We’re now a month into the COVID-19 pandemic and the world is adapting to a new normal where going out is minimal, ordering online is the main way to shop and “business as usual” is anything but most of the time. But as much as things change, the more they remain the same in many regards. The sun still shines, the birds still sing and Amazon and Walmart are in a full-tilt race for the consumer’s whole paycheck.
Yes, the track has changed in the past several weeks — different goods are going out, staffing needs have hit a fever pitch and managing the supply chain has become a challenge of a whole new order for a post-coronavirus world. But it’s a challenge that both retailers are rising to in their own way, although not without the occasional stumble.
Or, as in Amazon’s case this week, not without a potential major slip-up. Regulators are taking an extra-close look at the online giant’s antitrust status and the firm’s veracity around its private-label products.
But trip-ups and slip-ups aside, the race rages on as its two major competitors figure out the new lay of the land — and the fast ways to reach customers who also suddenly find themselves on a new and unexpected track.
Big News of the Week: Feeding the Food Bank
Among entities hit unexpectedly hard by the COVID-19 outbreak have been the nation’s food pantries for the poor. They’ve seen both private donations of funds and food donations from grocery chains sharply fall just as Americans’ requests for help have begun to spike.
To help alleviate the problem, Amazon announced on its blog earlier this week that it will deliver 6 million meals to underserved populations impacted by the COVID-19 pandemic. The company plans to partner with food banks in 25 U.S. cities to provide shelf-stable groceries and prepackaged foods.
Amazon has already delivered 427,000 pounds of groceries representing 336,000 meals in Los Angeles, Miami, Nashville, Orlando, San Francisco, Seattle and Washington, D.C. There are plans to expand to other U.S. cities and international locations in the coming weeks.
Writing on the company’s behalf, Barbara Abbott, vice president of supply chain at the San Francisco-Marin Food Bank, blogged that “emergencies often impact the most vulnerable the hardest. Now, more than ever, access to nutritious food is essential to keeping our community healthy. But we can’t do it alone.”
Prior to the global pandemic, one in five San Francisco and Marin residents were at risk of hunger, Abbott wrote, saying that figure has now swelled dramatically as thousands more suddenly find themselves unemployed or with reduced wages. In March, the charity saw 14,000 visits to its online food-locator tool. That’s up from just 1,500 visits in March 2019.
Moreover, though seniors are frequent users of food banks, many have been unable to physically venture out for fear of COVID-19 exposure. So apart from its push for donations, Amazon is also coordinating the logistics to make sure the food seniors need can come to them, Abbott noted.
Trouble of the Week: Misusing Some Third-Party Data for Product Development
But while Amazon has been lauded for its good deeds this week, it has also caught a lot of media attention for some perhaps not-so-good things it’s attempted in the name of getting ahead in the race for the consumer’s whole paycheck. The company is in hot water amid allegations that it violated its own policies when employees took data from its independent sellers to launch competing products, according to published reports.
Though Amazon has strenuously denied the allegations (and maintains that it restricts staff from accessing such data), more than 20 former employees told The Wall Street Journal that they accessed sellers’ information to determine which products Amazon should make under its private labels.
The former workers went on to note that data usage of that sort was a common practice at Amazon and routinely discussed in meetings they attended. “We knew we shouldn’t,” one former employee told the WSJ. “But at the same time, we are making Amazon-branded products, and we want them to sell.”
The report flies directly in contradiction of testimony Amazon’s lawyer gave Congress last summer. The company maintained that it doesn’t use individual sellers’ data to compete with businesses on Amazon platform.
That’s a position that Amazon maintains to this day despite the recently published allegations. “We strictly prohibit our employees from using non-public, seller-specific data to determine which private-label products to launch,” a company spokesperson said. “While we don’t believe these claims are accurate, we take these allegations very seriously and have launched an internal investigation.”
What effect this will have — on both the nearly 60 percent of Amazon’s sales that come care of third-party sellers and on the regulators that have been examining Amazon for antitrust violations — remains to be seen.
Big News of the Week: A First Foray Into Social Networking (for the Greater Good)
Walmart and social network service Nextdoor have joined forces to make it easier for neighbors to help each other during the COVID-19 pandemic via a program called, fittingly enough, Neighbors Helping Neighbors.
The collaboration is aimed at making it easier for U.S. Nextdoor members to ask for help or offer assistance to people in their communities by shopping at Walmart on their behalf. This should make it easier for at-risk residents to coordinate, contact-free, the pickup and delivery of groceries, medications and other essentials with neighbors who planned a shopping trip anyway.
Nextdoor said it’s seen a sevenfold increase in people joining to help one another in the last few weeks, from checking on elders and running errands to aiding those who simply need a helping hand.
“We’re inspired every day by the kindness of people around the world who are stepping up and helping out,” Nextdoor CEO Sarah Friar said in a statement. “In recent weeks, we’ve been blown away by the number of members who have raised their hands to run an errand, go to the grocery store or pick up a prescription for a neighbor. We’re grateful for Walmart’s partnership to make this important connection between neighbors around vital services, and we’re proud to come together to ensure everyone has a neighborhood to rely on.”
The move is one of many by Walmart to enhance its contact-free grocery services amid the coronavirus pandemic.
“I’ve seen firsthand the countless ways our Walmart team is working together during this challenging time, leading with humanity, compassion and understanding to serve our customers,” Janey Whiteside, Walmart’s chief customer officer, said in a statement. “We’re continuing to do that through our new program with Nextdoor. We’re connecting neighbors to each other so that more members of our communities have access to essential items while limiting contact and the number of people shopping in our stores.”
Selloff of the Week: Vudu Goes To Fandango
But Walmart hasn’t only been adding on to things this week, it’s also been letting go. Of one firm in specific – Vudu. And apparently of Walmart’s ambitions in one entire vertical.
When Walmart first bought Vudu in 2010 for $100 million, the idea was for the retail giant to put a toe into the increasingly popular world of video streaming. But while streaming did in fact surge, Walmart-owned Vudu never quite did.
And as of this week, it was announced that the service has found a new home. Fandango Media, best known for selling movie tickets online, has picked up Vudu from Walmart for an undisclosed sum.
“We will continue to invest in areas where we have the greatest strength and are in the best position to serve our customers today and in the future,” a Walmart spokesperson told TheStreet in discussing the sale. “Pickup and delivery are great examples of how we’ve invested to bring digital and physical capabilities together to better serve our customers by offering more choice and convenience.”
Despite streaming into more than 100 million U.S. homes and having been installed on 14.5 million mobile phones nationwide, Vudu never quite became a core area of strength for Walmart. Hence the sale.
But as part of the deal, Vudu customers will have continued access to their TV and movie libraries and can keep their Walmart logins. Vudu will also continue to power Walmart’s digital movie and TV store on Walmart.com.
Fandango, which has seen its business basically shut down in the wake of COVID-19 since no one is buying movie tickets these days, said the Vudu acquisition will allow the company to scale that side of its business. Fandango also plans to make job offers to the majority of the Vudu team when the deal closes.
“For us, it’s a combination of scale for our on-demand streaming service and the addition of Vudu talent,” a Fandango spokesperson told a news outlet. “Vudu has a strong brand presence and customer base. So right now, we’re focusing on making sure that during this transition, Vudu customers are taken care of and likewise on the FandangoNOW side. Both businesses will exist for the time being.”
So Fandango is stepping up, while Walmart is now content to drop out of the race for streaming dominance and leave Amazon to try to outrun Netflix, Disney, Hulu, Apple and the host of other big-name entertainment players stepping onto the track later this year. Apparently, Walmart has decided that even in a race for the consumer’s whole paycheck, there are some sub-events that just aren’t worth competing in.
And as for the larger state of the race? That, as always, is in transition and developing as COVID-19 continues to erect unexpected obstacles in the course for both players to get around.
But progress is being made, albeit differently and perhaps more slowly than before. And PYMNTS will be here to keep track as it all unfolds.