Disruptive Delivery: Amazon Strikes Again
You’ve got to hand it to Amazon.com. While consistently turning a profit has eluded Amazon for the past 18 years, the company has consistently taken a lead in disrupting retail. Whether it’s inventing e-commerce as a mainstream B2C transactional channel, taking a leading role in hosted cloud services with Amazon Web Services or helping to usher in the tablet era with Kindle e-readers, Amazon.com has never been afraid to do things in a way that alters how retail business is conducted.
With his recent surprise revelation on a popular TV news program that Amazon is developing a plan for automated drones to deliver some customer packages within half an hour of purchase, Amazon CEO Jeff Bezos once again proves his company remains at the forefront of retail disruption. Retailers and technology vendors have been trying to overhaul almost every aspect of e-commerce, but have made little effort to dramatically change the shipping experience beyond easing product return.
It’s not too surprising Amazon is taking a lead in attempting to bypass third-party delivery providers and directly touch customers through its delivery experience. However, despite deserving credit for thinking well outside the box, there are also a few precautions Amazon must take as it pushes the boundaries of e-commerce fulfillment.
Drone delivery may be convenient, but also potentially risky. Before launching drone delivery (we’ll assume at some point Congress will provide the regulations for commercial drone usage the FAA has mandated), Amazon needs to ensure that its drones can get from point A to point B without crashing into other drones, automobiles, people or homes. The drones will fly well lower than aircraft so that should not be a significant issue, but especially considering that Amazon.com will be taking on liability currently assumed by third-party delivery providers, the company must take every measure to guarantee that drone delivery is safe.
Know Your Limitations
For a variety of reasons, Amazon will not be able to use drones for all deliveries. Some products will be too big, bulky or fragile for drones to effectively and safely carry, some distances will be too far, some locations will be too remote or difficult to reach, and drone traffic will undoubtedly have tight restrictions. The retailer must devise an intelligent system to assign certain deliveries, and only certain deliveries, to drones. FedEx, UPS and other third-party carriers will still have plenty of opportunity to make Amazon deliveries even once the drones are flying.
Have a Backup Plan
Like any other form of aircraft, even the most sophisticated drones are still wholly subject to the whims of wind and weather. A major blizzard striking right before Christmas would wreak havoc on plans for last-minute, drone-based deliveries of holiday gift purchases. Drone traffic could also be unexpectedly disrupted by security-related flight restrictions (such as the president visiting a certain area) and a host of other unavoidable situations. Therefore, Amazon must always have a ground-based backup plan for any and all drone deliveries.
If history has taught us anything, it’s that even the very best technology is still no match for Mother Nature or for the unpredictabilities of human behavior. No matter how well drone-based delivery may work, Amazon will need to keep this in mind.
B&N stays positive following holiday sales results
Just a couple of days after news that Barnes & Noble permanently closed its onetime flagship on Fifth Ave. in New York, the company reported a revenue decrease of 6.6% for the nine-week holiday period ending Dec. 28, 2013 in its retail segment.
The decrease over the prior year in the retail segment, which consists of the Barnes & Noble bookstores and BN.com, was fueled by a 5.5% decline in comparable sales and store closures. Core comparable bookstore sales, which exclude sales of Nook products, decreased 0.2% as compared to the prior year.
The Nook segment (including digital content, devices and accessories) had revenues of $125 million for the nine-week holiday period, dropping 60.5% as compared to a year ago. Device and accessories sales were $88.7 million for the holiday period, a decrease of 66.7% from a year ago, due to lower unit selling volume and lower average selling prices. Digital content sales were $36.5 million for the holiday period, a decline of 27.3% compared to a year ago due to lower device unit sales and lower average selling prices.
"We are pleased with our holiday sales results, especially our core comparable bookstore sales, which were essentially flat and an improvement as compared to the first half of the year," said newly named CEO Michael P. Huseby. “During the holiday period we benefitted from a strong line-up of bestselling titles, great execution by our booksellers and merchants, an effective advertising campaign and strong increases in our juvenile, gift and toys and games categories.”
Huseby explained that sales in the Nook segment declined year-over-year largely because during the previous holiday season the company introduced two new tablet products, while no new tablets were introduced this year. “Instead, we executed our plan to sell through our existing high-quality devices," he added.
Barnes & Noble will report third quarter results in late February.
Supervalu doubles net earnings; commits to rebranding retail banners
Minneapolis – Supervalu reported net earnings of $31 million during the third quarter of fiscal 2014, almost double the net earnings of $16 million reported in the same quarter of the prior fiscal year. This dramatic increase came even as net sales slipped 1% to $4.1 billion from $4.5 billion.
Total same-store sales declined 3.7%, although the Save-A-Lot network reported a 1.7% increase. The net earnings results show that so far Supervalu’s decision to sell off larger banner such as Albertson’s and Jewel-Osco to focus its business on smaller regional chains such as Save-A-Lot is paying off.
"Although we are less than a year removed from the sale of five of our retail banners, Supervalu has made positive strides in all three of our business segments to better position the company for financial growth and improved shareholder value," said Sam Duncan, CEO of Supervalu.
The chain has committed to investing into its retail supermarket banners with a makeover for all of the banners, a review of the planograms within those banners and private label.
"We will launch shortly rebranding campaigns in all of our retail banners, where our customer messaging has been disjointed and oftentimes confusing," Duncan told analysts Thursday morning. "When complete, these banners will have a much more clearly defined identity, which we will be communicating across all platforms, including in-store signage, weekly ads, customer emails, mobile devices and banner web pages."