YouTube Officially Live

We’ve been offering live streaming on YouTube since 2011, before it was cool. Millions of people around the world tuned in to watch the Royal Wedding in 2011. One-sixth of the Internet watched Felix Baumgartner leap from space live on YouTube in 2012.

Today, we are announcing a new chapter in bringing the power of live video to creators everywhere. Soon, we’ll be putting the power of YouTube live streaming in the palm of your hands.

One has to wonder why YouTube didn't go "live" for all creators sooner? With Meerkat dead, Facebook moving full-steam ahead with live video and now Periscope built into Twitter...stage is set for a live broadcast video showdown.

Streaming and Facebook Reign Surpreme

The last time we reviewed top internet traffic properties in North America used fixed acess, Netflix, YouTube and Amazon Video accounted for 58.1% of total downstream traffic. Fast forward six months later and that number has declined to 56.7%. Netflix is down largely due to better optimization of data processing whilst Amazon Video picked up about a percent. On the upstream side, BitTorrent and other file sharing services continue to lose share while storage applications like Google Cloud, iCloud and Box pick up share. 

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The mobile snapshot looks a bit different. YouTube and Facebook are #1 and #2 controlling 35% of total downstream traffic. It's worth noting that Instagram and Snapchat continue to grow in both downstream and upstream. Instagram specifically owns the #5 spot for total mobile traffic in aggregate and leapfrogged Snapchat. Also worth noting that Pandora dropped from the top 10.

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North America continues to be addicted to streaming video and social media. 

Time Spent with Media

It's no secret that traditional media like TV and print continues to lose eye share. In 2011, TV took up about 41% of our time spent with media. That number shrank to 35% in 2015 as digital grew from 33% in 2011 of time to 47% of time in 2015. So where do we expect to spend our time in 2018? Actually very close to what it is today.

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Digital will remain #1 and the losses to traditional TV and radio are quite small. Print and other are down double digits in percentage but only account for about 10% of time spent. Taking a look at digital shows that even the major growth years of mobile are likely behind us with law of large numbers and time saturation catching up.

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The largest growth within the digital category is other connected devices like Roku, Apple TV and video game players. Surprisingly that category only equates to 8% of overall time spent within digital.

So what do you think? Do these numbers seem realistic as we seek to use bots, voice dictation and assistants like Siri and Alexa?

Note: eMarketer stats that include second screening

Online Retail ETF Launched (IBUY)

Amplify ETFs recently launched an ETF allowing investors to place investments in the fastest growing public companies generating at least 70% of their revenue from online and virtual retail sales. The ETF was established to mimic the EQM Online Retail Index launched in December of 2015. Since launch, the index is slightly down and lagged the S&P 500. 

Although one would think there isn't much diversity in the ETF, top 10 holdings are a mix of food service, gifting, marketplaces, travel, streaming video and specialty retail: GRUBHUB INC, ETSY INC, OVERSTOCK COM INC DEL, COPART INC, 1 800 FLOWERS COM, STAMPS COM INC, NETFLIX INC, FTD COS INC, BLUE NILE INC, PRICELINE GRP INC. I was a bit surprised to see Grubhub and Etsy as the top 2 holdings but when looking at all 45 holdings, all the majors you'd expect are there. 

For those as bullish as I on the shift to online, IBUY looks like a solid pick if you'd prefer holding a mix of online players in place of individual picks. 

Buy Ahead, Prep On-Time

Frequent readers of this blog know I have been impressed with Domino's ability to continue to innovate in what is thought of as a low tech business. This past week, Domino's announced a feature in which using the customer's mobile GPS, employees will be notified to begin prepping pizza's based on the proximity of the customer to the store. 

Another new service is the "on-time cooking" for pick up customers. With the use of a GPS customer tracker, Domino's will only start making the pizza when the customer is in close proximity to the store. This will help to ensure that customers receive their pizzas fresh.

This may sound familiar as we have seen Square Order use beacons and GPS to alert barista's of incoming customers that placed an online order ahead of a visit. We have also seen similar use cases from Starbucks and Taco Bell. 

Related posts:

Square Order > Seamless Location Based Food/Drink Preparation

Taco Bell Mobile Ordering Test Run

Innovation Award: Domino's Pizza

96.5% of Products on Amazon Aren't From Amazon

Many customers of Amazon fail to realize how many sellers Amazon has on its site and are often confused when I refer to Amazon as eBay 2.0. In Amazon's most recent quarter, 3rd party sellers were responsible for selling 48% of the units sold on Amazon. Even more staggering is the number products 3rd party sellers offer. Amazon itself has about 12 million listings in the top 20 categories. When you expand the number of listings to include 3rd party sellers, there are over 353 million. Therefore, 3rd party sellers account for 96.5% of products listed on Amazon.com. Because those listings are fixed priced with no expiration in offering period, they can sit idle and unproductive for years. Sellers only have to pay a fee once the product sells but are stuck holding onto that inventory at the same time. Amazon on the other hand has the benefit of offering that product on its' site without having to take on the cost of inventory. The faster the sales of product on Amazon shift to third party sellers, the more profitable Amazon becomes. 

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May Retail Sales

Last month everyone was calling for the death of retail due to headlines largely focusing on the doom and gloom of department stores. Eventually the monthly sales came out and April was up 3.0% to April 2015. May was along the same theme. 

Total May retail sales were up 0.5% to April and up 2.5% to May 2015. A few highlights from May:

• Non-store/online retailers posted a stellar 12.2% year over year gain. The acceleration to online shopping continues.
• Heath and personal care stores posted the 2nd largest year over year increase for April with a 8.3% gain
• Building material & garden equipment slowed but still posted a was up 3.6% year over year gain 
• Department Stores multi-decade decline continued with a decline of 5.8% year over year and now down 4.9% for the March thru May period
• The Electronics vacuum of sales to online continues with a decline of 3.1%

While building slowed considerably, non-store (online) exploded and we continue to see strength in health, restaurants and sport. The continued weakness in Electronics and Department Stores with combined weakness in Clothing Stores are the reasons why I believe we will see difficult earnings in Q2.

April Retail Sales can be found here.

March Retail Sales can be found here.

February Retail Sales can be found here.

January Retail Sales can be found here.

December Retail Sales can be found here.

Here Comes Primark.

Back in late 2015, I predicted that Cheap Chic will Reign Supreme in 2016 with discount stores seeing continued success in a heavy retail market. One of those new entrants is Primark, a UK based retailer known for selling $10 jeans and $3.50 t-shirts. With over 270 stores worldwide, Primark has set its' sights on the US market with 8 stores planned. The first store opened in Boston back in September 2015. Morgan Stanley believes the chain will generate $650 in sales per square foot driving roughly $325 million with the 8 stores over the next 12-18 months. Wow.

Morgan Stanley recently ran a price comparison shopping exercise within the Boston market and what they found was appalling. On average across 100 similar items, 14 other retailers were an average 200% higher in price. Like for like competition and fast fashion houses like H&M and Forever 21 were at least 100% higher in price. Whilst Primark is likely looking to come out with a bang in the US market, these findings do not bode well for traditional retail or fast fashion houses. 

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Consumer's desire for the lowest cost private label merchandise and heavily discounted branded merchandise continues. Primark is the latest entrant to drive private label price points lower. Those lower price points reset and lower the premium consumers are willing to pay for branded merchandise which in turn benefits the discount stores. 

One thing's for sure. Those who discount and those who make shopping convenient are winning. Primark falls into that discount bucket and will thrive.

Online > 51% of Purchases

UPS' annual survey of 5,000 online shoppers had a few recurring themes that we are accustomed to hearing, but there were a few milestones:

The shoppers now made 51% of their purchases on the web compared with 48% in 2015 and 47% in 2014, according to the survey by UPS and analytics firm comScore Inc. The survey polled shoppers who make at least two online purchases in a three-month period, excluding groceries.

The shoppers reported that only 20% of their purchases were made in a store the conventional way—going to a store, browsing there and buying—down from 22% a year ago. Forty-two percent chose to search and buy entirely online, while the rest said their purchases were made by combining online and in-store shopping and browsing.

Consider the source of survey (UPS) and that the respondents are already online shoppers, but it's clear that shoppers are becoming more and more comfortable with shopping online. Less shoppers are just searching online and buying in-store...more willingness to press checkout with the mouse or finger and have the item delivered.

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Shoe Dog: A Memoir by the Creator of Nike →

Phil Knight recently released his memoir under the title Shoe Dog. For those in the sports and retail world, I'd believe you would enjoy hearing about the early years pre-Nike. Phil started in the business by selling Onitsuka Tiger Shoes under the company name Blue Ribbon Sports. Ironically he lost the lucrative Tiger distribution deal and was forced to start his own brand, Nike. 

Some of the best lines include:

• On the idea of Nike Air: “Mr. Knight, we’ve come up with a way to inject . . . air . . . into a running shoe.” I frowned and dropped my pencil. “Why?” I said.
• On the IPO value of Nike vs. Apple: A company called Apple was also going public that same week, and selling for twenty-two dollars a share, and we were worth as much as them, I said to Hayes.
• On selling more than just shoes: But first we needed to start selling clothes. Aside from the plain numerical fact that Adidas sold more apparel than shoes, apparel gave them a psychological edge. Apparel helped them lure bigger athletes into sweeter endorsement deals. Look at all we can give you, Adidas would say to an athlete, pointing to their shirts and pants and other gear.
• On how retail used to work: Why not go to all of our biggest retailers and tell them that if they’d sign ironclad commitments, if they’d give us large and nonrefundable orders, six months in advance, we’d give them hefty discounts, up to 7 percent?

Unfortunately Phil summarizes the most recent 25 years in a short, final chapter with mentions to Jordan, Tiger and LeBron. Despite this, the memoir is supported by strong story telling, honesty and a relatively balanced view.

The Future of Money: M-Pesa

60 Minutes recently covered Kenya's M-Pesa. Twenty three million users using virtual currency to pay for taxi's to taxes:

View More: 60 Minutes News|Live News|More News Videos

Q1 Online Sales > 11%

From Forrester:

Online sales grew 15.1% in Q1 and accounted for 11.1% of retail sales when factoring out items not normally bought online. That’s the highest e-commerce penetration in history, as web sales totaled $86.3 billion for the period ended March 31, according to non-adjusted estimates released by the U.S. Department of Commerce.

Quite impressive but not entirely accurate when you consider:

Omnichannel efforts like endless aisle, ship-from-store, and in-store pickup programs have supported eCommerce by enabling merchants to transform slow-turning or “trapped” inventory into incremental sales. Merchants report that these services improve customer satisfaction and directly facilitate faster delivery of products to shoppers. Already, more than $1.5 trillion of total US retail sales are web-impacted

Bingo. To state that online accounted for 11.1% is truly a misrepresentation. If buy online, pick-up in-store/curbside fell into the online sales bucket, we would see a number several percentage points higher. 

Amazon: Frenemy or Enemy?

Art Peck, Gap CEO at the company's annual investor meeting recently said:

“To not be considering Amazon and others would be -- in my view -- delusional. We are always considering all of the opportunities beyond our traditional mix of channels and stores. Amazon is certainly one, and there are others as well.”

The comments resulted in a frenzy of comments from analysts to industry insiders asking whether Gap has lost their mind. So much so that Art had to quickly retract his comments by stating in no way is this an indication of an imminent partnership with Amazon. 

Despite the comments, Peck is right. The impact of Amazon on the retail market, customer expectations and customer service is undeniable. Let's just focus on the Apparel industry in the US, Gap's current top market and consider these facts:

• Amazon will be the largest apparel retailer by 2017
• Amazon ranked #1 in customer satisfaction when compared to other internet retailers and retailers
• Half of US households will be Prime members by 2020
• 45% of shopping searches begin on Amazon
• 61% of merchandise sold on Amazon was by 3rd party sellers that can control their price, inventory, marketing and brand aesthetic

Based on the above, why wouldn't you consider working with Amazon and at least listing product as a 3rd party and not selling directly? Without Amazon in your arsenal, your product isn't part of the largest marketplace filled with captive and satisfied customers thoughtlessly pressing one-click buy buttons. Gap's product is already on the site, why not control what's on the site and use it to your advantage. Maybe focus on only selling clearance. Maybe focus on only selling one particular line.

The point is that Amazon allows you to own control of your brand if you so desire. Retailers and brands that realize this and use Amazon as a frenemy will be those that ride the coattails of profitable ecommerce growth in sales and awareness.

Disrupted: My Misadventure in the Start-Up World

Recently finished Disrupted: My Misadventure in the Start-Up World that details Dan Lyons career shift into the world of start-ups as a 53 year old former journalist at HubSpot. An entertaining read and first hand look into the "smoke and mirrors" of some start-ups. There are a number of quotes that highlight the drive for start-ups to push growth in anyway possible and appease hungry VC's, bankers and angel investors:

“There’s an old expression on Wall Street,” Tad tells me. “‘When the ducks quack, feed them.’ Have you heard that? Back in the nineties investors wanted to buy anything with the word dotcom at the end of its name. So that’s what we gave them. Our job isn’t to talk people out of buying. Our job is to make what people want. Our job is to feed the ducks. And right now, the ducks are hungry.”

The book highlights the cultures surrounding start-ups and the endless thirst for "corporate kool-aid":

Perhaps by accident, or perhaps not, tech companies seem to employ techniques similar to those used by cults, the creation of special language being one example.

Lastly, the exploitation of labor created by start-ups using young and hungry millennials to create wealth for the investors:

This is the New Work, but really it is just a new twist on an old story, the one about labor being exploited by capital. The difference is that this time the exploitation is done with a big smiley face. Everything about this new workplace, from the crazy décor to the change-the-world rhetoric to the hero’s journey mythology and the perks that are not really perks—all of these things exist for one reason, which is to drive down the cost of labor so that investors can maximize their return.

The main takeaway is well timed with the current state of investing in start-ups using the "spray and pray" investment approach of taking many bets in hopes of a win. A few noteworthy lessons backed by stories of a career change gone wrong. 

Amazon Restaurants Launch Trial

GrubHub investors sent shares tumbling down 8% due to worries of Amazon's restaurant delivery service launch. While the drop was a bit much for Amazon only announcing NYC and Dallas, I would definitely argue that Amazon's service along with UberEATS and Square's Caviar has GrubHub losing sleep. 

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So what is the Amazon service like? Pretty straight forward and up, front and center within the Amazon Prime Now app.

Selection

As of this posting, there were roughly 125 restaurants available for my zip code in Midtown West in Manhattan. Restaurants were organized in alphabetical order with filters based on price tiers and type of food. There were no restaurant reviews but each restaurant profile had featured items.

Ordering

Ordering was simple and the app isolates restaurant orders from product orders. Unlike UberEATS and Caviar, the user sets the tip with a suggested $5 on a $20 tab. The user is provided free delivery for orders over $20 but there was a disclaimer within the app that free delivery is available for a limited time.

Delivery

Delivery time was average but difficult to gauge after one try. About 10 minutes after ordering, I received a call from Amazon in Seattle saying the driver is a bit behind but will still make it within the hour. Dropoff was seamless and the courier was courteous. Time from order confirmation to delivery was 55 minutes.

Overall

Overall it was a positive experience and I believe this service continues to add to the Amazon ecosystem and naturally will gain scale as more of America's wallets shift their share to Amazon. Watch out GrubHub, you have now have 3 major competitors who will release new cities by the week.

Images of the order flow:

April Retail Sales

April sales results were unexpectedly rosy. March retail sales were revised from down 0.4% to up 0.3%. This is why you should not believe the headlines calling for doom and gloom. That doom and gloom was predominantly a byproduct of one category: department stores.

Total April retail sales were up 1.3% to March and up 3.0% to April 2015. Total year to date excluding Autos is up 3.0%. A few highlights from April:

• Building material & garden equipment was up 8.2% and retails the largest percentage gain of 9.6% versus last year for Feb thru Apr
• Online/non-store retailers accelerated further and posted a 10.2% year over year gain and now showing 8.8% increase for Feb thru Apr versus last year
• Heath and personal care stores posted the 3rd largest year over year increase for April with a 8.1% gain 
• Department Stores multi-decade decline continued with a decline of 1.7% year over year and now down 3.6% for the February thru April period
• The Electronics vacuum of sales to online continues with a decline of 2.0%

The trends for strong Building, Online, health and sport retailers continues. The continued weakness in Electronics and Department Stores with combined weakness in Clothing Stores reiterates why the retailers are posting weak Q1 numbers. 

March Retail Sales can be found here.

February Retail Sales can be found here.

January Retail Sales can be found here.

December Retail Sales can be found here.

Retail Recap: Q1 Comp Sales

The overwhelming majority of retailer Q1 comps are in. Home improvement and discount showed strong gains, department stores struggled and big box was slightly up for the most part. The themes of spending to improve homes, buy big ticket items like cars, purchasing branded merchandise at a discount, and shifting to online players is a reality that is here to stay. 

Department Stores and Off-Price Retailers Comp Sales Growth

The only positive gains thus far of the major department stores is within the off-price space in Marmaxx (Marshall's and TJ Maxx), Ross and Nordstrom Rack. Not all off-price is strong though. Saks Off Fifth posted a negative comp. Unfortunately, the poor Q1 results were coupled with further sales and earnings revisions to the downside. 

*Includes license businesses. Excluding license businesses, comp of -6.1%.

Specialty and Dollar Stores Comp Sales Growth

Q1 comp sales for specialty and dollar stores was a bit mixed. American Eagle continues to flourish as Abercrombie struggles and Aeropostale enters Chapter 11. Best Buy was essentially flat while dollar stores continue to grow market share. On the luxury end, Tiffany saw one of its' worst comp sales numbers this decade.

Big Box and Warehouse Retailers Comp Sales Growth

Home Improvement remains incredibly strong while the big box retailers like Target and Walmart continue to eke out gains whilst heavily investing in ecommerce fulfillment and offsetting minimum wage increases. 

Tipping Continues

Feedback from smaller restaurants on eliminating tips has been mixed. Most of those restaurants are upscale restaurants that pride themselves on fine dining and a top notch level of customer service. But how would eliminating tips work for a casual chain of restaurants? Joe's Crab Shack which has more than 130 restaurants tested the no-tipping policy in 18 restaurants by raising prices and sharing the proceeds with staff. 

Company research had found that 60 percent of the restaurants’ customers disliked the change in tipping, Mr. Merritt said. They wanted to inspire good service with their tips and they didn’t trust management to pass on the money to its employees.

Sometimes perception is reality. Customers enjoy being in the driver's seat and feel they can positively or negatively impact service by owning the power of the tip. 

“The system has to change at some point, but our customers and staff spoke very loudly,” Mr. Merritt said. “And a lot of them voted with their feet.”

The number of customers at the no-tip locations dropped 8 percent to 10 percent on average, he said.

The results were significant enough for Joe's to pull back the number of locations from 18 to 4. Until there is a city wide regulation or a major chain adopting a no-tipping policy, I believe we will continue to be a tipping society. With minimum wages on the rise, the service industry should come out in a better position regardless. 

Programmable Dash Buttons

Just last week, I demo'd why I believe Amazon's Dash buttons are the closest version to one-click ordering in the physical world and provide for "thoughtless commerce." This week, Amazon announced the release of Dash buttons that are programmable:

You can code the button's logic in the cloud to configure button clicks to count or track items, call or alert someone, start or stop something, order services, or even provide feedback. For example, you can click the button to unlock or start a car, open your garage door, call a cab, call your spouse or a customer service representative, track the use of common household chores, medications or products, or remotely control your home appliances.

The button can be used as a remote control for Netflix, a switch for your Philips Hue light bulb, a check-in/check-out device for Airbnb guests, or a way to order your favorite pizza for delivery. You can integrate it with third-party APIs like Twitter, Facebook, Twilio, Slack or even your own company's applications. Connect it to things we haven’t even thought of yet. We can't wait to see what you will build with the AWS IoT Button!

AWS, Echo, IoT via Dash...all bets that further Amazon as a platform and not just a commerce company. 

What are Dash buttons? Watch here.

Wondering what the first Amazon store is like? Watch here.

"Thoughtless Commerce"

What makes a customer purchase without a thought? Comfort and ease. 

When a customer knows an order will delivered quickly, at a reasonable price with one touch of a button...."thoughtless commerce" takes place. That is what I believe Amazon had in mind with Amazon Dash buttons: