Streaming Video > Commercial Broadcast Networks

Netflix led all television  networks with eight nominations Thursday, besting traditional awards-season beast HBO by one nod. Just as significant were advances made by Amazon and Hulu. The former drew five nominations, following last year’s first nods and wins for “Transparent.” The latter netted its first nomination, for the Jason Reitman-produced comedy series “Casual.”
Together, the three streaming services drew 14 nominations — five more than the commercial broadcast networks combined.

Congrats Netflix, Hulu and Amazon Video. Quality coupled with a better experience at a lower cost. 

Source: http://www.thewrap.com/netflix-amazon-disr...

Same Day Shipping for 76 Million People

Amazon.com Inc. has a new, expensive-to-reach target in its quest to sell everything to everyone: last-minute holiday shoppers.
The online store has spent the past year expanding its same-day delivery service to 24 metropolitan areas covering a population of 75.7 million people, or almost one in four U.S. residents, according to data compiled by Bloomberg. One option—Prime Now—gets products to customers in an hour or less.
Source: http://www.bloomberg.com/news/articles/201...

Finland & Smartphones (Nokia) = Switzerland & Watches

The headline may seem a bit obnoxious but I truly believe we are starting to see the start of a significant decline in the world market share of Switzerland and watches. The weakness depicted below is largely due to a contraction in the growth rate of the Chinese economy with Swiss exports of watches in the first 10 months of 2015 only down 3.2%. 

However, that weakness comes at a time when active watches are on fire and smart watches are improving. Active watches would be those offered by Fitbit or Jawbone that offer to tell the time whilst tracking sleeps and steps. Why does a consumer need both a watch and a step counter that tells time? They don't. Secondly, consumers of today have very different purchasing habits. Consumers spending habits are flat to slightly down but the frequency of purchases are up considerably. Retail stalwarts like H&M, Zara and Uniqlo have become fast fashion global goliaths exploiting the trend of frivolous, throw away purchases. As for smart watches, Apple's first foray is a drop in the bucket today, but will grow quietly. Additionally, Android's host of Android Wear manufacturers (Samsung, Motorola, LG, etc.) will continue to improve their offerings for Android's 60%+ global market share.  

The first 10 months of 2015 are the start of a trend that should have those in Switzerland worrying. 

 

Inflection Point for Digital Downloads?

In previous posts I have asked Can Gamestop Survive and called Gamestop the IBM of Retail. This past week, an NPD report came out stating that retail video game sales declined 3% year over year in October. This result was despite a number of high profile games like Halo 5 and NBA 2K16 being released. Cowen analyst Doug Cruetz had expected a 34% increase and had the following to say: 

"'Halo 5' sold less than half of the units we were modeling, accounting for almost half the miss in our overall number," Creutz said. "Since Microsoft has already announced that 'Halo 5' is the fastest-selling 'Halo' title of all time, and even allowing for some variance in release date timing and such, this suggests to us that at least half of 'Halo 5''s non-bundled unit sales were digital."

Might this holiday season be the inflection point for digital downloads we have been anticipating? It will be interesting to see the digital vs. physical sales of Activision's latest Call of Duty and the upcoming Star Wars: Battlefront from EA. One thing is for sure, the more digital downloads, the better for publishers and worse for Gamestop and retailers.

Holiday Shopping Survey Findings

The recent Deloitte Holiday Shopping Survey had some interesting findings:

  • 19% of shoppers intend on spending more than the previous year due to 41% of respondents being in a better financial situation
  • Most favored format is the Internet for shopping at 47% (up from 45% in previous year)
  • Omni-channel behaviors will dominate with 63% webrooming, 53% showrooming and 43% buying online and picking up at store
  • Free shipping is more important than fast shipping (87% vs. 13%) and fast shipping is defined as a maximum of 3-4 days for the overwhelming majority
  • At least 75% of shoppers are somewhat likely to follow suggestions to purchase based upon other customer product reviews


Source: https://www.ama.org/publications/eNewslett...

10 Billion Yuan in 38 Minutes

November 11, also known as Singles Day, the largest global ecommerce shopping day largely celebrated in China has become Spending Day. 

Much of the buying takes place online. On November 11th last year, Alibaba, an e-commerce company, sold 57.1 billion yuan ($9.3 billion)-worth of goods; the first 10 billion yuan-worth was sold in just 38 minutes. This far eclipsed the $1.5 billion spent online by Americans on “Black Friday”, the day after Thanksgiving, which in the United States has become the biggest spending day of the year online, thanks to steep discounts.

Close to $10 billion in GMV in 38 minutes. Astonishing. 

Source: http://www.economist.com/news/china/216780...

Walmart Buy Online, Curb Pickup

Walmart has been on the offensive with the launch of pickup stores using dedicated parking spaces. Initial launch was small but has since expanded to 23 markets with another 20 to be added early next year. The offering now extends into mobile with an update Walmart app that allows the customer to inform Walmart associates when they are due to arrive or are in close proximity. The hope is that by better understanding customer arrivals, wait/queue times will be reduced. Look for Walmart to eventually use beacons or other tech for automated customer arrival updates. This type of offering was previously available as part of Square Order.

This is just another example as to how retailers worldwide will be forced to turn stores into fulfillment centers which drastically alters staffing, sales floors, traffic patterns and the merchandise.

Source: http://www.reuters.com/article/2015/10/29/...

Digital > Offline Media

Target is spending roughly the same amount on this year's marketing as last year, though executives declined to provide a figure. The 1,805-unit chain spent $170.6 million on measured media in November and December last year, according to Kantar Media. Same-store sales during the critical holiday period from November through January were up 3.8%.
Target is dedicating a whopping 61% of its media spending to digital, up from 51% last year.
Source: http://adage.com/article/cmo-strategy/targ...

Earnings Snippets: Amazon, Google, Pandora, eBay

Some commentary around a few stats that surprised me in listening/reviewing the various earnings reports this past week:

Amazon: 46% of product sales were 3rd party sellers. Amazon truly is becoming Ebay and Alibaba as 3rd party sellers drive the revenue flywheel. Most of the sales are through Prime members which drives 3rd party sellers to use Fulfillment By Amazon (FBA) when listing their product. Amazon charges a higher fee per unit sold and/or stored yet doesn't have to take on any inventory risk. With that said, Amazon is still struggling to bring any meaningful growth in revenue internationally. 

Google: 40% of all mobile searches return indexed app results. Desktop searches are flat to down, mobile searches are up considerably in aggregate but average less than desktop per user. 40% of searches driving app results is staggering but less searching equals less ads and clickthroughs. 

Pandora: 3% growth in listener hours year over year. The impact of Apple Music was seen this quarter and the loss was greater than expected. With that said, 5 billion listening hours still drove 31% growth in advertising. 

eBay: 12% fixed price listing growth and 21% drop in auction listings. As Amazon becomes more like eBay with 3rd party listings, eBay becomes less auction and fixed price like Amazon. Nothing too extraordinary about eBay earnings, stock benefited from low expectations.

NRF Holiday Survey

NRF Holiday Survey shows modest spend increases year over year and a more connected consumer. 

Average spending per person reaches $805.65, comparable with spending in 2014 holiday season ($802.45).
Spending on gifts for family members will total $462.95, up from $458.75 last year, and a survey high.
Almost half of holiday shopping, consisting of browsing and buying, will be done online: average consumers say 46 percent of their shopping (both browsing and buying) this holiday season will be conducted online, up from 44 percent last year.
21.4 percent of smartphone owners will use their device to purchase holiday merchandise this year, the highest seen since NRF first asked in 2011.
Nearly half (46.7%) said free shipping/shipping promotions are important factors in their decision on where to shop. 
55.8 percent of holiday shoppers will splurge on themselves and/or others for non-gift items, and will spend an average of $131.59, up from $126.37 last year.  
Source: https://nrf.com/media/press-releases/retai...

Jersey City to Potentially Legalize Airbnb

On Monday, Mayor Steven M. Fulop will introduce legislation to legalize the use of all short-term sleepover web services, like Airbnb and HomeAway. The law is expected to be approved by November.

In exchange for agreeing to let some of Jersey City’s 262,000 residents rent out a couch, a bedroom or even their entire apartment or house on Airbnb, the company would charge users the same 6 percent hospitality tax currently levied on guests at the city’s dozen hotels.

Mr. Fulop anticipates the tax would generate between $600,000 and $1 million annually on the more than 300 Airbnb listings in the city. That would be added to the roughly $6 million the city makes on its hotel rooms each year.

Kudos Mr. Fulop for recognizing the benefit to homeowners, visitors and city coffers. Hopefully this is just the start for other major cities to evaluate similar legislation. 

Source: http://www.nytimes.com/2015/10/12/nyregion...

American Express & Costco

Bloomberg recently wrote about the relationship breakup between American Express and Costco. A few interesting tidbits made the article:

Chenault went all out to hold on to the discounter in the U.S. Costco’s costs to accept credit cards as part of its deal with Amex was about 0.6 percent of every purchase, people familiar with the arrangements say, which was pretty cheap for any retailer, but Chenault offered to cut them further. Still, Jelinek insisted on putting the U.S. business up for grabs, too.
10 percent of the 112 million Amex cards were Costco-branded.
“Yet they decided not to tell us that 23 percent of their business was actually co-branded, which means it’s using someone else’s brand. I find those two things somewhat inconsistent.”

Whether the above is 100% accurate or not, Costco had quite the deal with Amex and it seems as though Amex was willing to provide even a better deal given that 10% of their current card base is Costco-branded. The Amex strategy of high tier, high spend consumers with award winning customer service is tough to maintain as they push further into prepaid and loyalty through offerings like Serve and Plenti. Will be interesting to see if Amex can replace cobrands like Costco.