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Whole Paycheck Tracker: New Blows Against The Amazon Empire

Whole Paycheck: New Blows Against Amazon Empire

Success breeds imitators, especially when the U.S. consumer’s whole paycheck is at stake. This week saw two major shots across the bow in the battle for said paycheck. One: Walmart teamed up with Instacart to go after the Amazon/Whole Foods portion of the paycheck. Two: Kroger launched a new marketplace initiative to attack Amazon.

Walmart made the announcement on Wednesday (Aug. 12) that it is partnering with Instacart in four test markets. It could put the Bentonville crew within striking distance of pretty much the whole country for grocery delivery – and could add some needed user-friendly technology to Walmart’s online grocery efforts. It could also be a welcome addition to the Walmart+ package when it is announced, potentially reducing overall delivery overhead.

“In turn, Instacart will benefit from the large volume of orders that Walmart customers are likely to send through,” says Seeking Alpha. “As such, it is a highly synergistic partnership that will benefit both companies once extended to a larger selection of markets. Of relevance is the fact that Instacart now has over 750,000 shoppers in its network. Pre-COVID-19, that figure was at around 200,000. In two massive hiring tranches, the headcount has almost quadrupled, making Instacart an even more desirable destination for traditional brick-and-mortar retailers looking to grow their customer bases on the back of digital.”

The Instacart partnership will definitely get some attention in Seattle. The same can probably not be said for Kroger’s plans to go live this fall with an eCommerce marketplace of third-party sellers through a partnership with Mirakl, which specializes in B2C and B2B eMarketplaces. The move represents an aggressive brand extension for Kroger, but will not pose much of a threat to Amazon. It also seems to be a customer retention play rather than a customer acquisition play, based on statements from Kroger.

“Our customers are increasingly turning to our eCommerce solutions provided at Kroger.com for their grocery and household essential needs. To better serve our customers, we’re continuing to invest in technology that enables us to expand our digital services to deliver anything, anytime, anywhere,” Jody Kalmbach, group vice president of product experience at Kroger, said in a statement. “Leveraging Mirakl’s best-in-class marketplace solution, we are broadening Kroger’s ship-to-home capabilities by offering more relevant products for our customers through exciting new partnerships with reputable third-party sellers.”

To its credit, the Mirakl announcement shows that Kroger is willing to think outside the box when it comes to expanding its momentum in eCommerce. And it could give it a leg up in its competition with Whole Foods, which is just a click away from Amazon.

Was Prime Day India Really a Test Case?

The reported numbers from Amazon’s Prime Day in India last week showed it was probably much more than a test case, as some pundits have speculated. Test cases usually don’t set year-over-year and even year-within-year records. The results from the two-day event last week showed that Amazon’s infrastructure on the subcontinent is more than solid – and that India’s expendable income, despite the pandemic, can support numbers that allowed Amazon to claim a big victory. It was probably never anything more or less than that.

According to a statement from Amazon India, the event saw the highest Prime Day participation for SMBs, with more than 91,000 sellers from 5,900 pin (postal or zip) codes participating. More than 62,000 SMBs from small towns received orders, and over 4,000 SMB sellers saw sales of at least 10 lakhs (one million Indian rupees). More than one million Prime members shopped from small businesses in the 14-day lead-up to Prime Day. And twice as many customers signed up for Prime memberships during Prime Day 2020 compared to last year.

In India, Amazon charges the equivalent of between $13 and $14 per year for a Prime subscription. In the U.S., Prime costs $119 per year.

“This Prime Day was dedicated to our small business (SMB) partners, who have been increasingly looking to Amazon to keep their businesses running. We are humbled that we were able to help, as this was our biggest Prime Day ever for small businesses – nearly 1 Lakh SMB sellers (70 percent from small towns) received orders from across 97 percent of India’s pin-codes; Karigar artisans, Saheli women sellers, Launchpad entrepreneurs and local shops enjoyed their highest-ever day of sales,” said Amit Agarwal, SVP and country manager of Amazon India. “We are overwhelmed by the response to Prime, with twice as many customers (65 percent from outside of the top 10 cities) signing up for membership compared to last year, and more members enjoying the benefits of shopping, new product launches and entertainment during the event than ever before."

If there was a surprise in the numbers, it came from Alexa. It handled three times more requests from customers to pay their mobile, electricity and other bills and mobile recharges on the Amazon Shopping app (Android) during Prime Day compared to an average day.

Walmart Earnings Preview 

The Wall Street numbers will be a very small part of the story when Walmart reports its quarterly earnings on Tuesday (Aug. 18). Analysts expect a minimal jump in same-store comparative sales and the stock will most likely take a hit, but that’s not what concerns the Whole Paycheck Tracker. The more intriguing storylines surround the follow-up to its 74 percent spike for eCommerce in Q1, and the potential for information around the launch of the Amazon Prime competitor, Walmart+.

First, eCommerce: It is highly unlikely that Walmart will match its 74 percent year-over-year spike, simply because consumers have been going back to the in-store environment. It will be more interesting to see if it can keep the quarter-over-quarter growth rate at a high level, even if it’s not at 74 percent. Some analysts have pegged the YOY growth at 60 percent, but even that could be high. The digital shift and Walmart’s ability to meet its demands have been on the plus side of many analyst recommendations, including this one from Stephens Inc. Analyst Ben Bienvenu.

“We felt that Walmart was well-positioned heading into calendar 2020, with line of sight to expense leverage and accelerated earnings growth set to deliver on the next leg of the value creation story [that] management had laid out for investors,” Bienvenu wrote. “Once COVID-19 showed up, the playbook clearly changed, but Walmart is unquestionably a winner in this environment, and we think the accelerated maturation of the eCommerce business will only enhance Walmart’s advantage relative to other grocers/retailers, and could help close the gap with Amazon.”

Next: Walmart+. The company’s website says “coming soon” – and at some point, Walmart has to deliver on that. Will it use an earnings call to do so? Probably not. The launch has to be a consumer event full of in-store signage, consumer advertising and consumer press exposure. It is evident, though, that the launch will be regional, maybe even limited to specific metros where Walmart has strong grocery and delivery. That cancels New York City, and probably cancels a major announcement next Tuesday

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