The Jason & Scot Show - E-Commerce And Retail News

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

http://jasonandscot.com

subscribe
share





episode 253: Amazon Q4 2020 Earnings Breakdown and Recap


EP253 - Amazon Q4 2020 Earnings

Amazon Earnings
  • Amazon reported in Q4 2020 earnings on Tuesday Feb 2.
  • Jeff Bezos is stepping down as CEO and moving into an executive chairman role. Read his letter to employees here.
  • We deep dive into the Q4 and full year 2020 results.
  • Sales, profit, and free cash flow were all above expectations. US product sales had a robust 44% YoY increase. 3P continues to grow as a share of sales (now 55% of sales mix). AWS continued to grow.
  • Other income (which is largely ad sales) was up 66% representing $21.477B of revenue in 2020, well above expectations.
In other news:
  • Walmart is accelerating it’s automated picking for store fulfillment.
  • Uber has purchased Drizly for $1.1B. We spoke with the VP of Partnerships at Drizly on Episode 163.

Episode 253 of the Jason & Scot show was recorded live on Tuesday, February 2nd, 2021.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scot show this is episode 253 being recorded on Tuesday February 2nd 2021 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:
[0:41] Hey Jason and welcome back Jason Scott show listeners,
Jason get him any more bummed out today I was all excited to get the Amazon news
Q4 we’re going to see finally how holiday 2020 went this is like one of the first companies reporting this cycle so I was all excited for that
and then I got my legs taken out Jeff Bezos is announced that he is going to move from CEO he’s no longer be CEO of Amazon he’s moving to executive director so I’m a little sad about that we’ve seen,
a 27-year run he’s one of our biggest fans of the podcast so he’s probably listening right now so Jeff great 27 years is good run and sorry to see you go so I’m going to do I’m going to miss hearing him.
Talk about,
day one and all is management principles and all that stuff so but I’m sure he’ll go do some cool new stuff how are you feeling about it Jason.

Jason:
[1:39] Yeah well at first I was excited because I was hoping I wouldn’t get all those like detailed notes that he sends after each episode about what he agreed and disagreed with
but then I was informed that he’s mostly stepping out of the the CEO Row in order to have more time to focus on our podcast so.
So I’m not sure how that’s going to play out but in all seriousness.

Scot:
[1:59] Maybe we could co-host the Jason Scott and Jeff show.

Jason:
[2:03] He keeps asking to come on we’re eventually going to have to relent and let him.
In all seriousness though I actually didn’t view this as very big news.
In my mind I feel like he had largely already stepped out of the operational CEO role.
Late last year early this year and then my understanding is he kind of became much more active and got re-engaged specifically because of covid and so I feel like.
He you know kind of sucked him back in and now that he feels like he’s worked through the at least the.
The big first wave he’s looking to take a step back again so I kind of view it as him kind of following in your footsteps and building a good company and then you know turning turning over the keys to other operators and.
I I think I mean he’s still going to own a bunch of stock he’s still gonna be involved in their strategic decisions I sort of don’t think he was getting.
The customer feedback the same way he was earlier in his career even before this so I’m not sure it’s a huge difference.

Scot:
[3:17] Yeah
cool well couple highlights from the letter he sent out I won’t read the whole thing although it’s it’s a good read I definitely recommend everyone look at it so we’re just pick out a couple things here first paragraph I’m excited to announce that this Q3 all transition so he’s so this will happen in
third quarter to Executive chair of the Amazon board and Andy Jesse will become CEO that’s interesting because Jeff will key was for long long thought to be
The Heir Apparent and then he left recently so there’s seems like there may have been some kind of a.
Bit of a struggle secession battle behind the scenes I don’t know what drama there was there but Andy runs the AWS part which has been.
Wildly successful but he has he didn’t just come up through cloud computing he has done a little bit of everything at Amazon.

[4:06] It continues in the exact chair roll I intend to focus my energies intention on new products and early initiatives that’s interesting because it does leave the door you know we’ve had a lot of these articles about
I’m thinking a lot about Shopify so that kind of like leaves the door open there a little bit Andy is well known inside the company and has been an Amazon almost as long as I have he will be an outstanding leader blah blah
and then kind of skipping to the end he kind of talks about.
Yeah the last 27 years for the first five of the biggest question you got was what’s the internet that was kind of funny and then in conclusion he says as exact chair I will stay engaged and important Amazon dishes but also have the time energy I need to focus on the day One Fund
that’s his largely I think it’s focus on homelessness the Bezos Earth fund that’s ones obviously for,
climate change kind of stuff and blue origin that’s obviously going to space and the Washington Post which is his little
news letter that he has there and my other passions I’ve never had more energy and this isn’t about retiring I’m super passionate about the impact I think these organizations can have so you know I guess the the
the bittersweet Part of this is is sad to see believe Amazon but maybe he’ll kick into kind of like an eel on second gear here you know and.
Do some other really cool stuff so we’ll see blue origin is moderately interesting I feel like it’s so far behind SpaceX at this point that I don’t know it’s not I don’t follow it as closely as SpaceX.
So if anyone wants to read the letter will put a link to it in the show notes.

Jason:
[5:35] Awesome yeah and it is a really well-written letter he’s a good communicator so I enjoyed the wetter and there were some funny parts but Scott I think we should put our emotions
back under the desk and we should jump into the Q4 results.

Scot:
[5:53] Yep we don’t get to 253 episodes without being consummate professionals so I’m okay let’s go let’s do this thing.

Jason:
[6:02] Good deal so let’s set the stage a little bit first of all if we think about the shape of the last year you know of course we get the the.
Data from the Department of Commerce on on e-commerce growth and so if we look at the last quarters of growth for the entire industry q1 e-commerce was growing at almost 15% 14.8%.
Amazon in q1 was growing much faster than that like 27% Q2
which was the main covid impacted quarter where a lot of retail was forced to close e-commerce jump from 14.8% to 44.5%
so you know one of the hugest growth in recent history and Amazon almost exactly mirrored that they jump from 27 percent growth.
To 41 percent growth Q3 the growth settled down a little bit still
twice its historical run rate but Q3 e-commerce industry grew at 37.7% Amazon grew exactly the same at 37%
so we don’t have the industry data from Q4 yet that actually,
um will get the raw version of that the monthly version on the 17th and then we’ll get the quarterly e-commerce roll up on the 19th so look for a show in the middle of the month from us to kind of recap what happened to the whole industry.

[7:31] Part of the reason I’ve been excited for Amazon’s earnings is they do mirror the industry so much that that it’s going to give us a pretty good hint of where.
Where the whole industry should come in at their guidance so what they told the Mark had to expect was around 38% so you know that would be similar to their Q3 growth.
And so that’s that’s kind of.
Where we were going in and then once the markets closed today they made their announcement and Q4 net sales growth was drumroll 44 percent so.
An acceleration above that guidance so I assume that makes,
the investors happy and interesting after the slight deceleration and Q3 that we saw tree accelerating Q4.
There would have been an argument that because Q4 is normally a heavy e-commerce quarter it’s harder to hit these really big growth numbers so that was impressive,
the number by the way was a hundred twenty five point six billion in sales which
versus 87 billion last year but what’s cool about that that is I believe that’s Amazon’s first hundred billion dollar quarter so that’s that’s pretty exciting.

Scot:
[8:50] Yeah for the longest time,
we you and I would co-present this yeah Walmart was a quote unquote 400 billion dollar company and it really hasn’t I don’t know if it’s changed that much is it still kind of that 400 billion right it hasn’t cracked.
So a hundred billion quarter is kind of like how big you have to be to get to Walmart now you and I would make the argument that with third-party gmv they passed a hundred billion a long time ago from a GMB perspective so it’s this is like just pure Revenue which is,
pretty amazing so by gmv I have to do the numbers they’re pretty pretty honking big.

Jason:
[9:25] Yeah I’m going to I’m looking forward to that and now I says it’s also interesting to me because of these rq-4 numbers you can now get like the snapshot for the whole year and so from from Amazon’s perspective for the year net sales grew 38%
um
so you know again we care more about gmv but but net sales were 386 billion for the year vs. 280 billion last year so that’s
thirty-eight percent growth or 37 percent growth under constant currency so not
not a bad year.

Scot:
[10:02] Yeah and then that’s the top line so that’s what I would call a beat and then on the top line and then operating profit was expected to be 4.4 billion by Wall Street and came in at 6.8 billion so that’s you know.
A paltry 2.2 billion more than Wall Street,
I was expecting but remember Jason Amazon is not a profitable company so so in Wall Street parlance that was a top and bottom line Beat which is always good
free cash flow increased to 30 1 billion for the trailing 12 months compared to 25 for the previous period so that’s 20 percent increase in free cash flow this is all after you know they spent I didn’t see them call this out
but they had forecasted that they would spend like four billion on covid,
stuff you know various like testing and then also social distancing and partitions and I’m sure mask and all this kind of stuff so.
If they had done this without covid there would be another four billion dollars down here on the bottom line I I imagine which would have just been.

Jason:
[11:09] Yeah although they also got a lot of extra demand from covid so it may be may be harder to.

Scot:
[11:13] It was a fair trade yes fair trade.
And then if we look at that for the year net income increased to 21 billion compared to 11 from last year so in 83 percent,
your increase of net income and you know when just kind of your basic math is if you know
revenues increasing 30 or 40 percent or whatever it is and and your net income is increasing faster you’re getting more profitable so that’s pretty impressive to see an acceleration in your business and you’re increasing the.
Profitability of the business so lots of lots of,
the thesis for this for literally 27 years is at some point those things can get so big they just can’t spend enough money and the scale will kick in,
with things like hundreds of fulfillment centers and all this stuff and that’s turns out a hundred billion dollars is a quarter is really a big scale that you get a lot of efficiencies in a business like this.

Jason:
[12:09] Yeah.

Scot:
[12:12] And then looking at the consolidated
you know what this means is looking at the segments inside so North America grew 40 percent and all this is without the impact of
constant currency so it’s X FX as they say and then International grew 50% and I have to go we have to the intern interns are off tonight
but I am pretty sure we haven’t seen International growth since like maybe 2017 when they started to really juice India,
so International usually is lagging the North America by.
Five percentage are some points or so so this is really interesting and will dig into a little bit more I need to kind of parse through the the
K in the queue when they come out they do have a little bit more country data inside of those than they have at this point but I’ll save that for a future show I’m intellectually curious like what’s going on in international cause that you know was it,
the covid bump was delayed internationally compared to the US or you know I don’t know why I’m really curious to dig into that international number.

[13:23] And then sets the quarterly View and then we look at the annual view Consolidated as you mentioned your your Amazon grew 38% North America was at 38% and that surge at the end
made International 40% just a hair more than then North America.

Jason:
[13:45] Yeah and it’s interesting because you know North America is quite a bit larger than International still so you you’d almost expect International to be growing.
Faster so it’s going to be interesting to see if they provide any more detail like did covid have a bigger impact.
On Cue for internationally for some reason or or is it just you know that they open up more markets I don’t know.
But one of the interesting things is to kind of look how the revenue breaks down so if if you look at that net sales growth by segment
forty-six percent growth in online retail so that’s.
For them that’s one piece sales they do break down physical stores separately which only I’m interested in and continuing a trend physical stores is the only thing in history to ever go down for Amazon,
and it went down 8% which is pretty material right it’s mostly Whole Foods and 8% is a pretty big drop especially in grocery which.
You like on average went up 20% thanks to covid but what I think is happening here is for any other grocer.
Their sales went way up but it disproportionately skewed to e-commerce and Amazon when you order something online and it’s delivered from a whole food sale it.

[15:12] Shifts from being a store a physical store sale to a digital sale so I think.
Um that that that is kind of gumming up the works when you look at this negative eight number.
Third party sales you know we’re growing even faster which has been the trend lately so they’re growing at 57% subscriptions which is like Amazon Prime,
grew at 35 percent AWS is maybe the first business at Amazon that seems like it might.
Start to have some impact of large numbers because while it’s still growing very healthily it’s its rate of growth is slowing so it was at 28 percent and then to me,
the most surprising number and we’ll unpack this a little bit later but the.
The the biggest surprise in all this was what Amazon calls other which which we believe is mostly advertising revenue and it was the biggest growth of all it was 66 percent so that’s pretty remarkable and,
we’ll talk about that a little bit more later when you look at that mix it’s about 61 percent to North America 27% International and 12% AWS is kind of hot,
the revenue breaks down but don’t spend too much time thinking about that because if you if you refactor did it Jim via it would look a little different.

Scot:
[16:38] Yeah
and then speaking my favorite topic third-party marketplaces that that growth of 57% made the unit mix of marketplace has hit a new high Watermark of 55% that’s the first time we’ve seen it
hit 55% it does typically tick up into the you know
high level in the fourth quarter because Amazon leans on its Army of entrepreneurs to help satisfy all that holiday demand so that’s as a third-party Marketplace guy.
I can remember when we were at like 33 percent and it’s pretty amazing to see it gets 55 I always felt like Amazon would balance it more at 50 so it’s interesting to see it kind of cross over there I wonder you know.
My bet is they have some data that makes them more comfortable increasing their sales from a customer experience standpoint like maybe the early days,
third-party sellers weren’t quite there as you know obviously have FBA but even then like maybe self-fulfilled Prime and that kind of stuff is is helping nudge that number because Amazon feels good about the customer experience.

Jason:
[17:45] Yeah I think you know one of the the trends themes in Jeff’s letter was this thing that like when you invent something crazy new it seems.
Completely implausible at first and then if it’s a wild success it one day it seems routine and that’s the biggest compliment you can never get and I feel like third-party Marketplace is the perfect example of that that it was like hugely controversial and somewhat unlikely
when it was launched and now it’s just like oh ho hum it’s 55 percent of our sales.

Scot:
[18:16] Yeah absolutely
so that’s kind of some of the highlights of the quarter will kind of from the marketplace retail side and then we’ll cover some of the other categories but it’s also interesting to look at the guidance so this is where Amazon tells Wall Street here’s kind of what we’re expecting for q1 of 2021
so I was this is always interesting because.
Yet factors in it at this point they’ve obviously seen most of January’s results internally so they have a third of the quarter kind of like under their belt and they can
make some predictions there so they said net sales are expected to be between a hundred and 106 billion which is
booked in growth of 33 to 40 percent so 36 at the midpoint so definitely a step down from that kind of 44 percent that they saw but they always they always kind of do this route this would be called quote conservative guidance.

Jason:
[19:06] Or sandbagging.

Scot:
[19:07] May possibly one of the things that is challenging I can speak from experience has you know everyone’s feels like,
we’re going to get a break in this whole covid thing but no one knows when it’s going to come you know you read some things that say maybe this summer and then you see other things this a we’re not going to return to normal ever so that makes it very hard to forecast.

[19:31] What to do a whole show on where you and I follow that
so before this announcement Wall Street was thinking q1 would be more like ninety to a hundred billion so they kind of have this is called raised beat so they beat the current quarter and then they raise the future quarter so this nudges the future quarter which is q1 2021,
to well beyond that,
previous Wall Street range so it’s going to be interesting there’s a lot of focus on the stock market with all the craziness going on with read it.
People in GameStop and all so you know the aside from that,
Amazon you’ve got you know this really smashing beat and raise kind of thing going on but then Jeff kind of quote unquote leaving so it’ll be interesting to see what the stock does I looked after market in there wasn’t really it was kind of flat which,
it’s interesting because I would have expected they beat expectations so I would have expected kind of like,
5% bump but so I think the headwind of of Jeff moving is put a wet blanket on that
looking at the forecast for the bottom line operating income is expected to be between three and six point five billion huge range there again kind of probably that covid uncertainty.
Um and then Wall Street had that at 5.4 so that one I would say is in line if does feel this one feels pretty thin baggy so I.

[20:54] Pretty easily beat that one and then they said approximately they’re forecasting about 2 billion of cost related to covid which is which is down and I think.
The part of that is some of these things you know are have to be replenished like testing where you’re constantly doing it but other things like any.
Changes they’ve made to the workstations at fulfillment centers or the driver schedules or any of those things are largely in the rearview and already Investments they have made.

[21:22] One other Tibbett I thought interesting is because sometimes we struggle you know at
my various companies to hire like five or ten people Amazon hired a hundred and seventy-five people in the quarter a hundred seventy five thousand people in the quarter.
So you know they have well over a million people right now and then that hundred and seventy-five thousand people that hired in Q4 is three times what they hired in the same period of 2019 so.
Just like just like imagine the infrastructure you’d have to have to hire a hundred and seventy-five thousand I can’t even.
Look how many recruiters do you have to have and you know HR sign up people.
They just must have these wildly it must be the recruiters must just be robots or something because I just don’t know how you scale something like that that’s just mind-boggling to me.
They do not break out how many of those are kind of more kind of corporate type folks versus Warehouse folks I do imagine a big chunk is warehouse but you know they are hiring corporate,
people at just a crazy clip as well so there’s there’s there’s nothing a mix of that in there also.
How about I know one of your favorite categories to look at is the ads / other business would you see there.

Jason:
[22:38] Yeah so we talked about that it was up unexpectedly 66 I mean we all expected to grow but 66% certainly exceeded my expectations that means if you add up,
the ads tend to be sort of seasonal people spend more money on advertising and Q4 than other other quarters
but if you add up the last four quarters of Amazon’s other it was 21 and a half billion dollars and I can tell you that that is,
wildly above anyone’s aggressive estimates for Amazon’s advertising business in 2020 so it’s,
it’s really impressive you know we’ve already talked about the fact that they were the,
the third largest digital advertising Network behind Facebook and Google they are.

[23:30] Facebook also had a pretty good quarter but Amazon is doing remarkable to put it in perspective that’s about seven times like Twitter’s advertising Revenue.
And one of the things that’s interesting to me here is,
that there are actually some good Tailwinds for this business to grow even more for Amazon in the advertising industry one of the biggest news things and it’s getting a lot of ink right now is.
Apple is changing the way that that third parties can track mobile app a mobile user IDs in the apps,
they have to be more overt about it and a lot of a lot of apps are choosing not to do that a lot of the browsers are turning off this tracking mechanism that’s called third-party cookies,
in the cumulative effect of those two changes third party cookies and app mobile app IDs,
are that a lot of the advertising vehicles that that brands use to Target their ads and particularly those like retargeting ads are going away.
So if you were Procter & Gamble and you are used to being it being able to buy a highly targeted audience.
You have less tools to do that and one of the best workarounds is to have someone else run the ad for you.
Does have a bunch of first-party customer data and knows a lot of consumers and it turns out.

Scot:
[24:56] Who would who would that be.

Jason:
[24:57] That would be Amazon and so.
So increasingly that and I’ll bet you a big chunk of that 21 billion is not ads that show up on Amazon I’ll bet you a bunch of that is,
ads the Amazon places on places I Google using its first party data to Target on behalf of people that have bought ads from them.
And you know that that trend is not lost on other retailers one of the most common things we see in the world right now is retailers are launching their own media networks and so I mean Ulta,
has launched one CBS has launched one and the probably the biggest one besides Amazon is Walmart they rebranded there’s this week they it’s now called Walmart.

[25:43] They had already kind of brought it in house and put a lot of effort behind it.
The big thing they added this week is they did a partnership with a company called trading desk that.
Buys a lot of off-site media so now Walmart is trying to leverage that same Trend that I just mentioned with Amazon where.
You can buy you can pay amp Walmart to use their first party data which they have even more customers than Amazon.
And they’ll run those ads for you and in Walmart’s case in addition to off-site ads and ads on Walmart.com there now also selling through the same network ads,
on all the TVs in the Walmart store and all the self-checkout terminals so.
So the retail media Space is really heating up and Amazon is certainly.
The leader and poised to continue to be so.

Scot:
[26:37] Sue AWS did you want to go there.

Jason:
[26:42] Yeah oh and one other side note you know if you remember way back to episode 251 when we did our predictions one of my predictions was that that ad space would totally heat up so I’m feeling good about that prediction so in the first two weeks.

Scot:
[26:56] Still too early to call.

Jason:
[26:57] Yeah absolutely.

Scot:
[26:58] It could totally slow down for the next 11 months.

Jason:
[27:01] Exactly yeah it could turn out digital ads are a fad.
AWS Wall Street was expecting just under 13 billion twelve point eight billion and it came in I think right right at twelve point eight billion
we talked about that that 28 percent top-line growth the.
Annualize that means AWS is growing at about thirty percent which you know again it’s a
very profitable business and that’s growing really quickly I do believe that there big competitors Google Cloud platform and Microsoft are probably
um at or better than that growth rate although there they’re both considerably smaller than AWS so so maybe they’re starting to make up a little bit of ground.

Scot:
[27:52] Cool and then so before we we wanted to spend a little bit of time on some other news that came out but before we do,
I felt like so this is gonna be interesting so we have this first data point kind of in the mid-40s you know historically you have this,
chart you have been publishing the kind of shows Amazon’s actually the middle of the pack right so we’re seeing like.
Historically Shopify has printed higher and even like BJ’s and Costco and so a lot of the omni-channel guys are seeing just this disorder to magnitude higher digital growth and Amazon because a lot of it is,
movement of analog to digital we’re what was your kind of gut reaction to the quarter that Amazon put up here.

Jason:
[28:38] Yeah so it’s interesting like they’ve made impressive performance start to feel somewhat boring to me so they’re a little north of where I expected I was I guess I was expecting high 30s and so like for you know
44 seems pretty impressive but,
I don’t know in some ways I always expect there to be some some extra Easter eggs or some fun surprises and in,
Amazon earnings and they just they just made it look too easy.

Scot:
[29:11] Let’s I’ll put elastics on there this International my spidey sense is tingling International I want to figure out what’s going on in there something’s up.

Jason:
[29:18] One one thing I will say that just interesting to me Amazon has always been this company that defied the law of large numbers that despite the fact that they’re by far the largest e-commerce player.
They generally content we’re continuing to grow faster than most everyone else.
And that was certainly true even in q1 of this year like you know e-commerce group 15% and they grew at like twenty seven percent but covid seems to have.
Helped everyone else’s e-commerce you know.
Mildly catch up with Amazon right so Amazon still has had impressive growth but they’ve kind of Fallen to the industry average and a lot of these other big players are growing way faster than the industry average so you know Walmart which is the second biggest e-commerce site in the US,
drew it like a hundred percent and targeted at 170 to 200 percent and you mentioned like BJ’s at three hundred percent.
It’s going to be interesting to me is that a.
A spike because of covid and you know the fact that these guys are growing from much smaller numbers than Amazon and.
You know as the health concerns around covid abates do we,
do we see Amazon kind of move back to the front of the pack in terms of growth rates or is this the new normal that that you know they’re going to be the biggest but their Challengers are going to be growing a little faster than them it’s going to be interesting to watch.

Scot:
[30:47] Yeah I agree there’s a case to be made that maybe their gains are going to be stickier because the omni-channel guys will just shift back to the store at some point or will that maybe they’ll stick to like you know there’s a lot of talk about Walmart’s Grocery and all that all that just so.

Jason:
[31:02] One thing that I will say is all these other retailers that are now selling a bunch of stuff e-commerce are having the same profitability problems that earlier Amazon had right so one thing that these other retailers are not getting is the,
the unit economics of scale that Amazon has.

Scot:
[31:18] Yes they’re they’re kind of on the other side of the mountain and kind of on the down slope of profitability in everyone else is like holy cow this is hard and there’s a there’s a big mountain in front of us to make this work.

Jason:
[31:30] Exactly any other closing thoughts on Amazon anything that jumped surprised you or that you were particular excited to read.

Scot:
[31:38] Not I know we’ve had some news out of one of the companies that was on the show so I want to hear your take on that.

Jason:
[31:46] So two other kind of news tidbits I just wanted to mention first of all just because we were just talking about me dominating the predictions and retailers are struggling for e-commerce profitability
one interesting bit of news last week was that Walmart announced that they were going all in on these what are called micro fulfillment centers or what
Walmart calls lfccs local fulfillment centers so this is kind of putting.
Automated picking in a store,
to make that that online grocery pickup or that curbside pickup more cost-effective for the retailer and Grocers have all been
piloting these things but Walmart’s announced that they now have plans to deploy dozens of them this year and they actually said they’re partnering with three different technology providers so,
alert Innovations is who’s been doing Walmart Micro fulfillment up to now and then you know two other good industry competitors de Mantic and fabric,
are both apparently getting some of the Walmart business as well so that,
that is like one of the things you would do to improve the unit economics of digital Grocery and so it’s interesting to see Walmart being a leader there and it’s especially interesting because that was yet another of my annual prediction so I’m feeling good about two of my,
my prediction so far.

Scot:
[33:12] Pin here CEST with the predictions this year how about is fabric is that fossils new company so the same fabric rather two Fabrics.

Jason:
[33:20] No so I think you’re thinking of fabric as an Israeli Fulfillment company in fassl’s is an e-commerce platform.

Scot:
[33:34] There are both called fabric rent.

Jason:
[33:37] And then the other bit of news that you you referenced is previous guest on the show drizzly just got acquired by Uber
so that was a 1.1 billion dollar acquisition for four
folks that haven’t heard every episode of the show drizzly is the market leader in alcohol home delivery Last Mile for alcohol.
And that has been a.
A little micro segment that has totally exploded thanks to covid before covid the overwhelming majority of all alcohol was sold at.
Bars
now of course we’re all buying booze to drink it home and a lot of us want that delivered so so drizzly has been kind of a Marketplace that delivered alcohol orders on behalf of clients.
And now they’re getting rolled up to be part of buber,
you’ll remember Uber bought Postmates for like 2.6 billion last year so they seem to be taking some of the.

[34:38] That good Uber equity and trying to convert it into other interesting businesses.
And the alcohol one is interesting to me because it’s.
It grew at unlike 80 percent this year home delivery of alcohol grew like 80% it’s Fork it was literally only one percent of alcohol sales before covid it’s forecasted to be like eight percent of alcohol sales on there’s a couple of years so it.
It seems like it’s on a great trajectory in and would be a good investment,
the challenges that there’s a bunch of Regulation around alcohol distribution and a lot of the regulation got kind of loosened during covid and it’s an open question whether.
It’s going to take him back up at some point or whether it won’t and there’s also some speculation that some of these small start-up companies weren’t perfectly compliant with all the alcohol distribution laws but as they get bigger.
The the risk and cost of not being compliant is going to get higher so so I would say there’s some,
there’s some Regulatory and compliance risk about these businesses scaling so it’s going to be super interesting to watch.

Scot:
[35:49] So will there be a day when you get an Uber and they offer you beer and wine is that what’s going to happen here.

Jason:
[35:55] I think this is more of the ubereats division than the Uber but who knows.

Scot:
[36:01] Uber select Uber mobile bar.

Jason:
[36:07] Exactly when they merge with Airbnb it’ll they’ll be restocking all those mini bars that they put in people’s houses.

Scot:
[36:14] Perfect I like where you’re going with this vertical integration around alcohol.

Jason:
[36:20] Yeah,
well look I know we wanted to get this show out quick because people are eager to hear our thoughts about that big Amazon earnings and
shout out to Jeff that was that 27 years was a good run and we’re excited to see now that you’re up to speed what you can really accomplish.

Scot:
[36:40] Yeah thanks everyone and if you enjoyed.
This episode or any episode of our 253 we would love a five star review you do have to kind of go into your favorite podcast app if you’re using iTunes that’s probably the most helpful for us but if you’re on Spotify or any of those other
awesome recording our podcast listening Technologies we really appreciate a review you could be one of our first reviews of 2021 how about that.

Jason:
[37:09] That is super exciting and until next time happy commercing!


share







 2021-02-03  37m