmazonFresh than the site’s other services that have slowed it down—the company needs to open refrigerated warehouses, carry its own stock of perishable groceries, and hire additional delivery people in each new market.
Word is that it’s difficult to convince customers it’s worth the $299/year price tag. Amazon is trying to grab a larger share of the grocery market with this expansion. Delivery currently makes up less than 5% of all grocery sales.
Here is how their 2015 10K describes their business.
General
Amazon.com opened its virtual doors on the World Wide Web in July 1995. We seek to be Earth’s most customer-centric company. We are guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. In each of our segments, we serve our primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators. In addition, we provide services, such as advertising services and co-branded credit card agreements.
Beginning in the first quarter of 2015, we changed our reportable segments to North America, International, and Amazon Web Services (“AWS”). These segments reflect the way the Company evaluates its business performance and manages its operations. Additional information on our operating segments and product information is contained in Item 8 of Part II, “Financial Statements and Supplementary Data—Note 11—Segment Information.” See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Supplemental Information” for supplemental information about our net sales. Our company-sponsored research and development expense is set forth within “Technology and content” in Item 8 of Part II, “Financial Statements and Supplementary Data—Consolidated Statements of Operations.”
Consumers
We serve consumers through our retail websites and focus on selection, price, and convenience. We design our websites to enable millions of unique products to be sold by us and by third parties across dozens of product categories. Customers access our websites directly and through our mobile websites and apps. We also manufacture and sell electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo. We strive to offer our customers the lowest prices possible through low everyday product pricing and shipping offers, and to improve our operating efficiencies so that we can continue to lower prices for our customers. We also provide easy-to-use functionality, fast and reliable fulfillment, and timely customer service. In addition, we offer Amazon Prime, an annual membership program that includes unlimited free shipping on millions of items, access to unlimited instant streaming of thousands of movies and TV episodes, and other benefits.
We fulfill customer orders in a number of ways, including through: North America and International fulfillment and delivery networks that we operate; co-sourced and outsourced arrangements in certain countries; and digital delivery. We operate customer service centers globally, which are supplemented by co-sourced arrangements. See Item 2 of Part I, “Properties.”
Sellers
We offer programs that enable sellers to sell their products on our websites and their own branded websites and to fulfill orders through us. We are not the seller of record in these transactions, but instead earn fixed fees, a percentage of sales, per-unit activity fees, or some combination thereof.
Here are prior posts:
=========
JUNE, 2015 POST on ECHO
Amazon’s Echo
See NYT article below on Amazon’s Echo (and note comparisons to other voice command systems, such as Siri, Google Now, and Cortana):
“If it moves nimbly, keeping ahead of Apple and Google, Amazon could transform the Echo into a something like a residential hub, the one device to control pretty much everything attached to your home.”
Functionality at the moment is:
– telling you the weather
– playing music you ask for
– adding stuff to your shopping list
– reordering items you frequently buy from Amazon
– giving you a heads-up about your nearing calendar appointments
– setting a kitchen timer
– answering the most basic of search queries
Amazon Echo, a.k.a. Alexa, Is a Personal Aide in Need of Schooling
By FARHAD MANJOOJUNE 24, 2015
The Amazon Echo, a wireless speaker and artificially intelligent personal assistant, can tell you the weather, play music and reorder items you frequently buy from Amazon, among other things.
THIS week, I asked a friend for help: “Alexa, can you write this review for me?”
“What’s your question?” Alexa responded.
“Can you write this review for me?”
“Review is spelled R-E-V-I-E-W.”
“Thanks,” I said. “That about sums it up.”
O.K., so Alexa isn’t perfect; far from it, in fact. If there is one glaring flaw in the Amazon Echo — the tiny wireless speaker and artificially intelligent personal assistant, a machine that one always addresses with the honorific “Alexa,” as if she’s some kind of digital monarch — it is that she is quite stupid.
If Alexa were a human assistant, you’d fire her, if not have her committed. “Sorry, I didn’t understand the question I heard” is her favorite response, though honestly she really doesn’t sound very sorry. She’ll resort to that line whether you ask her questions answered by a simple Google search (“How much does a cup of flour weigh?”) or something more complicated (“Alexa, what was that Martin Scorsese movie with Joe Pesci and Robert De Niro?”).
Other times, she is mind-numbingly literal. One night during the N.B.A. playoffs, I asked, “Alexa, what’s the score of the basketball game?” She proceeded to give me a two-minute, 18-part definition of the word “score” that included “a seduction culminating in sexual intercourse.” Not exactly what I was going for.
And yet, after spending three weeks testing the Echo, I really kind of love Alexa. She is just smart enough to be useful. And she keeps getting smarter. This week, after a long invitation-only preview period, Amazon began selling the Echo to the public. At $179.99, Alexa is more expensive than I’d like. (Subscribers to Amazon’s $99-a-year Prime subscription service could buy the Echo for only $100 during the preview.) But if you’re the type who enjoys taking chances on early, halfway useful tech novelties, the Echo is a fun thing to try.
And if you’re anything like me, after a week with the Echo, you may feel the device begin to change how you think about home tech. It will not seem far-fetched to expect that one day soon, you’ll have an all-knowing, all-seeing talking assistant to control your lights, thermostat, entertainment system and just about anything else at home. In Alexa, Amazon has created the perfect interface to control your home; if it adds some more intelligence, it would be quite handy.
The Echo is a stout, plain-looking cylinder, about the height of a toaster, that you can park just about anywhere you have Wi-Fi access, though it seems most useful in the kitchen. It comes with a remote control that you don’t really need, because after a quick initial setup using your smartphone, you can control pretty much everything the Echo does with your voice. (The remote does have a microphone that allows you to speak to the Echo from far away.) From there, the Echo is terrifically easy to use — say “Alexa” and ask your question.
At the moment, there are only a handful of uses for the Echo. She’s great at telling you the weather, adding stuff to your shopping list, reordering items you frequently buy from Amazon, giving you a heads-up about your nearing calendar appointments, and answering the most basic of search queries.
She is pretty good at playing music, though her main source is Amazon Prime Music, a streaming service that is included with a Prime membership. Prime Music’s selection is dreadfully limited, though, and at the moment, the Echo can’t connect to many other streaming services. Thankfully, with a few quick voice commands, Alexa can connect to your phone like any other Bluetooth speaker. That way, she can take control of music you play from most apps, including streaming apps like Spotify. You can’t call out for specific songs this way, but you can say “Alexa, pause” or “Alexa, next” and she’ll control the tunes playing from your phone.
The Echo is also a very good kitchen timer. Put your cookies in the oven; yell out, “Alexa, set timer for 12 minutes”; and she’s off. It’s far easier than fumbling with buttons on the microwave, especially when you have your hands full.
But wait a minute — can’t you do pretty much all this on your phone, your smartwatch or many other devices? Yes, you can, but Alexa is right there. She’s always plugged in. She’s always listening, and she’s fast. It’s surprising how much of a difference a few milliseconds make in maintaining the illusion of intelligence in our machines. Because Alexa is far quicker to spring into action than Siri, Apple’s digital personal assistant, especially Siri on the Apple Watch, I found her to be much more pleasant to use, even if she is frequently wrong.
Amazon says that it plans to constantly improve the Echo. During the preview period, it added a host of new features, including the ability to control some smart-home devices, built-in integration with the Pandora streaming service, and traffic information for your morning commute. I’m hoping Amazon creates an open system — what developers call an API — for the Echo, which will allow a wide variety of online services and apps to connect to the device. If it moves nimbly, keeping ahead of Apple and Google, Amazon could transform the Echo into a something like a residential hub, the one device to control pretty much everything attached to your home.
At the moment, that dream is far off. But dumb as she sometimes sounds, Alexa may be just smart enough to make it happen.
This entry was posted in Personalization, Systems, Technology and tagged Amazon, Echo, Technology, voice recognition on June 29, 2015.
“Free cash flow, a non-GAAP financial measure, was $3.2 billion for the trailing twelve months ended March 31, 2015, compared to $1.5 billion for the trailing twelve months ended March 31, 2014.”
Net sales are continuing sharp growth – to $89 billion.
2014
88,988
2013
74,452
2012
61,093
2011
48,077
2010
34,204
“
Sales increased 20%, 22%, and 27% in 2014, 2013, and 2012
, compared to the comparable prior year periods. Changes in foreign currency exchange rates impacted net sales by $(636) million, $(1.3) billion, and $(854) million for 2014, 2013, and 2012. For a discussion of the effect on sales growth of foreign exchange rates, see “Effect of Foreign Exchange Rates” below.
North America sales increased 25%, 28%, and 30% in 2014, 2013, and 2012
, compared to the comparable prior year periods. The sales growth in each year primarily reflects increased unit sales, including sales by marketplace sellers, and AWS, which was partially offset by AWS pricing changes. Increased unit sales were driven largely by our continued efforts to reduce prices for our customers, including from our shipping offers, by sales in faster growing categories such as electronics and other general merchandise, by increased in-stock inventory availability, and by increased selection of product offerings.
nternational sales increased 12%, 14%, and 23% in 2014, 2013, and 2012
, compared to the comparable prior year periods. The sales growth in each year primarily reflects increased unit sales, including sales by marketplace sellers. Increased unit sales were driven largely by our continued efforts to reduce prices for our customers, including from our shipping offers, by sales in faster growing categories such as electronics and other general merchandise, by increased in-stock inventory availability, and by increased selection of product offerings. Additionally, changes in foreign currency exchange rates impacted International net sales by $(580) million, $(1.3) billion, and $(853) million in 2014, 2013, and 2012. “
In their annual report, they state the key to their cash flow business model:
“Because of our model we are able to turn our inventory quickly and have a cash-generating operating cycle3. On average, our high inventory velocity means we generally collect from consumers before our payments to suppliers come due.”
Thanks to Oliver Wyman, Fast Company and many others for this update on last post on Amazon…..my sense from reading all:
– Twitch is Amazing! Driving 40% of all internet bandwidth???? Is that even possible? With 55 million users spending an average of 100+ minutes per day??? That is enormous! Bezos obviously intrigued and willing to take a risk to get this three-year old start-up in its fold? But why exactly? Don’t know
– FRESH is moving out. Per plan, and announcement to stockholders and also per rumor, Amazon Fresh is in a soft launch mode. The big news was the launch in LA (after 7 years in Seattle tweaking), and then it was small news that they rounded out most of the the rest of California markets – that is a HUGE expansion in less than a year. Moreover, Amazon green trucks are riding through Manhattan, and a roll there is imminent. No word yet, but I really think Chicago might be next – rumors say I am right.
– Manufacturers think this isn’t their fight. Most of them are just glad they are not retailers. But the truth is that Amazon will cause a massive reduction in retailer margin, as well as many of the brand-building activities at retail that manufacturers are used to …. horrible merchandising will replace great merchandising, forget about cold beverage sales, forget about impulse sales, etc.
– the truth is that retail is not at risk – just the marginally profitable ones.
Here are the articles:
AMAZONFRESH IN THE U.S.
After years of anticipation, AmazonFresh has now expanded its U.S. home grocery delivery service beyond its home market of Seattle.
In June 2013, it launched in Los Angeles, with more markets expected to follow. From conversations with supermarket retailers all over the U.S. and globally, it is clear that online and multi-channel competitors have come into focus as a key competitive threat, and AmazonFresh is by far the most dangerous of the new breed. What is striking is the similarity between what we hear from food retailers today and what leaders of category killers were saying back in 2009 – and we know that the category killers’ fears of Amazon proved to be well-founded.
WHAT IS AMAZON FRESH?
AmazonFresh, operating in pilot mode in Seattle since 2007, allows shopping online and on mobile apps. The assortment is surprisingly broad and deep, with between 10,000 and 30,000 items, depending on the market, including (for example) 400+ produce items, 500+ meat and seafood items, 1,300+ beverage items and 4,000+ health and beauty items. Unlike the traditional Amazon model, AmazonFresh prices on consumables are currently higher than those found in local supermarkets, as promotions are mostly absent – the current customer proposition focus is on convenience.
The differences between the Seattle and LA models (different membership and delivery pricing models and different assortment depth, to name a few) seem to indicate that Amazon is still trialling many elements of the business, but the rollout to additional markets suggests underlying confidence in the economics.
When Amazon decides to move from pilot to rollout, history indicates they will move very rapidly. The company has reportedly told vendors it could roll out to 40 U.S. markets by the end of 2014!
The direct impact that Amazon had on many category killers by winning market share is obvious, as is the impact on consumers’ price expectations, but one under-reported aspect of what is happening to category killers is the channel conflict competition Amazon provokes. Not only does Amazon take share, they also force category killers to shift transactions to their own websites. But those sites are not the basket-building machines that stores are. For one major category killer, the average online transaction has only a quarter of the number of items that the average in-store transaction has. So the incumbents face a conundrum – they must grow online sales, but doing so dramatically worsens their economics.
However, Amazon will never take as much share away from food retailers as it has taken from category killers. Food retailers’ natural defenses – low gross margins, focus on fresh product, “need it now” consumption patterns, the emotional aspect of personally selecting food to feed one’s family – mean the supermarket channel as a whole will not suffer the fate of Borders or even Best Buy.
The threat is not that stores will become obsolete; such notions are alarmist and naïve. But AmazonFresh can force dramatic change in the shape of the food retail industry with even modest market share. It doesn’t take complicated analysis to prove this. The industry overall runs with about a 2% bottom line and a 20% volume variable margin. This means
a 10% sales loss would wipe out the entire industry’s profit. Any experienced food retail executive knows that most chains have a “mushy middle” of stores that generate reasonable operating income with current sales volumes, but would quickly tip into negative store profit with a modest reduction in volume. We don’t know what Amazon’s ultimate ambitions in the food space are, but if they achieve even a 5% volume share it would force significant changes. Current players would have to either raise prices – kicking off the vicious cycle of volume loss, causing deleveraged fixed costs, leading to even more price rises – or close stores to bring costs into line. A 5% volume loss to AmazonFresh would result in 10-20% reduction in store count, because not all the volume from closed stores will be clawed back by surviving stores: as supermarkets become relatively less convenient, some of the volume would go to specialists (clubs, hard discounters, premium players) and online channels. It’s too early to know the full extent of the impact, but a good guess is that around one in eight supermarkets would have to close to maintain current profitability without raising prices.
Supermarkets should not count on their ability to weather this disruption the way they weathered the last major disruption: the Walmart supercenter tsunami, in the case of the U.S. Then, the best grocers got better, slashed cost out of their networks, improved their capabilities, and prospered at the expense of weaker competitors who couldn’t adapt fast enough. They had time to pull this off because Walmart couldn’t open a thousand supercenters overnight. But this time, the starting point is much, much more efficient – there will be a lot less “fat” to cut to preserve profitability in the face of falling volume – and the weaker players that were the victims last time are already gone. Most significantly, the rate of change in the competitive landscape will not be constrained by the process of opening new stores. Amazon only has to set up distribution centers and networks. It already has a strong consumer brand. This disruption could happen much faster than anything the industry has seen before.
WHAT SHOULD FOOD RETAILERS BE DOING? AT LEAST THREE THINGS:
Build a multi-channel offering. Of course, grocers must develop their own answer to online and mobile shopping. And it is better to cannibalize one’s own in-store sales than to surrender them to the competition. That said, it is very tricky to make the economics of these models work, so great care must be taken to manage the bottom line as online and mobile sales ramp up.
Get seriously good at fresh. The fresh categories represent a cushion around the rest of the customer offer. If customers believe they can’t get the same quality, freshness and selection online as they would in a store, it will be a formidable barrier to switching to on-line purchasing. So far AmazonFresh’s fresh product offering is highly variable (see Exhibit 1) but it stands to reason that they will get better with experience. And they have a built-in freshness advantage – as do all online grocers – because product take less time to go from the distribution center to the customer’s home. Most U.S. retailers are nowhere near where they could be, and the same is true in many other geographies. Getting good enough at fresh to fend off online competition means re-thinking the supply chain, store practices and merchandising standards. It means breaking the usual trade-off between availability and shrink, shifting the efficient frontier through better capabilities and greater accountability.
Prepare for a world with fewer stores. Possibly a lot fewer. Even an excellent multichannel platform and a rejuvenated fresh offer will not be nearly enough. We believe food retailers should be planning now for a world with far fewer stores. If, say, 15% of the square footage is going to have to close down, survival will depend on making sure the competition bears more than their fair share of the pain. So grocers’ competitive strategy should be focused on ensuring they get to keep more of their stores than the competition does, and being prepared to pounce when weakened competitors begin to wobble. This means understanding how to win store-by-store battles and drive maximum profit out of every square foot. To be clear, we are bullish on the supermarket industry. While the industry’s transformation will be painful for all and fatal for a few, the survivors will be better placed. Surviving stores will do much higher volume and, with higher fixed cost leverage, they could be massively more profitable. Stronger competition will force grocers to become even better operators and even more responsive to customer needs. Retailers who act fast can not only survive, but adapt their businesses to thrive in the new world.
Exhibit 1: PRELIMINARY CUSTOMER RESEARCH BY OLIVER WYMAN SHOWS a wide range of customer perceptions of the quality of AmazonFresh products
“The apples were the kind I would have hunted for and maybe not found. They looked great and the taste was fresh and sweet, the texture crisp which is exactly what I like. They were delicious.”
“The sell by date on the frozen beef says July 2013 [delivered in September 2013]. Granted it was frozen, this makes me believe it’s not fresh beef and I’m a little disappointed by that.”
“Some of the berries were very soft and leaking all over the box.”
ABOUT OLIVER WYMAN
Oliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation.
FastCompany: AmazonFresh a “Trojan horse;” 20 more markets expected
Aug 11 2013, 18:15 ET
In a cover story on Jeff Bezos and Amazon (AMZN), FastCompany’s J.J. McCorvey observes the company’s new AmazonFresh grocery service (offered via its $299/year Prime Fresh free shipping plan) is a “Trojan horse” meant to give Amazon’s broader same-day delivery efforts needed scale.
Amazon is also hoping its same-day infrastructure (replete with Amazon trucks) will increase its appeal to 3rd-party sellers (now responsible for 40% of unit sales) by lowering delivery times. Merchants already cite access to Prime as a reason for outsourcing fulfillment to Amazon (and giving a ~20% cut).
EBAY could prove a formidable same-day rival. Instead of building its own soup-to-nuts infrastructure, eBay is relying on dozens of offline retailers (inc. major national chains) to help handle fulfillment. Google is also dipping its toes into same-day.
Currently available in L.A. and Seattle, AmazonFresh is expected to expand to 20 more markets, including some international ones. SunTrust recently predicted an NYC launch will happen in 2014.
Also mentioned by McCorvey: Amazon is now able to ship items less than 2.5 hours after an order is placed; and wants to further lower than number; Prime now covers 15M+ items (up from 1M in ’05); and Amazon is still “evaluating” how to use Kiva’s robots.
Amazon buying Twitch for $970M in cash
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AMAZONFRESH IS JEFF BEZOS’ LAST MILE QUEST FOR TOTAL RETAIL DOMINATION
AMAZON UPENDED RETAIL, BUT CEO JEFF BEZOS — WHO JUST BOUGHT THE WASHINGTON POST FOR $250 MILLION — INSISTS IT’S STILL “DAY ONE.” WHAT COMES NEXT? A RELENTLESS PURSUIT OF CHEAPER GOODS AND FASTER SHIPPING. THE COMPETITION IS ALREADY GASPING FOR BREATH.
BY J.J. MCCORVEY
The first thing you notice about Jeff Bezos is how he strides into a room.
A surprisingly diminutive figure, clad in blue jeans and a blue pinstripe button-down, Bezos flings open the door with an audible whoosh and instantly commands the space with his explosive voice, boisterous manner, and a look of total confidence. “How are you?” he booms, in a way that makes it sound like both a question and a high-decibel announcement.
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Each of the dozen buildings on Amazon’s Seattle campus is named for a milestone in the company’s history–Wainwright, for instance, honors its first customer. Bezos and I meet in a six-floor structure known as Day One North. The name means far more than the fact that Amazon, like every company in the universe, opened on a certain date (in this case, it’s July 16, 1995). No, Day One is a central motivating idea for Bezos, who has been reminding the public since his first letter to shareholders in 1997 that we are only at Day One in the development of both the Internet and his ambitious retail enterprise. In one recent update for shareholders he went so far as to assert, with typical I-know-something-you-don’t flair, that “the alarm clock hasn’t even gone off yet.” So I ask Bezos: “What exactly does the rest of day one look like?” He pauses to think, then exclaims, “We’re still asleep at that!”
He’s a liar.
Amazon is a company that is anything but asleep. Amazon, in fact, is an eyes-wide-open army fighting–and winning–a battle that no one can map as well as its general. Yes, it is still the ruthless king of books–especially after Apple’s recent loss in a book price-fixing suit. But nearly two decades after its real day one, the e-commerce giant has evolved light-years from being just a book peddler. More than 209 million active customers rely on Amazon for everything from flat-panel TVs to dog food. Over the past five years, the retailer has snatched up its most sophisticated competition–shoe seller Zappos and Quidsi, parent of such sites as Diapers.com, Soap.com, Wag.com, and BeautyBar.com. It has purchased the robot maker Kiva Systems, because robots accelerate the speed at which Amazon can assemble customer orders, sometimes getting it down to 20 minutes from click to ship. Annual sales have quadrupled over the same period to a whopping $61 billion. Along the way, incidentally, Amazon also became the world’s most trusted company. Consumers voted it so in a recent Harris Poll, usurping the spot formerly held by Apple.
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Amazon has done a lot more than become a stellar retailer. It has reinvented, disrupted, redefined, and renovated the global marketplace. Last year, e-commerce sales around the world surpassed $1 trillion for the first time; Amazon accounted for more than 5% of that volume. This seemingly inevitable shift has claimed plenty of victims, with more to come. Big-box retailers like Circuit City and Best Buy bore the brunt of Amazon’s digital assault, while shopping-mall mainstays such as Sears and JCPenney have also seen sales tank. Malls in general, which once seemed to offer some shelter from the online pummeling, have been hollowed out. By Green Street Advisors’ estimate, 10% of the country’s large malls will close in the next decade. It has become painfully clear that the chance to sift through bins of sweaters simply isn’t enough of a draw for shoppers anymore. “It has been this way in retail forever,” says Kevin Sterneckert, a research VP at Gartner who focuses on shopping trends, and who lays out a strategy that should blow nobody’s mind: “If you don’t innovate and address who your customers are, you become irrelevant.” And now that means fending off threats from every phone, tablet, and laptop on the planet.
Amazon’s increasing dominance is now less about what it sells than how it sells. And that portends a second wave of change that will further devastate competitors and transform retail again. It’s not just “1-Click Ordering” on Amazon’s mobile app, which is tailor-made for impulse buying. It’s not just the company’s “Subscribe & Save” feature, which lets customers schedule regular replenishments of essentials like toilet paper and deodorant. It’s not just Amazon’s “Lockers” program, in which huge metal cabinets are installed at 7-Elevens and Staples in select cities, letting customers securely pick up packages at their convenience instead of risking missed (or stolen) deliveries.
“AMAZONFRESH IS REALLY A TROJAN HORSE. IT’S NOT ABOUT WINNING IN GROCERY SERVICES. IT’S ABOUT DOMINATING THE MARKET IN SAME-DAY DELIVERIES. ”
No, it’s all this, plus something more primal: speed. Bezos has turned Amazon into an unprecedented speed demon that can give you anything you want. Right. Now. To best understand Amazon’s aggressive game plan–and its true ambitions–you need to begin with Amazon Prime, the company’s $79-per-year, second-day delivery program. “I think Amazon Prime is the best bargain in the history of shopping,” Bezos tells me, noting that the service now includes free shipping on more than 15 million items, up from the 1 million it launched with in 2005. Prime members also gain access to more than 40,000 streaming Instant Video programs and 300,000 free books in the Kindle Owners’ Lending Library. As annoying as this might be to Netflix, it is not intended primarily as an assault on that business. Rather, Bezos is willing to lose money on shipping and services in exchange for loyalty. Those 10 million Prime members (up from 5 million two years ago, according to Morningstar) are practically addicted to using Amazon. The average Prime member spends an astounding $1,224 a year on Amazon, which is $700 more than a regular user. Members’ purchases and membership fees make up more than a third of Amazon’s U.S. profit. And memberships are projected to rise 150%, to 25 million, by 2017.
Nadia Shouraboura of Hointer, a new store that represents how retail must adapt in the Age of Amazon
Robbie Schwietzer, VP of Prime, is more candid than his boss when explaining Prime’s true purpose: “Once you become a Prime member, your human nature takes over. You want to leverage your $79 as much as possible,” he says. “Not only do you buy more, but you buy in a broader set of categories. You discover all the selections we have that you otherwise wouldn’t have thought to look to Amazon for.” And what you buy at Amazon you won’t buy from your local retailer.
Prime is phase one in a three-tiered scheme that also involves expanding Amazon’s local fulfillment capabilities and a nascent program called AmazonFresh. Together, these pillars will remake consumers’ expectations about retail. Bezos seems to relish the coming changes. “In the old world, you could make a living by hoping that your customer didn’t know whether your price was actually competitive. That’s a very”–Bezos pauses for a second to rummage for the least insulting word–“tenuous strategy in the new world. [Now] you can’t convince people you have the low price; you actually have to have the low price. You can’t persuade people that your delivery speeds are fast; you actually have to have fast delivery speeds!” With that last challenge, he erupts in a thunderous laugh, throwing his cleanly depilated head so far back that you can see the dark fillings on his upper molars. He really does seem to know something the rest of us don’t. We’re still asleep, he says? The alarm clock at Amazon went off hours ago. Whether the rest of the retail world has woken up yet is another question.
Amazon’s 1-million-square-foot Phoenix fulfillment center produces a steady and syncopated rhythm. It is the turn of mechanical conveyor belts, the thud of boxes hitting metal, the beeping of forklifts moving to and fro, and the hum of more than 100 industrial-size air conditioners whirring away. This is the sound of speed–a sonic representation of what it takes to serve millions of customers scattered across the globe.
In centers like this one, of which there are 89 globally (with more to come), Amazon has built the complex machinery to make sure a product will ship out in less than 2.5 hours from the time a customer clicks place your order.
From that click, a set of algorithms calculates the customer’s location, desired shipping speed, and product availability; it then dispatches the purchase request to “pickers” on duty at the nearest fulfillment center. The system directs the new order to the picker who is closest on the floor to that product, popping up with a bleep on the picker’s handheld scanner gun. These men and women roam the sea of product shelves with carts, guided by Amazon’s steady hand to the precise location of the product on the color-coded shelves. The picker gathers the item and puts it into a bin with other customer orders. And from there, the item zooms off on a conveyor belt to a boxing station, where a computer instructs a worker on what size box to grab and what items belong in that box. After the packer completes an order, the word success lights up in big green letters on a nearby computer screen. Then the package goes back on a conveyor, where the fastest delivery method is calculated by scanning the box, which is then kicked down a winding chute to the appropriate truck.
AMAZON-PROOF RETAIL
How one store merges digital and physical
If anyone can design a brick-and-mortar store for an e-commerce world, it should be Nadia Shouraboura. She used to be Amazon’s VP of global supply chain and fulfillment technology and has since created Hointer, a fully automated store run on software algorithms and machinery. She calls it a “microwarehouse” that marries digital’s instant gratification with in-store benefits. “In apparel, this will win,” she predicts. It works like this:
STEP 1. SEARCH
A customer enters the spare store, where there’s only one of every product in view. She pulls up the Hointer app, scans the QR code on a pair of jeans she likes, and enters her size.
STEP 2. DELIVER
Within 30 seconds of scanning the code, a pair of jeans in her size travels through a chute and lands in her dressing room. She can scan as many items as she likes.
STEP 3. REFINE
Inside the dressing room, she tries on the jeans, but they’re too baggy. So she chucks them down another chute and selects a smaller size from the app.
STEP 4. PURCHASE
The jeans fit! She pays on her phone or swipes her card at a kiosk, and leaves the store with her purchase. No sales clerk necessary.
The process is efficient, but still lower tech than it could be. Although Amazon shelled out $775 million last year for those orange Kiva robots, it says it’s still “evaluating” how to deploy the bots, and they’re nowhere to be seen here. “Fulfillment by Amazon” is still a very human endeavor–and the company’s creativity thrives within that limitation. A team at the Phoenix center is constantly thinking of ways to chip away at the 2.5-hour processing time. For instance, when products arrive from Amazon’s vendors and the 2 million third-party merchants who sell their goods on the site, workers now scan them into Amazon’s inventory system (again, with a handheld gun) instead of entering the details manually. Also, products have been stowed on shelves in what otherwise might appear to be a random way–for example, a single stuffed teddy bear might be next to a college biology book–because it reduces the potential distance a worker must trek between popular products that might be ordered together. Small tweaks like these have an impact: In the past two years, Amazon has reduced the time it took to move a product by a quarter. During the past holiday season, the company processed 306 items per second worldwide.
These centers aren’t just about warehouse speed, though: They’re also about proximity. Over the past several years, Bezos has poured billions into building them in areas closer and closer to customers. The Phoenix warehouse, one of four in the region, serves a metro area of nearly 4 million. Robbinsville, New Jersey, is roughly one hour from 8 million New Yorkers. Patterson, California, is an hour and a half from 7 million people living in the San Francisco Bay Area. Three locations in Texas–Coppell, Haslet, and Schertz–will serve not only the nearly 9 million citizens of the Dallas and San Antonio metro areas but also the other 17 million or so customers in the state (and possibly neighboring states too) who live only a few hundred miles away.
“What you see happening,” Bezos explains, “is that we can have inventory geographically near major urban populations. If we can be smart enough–and when I say ‘smart enough,’ I mean have the right technology, the right software systems, machine-learning tools–to position inventory in all the right places, over time, your items never get on an airplane. It’s lower cost, less fuel burned, and faster delivery.”
The holy grail of shipping–same-day delivery–is tantalizingly within reach. Amazon already offers that service in select cities, what it calls “local express” delivery, but the big trick is to do it nationally. And the crucial element of this ambitious plan is revealed by something wonkier than a bunch of buildings. It is something only an accountant could see coming: a cunning shift in tax strategy.
“”IN THE NEW DIGITAL WORLD,” SAYS BEZOS, “YOU CAN’T CONVINCE PEOPLE YOU HAVE THE LOW PRICE; YOU ACTUALLY HAVE TO HAVE THE LOW PRICE.””
If you were a competitor who knew what to listen for, you’d practically hear the Jaws theme every time Bezos said the word taxes. For years, Amazon fervently avoided establishing what is called a “tax nexus”–that is, a large-enough physical presence–in states that could potentially force it to collect sales tax from its customers, something brick-and-mortar and mom-and-pop stores had long argued would finally remove Amazon’s unfair pricing advantage. In states that dared to challenge Amazon, the company would quickly yank operations. The scrutiny even extended to its sale of products by other merchants. “We had to be very careful, even with the third-party business, about not incurring tax-nexus stuff,” recalls John Rossman, a former Amazon executive and current managing director at Alvarez and Marsal, a Seattle-based consulting firm.
But Amazon has since changed its mind. It determined that the benefits of more fulfillment centers–and all the speed they’ll provide–will outweigh the tax cost they’ll incur. So it began negotiating with states for tax incentives. South Carolina agreed to let the company slide without collecting sales tax until 2016, in exchange for bringing 2,000 jobs to the state. In California, Amazon was given a year to start collecting taxes in exchange for building three new warehouses. And at the end of 2011, Amazon even threw its support behind a federal bill that would mandate all online retailers with sales of more than $1 million to collect tax in states in which they sold to customers. In 2012 alone, Amazon spent $2.5 million lobbying for issues that included what’s known as the Marketplace Fairness Act–the same law, essentially, it had once moved heaven and earth to eradicate. The bill recently cleared the U.S. Senate and awaits passage in the House.
“The general perception is companies thinking, Oh, great, finally a level playing field,” Rossman says. “But other retailers are going to regret the day. Sales tax was one of the few things impeding Amazon from expanding. Now it’s like wherever Amazon wants to be, whatever Amazon wants to do, they are going to do it.”
There’s yet another weapon in Amazon’s offensive, and it’s ready for rollout. It’s called AmazonFresh, a grocery delivery service that has long been available only in Seattle. The site has a selection of 100,000 items, and from my hotel room in that city on a recent Saturday at 11 a.m., I gave it a try. I clicked on chips, bananas, apples, yogurt, and a case of bottled water–along with a DVD of Silver Linings Playbook and a Moleskine reporter’s notebook. After checking out and paying the $10 delivery fee, I requested my goods to arrive during the 7 p.m. to 8 p.m window. At 7:15 that evening, De, my AmazonFresh delivery woman, showed up in the lobby. She helped carry my bags up the elevator and to my hotel room, and tried several times to refuse a $5 tip for the trouble I put her through in the name of research. It was simple, easy–and for Amazon competitors, very threatening.
De and the Kiva robots are central to what Amazon sees as the future of shopping: whatever you want, whenever you want it, wherever you want it, as fast as you demand it. AmazonFresh is expected to expand soon to 20 more urban markets–including some outside America. Los Angeles became the second AmazonFresh market, this past June, and customers there were offered something the folks in Seattle must wish they got: a free trial of Prime Fresh, the upgrade version of Amazon Prime, which provides free shipping of products and free delivery of groceries for orders over $35. Subscribers will pay an annual fee of $299. Considering that grocery delivery otherwise costs between $8 and $10 each time (depending on order size), the subscription covers itself after about 30 deliveries–which busy families will quickly exceed.
Bezos, in his cagey, friendly way, seems more excited about my Fresh experience than he is about describing Fresh’s future. He seems almost surprised that the service worked so well at a hotel, given that it was designed for home delivery. “Thank you!” he shouts. After peppering me with questions on how, precisely, the delivery went down, he finally gets around to addressing the service’s business purpose.
“WE WON’T INVEST IN A COMPANY UNLESS THEY CAN TELL US WHY THEY WON’T GET STEAMROLLED BY AMAZON.”
“We’d been doing a very efficient job with our current distribution model for a wide variety of things,” Bezos says. “Diapers? Fine, no problem. Even Cheerios. But there are a bunch of products that you can’t just wrap up in a cardboard box and ship ’em. It doesn’t work for milk. It doesn’t work for hamburger.” So he developed a service that would work–not because he suddenly wanted to become your full-service grocer but because of how often people buy food.
AmazonFresh is actually a Trojan horse, a service designed for a much greater purpose. “It was articulated [in the initial, internal pitch to Bezos] that this would work with the broader rollout of same-day delivery,” says Tom Furphy, a former Amazon executive who launched Fresh in 2007 and ran it until 2009. Creating a same-day delivery service poses tremendous logistical and economic hurdles. It’s the so-called last-mile problem–you can ship trucks’ worth of packages from a warehouse easily enough, but getting an individual package to wind its way through a single neighborhood and arrive at a single consumer’s door isn’t easy. The volume of freight and frequency of delivery must outweigh the costs of fuel and time, or else this last mile is wildly expensive. You can’t hire a battalion of Des unless they earn their keep. So by expanding grocery delivery, Amazon hopes to transform monthly customers to weekly–or even thrice-weekly–customers. And that, in turn, will produce the kind of order volume that makes same-day delivery worth investing in. “Think of the synergy between Prime, same-day delivery, and Fresh,” says Furphy. “When all of those things start working in concert, it can be a very beautiful thing.”
AmazonFresh is arguably the last link in Bezos’s big plan: to make Amazon the dominant servicer–not just seller–of the entire retail experience. The difference is crucial. Third-party sellers, retailers large and small, now account for 40% of Amazon’s product sales. Amazon generally gets up to a 20% slice of each transaction. Those sellers are also highly incentivized to use Fulfillment by Amazon (known as FBA). Rather than shipping their products themselves after a sale is made on the Amazon site, these retailers let Amazon do the heavy lifting, picking and packing at places like the Phoenix center. For the sellers, an FBA agreement grants them access to Prime shipping speeds, which can help them win new customers and can allow them to sell at slightly higher prices. For Amazon, FBA increases sales, profits, and the likelihood that any shopper can find any item on its website.
“NOW YOU HAVE SMART BRICK-AND-MORTAR STORES SAYING, ‘WHY ISN’T OUR EXPERIENCE MORE INTUITIVE, AS IT IS ON THE WEB?’”
The burgeoning AmazonFresh transportation network will help expand these numbers. In Los Angeles and Seattle, a fleet of Fresh trucks delivers everything from full-course meals to chocolate from local merchants. The bright green branded trucks–with polite drivers in branded uniforms–let Amazon personify its brand, giving it the same kind of trustworthy familiarity that fueled the rise of UPS in the 1930s. “If you have all kinds of fly-by-night operations coming to your door, people don’t like that,” says Yossi Sheffi, professor and director of the MIT Center for Transportation and Logistics. “It’s different with someone in a U.S. Postal Service or FedEx uniform. Those brands inspire confidence.”
As Amazon evolves into a same-day delivery service, its active transportation fleet could become yet another competitive advantage. By supplementing its long-term relationships with UPS and FedEx with its own Fresh trucks, Amazon may well be able to deliver faster than retailers that depend entirely on outside services. “Pretty soon, if you’re a retailer with your online business, you’re going to be faced with a choice,” says Brian Walker, a former analyst at Forrester Research who is now with Hybris, a provider of e-commerce software. “You’re not going to be able to match Amazon, so you’re going to have to consider partnering with them and leveraging their network.”
This shift could even turn Amazon into a competitor to UPS and FedEx, the long-standing duopoly of next-day U.S. shipping. “If Amazon could do it at enough scale, they could offer shipping at a great value and still eke out some margin,” says Walker. “In classic Amazon fashion, they could leverage the infrastructure they’ve built for themselves, take a disruptive approach to the pricing, and run it as an efficiency play.”
Amazon has been down this road before. Its Web Services began as an efficient, reliable back end to handle its own web operations–then became so adept that it now provides digital services for an enormous range of customers, including Netflix and, reportedly, Apple. It’s not impossible to imagine Amazon doing the same with shipping. Last year, the company cut its shipping costs as a percentage of sales from 5.4% to 4.5%. As it builds more distribution centers, installs more lockers, and builds out its fleet, Amazon is likely to drive those efficiency costs down even further.
So is Amazon Freight Services Bezos’s next mission? When I ask, the laugh lines vanish from his face as if someone flipped a switch on his back. He contends that same-day delivery is too expensive outside of urban markets and that it only makes sense for Amazon to deliver its own products within the Fresh program. In China, he explains, Amazon does in fact deliver products via many couriers and bicycle messengers. “But in a country like the United States,” he says, “we have such a sophisticated last-mile delivery system that it makes more sense for Amazon to use that system to reach its customers in a rapid and accurate way.” When I ask whether he would consider, say, buying UPS, with its 90,000 trucks–or even more radically, purchasing the foundering USPS, with its 213,000 vehicles running daily through America’s cities and towns–Bezos scoffs. But he won’t precisely say no.
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Rivals aren’t waiting for an answer. EBay has launched eBay Now, a $5 service that uses its own branded couriers in New York, San Francisco, and San Jose, to fetch products from local retail stores like Best Buy and Toys “R” Us and deliver them to customers within an hour. Google, fully aware that Amazon’s market share in product search is substantial (now 30% to Google’s 13%), has launched a pilot service called Google Shopping Express, which partners with courier companies. Walmart–which has booted all Kindles from its stores–started testing same-day delivery in select cities during the last holiday season, shipping items directly from its stores. (Joel Anderson, chief executive of Walmart.com, even suggested paying in-store shoppers to deliver online orders to other customers the same day. Come for a handsaw, leave with a job!)
These are the sort of ideas that retailers–both e-commerce and physical, large and small–will have to consider as Amazon expands. Guys like Jeff Jordan, partner at well-known venture firm Andreessen Horowitz, will make sure of it. His firm follows and invests in direct-to-consumer businesses. “We won’t invest in a company,” he says, “unless they can tell us why they won’t get steamrolled by Amazon.”
Given the astounding growth of Amazon, and the seemingly infinite ways it has defied the critics, Bezos may have proved himself the best CEO in the world at taking the long view. But he doesn’t like talking about it. “Did you bring the crystal ball? I left mine at home today,” he quips. He does, however, like discussing what the future might bring for his customers. In fact, he likes talking about his customer so much that the word can seem like a conversational tic; he used it 40 times, by my count, in just one interview. “It’s impossible to imagine that 10 years from now, I could interview an Amazon customer and they would tell me, ‘Yeah, I really love Amazon. I just wish your prices were a little higher,’” he says. “Or, ‘I just wish you’d deliver a little more slowly.’” In Bezos’s world, the goal of the coming decade is a lot like the goal of the past two: Be cheap. Be fast. That’s how you win.
There is, naturally, no guarantee that Bezos will simply win and win and win. The bigger Amazon gets, the greater the number and variety of stakeholders required to make the Amazon machine hum. Many seem to be getting increasingly frustrated. Consider Amazon’s third-party sellers–that group making up 40% of the company’s product sales. Earlier this year, Amazon issued a series of fee hikes for use of its fulfillment services, ranging from as low as 5 cents per smallish unit to as much as $100 for heavier or awkwardly shaped items (like a whiteboard, say, or roll-away bed). Many sellers took to Amazon’s forums to complain, and others threatened to go to eBay, which mostly leaves fulfillment to its sellers. “I think Amazon is a necessary evil,” says Louisa Eyler, distributor for Lock Laces, a shoelace product that sells as many as 3,000 units per week on Amazon. After the price hike, Eyler says her total fees for the $7.99 item went from $2.37 to $3.62. She says Amazon now makes more per unit than she does.
Or consider the frustrations of Amazon employees, who are striking at two of its eight German facilities in an effort to wrest higher wages and overtime pay. At the height of the conflict, on June 17, 1,300 workers walked off the job. (It is one of Amazon’s largest walk-offs in its biggest foreign market, and could result in shipping delays.) Meanwhile, Amazon workers in the U.S. have filed a lawsuit claiming that they’ve been subject to excessive security checks–to search for pilfered items–at warehouses. The suit alleges their wait could last as long as 25 minutes, an inconvenience Amazon would never subject its customers to. “It means there’s a broken process somewhere,” says Annette Gleneicki, an executive at Confirmit, a software company that helps businesses capture customer and employee feedback. “[Bezos] clearly inspires passion in his employees, but that’s only sustainable for so long.”
The company could be vulnerable on other fronts as well. Target and Walgreens have “geo-fenced” their stores so their mobile apps can guide customers directly to the products they desire. Walmart and Macy’s have begun making their stores do double-duty, both as a place to shop and a warehouse from which to ship products. (The strategy seems to be paying off for Macy’s, which recently reported a jump in first-quarter profit and is now fulfilling 10% of its online purchases from its stores.) They’re proving that retail won’t go away–it’ll learn and adapt. “Now you have smart brick-and-mortar stores saying, Why isn’t our experience more intuitive, as it is on the web?” says Doug Stephens, author of The Retail Revival: Re-Imagining Business for the New Age of Consumerism. “We should know a consumer when they walk in, and what they bought before, in the same way as Amazon’s recommendation engine.”
Bezos won’t admit to any deep concern. While Amazon’s paper-thin profits continue to perplex observers (the company netted only $82 million in the first quarter of 2013), the three primary weapons in its retail takeover–fulfillment centers, Amazon Prime, and now AmazonFresh–are coming to maturity. If the next year tells us anything about Amazon’s future, it should reveal whether Bezos’s decision to plow billions back into these operations will give the company an end-to-end service advantage that might be nearly impossible for its competitors to overcome.
The sun seems to be setting on Bezos’s big Day One. Before we part ways in Seattle, I ask him what we can expect to see on Day Two. “Day Two will be when the rate of change slows,” he replies. “But there’s still so much you can do with technology to improve the customer experience. And that’s the sense in which I believe it’s still Day One, and that it’s early in the day. If anything, the rate of change is accelerating.”
Of course, Bezos is the accelerator.
Amazon Buys Twitch For $970 Million In Cash
EUGENE KIM
AUG. 25, 2014, 4:03 PM 13,994 21
Patrick T. Fallon/Getty Images
Twitch CEO Emmett Shear.
Amazon said on Monday it would pay $970 million in cash for Twitch, a live video-game-streaming site with more than 55 million users that’s like YouTube for video games.
As of July, Twitch had over 15 billion minutes of content, and users were spending more than 100 minutes a day on the site, on average. Twitch users can host live streams of their gaming sessions and broadcast them to the world. They can also chop up their sessions into segments for streaming later.
It’s also a resource for gamers who like to show off their unique skills. For example, there’s an entire community on Twitch dedicated to doing weird stuff like beating Zelda games in under 20 minutes or playing massively collaborative games of Pokemon.
Twitch/Screenshot
A Twitch streaming session.
Twitch is a huge part of the internet, and it accounts for nearly 2% of all traffic in the U.S. during peak hours, according to a report by The Wall Street Journal. Only Netflix, Google, and Apple account for more traffic. In that respect, Twitch even streams more video than Hulu.
Twitch also accounts for 40% of all live-streamed internet content, according to Business Insider Intelligence:
BI Intelligence
What’s really impressive is that Twitch was able to become so big after just three years.
You can see Amazon’s purchase of Twitch as a play to take over the future of TV. More and more content is being streamed online, and more and more hours of video watching are being done on sites like YouTube, Netflix, and Hulu. Amazon has its own streaming video service called Amazon Instant that comes with Amazon Prime memberships. Amazon Instant includes thousands of streaming movies and TV shows, including original shows like “Alpha House.”
Amazon
Alpha House is an original Amazon show.
Earlier Monday, multiple reports indicated Amazon was in late-stage talks to acquire Twitch. The news came as a big surprise because just last month it was reported that Google had agreed to acquire Twitch for about $1 billion. That deal, however, was never officially confirmed.
The Google-Twitch deal felt like a natural fit, since it would’ve been a good way for YouTube to expand its video offerings. Yahoo also tried to buy Twitch for $970 million, but Amazon swooped in and got it instead.
It’s unclear what had caused the Google-Twitch deal to fall through, but one possible reason is over antitrust issues. Since Google already owns YouTube, the world’s largest video streaming site, acquiring another massive video streaming site like Twitch could raise antitrust issues. According to Forbes, the two sides couldn’t agree on the potential break up fee.
Here’s the official announcement from Amazon:
Amazon.com, Inc. (NASDAQ: AMZN) today announced that it has reached an agreement to acquire Twitch Interactive, Inc., the leading live video platform for gamers. In July, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling esports organizations.
“Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month – from The International, to breaking the world record for Mario, to gaming conferences like E3. And, amazingly, Twitch is only three years old,” said Jeff Bezos, founder and CEO of Amazon.com. “Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community.”
“Amazon and Twitch optimize for our customers first and are both believers in the future of gaming,” said Twitch CEO Emmett Shear. “Being part of Amazon will let us do even more for our community. We will be able to create tools and services faster than we could have independently. This change will mean great things for our community, and will let us bring Twitch to even more people around the world.”
Twitch launched in June 2011 to focus exclusively on live video for gamers. Under the terms of the agreement, which has been approved by Twitch’s shareholders, Amazon will acquire all of the outstanding shares of Twitch for approximately $970 million in cash, as adjusted for the assumption of options and other items. Subject to customary closing conditions, the acquisition is expected to close in the second half of 2014.
Here’s a letter from Twitch’s CEO:
Dear Twitch Community,
It’s almost unbelievable that slightly more than 3 years ago, Twitch didn’t exist. The moment we launched, we knew we had stumbled across something special. But what followed surprised us as much as anyone else, and the impact it’s had on both the community and us has been truly profound. Your talent, your passion, your dedication to gaming, your memes, your brilliance – these have made Twitch what it is today. Every day, we strive to live up to the standard set by you, the community. We want to create the very best place to share your gaming and life online, and that mission continues to guide us. Together with you, we’ve found new ways of connecting developers and publishers with their fans. We’ve created a whole new kind of career that lets people make a living sharing their love of games. We’ve brought billions of hours of entertainment, laughter, joy and the occasional ragequit. I think we can all call that a pretty good start. Today, I’m pleased to announce we’ve been acquired by Amazon. We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon’s support we’ll have the resources to bring you an even better Twitch. I personally want to thank you, each and every member of the Twitch community, for what you’ve created. Thank you for putting your faith in us. Thank you for sticking with us through growing pains and stumbles. Thank you for bringing your very best to us and sharing it with the world. Thank you, from a group of gamers who never dreamed they’d get to help shape the face of the industry that we love so much. It’s dangerous to go alone. On behalf of myself and everyone else at Twitch, thank you for coming with us. Emmett Shear, CEO
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
SEE ALSO: Here’s Why Amazon Just Paid Nearly $1 Billion For A Site Where You Can Watch People Play Video Games
• Has its own mobile operating system for tablets and smartphones.
• Has its own app store.
• Sells digital music, books, movies, and TV shows.
• Will soon have an online ad network.
• Created a way to accept payments with a smartphone.
• Owns the servers that act as the backbone for several major apps and startups and even parts of the CIA.
• Is experimenting with drones.
It’s not Google. It’s Amazon.
But just like Google has expanded beyond search into everything from finding ways to cheat death to making cars that can drive themselves, Amazon has been increasingly expanding beyond its core e-commerce business.
And in recent months, that only seems to be speeding up.
Amazon’s $970 million purchase of Twitch, a site that lets you watch people play video games via a live stream, is its latest push into original video content and a move to transform itself into part media company. It’s a longer-term bet that the trend of watching stuff online versus cable will continue.
Add that on top of the stuff listed above, and Amazon suddenly sounds less like an online store for buying books and gifts and more like a company trying to insert itself into everything you do online. It sounds very Google-y.
Plus …
There’s experimentation with same-day delivery, grocery delivery, and point of sale systems for brick-and-mortar retailers. Those are all things Google is working on or has at least experimented with.
The only difference, of course, is that Google is wildly profitable while Amazon continues to post losses each quarter. (Next quarter could be a doozy. Amazon said to expect at least a $410 million operating loss.)
But it’s also a changing company, one that’s no longly simply “the everything store,” but an entity creeping its way into everything we do from shop to play games to run our small businesses.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
Grocery delivery fans outside of Seattle and California, rejoice: Amazon plans to expand its AmazonFresh offering beyond its current three markets, CEO Jeff Bezos confirmed in his 2013 letter to shareholders published today.
“We’ll continue our methodical approach — measuring and refining AmazonFresh — with the goal of bringing this incredible service to more cities over time,” he said in the letter.
For five years, Fresh was only available in Seattle, before the company launched the program last year in Los Angeles and, six months later, San Francisco. Several reports over the past year have said Amazon plans to expand the delivery service into 10 to 20 more new markets this year, but this may be the first time Bezos has publicly acknowledged the expansion plans.
Through Fresh, shoppers can order deliveries of groceries and hundreds of thousands of other items, from TVs to toys, that arrive either that same day or the following morning. Industry observers believe that part of Amazon’s reason for delivering groceries is that it will create enough sales volume and delivery demand to justify delivering all other Amazon merchandise within one day.
Another highlight from the letter: Drones.
“The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles,” Bezos wrote, “and we are in the design phase on generations 7 and 8.”
Is it possible that drone delivery is still a marketing stunt? Sure. If so, Bezos is sticking to the script.
More from this story
SLIDE SHOW:
Headed your way: AmazonFresh widens range of grocery deliveries
Doorstep delivery: Our reporter gives AmazonFresh grocery service a whirl
BY NANCY LUNA / STAFF WRITER
Published: June 20, 2014 Updated: June 23, 2014 11:44 a.m.
STEVEN GEORGES, CONTRIBUTING PHOTOGRAPHER
VONS VS. AMAZONFRESH
Here are a few price comparisons based on items found online this week:
1 gallon of Alta Dena fat-free milk: $5.49 Vons vs. $4.99 AmazonFresh
59-ounce jug of Simply Lemonade: $2.50 Vons vs. $2 AmazonFresh
5 ounces organic baby romaine: $3.90 O private-label Vons brand vs. $3.39 Earthbound brand at AmazonFresh
24-pack of Aquafina 16.9-ounce bottled water: $5.49 Vons vs. $4.29 AmazonFresh
Tide Free and Gentle (100 ounces): $11.99 Vons vs. $11.97 AmazonFresh
20-pack Coke Zero: $8.29 Vons vs. $6.99 AmazonFresh
Winder Farms: A Utah-based delivery service in California, Utah and Nevada. Delivers roughly 300 farm fresh items. Delivery in Orange County and parts of Los Angeles County. winderfarms.com
Good Eggs: Delivery of locally grown, sustainable goods from stores or farmers’ markets. Los Angeles County only. goodeggs.com/about/mission
Vons: Traditional market with home delivery in Orange County. shop.safeway.com
Instacart: Delivers from local stores like Whole Foods, Ralphs and Bristol Farms. Limited to a few ZIP codes in Los Angeles County. instacart.com/store/whole-foods
Deliveer: Personal shoppers deliver groceries from Whole Foods Market, Trader Joe’s, Vons and Costco in Pasadena, San Marino, South Pasadena and Altadena. Expansion to other parts of Los Angeles County coming soon. deliveer.com
As Amazon’s fledgling grocery service in Southern California widens its reach, some boutique food suppliers say the experiment has proven to be a boon for business.
Huntington Meats saw sales go from single-digit growth to double digits after the first month of partnering with AmazonFresh, a doorstep food service that launched last summer in Los Angeles.
The 30-year-old butcher shop, known for its top-grade meats and wild game, partnered with AmazonFresh last summer. Co-owner Jim Cascone said his meat market sells the “whole store,” or 175 items, through the online site, from free-range chickens to ground elk.
Demand for his specialty goods continues to soar and was boosted in recent weeks when the company expanded its service to most of Orange County.
“We’re very pleased,” said Cascone. “We’re definitely getting a lot of business out of it.”
For other Amazon partners, the impact has been much less dramatic. Greg Daniels, executive chef-partner at Haven Collective, has been working with AmazonFresh the last six months. The company’s Provisions Market bottle and cheese shop in Old Towne Orange offers Amazon shoppers specialty cheeses, cured meats, chocolate and a wide selection of craft beer.
“Cheese is popular, and beer not too much yet,” said Daniels. “It’s definitely brand exposure more than money.”
Amazon’s doorstep service initially was limited to Los Angeles, four cities in Orange County and parts of Long Beach. Shoppers choose from a wide selection – some 500,000 items – of merchandise, groceries and specialty foods.
In recent weeks, AmazonFresh has expanded to Orange, Tustin, Garden Grove, Aliso Viejo, Santa Ana, Laguna Niguel and Mission Viejo in addition to Irvine, Anaheim, Huntington Beach and Newport Beach. All of Long Beach is also eligible for delivery, a company spokesperson said.
The expansion comes as Amazon sees positive results in the greater Los Angeles area.
“While I can’t share specific numbers, we are very pleased with the response from our customers so far,” AmazonFresh said in a statement.
AmazonFresh’s grocery delivery expansion comes as doorstep food services experience a resurgence after failing years ago.
In 2013, revenue from online grocery sales reached $6.5 billion, according to market research firm IBIS World. By 2018, sales are projected to reach $10.1 billion as time-strapped consumers seek convenient ways to shop through mobiles devices and home computers, IBIS said.
AmazonFresh entered Los Angeles last summer after testing its grocery service near its home turf in Seattle. The service is also available in San Francisco and Berkeley.
Other food delivery options in the region include Winder Farms, Good Eggs, Deliveer, Instacart and Vons.
AmazonFresh rolls into San Diego
By Katherine P. Harvey2:08 P.M.JULY 29, 2014Updated5:36 P.M.
This entry was posted in Business Models, E-Commerce and tagged Amazon on August 20, 2014. Edit
==============AMAZING AMAZON POST AUGUST, 2014 ========
Amazing Amazon
Continually updated notes as I try to keep up with Jeff Bezos (impossible)
As of 10/23/2013
Background
JCR was working with a partner at a major consulting firm on CGF business. In a casual moment, they got talking about e-commerce, and the subject of Amazon came up. The partner shared that they had just completed a major piece about Amazon, using entirely public sources, for a retailer client. He graciously offered to share the work, and did not label the work confidential. JCR reviewed it and thought that the sources and insights were outstanding – but he thought it best not to quote or share the document directly. So these facts are largely from that analysis and that analysis’ public sources (shown at the end of this paper). They are extended by other facts and articles discovered by JCR.
Purpose
The purpose of this working paper is to lay out a case that Amazon deserves high-priority consideration by virtually all Fortune 1000 companies operating in a retail or manufacturer environment.
!Hypotheses
From 2015-2018, there is a high likelihood that:
1. E-commercewillbemainstream.Itwillbecomethepreferredmethodofshoppingformany consumers, and it will enjoy ubiquity and mainstream use by the global middle class like cell phones do today;
2. Amazon will lead e-commerce. Amazon will be – far and away – the leader in the e-commerce retailing space;
4. Amazon will aggressively enter food and beverage retail globally. They will establish themselves
in key markets as one of the top 10 customers of most manufacturers;
5. Amazon will “perfect” home delivery. They will crack the “last mile” of retail. They will “perfect” delivering direct to the home or to a designated agent of the home, thereby making obsolete traditional retailers who cannot do this;
6. Amazon will “perfect” their business model. Amazon will dominate best practice in logistics, fulfillment, and customer satisfaction over this planning period, in a manner so effective that others who fail to keep up will be left behind by 2016;
7. Amazon will disrupt most business models. Amazon can potentially disrupt fundamental assumptions bout store delivery, merchandising, and the viability of home delivery
Discussion
Experts project that:
– E-Commerce will exceed $1,400 billion revenue by 2020
– It will be ubiquitous, accepted by virtually all (like cell phones today)
– It will be primary source of purchasing by consumers, who will be intensively engaged
– It will extend from its current 33 retail categories into all retail categories
1. E-Commerce Will Be Mainstream
2. Amazon Will Lead E-Commerce
Amazon will be – far and away – the leader in the e-commerce retailing space. Amazon revenue will continue to grow fast: in 2013 it was $75 billion, up from $61, $48, $34, $25, and $19 billion in 2012, 2011, 2010, 2009, and 2008 respectively. Analysts predict revenue will reach $90 billion in 2014. By 2015, Amazon is highly likely to have revenues exceeding $100 billion annually. Conservatively, Amazon revenue is likely to grow 20% per year from 2015 to 2020, reaching at least $250 billion in 2020 (one third of e-commerce and more than half the size of Wal-Mart today).
Amazon will begin to directly threaten Walmart over this 2015-2020 planning cycle
Today, Amazon revenue ($61 billion) is small compared to brick & mortar Wal-Mart, who closed 2012 with revenue of $444 billion. But, it nonetheless is remarkable for an online retailer. In 2000, the entire universe
of e-commerce was predicted to be less than $20B by Forrester and yet today, Amazon alone sells $61 MM and is closing in on $100 MM.
In contrast, it appears that Wal-Mart online sales will be less than $10 million. $61 million versus $10 million: it seems reasonably clear who is going to win in e-commerce. Although recent reports make it very clear that Wal-Mart has woken up to the threat and is responding so no one can know for sure what the outcome of this battle will be.
Not bad for a company that opened for business as a bookseller less than 20 years ago – in 1995.
3. E-Commerce Will Impact Food And Beverage
Food & Beverages to Grow as a Proportion of Total E-Commerce Sales
Amazon will emerge as a force in food and beverage retail. Some have concluded that grocery was approximately $36M in 2011 and would nearly double by 2015 to $57M and nearly triple from 2011 to $101B in 2020. Furthermore, it is predicted that beverages would grow from $6B in 2011, to $8B in 2015, and to $17B by 2020 (see Exhibit 1).
Amazon will establish itself in key markets as one of our top 10 customers. The food and beverage category will grow in importance online and Amazon is expected to own 30% of that market.
Amazon will crack the “last mile” of retail. They will “perfect” delivering direct to the home or to a designated agent of the home, thereby marginalizing traditional retailers who cannot do this. Amazon is currently testing and honing their approach through AmazonFresh.
AmazonFresh
AmazonFresh is a new service that is currently available in Seattle and Los Angeles in select zip codes. The service offers same-day and early morning delivery on orders of over $35 of more than 500,000 Amazon items, including fresh grocery and local products. The annual “membership” costs $299 with unlimited free delivery and is offered as an additional level of Amazon Prime.
4. Amazon Will Aggressively Enter Food and Beverage Retail Globally
5. Amazon Will “Perfect” Home Delivery
Exhibit 3: AmazonFresh Sortable Shopping
6. Amazon Will “Perfect” Their Business Model
Amazon will dominate best practice in logistics, fulfillment, and customer satisfaction over this planning period, in a manner so effective that others who fail to keep up will be left behind by 2016. One example of their current testing in fulfillment, logistics, and delivery is the launch of
Amazon Locker.
Amazon Locker
Now Amazon has taken a small step toward eliminating the UPS wait with a service inspired less by the internet and more by the Port Authority. Amazon Locker allows you to have your packages sent to the equivalent of single-use P.O. boxes housed in 24-hour convenience stores, grocery stores and drug stores. Amazon sends you an email with a pickup code, which you enter on a touchscreen to open the door of the locker containing your package. You have three days from the delivery date to pick it up.
Additionally, Amazon has started sharing warehouse space with some of its key suppliers. Amazon has been sharing warehouse space with P&G for 3 years and is now in at least 7 P&G distribution centers. Amazon also has arrangements in place or is working out deals with companies such as Kimberly-Clark, Seventh Generation, and Georgia-Pacific.
7. Amazon Will Disrupt Many Business Models
Amazon can potentially disrupt fundamental assumptions about direct store delivery, merchandising, bottlers, OBPPC, and the viability of home delivery.
================ 2013 AMAZON FACT SHEET ========
Amazon Fact Sheet
Last Updated in Late 2013
Basic Facts
Corporate mission: We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators
Headquarters: Seattle, WA
When Founded: The company was incorporated in 1994 as Cadabra and went online as Amazon.com in 1995
CEO: Jeffrey Bezos
Number of Employees: 97,000
Number of Retail Categories: 33 categories
Customers: 200 million active customers; 132 million unique visitors each month Fulfillment Centers: 89 worldwide, 54 million square feet of total space
Geographical Presence
Amazon has 89 fulfillment centers worldwide
Fulfillment centers are located in 8 countries including USA, Canada, France, Germany, Italy, China, Japan, and the UK
Amazon has separate retail sites for USA, Canada, France, Germany, Italy, China, Japan, and UK plus Brazil, India, Mexico, and Spain
The US fulfillment centers are located in: Arizona, California, Delaware, Indiana, Kansas, Kentucky, Nevada, New Hampshire, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington 1995: 400 square foot 2010: 50 fulfillment centers 26M square feet
Revenue was $61, $48, $34, $25, and $19B in 2012, 2011, 2010, 2009, and 2008 respectively o Annual revenue in 2011 was 27% more than Google’s
Revenue to reach $74.6B in 2013 (though $0 net income), 24.6% CAGR from 2011 Amazon’s market share represents one third of U.S. e-commerce sales
Amazon on pace to reach over $125B globally by 2016; 4.5% CAGR from 2010
North America: $65.4B by 2016; 23.2% CAGR from 2010
International: $61.3B by 2016; 26.3% CAGR from 2010 Amazon has had one of the fastest growths in the internet’s history
Financial Results
After 5 years eBay reached $0.4B, Google reached $1.5B, and Amazon reached $2.8B
Amazon Revenue vs. Net Income ($M)
$ $ $ $
70,000 52,500 35,000 17,500
00 (17,500)
$
2008 2009 2010 2011 2012
!
Millions ($)
!Organizational Structure
CEO and founder Jeffery Bezos and an eight-member board of directors
CEO oversees the Chief Financial Officer (CFO), the Chief Technology Officer and the following 8 departments:
o Business Development o E-Commerce Platform o International Retail
o North America Retail o Web Services
o Digital Media
o Legal & Secretary o Kindle
CFO oversees the Real Estate and Control department
International Retail oversees three separate departments: China, Europe and India
North America Retail oversees the following five departments: Seller Services, Operations, Toys, Sports & Home Improvement, Amazon Publishing and Music & Video
Web Services department oversees Amazon S3 and Database Services
Other departments include Product Development & Studios, Europe Operations, Global Advertising Sales, Computing Services, and Global Customer Fulfillment
Key Acquisitions
1998: PlanetAll, Junglee, Bookpages.co.uk
1999: Internet Movie Database (IMDb), Alexa Internet, Accept.com, Exchange.com, Pets.com, Home
2011: LoveFilm, The Book Depository, Pushbutton, Yap
2012: Kiva Systems, Teachstreet, Evi
2013: IVONA Software, GoodReads, Liquavista
Corporate Timeline (1995-2013)
July, 1995
o Began selling books online
o Two small fulfillment centers – Seattle and Delaware 1999
o Acquired Pets.com for $58 million
o Acquired Home Grocer for $42.5 million
o Acquired Back-to-Basics toys for $135 million
o Acquired drugstore.com for $44 million
o (Since then have acquired hardware, car, electronics, sporting goods, luxury, wine, etc.)
2001
o Became the online engine behind Borders.com o Broadened beyond books to CD’s and DVD’s
2005
o Launched Amazon Prime 2007
o Launched Kindle (developed by Lab126, their internal appliance R&D shop)
o Launched Amazon Fresh in Seattle 2008
o $19 billion revenue 2009
o $24.5 billion revenue (+28%)
o $.6 billion net income
o Acquired Zappos for $920 million
2010
o Acquired Quidsi for $500 million (owns Diapers.com) 2011
o $48 billion revenue (+41%) 2012
o 164 million active customers
o $61 billion revenue (+27%)
o $.6 billion net income
o Launched AmazonSupply (with 500,000 products, in 14 categories, B2B target)
• • •
o (Instant new major competitor for Blockbuster and Netflix)
2013
o $75 billion revenue PROJECTED (+22%)
o $0 net income
o 200 million active customers
!o (132 million every month, compared to EBAY 60MM; Wal-Mart 63 MM; Apple 18MM)
Product Categories
In 15 years, Amazon went from one category (books) to 33 (cloud services, clothing, baby products, sports, electronics, music, video games, books, film, audio, beauty products, tools & home improvement, office products etc.)
!• Has introduced two new product categories every year for almost a decade !Strategies
Build, buy, partner
o Build: new categories (e.g., MYHABIT)
o Buy: well-established competitors (E.g., Quidsi)
o Partner: offers tech service / e-commerce expertize to third parties (e.g., cobranded website
with Toys “R” Us Customer-first solutions
o Bottom-up approach: customer needs drive everything
o Frugality: Amazon continually seeking to do things cost-efficiently o Innovation: Amazon always seeing simpler solutions
Data & human driven customer service
o Every employee, even the CEO, spends two days every two years on the service desk to answer
calls and help customers
o 90% of customer service by email rather than by telephone
o Amazon has developed its own software to manage email centers
•
Convenience
o 1-click ordering
o Amazon Prime – $79 / year, instant streaming of movies & TV shows, instant access to thousands
of Kindle Books, free-two day shipping
o Amazon Locker – lockers installed in grocery, convenience and drugstore outlets that can accept
packages for customers for a later pick-up o Moving towards same-day delivery
Building warehouses close to city center – risky because Amazon will pay states taxes it did not pay before, but it will get closer to same-day deliver
Warehouses currently being built in California, Indiana, New Jersey, Tennessee, South Carolina, Virginia
o Amazon Supply – free two-day shipping for orders over $50 Low price
o Amazon significantly cheaper than competitors Digital optimization of supply chain
• •
Amazon automatically chooses the cheapest origin for the customer’s order in real-time It re-optimizes it based on the customers’ orders
Fast moving items are stored in all the fulfillment centers
Hard-to-find items are kept in small quantities in one or two fulfillment centers
Easily movable items (e.g. media) are stored in highly automated facilities
Extensive use of tracing
Drop shipping: when applicable, Amazon provides packages and asks the supplier to ship the product himself
Third-party sellers follow the same principle, which increases margins
Selling at a loss – costs around $210 to produce, sold at $199
But over the first 6 months of use, Amazon makes $136 of margin on average on every Kindle Fire by selling digital content
Amazon is developing international partnerships with retailers (e.g., Darty in France) to sell more Kindles
Kindle
Wal-Mart had 62.5M unique visitors in August 2013, compared with Amazon’s 133M Wal-Mart copycatting some of Amazon’s most successful tactics
o Trying out lockers, allowing shoppers to order items online and pick them up in stores o Dabbling in same-day delivery (testing in four cities) and even going a step further than
Amazon by attempting to crowd-source package drop-off among customers
o Investing in web technology to improve both their site’s appearance and ease of navigation
Comparisons to Wal-Mart
Contrary to Wal-Mart, which failed to enter the German and South Korean markets, Amazon’s international expansion has been successful
Amazon to reach $74.6B in 2013, 24.6% CAGR from 2011
o Wal-Mart’s revenue will be $500B in 2013, but its revenue in e-commerce by 2014 will reach just $10B
E-commerce is growing at 11% a year, but sales for consumer packaged goods online – food, groceries, everyday items – are growing at closer to 20% this is the area Wal-Mart will go after
o Amazon already one step ahead with Amazon Fresh !!