Company / division: Amazon
Amazon has announced two grocery pickup locations that are free for Prime members – Recode (Mar 28, 2017)
These stores have been in the works for a while, and launch has felt imminent as people have spotted signs going up and other indications that they would be opening soon. So I’d take with a pinch of salt the slightly cynical take here that this announcement was a response to the negative Amazon Go story from yesterday. However, it is worth noting that these stores are opening to employees only for now, apparently with no set timeframe for public launch, though the pricing model is already clear: Prime subscribers get to use the service and these locations at no additional cost, versus the additional monthly fee Prime subscribers have to pay for Fresh delivery at the moment. As I pointed out earlier, this is a much less groundbreaking model than the Go concept, one that’s already being offered both in other markets (this piece mentions the UK) but here in the US too, with big grocery chains including my local Smith’s store. But it’s still a useful additional feature for an online-only (for now) grocery retailer to offer, and part of Amazon’s broader experimentation with physical retail.
The High-Speed Trading Behind Your Amazon Purchase – WSJ (Mar 27, 2017)
This is a fascinating article looking into some of the mechanics behind how Amazon’s third-party sellers price their products on the site. I was actually aware of quite a bit of this already because I have a neighbor who runs a business which operates as a third-party seller on Amazon, and he’s told me a little of how his company operates. This piece only has a couple of examples, but in essence these sellers hunt down product categories where there’s room for price arbitrage by undercutting the current lowest price while still maintaining a margin. Suppliers in China will make many of the products cheaply enough to allow undercutting of the current top option on the site, and so there’s this constant hunt for the next product category with an opportunity for becoming the top seller by offering a lower price. It’s obviously great for Amazon and for its customers to have sellers competing so aggressively for business, because it brings down prices and raises sales, but Christopher argues in this piece that in some cases the same computerized models sometimes lead to price increases rather than just drops. Well worth a read of the whole thing.
There’s a certain amount of schadenfreude around about this story this morning, both from tech observers and I suspect from other retailers smirking at Amazon’s apparent inability to deliver on its store of the future concept. The idea of tracking products as they’re taken off shelves, placed in baskets and then ultimately carried out of a shop has seemed enormously ambitious to me from the start, because there just seemed to be so many ways it could go wrong. And now it seems that Amazon is holding up the launch of its Amazon Go store to regular customers because the technology can’t handle more than 20 people in the store at once, people who move too quickly around the store, or products which get moved from their original locations. These all seem like obvious bugs to have been worked out early on in development, and also ones which will all get worse when you go from friendly employee testers to real-world customers, so it’s a bit baffling Amazon would have whiffed on this so badly this late in the game. I’m very curious what happens from here on: whether we see Amazon launch just a little later than planned, with the bugs fixed, whether it launches despite the bugs (and risk of under- or over-charging customers), or whether it keeps the store employee-only for quite a bit longer. The last scenario seems most likely at this point.
Facebook, Amazon, Twitter and YouTube are bidding to stream the NFL’s Thursday night games – Recode (Mar 24, 2017)
When Twitter won these rights last time around in their first year as a separate set from television rights, it turned out to be something very different from what many of us expected. Rather than a massive splurge on a very valuable set of rights, it turned out that the winner merely got the right to show the games along with advertising mostly already sold by broadcasters, meaning there was very little additional revenue opportunity, and as such Twitter got the rights for a paltry $10 million. These NFL games have actually been a good fit with Twitter’s overall live strategy, which has mostly been focused on winning audiences rather than lots of new revenue, but it seems others are interested in taking another crack this year. It would obviously fit well with Facebook’s recent push into professionally produced live video, but also with YouTube’s recent investment in e-sports rights and with Amazon’s foray into TV bundles and Twitch video streaming. It’s less of a good fit with Apple’s current focus in the TV space, so it’s not surprising that its name doesn’t appear here. I’ll be very interested to see if the NFL is pitching the same kind of package as last time or whether the winning bidder will have the right to sell more of its own ads this time around.
Amazon to acquire Souq, a Middle East clone once valued at $1B, for $650M – TechCrunch (Mar 23, 2017)
This would be one of Amazon’s biggest acquisitions to date, ranking fourth behind Zappos ($1.2 billion), Twitch ($970m), and Kiva Systems ($775m) if it goes ahead at the price reported here. And given how Amazon is competing with local competitors such as Flipkart in India and Alibaba in China, it’s interesting to see it absorbing a smaller one in a region where Amazon itself has no presence. Local infrastructure is critical to Amazon’s success elsewhere, and an acquisition like this potentially gives Amazon a huge head start in the region. I could definitely see it taking out more second-tier e-commerce players in other regions like this over the next few years as a way to accelerate its international growth.
Netflix still has a huge lead in the streaming wars, but Hulu’s smaller service has loyal users (on TV sets) – Recode (Mar 22, 2017)
I added the parenthetical in the headline because that’s the key caveat here, as the piece itself points out. There’s a great chart in here comparing penetration of TV viewing over WiFi by various services with the average hours spent viewing those services in households that use them, and it highlights Netflix’s dominance as both the most popular and most used service within that narrow viewing category. Hulu does well on time spent too, though with far fewer households, while Amazon Video comes bottom of the four, and YouTube has reasonably high penetration but low time spent (again, on TVs in homes). Obviously, all four services can be viewed outside of homes too, and it’s YouTube in particular would score much higher in a mobile-only comparison. But for the other three services, in-home viewing on a TV is a critical segment of the audience, and it’s worth noting the order on that basis: Netflix first, Hulu second, and Amazon third. Sadly, there’s no traditional content in here for comparison’s sake – much higher percentages take pay TV services in the US than any of these services, and time spent is quite a bit higher too. The full Comscore report (linked below) is well worth reading in its entirety – lots of other interesting data points.
I joked on Twitter earlier that this is basically Content ID for the physical world – Amazon is now allowing brands to register their intellectual property in physical goods, so that Amazon can more easily identify and remove from its listings any counterfeit goods. That’s important because the company has been increasingly criticized in recent months for selling knockoff items from counterfeiters without doing much about it, and in some cases those goods have even been dangerous (for example fake iPhone chargers and cables). This feels like a step in the right direction, but to draw another Google analogy, this is a bit like Google policing videos on YouTube – the raw scale here is impossible for human employees to monitor alone. In this case, Amazon needs customers and brands to flag counterfeit items, but at least this registry makes it easier to match those items to copyrighted originals and therefore to take them down more quickly.
eBay: Yes, speedy shipping really is a thing with us – CNET (Mar 20, 2017)
eBay is announcing that it now offers guaranteed 3-day shipping on 20 million items, compared to Amazon Prime’s two-day shipping for over 50 million items. The difference in the range and timing here highlights another big difference: whereas Amazon increasingly controls its logistics infrastructure, eBay has very little control at all, which is why it’s been reluctant in the past to commit to delivery dates even though it says almost two thirds of its sales already reach customers in three days. That’s because eBay buyers are responsible for shipping their own goods, while Prime and Fulfillment by Amazon leverage the company’s massive distribution infrastructure including an increasingly deep investment in its own shipping. Yes, eBay is making progress here, but it’s going to be hard for customers not to notice both the difference in the number of items and the speed of delivery and spend their money accordingly.
The ANA represents 1000 large advertisers including many of the largest companies in the US, so what it says definitely counts for something when it comes to advertising policy. And in this case it’s saying that it wants other big tech companies to submit to outside audits alongside Facebook and Google, who have already committed to do so. Strangely, Instagram is on the list anyway, alongside other independent names like Twitter and Snapchat. There really seems to be increasing pressure from advertisers for transparency and consistency, and this was one of the themes of P&G exec Marc Pritchard’s talk a few weeks back in which he called on the ad industry to do better on several fronts.
E-sports are one of the few where the TV and digital rights aren’t sewn up for years to come, and so they’ve become a battleground for big digital players, with Amazon buying Twitch and YouTube now stealing one of its most high-profile, high-quality content deals. This is a big step for YouTube, which has dabbled with various bits of live sports in the past but has never had a really high-profile deal. It’s obviously not going to deliver NFL-like viewing numbers, but it’s a good test of YouTube’s commitment to live video and sports.
Amazon puts Alexa inside its main iPhone app – VentureBeat (Mar 16, 2017)
Alexa’s single biggest flaw today is that it’s a shut-in: for the most part, it can’t leave the house. That means competing in a broad-based way with Siri and the Google Assistant requires getting onto smartphones, and now we have Amazon putting Alexa into the Amazon shopping app on iOS. Job done? Well, no. Because just having an app on a phone doesn’t mean people will use it. And if it’s buried inside a shopping app, that’s a steep hill to climb relative to just holding down the home button to summon Siri. On the one hand, I get the logic of putting Alexa in the Amazon app – it’s an app many of the company’s most loyal users already have installed and likely use frequently, but it also means it’s going to be several clicks away. I can see some parents with kids using it to keep them quiet with jokes, but it’s hard to imagine people using an Alexa buried in a shopping app as their main assistant while away from home. Integration within the smartphone and its operating system is the key here, which will be impossible on iOS but more feasible on Android, as we’ve already seen with Huawei and Lenovo’s integration plans.
Amazon makes it cheaper to host Alexa skills on AWS – ZDNet (Mar 16, 2017)
This is clever tie-in by Amazon of two of its valuable assets: its Alexa skills engine and its AWS cloud infrastructure. It’s offering developers of Alexa voice skills a better deal on hosting through AWS as a way to remove the barriers to developing smarter and more sophisticated skills for its Echo devices (and the small number of third party devices using Alexa). Amazon has touted its number of third party skills repeatedly since launching them as a sign of Echo and Alexa’s capability, but the reality is that many of those skills are very basic, and the model is clumsy to use. If it’s able to attract better skills to the platform, those numbers will start to be more meaningful as signifiers of the platform’s capabilities.
Amazon Plans Air Cargo Service for Chinese Customers – WSJ (Mar 15, 2017)
There have been lots of stories about Amazon expanding in logistics over the last couple of months – see here (chartering planes), here (ocean freight), and here (an air cargo hub in the US), for example. Now it seems it’s investing in both sea and air cargo for Chinese sellers. That should allow Chinese companies to sell more easily and potentially cheaply to US buyers, but another interesting angle would be US sellers who source their goods from China – I know of several businesses which basically scan Amazon’s top seller lists for arbitrage opportunities and then have goods made in and shipped from China. So those would be other potential users of these new services. Overall, though, this is just another investment in unique logistics infrastructure and more of a competitive moat versus other retailers.
Apple Joins Group of Companies Supporting Google in Foreign Email Privacy Case – Mac Rumors (Mar 14, 2017)
Given the way other big tech companies had weighed in on the related Microsoft case over the past few years, it was a little odd that more hadn’t sprung to Google’s defense in this one, but it’s good to see that they are now doing so. These cases have far-reaching consequences not just for user privacy but for the ability of US companies to do business in overseas markets, and those companies need to defend themselves vigorously. The final outcome of both cases is therefore worth watching closely.
via Mac Rumors
Documents reveal ‘AmazonFresh Pickup’ as the tech giant’s next physical retail concept – GeekWire (Mar 14, 2017)
The concept here isn’t new, either for Amazon or in general. With regard to Amazon, it was one of several physical retail concepts discussed in an article last year, and looks like it’s now coming to fruition. But the concept of ordering groceries online and picking them up outside a store isn’t new either – my local Smith’s grocery store (part of the Kroger company) does this today. The big difference will be that this AmazonFresh Pickup store won’t be a regular grocery store, but just that pickup experience. This would fill a gap in the current AmazonFresh service for those who won’t be home (or don’t know when they’ll be home) when groceries might be delivered, but can schedule a stop at a grocery store on their way home. I think we’re going to continue to see Amazon experimenting with lots of physical retail models until they get the right mix to complement their online presence.
Groceries and clothing are two categories where I and others might once have assumed Amazon would never be a serious force, because they appear to lend themselves so poorly to online purchases. On the grocery side, Amazon still is a minor presence, but in clothing it’s now starting to make real inroads, especially among younger age groups. Of course, this data says nothing about total online purchases as a percentage of clothing purchases, and it’s likely that physical retail still dominates, but within e-commerce Amazon is now the biggest retailer among millennials, which is quite the achievement. It continues to feel like Amazon is methodically looking at those retail segments where it’s underrepresented and methodically breaking down the barriers to growth. And of course even in the groceries category it’s doing some interesting things.
Another reminder that Amazon has a much broader future in mind for Twitch than just gaming videos – it’s paying out of pocket to stream the Power Rangers TV series in a free marathon over the course of 17 days. Its investments in TV content for Twitch have mostly been very small (and often somewhat obscure) in relation to its original content and other investments for Prime Video, but they seem to be building steam. And as this piece points out, Power Rangers is probably a better fit for the core Twitch audience than old Bob Ross or Julia Child shows.
Apple’s Siri learns Shanghainese as voice assistants race to cover languages – Reuters (Mar 9, 2017)
One of the things that’s often missed by US writers covering Amazon’s Alexa and its competitors is how limited it still is in language and geographic terms. It only speaks English and German and the Echo range is only available in a handful of countries. Siri, meanwhile, just got its 21st country and 36th language, which reflects a long-time strength of Apple’s: broad global support. Apple News is a notable exception, which is only available in a few countries and one language, but almost all of Apple’s other products are available in a very long list of countries and territories, often longer than for other competing services. The article here is also interesting for the insights it provides into how each company goes about the process of localization, which is quite a bit more involved than you might surmise.
This is a good counterpart to the Time article from last week about Amazon working on voice identification in their respective home speakers. It points out the complications in providing such a feature, not least that heavy processing to make voices clearer will also tend to distort them and therefore make it harder to recognize and distinguish speakers. The article also makes clear, though, that these challenges are far from insurmountable, which leads me to believe that Amazon or Google or both will eventually figure this out. In fact, whichever does figure it out first could have a big advantage, because for a lot of the most useful features (calendar, emails, etc) individual profiles are critical. So much so that Google misleadingly included that exact use case in its I/O launch video last year.
via Fast Company
In my last post about Twitch just over a week ago I described Amazon’s acquisition of the site as one of the most interesting it’s made, and talked about the two separate tracks it’s pursued with Twitch: deepening the gamer focus on the one hand, and using it as a jumping off point for other things on the other. This news is yet another example of the latter strategy, in which Twitch is being used as a platform for creating a Twitter- or Facebook-like feed of content from brands and creators. For now, that’s not going to have mainstream appeal beyond the core Twitch audience, but as Twitter also continues to evolve into something more like YouTube, that could actually become very interesting. In reality, of course, what’s missing for now is the social side – it sounds like this is mostly a one-way feed from creators to followers. But there’s no reason it couldn’t evolve into a more social or two-way following relationship between regular users as well, even if they’re not regularly posting gaming videos. Between Twitch and Echo, it’s starting to feel like Amazon has the beginnings of some really interesting and potentially powerful extensions to its ecosystem well beyond its current focus areas.