Author Archives: reidcurtis

Microbiome Update

Microbiome update

20210318

Credit: https://www.nytimes.com/2021/03/18/well/eat/microbiome-aging.html?action=click&algo=bandit-all-surfaces-decay-decay-02&block=trending_recirc&fellback=false&imp_id=986584686&impression_id=0cc53dd8-8b11-11eb-87e0-b362713e87cd&index=8&pgtype=Article&region=footer&req_id=227739339&surface=most-popular-story&variant=2_bandit-all-surfaces-decay-decay-02

By Anahad O’Connor

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.”

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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.

Other studies have shown that diet can have a substantial impact on the composition of the microbiome. While the new research did not look closely at the impact of different foods on changes in the microbiome as we age, Dr. Gibbons said he hopes to examine that in a future study.

“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.” 

Batteries

CREDIT: https://www.nytimes.com/2021/02/16/business/energy-environment/electric-car-batteries-investment.html?action=click&module=Top%20Stories&pgtype=Homepage

Key points:

Demand for batteries will explode.

Global race to dominate the field.

China currently dominate.

Europe (EU) investing heavily.

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 MotorsVolkswagen 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.”

The Electric Car Race

Remaking the auto industry

G.M. Announcement Shakes Up U.S. Automakers’ Transition to Electric Cars

Jan. 29, 2021

G.M.’s Electric Car Push Could Put China in the Driver’s Seat

Jan. 29, 2021

California Is Trying to Jump-Start the Hydrogen Economy

Nov. 11, 2020

The Age of Electric Cars Is Dawning Ahead of Schedule

Sept. 20, 2020

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

Trust

Trust

George Schultz at age 100, on the importance of trust:

https://www.washingtonpost.com/opinions/2020/12/11/10-most-important-things-ive-learned-about-trust-over-my-100-years/?arc404=true

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.”

Self-Driving Cars

Here is the latest on self driving cars, called “autonomous vehicles” from the New York Times:

https://www.nytimes.com/2020/12/14/opinion/Zoox-Amazon-self-driving.html

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.

Amazon Crush 2020 Edition

Amazon Crush: May, 2020 Edition

+++++++++++++++++CURRENT POST +++++++++++++++=

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.

CREDIT: https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/

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 America33%
21%
International21

13
AWS47

37
Consolidated31

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))
AWS7,296

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 flow19,400

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
AWS17,459

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.

CREDIT: https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn-20181231x10k.htm

Amazon Crush: July, 2019 Edition

+++++++++++++++++CURRENT POST +++++++++++++++=

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.

CREDIT: https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/

+++++++++++++++++EARLIER POSTS +++++++++++++++=

Amazon Crush: July 2018 Edition

“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.”

Amazon’s 10K documents this remarkable year:

CREDIT: http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=97664&fid=15414896

Jeff Bezos shared his pride in his 2018 Shareholder’s Letter:

CREDIT: https://www.sec.gov/Archives/edgar/data/1018724/000119312518121161/d456916dex991.htm

He identifies 16 sources of pride:

Prime

AWS

Marketplace

Amazon Music

Fashion

Whole Foods

Alexa

Amazon Devices

Prime Video

Amazon Go

Treasure Truck

India

Sustainability

Empowering Small Business

Investment and Job Creation

Career Choice

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

==================ECONOMIST ARTICLE=========

CREDIT: https://www.economist.com/news/leaders/21719487-amazon-has-potential-meet-expectations-investors-success-will-bring-big

CREDIT: https://www.youtube.com/watch?v=H0UH1TxjcEA

Corporate ambitions

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”.

Financial Times Article on Amazon

For all prior Amazon Updates, see 11/2016 Update

====Amazon Crush March 2017 Edition ===

CREDIT: https://www.bloomberg.com/news/features/2017-03-20/inside-amazon-s-battle-to-break-into-the-800-billion-grocery-market

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.

========= MAY 2015 POST ============

The Amazon Crush continues:

Just look at cash:

CASH AND CASH EQUIVALENTS, END OF PERIOD

2014

14.557 billion

2013

8,.658 billion

2012

8.084 billion

Amazon has published its 10Q for Q1 2015

http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsother

Note that free cash flow has doubled:

“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.”

Note also that international revenue is down.

They also have published their annual report:

http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual

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.”

https://openforum.hbs.org/challenge/understand-digital-transformation-of-business/business-model/amazonfresh-well-positioned-to-capture-value-in-online-grocery

====================== Posted 20140820: Amazon Crush – Update =====

Amazon Crush – Update

Amazon update

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.

Copyright © 2014 Oliver Wyman. All rights reserved.

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

Read more: http://www.businessinsider.com/amazon-buys-twitch-2014-8#ixzz3BSBNYa53

Amazon Is Turning Into Google

STEVE KOVACH

AUG. 25, 2014, 7:15 PM 1,038 3

Amazon Inc.

Amazon CEO Jeff Bezos.

Tell me which company this sounds like:

A company that…

• 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.

SEE ALSO: 9 impressive stats about Twitch

Read more: http://www.businessinsider.com/amazon-is-google-2014-8#ixzz3BSE4Hglt

Bezos Confirms

AmazonFresh Expansion Plans

, Says Drones Are for Real

April 10, 2014, 9:15 AM PDT

By Jason Del Rey

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;

3. E-commercewillimpactfoodandbeverage.Itwillemergeasaforceinfoodandbeverageretail;

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).

Exhibit 2: Projected Amazon Revenue Growth (2008-2024)

Note: 2008-2012 are actual revenues !

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

Grocer, Back-to-Basics Toys, drugstore.com

2004: Joyo.com

2005: BookSurge, Mobipocket.com, CreateSpace.com

2006: Shopbop

2007: DPRreview.com, Brilliance Audio

2008: Audible.com, Fabric.com, Box Office Mojo, AbeBooks, Shelfari, Reflexive Entertainment 2009: Zappos, Lexcycle. SnapTell, Stanza

2010: Touchco, Woot, Quidsi, BuyVIP, Amie Street

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 !!

Added Sources:

How Amazon Controls Ecommerce (Slides)

http://www.forbes.com/sites/clareoconnor/2013/04/23/wal-mart-vs-amazon-worlds-biggest-e-commerce- battle-could-boil-down-to-vegetables/

======================

Gratitude

I love asking my grandchildren: “what’s the proper attitude? “When I’m lucky, they yell back “GRATITUDE! “

As cheesy as it sounds, gratitude is a bigger factor in one’s personal well-being than most people realize.

The article below spells out a way to think about gratitude – about your past, about your present, and about your future – that can literally change the way you view your life.

https://www.inc.com/benjamin-p-hardy/gratitude-is-different-and-more-powerful-than-you-think.html

Arivale busts: a scientific wellness darling

Arivale – the end of a promising “scientific wellness” company

Anyone who cares about well-being, particularly that subset of well-being that many labeled as the “scientific wellness” movement, should note a decade-ender: the failure of Arivale. 

They burned through $50 million. They sold 5,000 customers over their lifetime. The customers were paying $99 per month on LABS tracking and health coaching that was tailored to the person’s genomes and other critical lab work. 

Their conclusion: customers would not pay for what it cost to serve them. In the future? Maybe. But not now. 

=======ARTICLE ON ARIVALE FOLLOWS=======

CREDIT: https://www.geekwire.com/2019/scientific-wellness-startup-arivale-closes-abruptly-tragic-end-vision-transform-personal-health/

Scientific wellness startup Arivale closes abruptly in ‘tragic’ end to vision to transform personal health

BY TODD BISHOP & TAYLOR SOPER on April 24, 2019

Arivale, the genetic testing and personal health coaching startup co-founded by genomics pioneer Leroy “Lee” Hood, shut down unexpectedly Wednesday — bringing an abrupt end to its ambitions to transform the lives of Americans through a new field that Hood dubbed “scientific wellness.”

All of the Seattle-based company’s approximately 120 employees were let go as of noon today, Arivale CEO Clayton Lewis confirmed in an interview. Arivale raised more than $50 million over its lifetime. The company offered ongoing wellness and nutritional coaching tailored to the results of each person’s genetic, blood and microbiome tests.

FOLLOW-UP: Why Arivale failed: Inside the surprise closure of an ambitious ‘scientific wellness’ startup

The decision was a surprise to many Arivale employees and customers. In a message to Arivale customers this afternoon, the company attributed the decision to “the simple fact that the cost of providing the service exceeds what our customers can pay for it.”

The message added, “We believe the costs of collecting the genetic, blood and microbiome assays that form the foundation of the program will eventually decline to a point where the program can be delivered to consumers cost-effectively. However, we are unable to continue to operate at a loss until that time arrives.”

Lewis told GeekWire that the high cost of acquiring customers also played a role in the decision.

“What is tragic on so many levels is that we were not successful in going out and convincing consumers that you could optimize your wellness and avoid disease with a little bit data and some changes in your lifestyle — that there’s not a market for that product that I believe in passionately,” Lewis said. “And that’s what we were trying to do.”

About 5,000 people took part in the Arivale program over the lifetime of the company, and Lewis said he is “incredibly proud” of the results. The program launched at a cost of $3,500 per year, but the price had dropped to the point where most customers were paying $99 per month for the flagship Arivale program, Lewis said.

The larger personal wellness industry includes heavyweights such as 23andMe, a genetic testing startup valued at more than $1 billion, and smaller players including EverlyWell, which raised a $50 million round last week, and Viome, the Seattle-area microbiome company led by Naveen Jain that just announced a new $25 million funding round from investors including Salesforce CEO Marc Benioff.

Global Wellness Institute estimates that the preventative and personalized medicine and public health industry is worth $575 billion.

Some of Arivale’s underlying work will continue at the Institute for Systems Biology (ISB), the not-for-profit biomedical research organization co-founded by Hood, where the ideas that led to Arivale were originally developed. ISB is now part of Providence St. Joseph Health, where Hood is chief science officer. Clayton said ISB is expected to hire some of the employees let go by Arivale as part of its closure. He declined to disclose details of the severance offered to employees, but said the same package was provided to all executives and employees.

Investors in Arivale included Arch Venture Partners, Polaris, and Maveron, where Lewis worked full-time before joining Arivale as co-founder and CEO.

Its scientific advisory board included George Church, a professor at Harvard and MIT; James Heath, president of Institute of Systems Biology; and Ed Lazowska, computer science professor at the University of Washington.

“Lee Hood sees the future with unmatched clarity,” said Lazowska, an early participant in the Arivale program. “A clear view, however, does not always imply a short path. Scientific wellness, as pioneered by Arivale, will be a foundation of 21st century medicine. But not right now. Right now, the cost of providing the service (the tests, the coaching) exceeds what people are willing to pay. Those costs will fall in time, and Arivale’s model and Arivale’s discoveries will see another day.”

Lewis said he has come to believe that Arivale was about a decade too early.

Arivale’s executive team included Sean Bell, chief operating officer; Jennifer Lovejoy, chief translational science officer; Mia Nease, head of healthcare and life sciences partnerships; Andrew Magis, director of research; Ashley Wells, chief product officer; and others.

Hood, who led the Caltech team that pioneered the automated DNA sequencer, said in a 2015 interview with GeekWire that Arivale was “the opening shot in a whole new industry called scientific wellness, and it really stands a chance of being the Google or Microsoft of this whole arena.”

GeekWire chief business officer Daniel Rossi was a longtime paying customer of the program, and we chronicled his early experience with Arivale in series of articles in 2017. “Arivale was crucial to my health journey,” Rossi said. “From them I learned not only the genetic hand I was dealt but also the best ways to maximize my health and well-being. I am most thankful for the weekly calls with my coaches who encouraged me every step of the way. I’ll miss this program. It was terrific.”

Here’s the text of the message sent to Arivale customers earlier today, a version of which was also posted to the Arivale website.

To Our Customers,

We are very sorry to inform you that, effective immediately, Arivale can no longer provide our program to you and our other customers. This letter explains why we are ending the consumer program and answers the questions you are likely to have about the process.

Our decision to terminate the program today comes despite the fact that customer engagement and satisfaction with the program is high and the clinical health markers of many customers have improved significantly. Our decision to cease operations is attributable to the simple fact that the cost of providing the program exceeds what our customers can pay for it. We believe the costs of collecting the genetic, blood and microbiome assays that form the foundation of the program will eventually decline to a point where the program can be delivered to consumers cost-effectively. Regrettably, we are unable to continue to operate at a loss until that time arrives; in other words, we have concluded that it is simply too early for a direct-to-consumer scientific wellness offering to be viable.

We founded Arivale with the vision of making personalized, data-driven, preventive coaching a new wellness paradigm in the United States. Since its launch in 2015, the results of the Arivale program have been remarkable. To cite but one example, our scientific paper describing the improvements seen in multiple health markers in ~2500 participants was recently accepted for publication in the journal Scientific Reports.

While our direct-to-consumer model isn’t yet sustainable, we know that the Arivale program improved the lives of our customers and showed great scientific merit. We are proud of everyone at Arivale for their dedication and devotion to our mission and grateful to you and all of our other customers for joining us on this journey. Together, our efforts have launched a new paradigm—scientific or quantitative wellness—which, we are confident will become a major component of 21st century medicine.

================== END ARTICLE==============

Written by: Todd Bishop is GeekWire’s co-founder and editor, a longtime technology journalist who covers subjects including cloud tech, e-commerce, virtual reality, devices, apps and tech giants such as Amazon.com, Apple, Microsoft and Google. Follow him @toddbishop, email todd@geekwire.com, or call (206) 294-6255.

A new Amazon Grocery Chain?

CREDIT: https://www.nytimes.com/2019/07/28/technology/whole-foods-amazon-grocery.html

This recent NYT article points out that the August, 2017 acquisition by Amazon of Whole Foods “…is the beginning, not the end.”

Are they designing a new grocery store? Apparently. 

The article reports that Amazon envisions a store designed from the ground up – centered around pick-up and delivery, not in store purchase. 

This paradigm-breaking idea is right in Amazon’s wheelhouse. 

The core idea is to focus the in-store experience on perishables, a lesson learned from their decade of testing AmazonFresh. Non-perishables would be available, but out of sight on a separate floor. 

The article puts forth a vision that the store might eventually be a 2,500 grocery store chain.  Not comparable to WalMart’s 5000 storm, but every bit as big as all the other chains, such as Publix. 

A few key passages: 

“The mixed results are reflected in prices at Whole Foods today. A standard basket of goods has fallen about 2.5 percent since the acquisition, according to Gordon Haskett Research Advisors.”

“Amazon has said its Prime members, who get charged $119 for an annual subscription, have saved hundreds of millions of dollars in discounts at Whole Foods.”

“Within six months, Amazon began making two-hour deliveries from Whole Foods in four cities for Prime members. Six months later, that had expanded to more than two dozen cities. It’s now available in 90.”

Some things not mentioned in the article:

Amazon is not reporting delivery sales as part of Whole Foods. They account for those in on-line deliveries. So Whole Foods reports a 5% growth in 2018, but it doesn’t include deliveries. Clever. 

AmazonFresh is national. So they have a big head start. Perishables were, and are, a challenge, but the entire concept is now national. 

====================

Amazon wants to Rule the Grocery Aisles and Not Just at Whole Foods

By Karen Weise

  • July 28, 2019

SEATTLE — In early 2017, a memo circulated inside Amazon that imagined an ambitious new grocery chain. The document was written like a news release, a common practice for ideas being weighed inside the company, with the title “Grocery Shopping for Everyone.”

The new stores, the document envisioned, would have robust sections for produce, fresh food and prepared meals. Nonperishable products, like paper towels or canned beans, would be stored on a separate floor, away from customers. Shoppers could order those items with an app, and while they shopped for fresh food, the other products would be brought down in time for check out. There would also be an area to pick up groceries ordered online and to manage packages for delivery drivers.

The faux news release, which has not previously been reported, cited a fictional grocery expert named Hal Apenyo, as in the chili pepper, declaring success in just six months. “The conversion from offline grocery shopping to mixed format shopping has been massive,” the character was quoted as saying.

A few months later, in June 2017, Amazon barged into the grocery business in a different way, by announcing a blockbuster deal to buy Whole Foods for $13.4 billion. The purchase catapulted Amazon near the top of the $700 billion grocery industry, and sank stocks of traditional grocers on fears that they would be outmaneuvered into oblivion. The memo and other big grocery proposals stopped circulating inside Amazon, as Whole Foods demanded everyone’s attention.

But two years later, instead of Whole Foods being the answer to Amazon’s grocery ambitions, it seems to have only whetted executives’ appetites.

The marriage has made clear the difficulties of selling fresh food inexpensively, either in a physical store or through delivery. Bananas are not the same as books.

But the combination has also shown glimmers of success, particularly in delivery. And that has provided some fuel to Amazon executives pushing to add another food-selling option — one built from the ground up that would change how people buy groceries.

The company is now quietly exploring an ambitious new chain, probably separate from Whole Foods, that is not far removed from the one outlined in the old memo. It would be built for in-store shopping as well as pickup and delivery. As the discussions heated up this year, employees passed around a slightly updated version of the memo.

The details of Amazon’s challenges and ambitions in the grocery business are based on interviews with more than 15 people who have worked at or with the company. Most spoke on the condition of anonymity because they have nondisclosure agreements or were not authorized to speak publicly.

“People really need to understand — Whole Foods is the beginning, it’s not the end,” said Brittain Ladd, who worked on Amazon’s grocery operations until 2017. “It’s not everything.”

An Amazon spokeswoman, Rachel Hass, said the company “doesn’t comment on rumors or speculation.”

Before it bought Whole Foods, Amazon was an afterthought as a grocer, well behind chains like Publix and ShopRite. The food it sold was limited to mostly canned and dry goods, and its decade-long effort to sell perishables through a pickup and delivery program called AmazonFresh never caught on.

Whole Foods had struggles of its own. The company was fending off activist investors and had stopped expanding. While its base remained loyal, grocers like Kroger and Walmart had started selling many of the products that once set Whole Foods apart, like organic kale or kombucha.

“Whole Foods was broken — we shouldn’t forget that, which is why they could buy it,” said Phil Lempert, a food marketing analyst.

It was clear from the start that the two companies differed culturally. John Mackey, Whole Foods’ co-founder and longtime chief executive, had written a best seller about how companies should have a social conscience and consider all stakeholders in their decisions. Amazon corporate principles say good leaders “do not compromise for the sake of social cohesion.” But Amazon pushed ahead with some changes that were once held up as points of pride for the grocer.

In an effort to shed Whole Foods’ “whole paycheck” reputation, Amazon bought more from national food distributors and cut back on the local farms. United Natural Foods, a leading organic distributor, has increased its sales to Whole Foods by 38 percent over the past two years. And inside stores, employees stopped making signs on chalkboards by hand. Now, Whole Foods prints signs with black ink on paper in a font that resembles handwriting but requires less labor.

Other price-cutting efforts failed. The former head of a major produce company said Amazon told him it wanted to sell marquee fresh items at low prices every day. The executive said he had to explain that certain products, like berries or lettuce, may be available all year thanks to global supply chains, but that they cost more in the off-season. Forcing flat, low prices would put too much risk on growers.

Amazon executives, the person said, were caught off guard by the response. It didn’t seem as if they had fully appreciated how seasonality made predictable pricing far harder than selling cereal or paper towels.

The mixed results are reflected in prices at Whole Foods today. A standard basket of goods has fallen about 2.5 percent since the acquisition, according to Gordon Haskett Research Advisors. Amazon has said its Prime members, who get charged $119 for an annual subscription, have saved hundreds of millions of dollars in discounts at Whole Foods. But over all, Whole Foods is still more expensive than other major grocers, particularly for items like meat.

Amazon has also run into some trouble integrating Whole Foods into its delivery machine. Amazon never saw delivering cold milk and fragile fruit to doorsteps as something for the masses, according to former employees. Instead, executives thought of it as an option for people who wanted high-quality foods and could afford a premium price to have fragile and fresh items arrive at their doorstep.

In theory, that was a good fit for Whole Foods and its affluent shoppers. Within six months, Amazon began making two-hour deliveries from Whole Foods in four cities for Prime members. Six months later, that had expanded to more than two dozen cities. It’s now available in 90.

But Whole Foods stores are not like Amazon’s 

delivery warehouses. Because Whole Foods sells so many fresh items, its stores have smaller back-of-house areas than a standard supermarket. That means employees who pick products for online orders must gather more items from the same shelves as shoppers. They roam aisles with scanners in hand, asking associates on the floor when they can’t find something.

In addition, items in grocery stores are grouped together. Walk into a Whole Foods, and a picker for an online order might be standing there trying to see if the identical tubs of Parmesan she’s grabbed are grated or shaved. In a warehouse, similar items are kept far apart to avoid confusion.

Still, deliveries have shown big potential, making up almost all of Whole Foods’ growth.

The promise of serving customers, but doing so more efficiently, has Amazon thinking again about aggressive investment in groceries.

Rather than dramatically substantially expand Whole Foods, several former employees said, Amazon is considering designing stores specifically with pickup and delivery in mind, and with a smaller area dedicated to fresh shopping — as the old memo imagined.

While it is unclear what hybrid design Amazon has in the works, a recent job posting for a store designer on “an exciting new team” was looking for someone interested in “creating multiple customer experiences under one roof.”

And Amazon has been looking for spaces close to Whole Foods locations, indicating a hub-and-spoke approach where one store serves as the warehouse and commissary for others. Experts say it could take more than a decade to build a new chain from the ground up.

To be a major grocery player, Amazon would need a little more than 2,000 stores, the old memo estimated. That’s far fewer than the 5,000 run by Walmart, the country’s top grocery seller, but more than the roughly 1,200 operated by Publix. Whole Foods got Amazon about a quarter of the way there.

A store designed with different shopping options, “Mr. Apenyo” predicted in the old memo, would be “highly scalable.”

Charisma

CREDIT: www.nytimes.com/2019/08/15/smarter-living/what-makes-people-charismatic-and-how-you-can-be-too

What Makes People Charismatic

Ask people to name someone they find charming and the answers are often predictable. There’s James Bond, the fictional spy with a penchant for shaken martinis. Maybe they’ll mention Oprah Winfrey, Bill Clinton or a historical figure, like the Rev. Dr. Martin Luther King Jr. or Mahatma Gandhi. Now ask the same people to describe, in just a few seconds, what makes these charmers so likable.

It’s here, in defining what exactly charisma is, that most hit a wall. Instinctually, we know that we’re drawn to certain people more than others. Quantifying why we like them is an entirely different exercise.

The ancient Greeks described charisma as a “gift of grace,” an apt descriptor if you believe likability is a God-given trait that comes naturally to some but not others. The truth is that charisma is a learned behavior, a skill to be developed in much the same way that we learned to walk or practice vocabulary when studying a new language. Other desirable traits, like wealth or appearance, are undoubtedly linked to likability, but being born without either doesn’t preclude you from being charismatic.

Quantifying charisma

For all the work put into quantifying charisma — and it’s been studied by experts through the ages, including Plato and those we talked to for this piece — there are still a lot of unknowns. There are, however, two undisputed truths.

The first is that we are almost supernaturally drawn to some people, particularly those we like. Though this is not always the case; we can just as easily be drawn in by a charismatic villain.

The second truth is that we are terrible at putting a finger on what it is that makes these people so captivating. Beyond surface-level observations — a nice smile, or the ability to tell a good story — few of us can quantify, in an instant, what makes charismatic people so magnetic.

Perhaps it’s evolutionary. As a species, innate instinctual feelings lead to things we often describe as gut feelings. These feelings are actually a subconscious response to dozens, or possibly hundreds, of verbal and nonverbal cues that we unknowingly process in every interaction with others. It’s a necessary skill, one that allows all mammals to gauge the intention of others by taking continuous inventory of things like body language, speech pacing and subtle movements that may allude to a threat.

John Antonakis, a professor of organizational behavior at the University of Lausanne in Switzerland, notes that charisma, at its most basic, is merely information signaling. “Basically put, charisma is all about signaling information in a symbolic, emotional and value-based manner,” he said. “Thus, charisma signaling is all about using verbal — what you say — and nonverbal techniques.”

For comparison’s sake, what Dr. Antonakis described is essentially a simpler version of the fight-or-flight response. Instead of fighting or fleeing, however, we’re making constant micro-decisions about whether the person demanding our attention is deserving of it. 

The three pillars of charisma, and how to practice each

Olivia Fox Cabane, a charisma coach and the author of the book “The Charisma Myth,” says we can boil charismatic behavior down to three pillars.

The first pillar: PRESENCE

The first pillar, presence, involves residing in the moment. When you find your attention slipping while speaking to someone, refocus by centering yourself. Pay attention to the sounds in the environment, your breath and the subtle sensations in your body — the tingles that start in your toes and radiate throughout your frame.

The second pillar: POWER

Power, the second pillar, involves breaking down self-imposed barriers rather than achieving higher status. It’s about lifting the stigma that comes with the success you’ve already earned. Impostor syndrome, as it’s known, is the prevalent fear that you’re not worthy of the position you’re in. The higher up the ladder you climb, the more prevalent the feeling becomes.

The key to this pillar is to remove self-doubt, assuring yourself that you belong and that your skills and passions are valuable and interesting to others. It’s easier said than done.

The third pillar: WARMTH

The third pillar, warmth, is a little harder to fake. This one requires you to radiate a certain kind of vibe that signals kindness and acceptance. It’s the sort of feeling you might get from a close relative or a dear friend. It’s tricky, considering those who excel here are people who invoke this feeling in others, even when they’ve just met.

To master this pillar, Ms. Cabane suggests imagining a person you feel great warmth and affection for, and then focusing on what you enjoy most about your shared interactions. You can do this before interactions, or in shorter spurts while listening to someone else speak. This, she says, can change body chemistry in seconds, making even the most introverted among us exude the type of warmth linked to high-charisma people.

Scratching the surface

All of our experts agreed that charisma isn’t a one-size-fits-all descriptor; it’s more of a hierarchy. Some people exude charm through warmth and generosity, while others are likable in a sort of evolutionary sense — the alpha types who radiate confidence and success.

Going back to the three pillars, the most charismatic people you know on a personal level have generally achieved a high level of success in only one, or perhaps two, of these traits. A rare few, though, show a mastery of all three.

Dr. King, for example, displayed signs of mastery in each of these pillars, leading to the rare classification that Ms. Cabane calls “visionary charisma.”

If that’s the top of the hierarchy, the next three examples would reside somewhere in the middle.

Steve Jobs, the co-founder of Apple, exhibited mastery in power and achieved high marks for presence. However, according to his daughter Lisa Brennan-Jobs, in her 2018 memoir “Small Fry,” he lacked warmth. Tesla’s chief executive, Elon Musk, also arguably lacks warmth. He’s a classic introvert who makes up for his lack of people skills with mastery in presence and above-average levels of power.

Mr. Jobs, according to Ms. Cabane, is best classified as having “authority charisma,” while Mr. Musk has “focus charisma.”

Then there are those like Emilia Clarke, who starred on HBO’s “Game of Thrones.” Clarke’s exuberance earns her high marks in “kindness charisma,” a classification for those who excel at the warmth pillar, while maintaining a high presence but low power.

This is just scratching the surface, of course. But the important takeaway here is that charisma isn’t a singular thing. Instead, it’s often best to think of it in the same way you would consider intelligence. Earning high marks in math and science is a signal of intelligence, but so is mastery in art or music. Trying to compare one intelligent person to another just leads to more confusion.The same can be said for charisma.

Charisma training: Low-hanging-fruit edition

If you’re looking for a good starting point to be more likable, Dr. Antonakis suggests storytelling. The most charismatic people in a room, he says, are those who speak metaphorically, providing substance to a conversation through exemplary use of anecdotes and comparisons. They aren’t recounting events but paraphrasing action while using facial gestures, energetic body language and vocal inflections to frame key points. They’re experts at using moral conviction and reflections of group sentiment, as well as employing questions, even rhetorical ones, that keep people engaged. In short, they just tell a good story.

In fact, a theme emerged while speaking to experts on charisma, one that becomes instantly recognizable to anyone who has taken a public-speaking course or sat in on a Toastmasters meeting: The most charismatic people are often the most effective public speakers.

Charisma goes beyond being a refined and engaging speaker, however. Charismatic people are well liked not just because they can tell a good story, but also because of how they make others feel. Aside from being humorous and engaging, charismatic people are able to block out distractions, leaving those who interact with them feeling as if time had stopped and they were all that mattered. They make people feel better about themselves, which leads them to return for future interactions, or to extend existing ones, if only to savor such moments.

The quickest way to be more likable is to get out and practice being more likable. It starts at home, by removing your own self-doubt and focusing instead on being an active participant in conversations and interactions with others.

From there, it requires little more than saying yes to more social invitations, joining a public speaking class (or a local group like Toastmasters) and continuing to look for ways to show off your strengths while leveling up your weaknesses. Each interaction offers a chance to practice, to study and to employ new strategies.

Much like learning any other skill, sometimes it will go well and often it won’t, especially at first. But if you think of charisma as a skill tree, each practice session is merely a way to brush up on the many ways to climb it.

Bryan Clark is a journalist from San Diego who lives at the intersection between technology and culture. 

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