Instacart has confirmed its giant $220 million investment led by Kleiner Perkins Caufield & Byers, which Re/code previously reported values the grocery delivery startup at $2 billion. Now the real work begins.
Instacart, whose service lets people order groceries from local stores such as Whole Foods and Costco and have them delivered on the same day, faces a long list of challenges to live up to the hype that comes with such a deal.
One challenge will be managing a colossal — and growing — network of contractors who are either stationed in stores picking the groceries off the shelves or delivering the orders to customers’ doors. CEO Apoorva Mehta confirmed that Instacart is experimenting with outsourcing some deliveries to third-party companies, but declined to give more details about which companies or how heavily Instacart is moving into this new model. Such a move may help Instacart deal with demand when it moves into new cities, or perhaps it’s being done for financial reasons. But it’s always risky to outsource part of a consumer-facing experience.
In the future, Instacart may also have to find a model that works well outside of major metropolitan areas if it wants to build a true nationwide business. Mehta said the company’s current valuation is based exclusively on operating in metropolises. He also hinted that the company could choose to expand to international urban centers before going to rural America.
But he said Instacart may decide to tweak its model if and when the time comes to expand into smaller cities and towns.
“Maybe you don’t need to do one-hour delivery,” he said. “Maybe it’s same-day delivery. Maybe it’s also click and collect,” a model in which customers order groceries online and pick them up outside the store, which Instacart has started experimenting with.
Instacart also will need to continue to secure close relationships with grocers, in part so the inventory it shows on its site and app is the inventory that it ends up delivering to its customers. Mehta says his company is building software that some grocers are using to reflect a more accurate picture of their inventory online.
Lastly, the company will have to be smart about expansion into categories outside of groceries, which Mehta said will happen eventually with the help of the gobs of new cash he just secured. Mehta may also have to convince one of his investors that it’s a necessary move.
“From my point of view, we just need to be the supermarket’s best friend,” Michael Moritz, chairman of Sequoia Capital and an Instacart board member, said in an interview with Re/code. “We can be a fantastic supermarket delivery service and just have a fantastic company — end of sentence.”
That’s pretty definitive. I then asked him if that means he’s not a fan of Instacart’s desire to enter other categories?
“I cannot imagine running out of opportunities to deliver groceries to Americans who want to shop online,” he answered.
Moritz’s caution may come from experience. He was a board member of Webvan, the grocery delivery startup that went bust in 2001 because it expanded too quickly and couldn’t control its costs.
Mehta declined to specify a timeline for expansion into non-grocery categories or provide details of which categories.
“This is an enormous market and we have so much to do here. I’m not surprised [Moritz] said that and clearly it’s a great observation,” Mehta said. “The way I think about it is: We have strategic reasons why we’ll go into other categories and experiment and prove out other things. Of course this is a decision we’ll make as a team, as we need to.”
In addition to Kleiner Perkins, new investors in the round included Thrive Capital, Comcast Ventures, Dragoneer Investment Group and Valiant Capital.
Link to article here
Amazon had it’s ‘Prime Day’ last week and promises to continue annually
/in Amazon.com /by tashmanSource- Chicago Tribune
Amazon says its “Prime Day” sale led to a sales surge and “hundreds of thousands” of new signups for its $99 annual Prime loyalty program. The company said it plans to make the sale an annual event.
Tied to its 20th anniversary, Amazon promoted Wednesday’s sale for weeks by saying there would be more deals than during the busy winter holiday shopping season. Some shoppers took to social media and elsewhere to complain about the types of sales they were seeing and their limited nature.
Nonetheless, Amazon said Thursday that in the U.S. and nine countries around the world that offer the Prime program, shoppers ordered 398 items per second, surpassing the rate of ordering on Black Friday, the busy shopping day after Thanksgiving. It said worldwide order growth more than quadrupled over the same day last year, which is typically a sluggish sales day, and rose 18 percent more than Black Friday 2014.
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Amazon Dreams Up a Sale in a Calendar Bursting With Them
/in Amazon.com /by tashmanAs seen in the New York Times:
Even Black Friday is fast getting lost in the blur of perpetual discounts as some of the nation’s biggest retailers go head-to-head Wednesday in a new midsummer event — yet another addition to an annual sales calendar packed with sales, sales and more sales.
Amazon, the online juggernaut that has been upending brick-and-mortar retailing for years, set off the latest sales frenzy by announcing a sale for the site’s 20th anniversary on Wednesday. Its AmazonPrime Day, meant to attract more shoppers to its $99 free-shipping membership plan, promises “more deals than Black Friday.”
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How To Get Paid Faster from Home Depot
/in General Industry News, Hardware News, The Home Depot /by tashmanHome Depot is a great company – but let’s face it, they do what a lot of big businesses do: They pay kind of slow. I know this because I have clients who do business with them. Typical terms are around 60 days. These terms are not uncommon when dealing with larger companies. And yet, it’s a huge issue for smaller companies.
That’s because smaller companies need cash. By the time one of my clients sells product to Home Depot or a larger company all of their money has been spent on buying the raw materials, producing the product, paying people, maintaining overhead and shipping the items…and then it’s another 60 days until the cash comes in. Big businesses have greater cash reserves and large credit facilities made available by banks who are more than happy to lend them money. Small companies don’t have these resources at their disposal. They just wait.
Until now. There is an enormous change happening in payments processing, a change that will impact any small business doing business with larger companies. Technology is driving this change and a company named Taulia is right in the middle of it. Taulia, founded by former entrepreneurs who wrote payment processing software for SAP, raised about $15 million in additional financing last January and is now valued at close to $1 billion – and there are rumors that they’re considering a public offering in 2016.
“This company makes a lot of sense,” says Josh Hannah of Matrix Partners, one of Taulia’s earliest investors and a board member. “I love companies that find legacy-related inefficiencies that have persisted for years then make them efficient.”
How is Taulia solving these problems? Take Home Depot (or John Deere, EBay, Grainger, Salesforce, PayPal, Coca-Cola Bottling Consolidated, Hallmark Cards, Johnson Controls, Graphic Packaging, Pacific Gas & Electric – all customers, according to the company). You’re a small company selling product or providing services to one of these giants. You ship your product/do your service, send your invoice…and wait to get paid. Meanwhile, other bills need to be paid. Your bank is offering you less credit (if any credit at all). Factoring and micro-finance options are expensive. You’re trying to grow but you’re restricted. You need the cash now.
But what if Home Depot comes back to you and says “Look little guy – we value you and we’re happy to pay you earlier. Just find your invoice in our online portal and click the button that says ‘pay earlier.’ It’s as simple as that.” And it really is that simple. Taulia’s software is written to integrate with their customers’ back end systems. A portal is provided to the small business suppliers, either by Taulia or from the large company. If a small supplier chooses to be paid earlier the payment will be made, net of a discount. The discount is ultimately split between the big company and Taulia. I’m simplifying a few things here, but you get the point.
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Amazon Launches a New ‘Kickstarter’ Marketplace
/in Amazon.com /by tashmanNeed some new shoes with images of limes on them but not sure where to look? Amazon has you covered.
The Seattle company’s e-commerce site already sells pretty much any commodity you could want, but Amazon’s new marketplace branches beyond the ordinary household items and electronics.
Amazon Exclusives, which launched Wednesday, will sell new products from “up-and-coming” companies, that have done well in pitch competitions or crowdfunding campaigns on Kickstarter or other sites.
Amazon customers have been expecting something like the new marketplace since job postings surfaced in January.
Some of the products were featured on the reality TV show “Shark Tank” and many others have won industry innovation awards, according to an Amazon press release.
“Our mission on behalf of customers is to make Amazon the destination for brands and innovators to launch and sell their products, providing our customers early access to new products,” Peter Faricy, VP of Amazon Marketplace, said in a statement. “We understand that helping brands gain exposure for their award-winning new products is beneficial to customers that desire to be the first to have the hot new item.”
The new program is also beneficial to Amazon (Nasdaq: AMZN).
Amazon will hold exclusive third-party rights to the products on the site, meaning the companies can sell the items on their own sites but not on any other outside site or in outside physical stores.
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Costco near deal with new credit card issuer
/in Costco Wholesale /by tashmanNEW YORK — Costco Wholesale Corp., acknowledging its split with American Express Co., said Friday that it is close to reaching a deal with a new credit card company for exclusive rights to serve the giant retailer’s customers.
Costco should be in a position to announce the new partner “probably sooner rather than later,” said spokesman Bob Nelson, raising the possibility that could happen as early as next week.
The company, based in Issaquah, Wash., east of Seattle, has been talking with several credit card firms for some time in anticipation of a break with AmEx, Nelson said. Last fall, Costco ended its partnership with AmEx in Canada, choosing instead a Capital One MasterCard.
Costco’s efforts to hook up with a lower-cost credit card company have rattled some of its U.S. customers.
“It’s the only reason I have an American Express card,” Tim Young said Friday outside a Costco store in San Juan Capistrano, where he had put his car through the store’s $7.99 carwash and picked up a few odds and ends inside.
As usual, Young said, his purchases included something he had not planned to buy — a pair of jeans he had decided, on the spur of the moment, that his teenage son could use — ratcheting the bill a bit higher.
For the last 15 years, AmEx has been the only credit card accepted at Costco, a membership-only business with 50 million discount-minded customers. The store otherwise accepts only cash or debit cards.
Under the exclusive deal, Costco also heavily marketed its own branded American Express cards to its members, though they were free to use other AmEx cards. Analysts said the relationship has been a boon to both, particularly the New York credit card company.
AmEx said Thursday that the relationship would end in March 2016 when its current 10-year contract with Costco expires.
Amazon opens brick-and-mortar on campus
/in Amazon.com /by tashmanIn its latest effort to win more customers, e-commerce giant Amazon is going brick-and-mortar on campus.
The retailer has opened its first-ever staffed customer order pickup and drop-off location at Purdue University’s West Lafayette, Ind., campus. Purdue students now have a new convenient option for receiving textbooks and other college essentials, as well as a hassle-free way to return textbook rentals and other orders.
“We’re excited to open our first-ever staffed pickup location at Purdue, making it more convenient and affordable for students to get everything they need for life on campus,” said Paul Ryder, VP of media and student programs at Amazon. “Whether students are ordering textbooks, laptops, or mac and cheese, Amazon and Purdue are now providing a convenient and secure spot for them to pick up their stuff at hours that work with their schedules. We look forward to bringing this experience to more universities soon.”
Amazon Student and Amazon Prime members at Purdue get Free One-Day Shipping on textbooks shipped to the West Lafayette campus area and are also eligible for Free One-Day Pickup on over one million items when shipped to the new Amazon@Purdue location.
“Our goal in working with Amazon has been to make books and other needed supplies more affordable for our students, as we have with tuition and room and board,” said Purdue President Mitch Daniels. “The opening of the Amazon@Purdue location adds convenience to the mix.”
Student affordability and accessibility is a key component of Purdue Moves, a range of initiatives to broaden Purdue’s global impact and enhance educational opportunities for its students. Here’s how Amazon@Purdue will work:
The opening of Amazon@Purdue marks the next phase of the collaboration announced by Purdue and Amazon last August, where Amazon will return a percentage of eligible sales to customers that have activated the Purdue experience to the university, including sales to faculty, staff and alumni.
Purdue will use the proceeds for its student affordability and accessibility initiatives. A second location will open this spring in the Purdue Memorial Union building. Also this spring, all Purdue students will be eligible for Free One-Day Shipping on Purdue textbooks shipped to the West Lafayette campus area.
Link to article here
Boxed App for Bulk Grocery Shopping
/in Warehouse Clubs /by tashmanA new app called Boxed is going after bulk retailers like Sam’s Club, Costco, and BJ’s, according to Fortune. Boxed lets customers order bulk groceries and more via smartphone. The company reportedly has over one million users. Executives told Fortune that Boxed has already raised over $25 million in Series B funding. There’s delivery available for nearly everything — groceries, electronics, alcohol, diapers, and even laundry.
The app personalizes the shopping experience in a way that brick-and-mortar retailers can’t. In 2013, Pando Daily reported that Boxed uses technology that targets personal preferences and offers customization. A person would be notified than an item that he or she viewed is on sale.
Unlike warehouses like Sam’s Club and Costco, Boxed doesn’t offer a membership fee, which could make it especially enticing to budget-strapped millennials.
Boxed executives told Fortune that they are targeting the young millennial customer.
The appeal of the app (and delivery) is undeniable to those who live in urban environments and do not have cars.
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The Home Depot Names Craig Menear as Chairman
/in The Home Depot /by tashmanATLANTA, Jan. 16, 2015 /PRNewswire/ — The Home Depot®, the world’s largest home improvement retailer, today announced that its Board of Directors has elected CEO and president, Craig Menear, as chairman, effective February 2. He will succeed Frank Blake, who will retire as chairman.
“On behalf of the Board of Directors, I once again want to thank Frank for his outstanding leadership and dedication to our customers, associates and shareholders,” said Greg Brenneman, lead director. “We’re fortunate to have another great leader in Craig Menear and look forward to working closely with him moving forward.”
The Home Depot named Menear CEO and president in November of 2014. He is a 17-year veteran of the company, and is the first merchant to be named chairman and CEO since co-founder Bernie Marcus.
The Home Depot is the world’s largest home improvement specialty retailer, with 2,269 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. In fiscal 2013, The Home Depot had sales of $78.8 billion and earnings of $5.4 billion. The Company employs more than 300,000 associates. The Home Depot’s stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor’s 500 index.
Read full press release here
Instacart Confirms $220 Million Investment
/in General Industry News, Retail, Uncategorized /by tashmanInstacart has confirmed its giant $220 million investment led by Kleiner Perkins Caufield & Byers, which Re/code previously reported values the grocery delivery startup at $2 billion. Now the real work begins.
Instacart, whose service lets people order groceries from local stores such as Whole Foods and Costco and have them delivered on the same day, faces a long list of challenges to live up to the hype that comes with such a deal.
One challenge will be managing a colossal — and growing — network of contractors who are either stationed in stores picking the groceries off the shelves or delivering the orders to customers’ doors. CEO Apoorva Mehta confirmed that Instacart is experimenting with outsourcing some deliveries to third-party companies, but declined to give more details about which companies or how heavily Instacart is moving into this new model. Such a move may help Instacart deal with demand when it moves into new cities, or perhaps it’s being done for financial reasons. But it’s always risky to outsource part of a consumer-facing experience.
In the future, Instacart may also have to find a model that works well outside of major metropolitan areas if it wants to build a true nationwide business. Mehta said the company’s current valuation is based exclusively on operating in metropolises. He also hinted that the company could choose to expand to international urban centers before going to rural America.
But he said Instacart may decide to tweak its model if and when the time comes to expand into smaller cities and towns.
“Maybe you don’t need to do one-hour delivery,” he said. “Maybe it’s same-day delivery. Maybe it’s also click and collect,” a model in which customers order groceries online and pick them up outside the store, which Instacart has started experimenting with.
Instacart also will need to continue to secure close relationships with grocers, in part so the inventory it shows on its site and app is the inventory that it ends up delivering to its customers. Mehta says his company is building software that some grocers are using to reflect a more accurate picture of their inventory online.
Lastly, the company will have to be smart about expansion into categories outside of groceries, which Mehta said will happen eventually with the help of the gobs of new cash he just secured. Mehta may also have to convince one of his investors that it’s a necessary move.
“From my point of view, we just need to be the supermarket’s best friend,” Michael Moritz, chairman of Sequoia Capital and an Instacart board member, said in an interview with Re/code. “We can be a fantastic supermarket delivery service and just have a fantastic company — end of sentence.”
That’s pretty definitive. I then asked him if that means he’s not a fan of Instacart’s desire to enter other categories?
“I cannot imagine running out of opportunities to deliver groceries to Americans who want to shop online,” he answered.
Moritz’s caution may come from experience. He was a board member of Webvan, the grocery delivery startup that went bust in 2001 because it expanded too quickly and couldn’t control its costs.
Mehta declined to specify a timeline for expansion into non-grocery categories or provide details of which categories.
“This is an enormous market and we have so much to do here. I’m not surprised [Moritz] said that and clearly it’s a great observation,” Mehta said. “The way I think about it is: We have strategic reasons why we’ll go into other categories and experiment and prove out other things. Of course this is a decision we’ll make as a team, as we need to.”
In addition to Kleiner Perkins, new investors in the round included Thrive Capital, Comcast Ventures, Dragoneer Investment Group and Valiant Capital.
Link to article here
Costco ‘shocked’ by one-day sales of $3.5M on Alibaba’s TMall site
/in Costco Wholesale, E-Commerce, General Industry News, Warehouse Clubs /by tashmanCostco will expand more heavily into China after it sold $3.5 million worth of goods over a 24-hour period with the help of Alibaba.
In October, the Seattle-area retail giant announced it was partnering with Alibaba to enter the China market for the first time. In doing so, Costco planned to sell some of its merchandise, including some of the Kirkland brand products, to consumers visiting the Tmall e-commerce platform.
As part of an Alibaba announcement today regarding Tmall Global’s performance, Costco said it sold $3.5 million worth of merchandise on Singles Day, which is China’s equivalent Cyber Monday.
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