Amazon and Walmart Fight for the On-Demand Grocery Shopper

On March 28, Amazon fired a shot in its war with Walmart to define the future of the $600 billion grocery industry. The world’s biggest online retailer announced the beta launch of AmazonFresh Pickup, an on-demand grocery service. With AmazonFresh Pickup, customers can order groceries online and have their orders ready for pick-up at designated AmazonFresh Pickup physical locations — in as little as 15 minutes.

The service is a clear response to Walmart’s limited rollout of Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.

Both businesses are racing to win loyalty from the on-demand consumer.

The rise of the on-demand consumer is one of the compelling trends defining the 21st Century economy. As Google has reported, we’re living in the era of the micro-moment, when consumers, armed with mobile devices and apps, can research and purchase goods and services on their own time and terms. On-demand businesses such as Uber have acted as important catalysts. Uber, for all its flaws, demonstrated the power of responding to mobile consumers with an easy-to-use app that provides a service on demand, and the company has had a profound impact across many industries. Businesses ranging from Panera Bread to 7-Eleven have responded to the on-demand consumer with services such as online ordering and drone delivery.

The grocery industry is well suited to an on-demand model. People need to restock groceries often, and obviously perishable goods have a limited shelf life. But as writer Mark Rogowksy notes in Forbes, the on-demand grocery model has been fraught with its share of failure, one of the reasons being that grocery delivery is not as “on-demand” as it sounds. In fact, it’s a lot easier for mobile consumers to order and pick up groceries on the go rather than wait around in their homes for delivery. Hence, Walmart has been experimenting with the Pickup and Fuel stores. Walmart launched the stores in late 2016 amid speculation that the giant retailer had found a way to battle the ongoing Amazon threat.

At about the same time Walmart began experimenting with Pickup and Fuel, Amazon made headlines with the beta launch of Amazon Go, which consists of physical self-service grocery stores where anyone with an Amazon account, a supported smartphone, and the Amazon Go app can simply take what they want from the store and leave with no check-out required. The flagship Amazon Go store is open exclusively to Amazon employees, and so far the frictionless shopping model has encountered glitches as the in-store technology struggles to keep pace with consumer foot traffic when the Amazon Go store gets busy. Amazon has delayed the launch of a public-ready Amazon Go. But as Amazon has demonstrated with its latest announcement, Amazon has many more cards to play.

Both Amazon and Walmart are in a strong position to lead the on-demand grocery business. They both have brand muscle and deep pockets. Amazon is crushing Walmart (and everyone else) in online retailing, and Amazon is successfully moving into our homes and cars with on-demand devices and technologies such as the Dash button and Alexa voice assistant, which make Amazon a more ubiquitous and convenient presence in our lives, as Google strives to be. Walmart, though, possesses many advantages, including scale and a powerful physical ecosystem that includes not only its stores but network of partners, over whom Walmart wields considerable power.

Walmart also has an uncanny knack to experiment and learn. For example, in 2015 the company launched Walmart Pay to make it possible for shoppers to use their mobile devices to check out and purchase goods, and in 2016, Walmart expanded Walmart Pay across 4,600 stores. Walmart has quickly added services to Walmart Pay that cater to the needs of on-demand consumers, such as the ability for shoppers to refill prescriptions and skip pharmacy lines. Here is a company that understands the intersection of the mobile and physical worlds.

In coming months, Amazon and Walmart will continue to claw their way for leadership. And who will win? The on-demand consumer. With each innovation, Amazon and Walmart are reshaping the grocery industry around the needs of mobile consumers — which is good news for shoppers and the businesses that possess the means to service them on shoppers’ own terms.

Image source: Matthew Kane (https://unsplash.com/@matthewkane)

Amazon Wants to Be Your Personal Stylist

Amazon sure knows how to keep everyone off balance. While retailers are figuring out how to use automated chatbots to service customers, Amazon is pushing a new personal styling feature that relies on the human touch.

The Launch of Outfit Compare

Days ago, Amazon began to make available to Prime members a service called Outfit Compare. With Outfit Compare, Amazon Prime members receive advice from Amazon on their style choices. The service works like this:

  • Amazon Prime customers may post two photos of themselves wearing different outfits of interest to them.
  • An Amazon stylist then gives feedback on which outfit looks better on the customer. The stylist provides feedback based on factors ranging from what’s trending to what looks best on you. The stylist uses a style scale in voting for the preferred option, ranging from “Definitely Pick This One!” to “It was a close call.”

And according to Amazon, your stylist is a real person, not a bot. Amazon says that Outfit Compare “is powered by a team of fashion specialists” whose backgrounds include retail, editorial, and styling.

Throughout the past week, a number of journalists have reported on the launch and have tested it. So far the coverage of Outfit Compare includes a fair bit of incredulous head scratching, such as:

  • How Amazon corralled a team of fashionistas to help people in a stylistic funk is a weird question. It’s unclear whether there’s any sort of automation at play — because it’s hard to imagine a team of stylists eagerly waiting just to dress you. — Sam Blum, Thrillist.
  • It’s not immediately clear how this feature will boost Amazon’s bottom line in the near-term. — Sarah Perez, TechCrunch.
  • Amazon has added what might be the strangest feature for Prime members yet . . . Outfit Compare is a fun tool to mess around with, but it’s unclear what exactly Amazon gets out of it. — Chaim Gartenberg, The Verge.

Those comments remind me of the bemused reactions when Amazon rolled out the Dash button in 2015. The Dash button seemed so out of the blue that many thought its launch was an April Fool’s joke. But two years later, Amazon says the list of brands signing up for the Dash program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

In other words, Amazon is not just messing around.

Amazon’s Fashion Aspirations

So then what does Amazon get out of rating customers’ style habits? I think Amazon is using Outfit Compare to figure out how to create a more effective balance between human judgment and personalization through technology. Why? To become a true fashion brand.

Amazon clearly wants to become a fashion brand. The company operates Amazon Fashion, which bills itself as “a one-stop destination for head-to-toe style.” Its moves to build up its fashion business also include, among other things, consulting with fashionistas such as Julie Gilhart (formerly the fashion director for Barneys New York) and hiring Caroline Palmer, formerly Vogue.com editor, as director of Editorial, Video, and Social Media for Amazon Fashion.

Amazon has already launched seven private-label clothing brands, and Amazon is poised to become the largest clothing retailer in the United States. But selling a lot of clothing and being a fashion brand are two different things. Successful fashion brands build trust by possessing a sense of style and curating style appropriately. And as reported by Business Insider, Amazon gets lukewarm customer reviews for style curation.

Stitch Fix Shows the Way

I suspect Amazon is watching Stitch Fix to learn about style curation. Stitch Fix is an online style recommendation service. The site uses artificial intelligence to analyze and recommend personal style options to its customers based on a variety of data, including information reported by customers. Personal stylists analyze the AI-based recommendations and then assemble a customized package of clothing, which is delivered to the customer. Customers can always return what they don’t want — in fact, returns help Stitch Fix’s AI engine get smarter.

One Stitch Fix stylist explained to Computerworld the human/AI dynamic this way:

When a client fills out a profile and is ready to be styled, we are able to see what the algorithm is suggesting based on the data collected from her profile — everything from sizing to location, geography, body type, fabric preferences, colors and pattern preferences. It helps to not have to worry about the broad strokes of what a client does not want. Then we can make creative decisions about what will fit her body and her lifestyle.

By contrast, without AI, a stylist might need weeks of working with a client to come up with the best recommendations.

So far, the combination of AI and human judgment has made Stitch Fix so successful that more than 80 percent of its clients come back for a another delivery within 90 days, and one third spend more than half their clothing wallet share on Stitch Fix. Stitch Fix has achieved a valuation of $300 million since its founding in 2011 and is reportedly considering an IPO.

Amazon is already known for using AI to power its product recommendations. But the launch of Outfit Compare suggests that to become a fashion brand, Amazon realizes it needs to apply more than algorithms. It looks to me that Amazon is learning from Stitch Fix to apply the human touch. Amazon is a fast learner. And what Amazon wants, Amazon usually gets.

Drake and Jay Z Write Rules for Music Moguls

Drake and Jay Z are among the most successful musicians year after year. Between them, they earned $92 million in 2016 while making the list of Forbes highest-paid musicians, adding to the nearly $97 million they pulled down in 2015, and $93 million in 2014. Drake’s 2016 album Views was a gigantic commercial success (which is saying something in the era of the single), and he gets the most streams of any artist on Spotify. Recently both made the news for two different reasons: on March 6, Jay Z launched a venture capital firm, Arrive, to invest in startups. On March 18, Drake released a 22-song playlist, More Life, that promptly broke two Spotify streaming records and one Apple Music streaming record. Drake and Jay Z demonstrate how the new music moguls are defining success for the recording industry. On the one hand, Drake illustrates why artists need to hustle their songs constantly in an on-demand economy. And Jay Z understands why musicians — even the elite — need to build personal brands that transcend music.

Drake: Hustle Your Music

Drake knows that making music inaccessible doesn’t work in the on-demand economy. You can’t expect fans to buy your albums to find hidden gems of songs that reward patient listening the way Led Zeppelin used to do in the glory years of album oriented rock. As Brian Solis once noted, attention is a currency to earn and spend. And attention, while difficult to earn, is easily spent. Keeping anyone’s attention is increasingly difficult at a time when Americans own four devices on average and toggle their way through a sea of websites, apps, games, and other distractions that compete for our time. So Drake distributes music liberally, dropping multiple songs like attention bombs as he did with More Life, Views in 2016, and If You’re Reading This It’s Too Late in 2015 (along with a short film for good measure). He doesn’t expect his fans to wait for a new album to hear his new songs — he maintains a constant hum of activity through his music, supported by a strong social media presence.

As Dan Rys of Billboard noted, “Unlike superstars for whom every move is an event, Drake keeps his activity at a constant simmer, peaking at ­strategic moments.” As a result, he is one of the few artists in the Forbes list who made the bulk of his money in 2016 from music sales.

Even Beyoncé, whose every album is an event, keeps our attention by releasing a barrage of videos to support her albums. Artists need to feed a content stream to keep their names visible. As music pundit and consultant Cortney Harding once told me, “Albums take a very long time to make, and artists can’t remain silent in between album releases, especially when everyone else is releasing a steady stream of content on YouTube. If you want to release an album a year from now, you need to release a song a month and content between songs rather than remain quiet and expect fans to wait for the big release day.”

For Drake, every day is release day.

Jay Z: All Business, Man

Jay Z has always known his brand is bigger than music. Even as his star was ascending as a rapper in the 1990s, he was creating business ventures. In 1996, Jay Z cofounded of Roc-A-Fella Records, and then a few years later cofounded Rocawear clothing line. He Jay Z operates businesses such as his entertainment company Roc Nation and Armand de Brignac champagne (which he acquired in 2014). As he put it, “I’m not a business man, I’m a business, man.” (Ironically the one venture that he’s apparently not mastered is streaming. His Tidal streaming service has famously struggled.)

In 2016, he released no new music, and he didn’t tour. And yet he earned $53.5 million as he cashed in on his many business ventures. His latest, Arrive, will invest in early-stage startups and provide support ranging from marketing to business development. Part of Roc Nation, Arrive will apply Roc Nation’s entertainment management experience to support entrepreneurs (and that experience is considerable, as Roc Nation works with the likes of J. Cole and Rihanna.) Arrive will apparently not restrict itself to entertainment startups.

Jay Z has also proven to be an innovative business operator with his music. For instance, in 2013, he signed an intriguing deal with Samsung to distribute one million copies of his Jay Z’s Magna Carta Holy Grail album through a special app exclusively on Samsung phones before the album went on sale publicly. Samsung reportedly paid $5 for every album, meaning Magna Carta Holy Grail sold $5 million before a consumer purchased a single copy.

As I noted in my ebook The New Music Moguls, the successful moguls who regularly make the Forbes list of highest-paid musicians build their audience through recorded music, but make their real money elsewhere, whether from touring, endorsing products, or investing in businesses. Dr. Dre may have earned his reputation as a rapper, but he earned his biggest payday, $620 million, through his stake in Beats Electronics. Diddy is worth hundreds of millions of dollars because of his branding deals with Cirac vodka and Aquahydrate. The list of celebrities as business brands goes on and on: Katy Perry (who has cobranded music with H&M), Luke Bryan (who endorses Miller Lite), Rihanna (who has her own footwear line with Puma), and Taylor Swift (who earned $170 million in 2016 through touring and via deals with Keds, Diet Coke, and Apple). Oh, and Drake hedged his bets through branding relationships with Apple, Nike, and Sprint. They all realize that recorded music is a launching pad, not an end unto itself.

The days of consumers rushing out to buy recorded music are over. We’re streaming songs, discovering music through ads, apps like Snapchat, and many other platforms that didn’t exist before digital. But music no longer engages our hearts. Music captures a fraction of our attention at best. The new music moguls grab our attention through their music and turn attention into money through their personal brands.

How the Apple Watch May Simplify Your Next Doctor’s Visit

Doctors and dentists are not exactly renowned for managing the flow of information in their offices effectively. How many times have you been to a doctor’s or dentist’s office and gotten the sense that providers spend an inordinate amount of time checking in with administrative staff for patient records? A software provider named Simplifeye aims to make work flow in the medical office more efficient by storing information on wearables such as the Apple Watch.

By having patient information stored on the Apple Watch, providers always have instant access to patient records and thus an make themselves more efficient and cut out the downtime associated with waiting for administrative staff to deliver records.

As reported in TechCrunch, Simplifeye has obtained $3 million in funding. In addition, the good news for Simplifeye is good news for Apple. As I reported recently, Apple seeks to be the data backbone for patient care. Having its hardware and software integrated into companies such as Simplifeye helps Apple deliver on its strategy by strengthening the Apple data infrastructure in healthcare.

Simplifeye is set up to be an Apple shop, so to speak (one of its founders worked at Apple) although Simplifeye also offers a mobile app for providers who don’t want to use wearables.

Whether the Apple Watch has penetrated the consumer sector adequately is an open question. Apple officially does not report Apple Watch sales. But the signs are that the Apple Watch is making inroads in both the health provider and payer side (as witnessed by mass purchases of the Apple Watch by Aetna). And Simplifeye applies to dental care, too. As reported in Dentistry Today, “The Simplifeye app works in conjuction with the Apple Watch and allows dentists and staff to view the day’s schedule, know who’s in the waiting room, which operatories are ready for patients, and more. This system will allow you to flow patients through your office more quickly and efficiently, and your patients will be thrilled with the quick turnaround time.”

My recently published ebook, Dr. Apple Will See You Now, offers more insight into Apple’s direction in healthcare. Meanwhile, up-and-comers such as Simplifeye are helping Apple influence the future of healthcare.

Image source: dentistrytoday.com

The Four Elements of the On-Demand Economy

Big brands continue to transition to the $57.6 billion on-demand economy, which is characterized by the complete removal of friction from consumer purchases:

  • Jaguar and Shell recently rolled out a partnership to make it possible for people to prepay for gas from their in-car infotainment touchscreens. By using Apple Pay or Paypal configured in a Shell app, Jaguar drivers in the United Kingdom can select how much gas they want and prepay without needing to take out their wallets. The service will expand globally.
  • Walmart now allows customers to bypass lines at its in-store pharmacies. Pharmacy customers use their Walmart app on their mobile devices to order prescription refills and then use an express lane to move ahead of the customer service line and retrieve their orders. Customers can also track order status and view pricing details.

Product preordering is hardly new. As I have discussed on my blog, brands such as Starbucks and Panera Bread have been offering preorder services for a few years. But businesses such as Jaguar and Walmart help legitimize preordering, which is one of the elements of the on-demand economy. Meanwhile, many brands continue to develop services that deliver products to consumers on demand. Amazon removes friction from online (and offline) buying with Dash buttons and Amazon Go stores. Retailers such as (Walmart among them) have launched services that make it easier to either pick up products or have them delivered to your home. Uber deserves credit for being the on-demand catalyst. Now the legacy brands are learning and adapting.

The Four Elements of the On-Demand Economy

The “on-demand brands” typically adopt one or more of the following four elements of the on-demand economy:

  • Making it possible for consumers to prepay and avoid needing to reach for their debit cards or for cash, a model that fueled Uber’s rise. Prepay works especially well with high-volume products that rely on repeat purchases and low consideration, as is the case with Panera, Starbucks, and Walmart’s pharmacy. Typically customers know what they want before arriving at the store and don’t want to spend a lot of time choosing among products.
  • Delivering products to consumers on their own terms, often at their own homes, faster than ever before. For instance, Amazon has launched drone delivery in the United Kingdom to speed up product delivery and is preparing to do the same in the United States. UberRUSH partners with brands such as Nordstrom to offer product delivery, and business such as Heal in Los Angeles bring doctors to your doorstep. These types of services appeal to a variety of demographic segments, ranging from busy parents to urbanites who don’t own cars and lack time to pick up their products. But fulfilling product orders in an on-demand fashion does not need to require the brand to deliver products to the home. Walmart is experimenting with Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.
  • Relying on mobile devices such as phones and wearables. One cannot overstate why mobile has been integral to the rise of the on-demand economy. Mobile searches overtook desktop searches two years ago. There are almost as many mobile phone subscriptions as there are people on earth (which took only 20 years to happen). As Google noted, mobile phone users typically want things done in the moment — what Google calls micro-moments of demand. During micro-moments, people make instant decisions about where to go, what to do, and what to buy: about 76 percent of people who search on their smartphones for something nearby visit a business within a day, and there was a 2.1x increase in mobile searches for stores open now and food open now from 2015 to 2016. Those findings make intuitive sense: when you’re on the go, you don’t have a lot of time to do complex research for things to buy.
  • Using on-demand marketplaces in which people tap into a pool of available inventory to get what they want. Examples of on-demand marketplaces include Uber, Lyft, and Zipcar for either getting a ride (Uber and Lyft) or renting a car quickly. A number of on-demand marketplaces have popped up in local markets to service different industries. For instance, in Chicago, ParqEx connects people who want to rent their parking spaces with people looking for parking in the moment. Many pundits associate Airbnb with the on-demand economy. But I think Airbnb’s success has more to do with opening up a broader inventory of lodging options as opposed to making them available on-demand. Browsing Airbnb is more of an “I am traveling and want an interesting alternative to a hotel” than “I need a place to stay now.”

Voice and Self-Service

The on-demand economy is evolving rapidly in a number of ways, mostly notably through the rise of voice search. Voice search ads a layer of complexity to on-demand transactions: with our voices, we can request more complex services and products. We can ask Alexa, “Tell me where I can watch the movie Get Out this afternoon and use my Stubs discount card” or “Where can I get barbeque ribs in the west Chicago suburbs?” Businesses that want to be found during those open-ended searches need to optimize their online content and data so that they are visible for voice search. Businesses that understand how to make themselves visible for voice will capture more on-demand queries, thus being part of the on-demand journey, from awareness to consideration to purchase and service.

Another major development is the use of buy buttons such as Amazon Dash to enable self-service on-demand. The Amazon Dash button turns any object into a smart device for replenishing items such as laundry detergent. Amazon reports that the Dash buttons, available to Amazon Prime members, have taken off. According to Amazon, Dash button orders occur over twice a minute, and for many popular items, more than half of orders are done via Dash buttons. The list of brands signing up for the program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

It’s easy to foresee a time when Amazon will turn the Dash button into an auto-order device that uses sensors to replenish certain products without the consumer even needing to click a button. Auto on-demand may take hold in other industries and forms for products that are ordered often. For now, brands are responding when consumers call — and faster than ever.

Image source: nextjuggernaut.com