Amazon Prime Wardrobe

Amazon Prime Wardrobe lets you try on and return clothes free

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Amazon’s latest perk for Prime members could make us more stylish by letting us buy everything that catches our eye and return what doesn’t fit. Today Amazon revealed Amazon Prime Wardrobe, which is currently in beta, but you can sign up to be notified when it launches.

First you pick at least three items, and up to 15, from more than a million Amazon Fashion options, including clothes, shoes and accessories for kids and adults, to fill your Prime Wardrobe box with no upfront cost. Brands available include Calvin Klein, Levi’s, Adidas, Theory, Timex, Lacoste and more.

Once the Amazon Prime Wardrobe box arrives, you can try on the clothes for up to seven days. Then you either schedule a free pick-up or drop the resealable box with its pre-paid shipping label at a nearby UPS to return whatever you don’t want. Keep three or four items from the box and get 10 percent off everything, or keep five or more for 20 percent off. You only pay for what you keep, with no charge upfront. Amazon Prime Wardrobe is free for Prime members with no extra fees.

Amazon emailed us a scant statement, noting “today Amazon Fashion announced Prime Wardrobe, a new way to shop for fashion at Amazon, where you can try things before you buy them.”

By taking the hassle and regret out of returns for clothing, the same way Zappos did before it bought it, Amazon could make people much more comfortable pulling the trigger on an online apparel purchase. Pick well and you get a bonus discount. But pick poorly and… no big deal. The move could be quite lucrative for Amazon, as apparel’s share of all digital spend has grown for the past three years straight, from 15.4 percent in 2013 to 17 percent in 2016, according to comScore.

Amazon Prime Wardrobe is similar to Stitch Fix and some other fashion delivery services where you get shipped a box of clothing you don’t choose. That’s more targeted at people who don’t like shopping, especially men. But Wardrobe lets you pick and choose what you want rather than receiving a random grab bag. Perhaps if Wardrobe tests well, Amazon would consider acquiring Stitch Fix, Trunk Club or another boxed fashion delivery service to instantly boost its scale.

The speed and simplicity of Prime Wardrobe could be its biggest selling point. If you want the clothes for a special occasion, you can be confident Amazon will get them to you in time, and you won’t have to fiddle with getting a box and shipping label if you want to send something back. That friction can often cause people to keep items they don’t want, or dissuade people from buying clothes online in the first place.

Amazon eliminating these troubles could remove one of the last big selling points for brick-and-mortar retailers. And because you can return misbuys, Prime Wardrobe could make it more comfortable purchasing through voice commands to Amazon Alexa.

Prime Wardrobe aligns well with the Amazon Echo Look that takes full-length photos of you to review your day’s clothing choices and uses the Amazon StyleCheck app feature to have AI score your fashion decisions. Prime Wardrobe also could mesh with the Amazon Fashion vertical that features upscale clothing.

A decade ago, Jeff Bezos said “In order to be a $200 billion company we’ve got to learn how to sell clothes and food.” While it’s far surpassed that mark already, nailing the clothing e-commerce experience could further expand Amazon’s empire. Plus, now it has all those Whole Foods stores where it could sell clothing, too.

Fresh Food Hinders Online Grocery

Fresh Food Hinders Online Grocery Shopping: Study

Consumers value physical stores for selecting fresh food, in-store experience

June 20, 2017, 04:10 pm

Although a growing number of shoppers are turning to their computers or smart devices for grocery shopping, much progress remains to be made, as only 7 percent of U.S. consumers shopped online for groceries in the last month, according to The NPD Group. The biggest barrier? Being able to pick out one’s own fresh products.

The Port Washington, N.Y.-based research firm’s “The Virtual Grocery Store” study noted that online grocery shopping will grow at a faster rate than the early online pioneers, as consumers have already experienced the convenience of online shopping.

“In fact, 20 million consumers who are current, lapsed or new to online grocery shopping plan to increase their virtual shopping for foods and beverages over the next six months,” the study said.

However, in addition to wanting to select their own fresh food, many consumers simply enjoy shopping for groceries in a brick-and-mortar store, saying that walking the store reminds them of what else they need, or reveals new products to them. Additional barriers included higher costs associated with online grocery shopping – such as delivery and membership fees – and having to wait for delivery. This could change in the not-too-distant future, though, with Amazon’s purchase of Whole Foods Market.

“Brick-and-mortar stores aren’t dead; they will just need to step up their game,” said Darren Seifer, NPD food and beverage industry analyst. “There will continue to be a large percentage of the population who will prefer to shop at brick-and-mortar grocers. Brick-and-mortar food retailers should market the unique consumer needs they meet that online grocers aren’t currently offering, experience being a key one.  At the same time, they need to keep up with the times and leverage digital ordering via their own click-and-collect programs as well as partnering with third parties for delivery in order to expand their offerings.”

Save the Oceans

Will the world’s 9 biggest seafood companies help save the oceans?

Monday, June 19, 2017 – 2:30am

ShutterstockOlegDoroshin

With the world’s land-walking population projected to climb to 9 billion people by mid-century, the oceans and their bounty of fish are on the hook for supporting growing global appetites.

The marine world currently provides 20 percent of the world’s food. Due to demand that already has risen sharply, unsustainable fishing practices and climate change, nearly 90 percent of seafood species are over-fished.

Now, however, nine of the world’s biggest seafood companies have pledged to take steps to eliminate illegal products, end modern-day slavery in fishing supply chains and responsibly manage aquaculture farms. Along with signing a pledge, the nine companies also asked for government cooperation in fulfilling their obligations to marine protection, outlined in United Nations Sustainable Development Goal (SDG) 14.

Unfamiliar brand names on the declaration are behind the catch that ends up on household plates: tuna specialists Thai Union Group, Dongwon Industries and Kyokuyo Co., Ltd.; salmon farmers Marine Harvest ASA and Cermaq; aquafeed manufacturers Cargill Aqua Nutrition and Nutreco; and marine products companies Nippon Suisan Kaisha, Ltd. and Maruha Nichiro Corporation.

With the new effort, members of the Seafood Business for Ocean Stewardship (SeaBOS) initiative convened during the United Nations Ocean Conference in New York in early June, followed through on the work commenced in November at the so-called “Keystone Dialogues” in the Maldives.

The nine companies, with revenues of about $30 billion, are known as “keystone actors” because they are among the 13 corporations controlling up to 16 percent of global marine catch and up to 40 percent of largest and most valuable seafood stocks. Taken together, these companies “have a disproportionate influence on the health of the oceans,” according to academic journal PLOS ONE.

A pledge and a plea

At the heart of the new effort, which follows several high-profile reports on environmental and labor abuses in the global seafood supply chains, is a new professed commitment to longer-term preservation of the world’s oceans.

“Well managed fisheries and aquaculture, produced in resilient ecosystems, result in healthy and sustainable protein supplies,” a statement from the companies noted. “There is no seafood industry in a dead ocean.”

Specifically, the nine seafood suppliers involved have pledged to:

  • Eliminate illegal and unregulated products and any form of modern slavery in their supply chains
  • Develop a code of conduct for their operations and that of suppliers
  • Work towards full traceability and transparency in their supply chains
  • Use efficient and sustainable aquaculture stocks
  • Use and develop fish health management systems and health prevention methods
  • Apply existing certification standards and prevent harmful discharges and habitat destruction
  • Work with governments to improve existing regulations for fisheries, aquaculture and the ocean

In return, they ask for “adequate regulations and best practices [that] are critical for sustaining and expanding future seafood production in ways that contribute to meeting the SDGs.”

Specifically, they want governance of oceans and coastal areas, reduced pollution from farming into coastal waters, elimination of plastic and pollutants from coastal waters and for greenhouse gas emissions to peak by 2020, aligning with the goals of the Paris Agreement.

The June oceans conference was the first time that otherwise competitor seafood companies from Asia, Europe and the U.S. came together to create concrete commitments to meet SDG Goal 14 and pressure politicians to set the stage.

A tangled net of challenges

Reforming and recovering the fishing industry can yield enormous economic opportunities.

Research published in the National Academy of Sciences has found that “applying sound management reforms to global fisheries […] could generate annual increases exceeding 16 million metric tons (MMT) in catch, $53 billion in profit and 619 MMT in biomass relative to business as usual,” all within a decade.

Valuing long-term sustainable economic value, the research said, can increase product prices because of better quality and market timing. It also could increase product: The U.N. Food and Agriculture Organization found that proper fisheries management could increase catch by 16 million tons annually by 2050.

However, fisheries have been doing dismally on the sustainability front: In 2016, Greenpeace gave only three seafood contractors out of 15 passing marks for sustainability. Thai Union Group also has been called out for lax supplier rules.

SeaBOS hopes to close loopholes in the fishing supply-chain network that have allowed illegal and unreported fishing activities to bloom like algae. Unregulated fishing may comprise one in five fish eaten and creates losses of $23.5 billion annually.

More seriously, unregulated seafood supply chains are wrought with human rights violations, forced migrant labor and other forms of slavery carried out (largely) in Asia to create products that wind up on Western shelves.

Aquaculture, or farmed fish, seems a promising response to dwindling wild catch and a possible solution to the violence within seafood supply chains. Yet the $160 billion aquaculture industry, which is outgrowing any other food production system, struggles with dependence on wild fish used for feed, heavy water use, disease, and fertilizer and antibiotics overuse.

SeaBOS will report how these challenges are being met when the cohort meets again in 2018.

Taking care of tuna

Another non-binding declaration signed in the June forum is the Tuna 2020 Traceability Declaration, headed by the World Economic Forum (WEF).

The declaration is endorsed by over 60 retailers, including tuna processors, marketers, traders and harvesters, featuring names such as Marks & Spencer, Bumble Bee Seafoods and Starkist. They are joined by six island nations and nearly 20 nonprofits such as the World Wildlife Fund.

Tuna is the second-most popular type of seafood consumed by Americans, with an estimated end-product value of over $40 billion, according to the WEF. Species of skipjack, albacore, bigeye, yellowfin and bluefin tuna — itself a keystone predator — support artisanal and industrial fishing in both tropical and temperate waters.

To support tuna populations, the members set goals for 2020 to ensure traceability throughout the supply chain, commit to socially responsible sourcing, purchase from environmentally responsible sources and base management plans on science-based targets.

If, like at the end of Hemingway’s classic “The Old Man and the Sea,” the world’s fisheries use these pledges to attain humility and carry no loss of pride, the oceans may provide a sound source of nutrition for future generations.

Improving Sales

The One Sales Step that Most Sales People Miss

Here is the hidden sales step that most sales people miss, many times costing them the sale when their buyer gets cold feet.
  1. Establish that they bought in a way that taps into the power of consistency and commitment.
  2. Help them feel great about their decision.
  3. Preempt any reoccurring buyer’s remorse issues for your business.
  4. Clarify next steps so you can reduce any uncertainty or anxiety.

Here are seven simple things we’ve encourage many of our business coaching program clients to add into their sales system that you can use to solidify your post sell system:

  • Congratulate them on their smart move. (“Tim, you made the right choice…”)
  • Model a high level of excitement for them.
  • Ask them for referrals (if they have just given you two referrals that is a very powerful consistency and commitment step)
  • Reduce their anxiety by letting them know exactly what happens now and make sure you meet all your commitments, especially in the early stages of the sale.
  • Ask them, now that it’s over, what was the biggest thing that tipped the scale and prompted them to make the decision to own your product or service.
  • Give them a parting gift which taps into the powerful social influencer of “reciprocity”.
  • Send them a hand written thank you card. Old school, yet still very classy.

By strategically and systematically building in a “post sale” step into your sales process you’ll keep more of the business you would have otherwise lost through buyer’s remorse.

If you enjoyed the ideas I shared, then I encourage you to download a free copy of my newest book, Build a Business, Not a Job. Click here for full details and to get your complimentary copy.

End of Car Ownership

The End of Car Ownership

Ride sharing and self-driving vehicles will redefine our relationship with cars. Auto makers and startups are already gearing up for the change.

For auto giants, the new ownership models—whether for traditional cars or self-driving ones—constitute a major threat.
For auto giants, the new ownership models—whether for traditional cars or self-driving ones—constitute a major threat. ILLUSTRATION:R. KIKUO JOHNSON FOR THE WALL STREET JOURNAL

Cars are going to undergo a lot of changes in the coming years.

One of the biggest: You probably won’t own one.

Thanks to ride sharing and the looming introduction of self-driving vehicles, the entire model of car ownership is being upended—and very soon may not look anything like it has for the past century.

Drivers, for instance, may no longer be drivers, relying instead on hailing a driverless car on demand, and if they do decide to buy, they will likely share the vehicle—by renting it out to other people when it isn’t in use.

Auto makers, meanwhile, already are looking for ways to sustain their business as fewer people make a long-term commitment to a car.

And startups will spring up to develop services that this new ownership model demands—perhaps even create whole new industries around self-driving cars and ride sharing.

Here’s a look at the changes to come, and what they mean.

Drivers: No more permanent arrangements

Car ownership, for a long time, has symbolized freedom and independence. But in the future, it may be akin to owning a horse today—a rare luxury.

Ride sharing as we know it will grow in popularity as people get even more comfortable with the sharing economy, and more people migrate to dense cities where owning a car is a burden. One-quarter of miles driven in the U.S. may be through shared, self-driving vehicles by 2030, according to an estimate by Boston Consulting Group.

Startups such as Los Angeles-based Faraday Future envision selling subscriptions to a vehicle—for instance, allowing people to use it for a certain number of hours a day, on a regular schedule for a fixed price. So, people who need a vehicle for a few hours daily to attend meetings or make deliveries could subscribe and avoid having to summon on-demand rides every day (and potentially paying a lot more).

Other companies are experimenting with the idea of allowing drivers to access more than just one kind of vehicle through a subscription—so, a driver might choose a compact model one day but a minivan another day if she needed more passenger space.

“By 2022, 2023, the majority of transportation in urban cities with temperate weather will be on demand, shared and likely autonomous,” says Aarjav Trivedi, chief executive of Ridecell, a San Francisco company that provides the back-end software for car sharing.

Even people who do end up buying a car may come to see it as a short-term arrangement—and a source of income.

Chief Executive Elon Musk has hinted that he’s preparing to create a network of Tesla owners that could rent out their self-driving cars to make money. Already, some drivers are testing this idea using other services that let them market their cars, something like Airbnb rentals on wheels.

Take Jeff Cohen, who works for an electric-vehicle-charging company. His wife balked at his desire to buy the Model S sedan, whichTesla Inc. typically sells for about $100,000.

He persuaded her to allow him to buy a Tesla if he would in turn rent it out on a site called Turo. Doing so—at $189 a day—almost covered the cost of the entire monthly loan payment while giving him the ability to drive the electric car around Atlanta when not in service, he says. “It allowed me to get the car,” says Mr. Cohen, 58 years old. “We weren’t in agreement that we could get a car like this without some way to fund it.”

Turo, which had more than three million people sign up for the service through the end of May, says Teslas, along with BMW and Mercedes-Benz cars are among the more popular searched vehicles on the site.

“A lot of people are realizing that the car is no longer just a cost—it’s an asset,” says Andre Haddad, Turo’s chief executive.

Of course, the biggest obstacle to many of the changes may be the most simple: People have to be willing to give up the idea of owning their car—something that has been culturally ingrained over many decades.

What’s more, under this vision, car buyers won’t just give up the idea of sole ownership. They may also give up the idea of sitting behind the wheel by using autonomous vehicles.

They will have a powerful incentive to do so. A study by Deloitte Consulting, for example, estimates that the cost of personal car ownership is on average 97 cents a mile today but could drop by two-thirds in a world of shared, self-driving vehicles—a tipping point that could usher the technology into daily life for many people. In cities, the idea will be even more appealing, because it takes away the unpleasant sides of ownership, such as parking and negotiating traffic jams.

Companies are already looking at how to market vehicles to overcome some of the possible psychological resistance to nonownership. Waymo, the self-driving tech unit of Google parent Alphabet Inc., has begun public trials of self-driving minivans in Phoenix for select users, with the eventual goal of testing them with hundreds of families.

The goal is a better understanding how to make such a service appealing enough to take the place of a family car.

“We’re really experimenting here with how far our users can go in terms of using a service like this one to replace their own personal transportation,” says John Krafcik, head of Waymo and a former automotive-industry executive.

Big auto makers: Making peace with on-demand services

For auto giants, the new ownership models—whether for traditional cars or self-driving ones—constitute a major threat.

As a result of both driverless cars and fleets of robot taxis, sales of conventionally purchased automobiles may likely drop. What’s more, because autonomous cars will likely be designed to be on the road longer with easily upgradable or replaceable parts, the results could be devastating to auto makers that have built businesses around two-car households buying new vehicles regularly. Currently, cars get replaced every 60 months on average, according to Experian.

“It may become more like the airline business where we see jets that have been in service for 50 years,” says Chris Ballinger, chief financial officer and head of mobility services at the Toyota Research Institute. “Now I don’t think a car will be in service for 50 years but I’m saying it may move in that direction…with tens of millions of miles and decades of service.”

In response, some car companies are trying to meet that threat head-on, by experimenting with different ownership models.

One plan to get drivers to buy a vehicle of their own is to help owners rent out their vehicles, as they would in Mr. Musk’s planned network of Tesla owners. Toyota’s Lexus brand is testing payment plans that let people subsidize the purchase of pricey cars by renting them through a service called Getaround. The hope is that young buyers, who have been eschewing traditional ownership but are still attracted to luxury nameplates, will grab the chance to afford fancy cars on Corolla budgets.

BMW , meanwhile, is experimenting with shared rides through its Reachnow service. Members can get access to a fleet of BMW vehicles—and Minis, in some areas—that they pick up as needed and can drop off anywhere when they’re done.

General Motors Co. , the largest U.S. auto maker by sales, seems to be hedging all bets. The company acquired an autonomous-car tech startup called Cruise Automation last year in a deal with a potential value of more than $1 billion. It also invested $500 million in ride-share company Lyft, as well as starting a car-sharing service of its own called Maven.

Meanwhile, it’s offering Cadillac customers the ability to subscribe to ownership, letting them use a vehicle for a month at a flat fee.

New businesses: Helping to power a new industry

The advent of self-driving cars will give people more free time while in the vehicle. And that will create new opportunities for car makers and others to make money.

Autonomous vehicles could ultimately free up more than 250 million hours of consumers’ commuting time a year, unlocking a new so-called passenger economy, according to Intel Corp. , which is trying to provide the computing power behind self-driving software.

The chip maker released a study in June that estimates as much as $800 billion could be generated by 2035 by this passenger economy, while as much as $7 trillion could be in play by 2050.

All of which might explain why new entrants to transportation, such as Apple Inc.,Amazon.com Inc. and Samsung Electronics Co., are exploring the field. Apple in April, for example, became licensed to test-drive autonomous vehicles on California roadways.

This could lead to a turn away from using the exterior of the vehicle as a selling point and focusing on making the interior as comfortable and loaded with features as possible.

In some cases, that means turning cars into living rooms on wheels: Harman International Industries Inc., the auto-parts supplier acquired by Samsung for $8 billion, demonstrated in Las Vegas earlier this year a vision of a car that replaces a vehicle’s windows with video screens that create a wraparound movie theater inside the cabin.

Design firms will also cook up features designed to ease people into the practice of sharing rides regularly. IDEO, the design firm that came up with Apple’s first computer mouse, has released a vision of autonomous vehicles designed to accommodate strangers who end up riding together.

One central feature is “pods”—seats that can be adjusted to block a passenger from the view of the others—and there are areas in the vehicle that allow them to lock items while other people use the car.

Other companies are working on ways to make cars recognize passengers’ digital profiles and become more responsive to their needs. That might involve things such as reminding someone that a calendar appointment is coming up, and nudging them to leave earlier that day, or giving advice on places to eat along their route or ways to shop online while in traffic.

Zoox, a startup valued at more than $1.5 billion, is working on designing a robot taxi that takes the entire riding experience into consideration, co-founder Timothy Kentley-Klay said last year.

Although he didn’t go into details on the so-called mobility service’s features, Mr. Kentley-Klay said that such a vehicle would be “smart enough to understand its environment, but importantly, it’s also smart enough to understand you, where you need to be, what you want to do in the vehicle and how you want to move around the city.”

Existing industries may change to support an autonomous, shared future. For instance, the alcohol industry might see a rise in drinks consumed weekly with customers not having to worry about driving home, says a Morgan Stanley report by analyst Adam Jonas. He estimates the $1.5 trillion annual market might expand by $250 billion due to autonomous vehicles.

One industry that knows cars very well—dealerships—may also adjust to fit the changing times: Managing autonomous car fleets may be a new line of business. Toyota’s Mr. Ballinger noted that auto makers’ finance arms largely finance local franchise dealers’ inventories, called floor plans.

“It may be a variation of that model where we continue to finance the floor plan, only the floor plan now isn’t an inventory of cars ready for sale but an inventory of cars going around providing services—maintained and managed by the dealer or somebody like the dealer,” Mr. Ballinger says.

For all the speculation about big changes on the way, and plans to meet those changes, it’s important to remember that drivers may want to hang onto some form of ownership even if others are more convenient and cost-effective.

Mr. Cohen, after spending about two years renting out his Model S on Turo, has begun to wind down that effort.

“At almost exactly the second anniversary of that note, I paid off my Tesla,” he says. He’s keeping an eye on Tesla’s ambitions for renting out autonomous vehicles, though he is dubious about giving up the thrill of driving. “For me, autonomous driving is not something I am looking forward to,” he said, “but I can tell you that my 25-year-old son and recent UVA Law School graduate certainly is.”

Distributing Broccoli is Harder Than Books

Amazon Bought Whole Foods Because Distributing Broccoli Is Harder Than Books

The hard thing about soft things

SEATTLE, WA - JUNE 16: An AmazonFresh Pickup location is seen on June 16, 2017 in Seattle, Washington. Amazon announced that it will buy Whole Foods Market, Inc. for over $13 billion dollars. (Photo by David Ryder/Getty Images)

It’s hard to distribute food. “It’s not like you can just walk in and grab a building” and turn it into a food-ready warehouse, Marc Wulfraat, the president of MWPVL International explained to the Observer in a phone call. Warehouses used for food and food distribution can take a year or so to build or rehab to the specifications safe for storing stuff people will one day eat.

“Amazon’s been trying to get into groceries and it’s been a long slow process,” Wulfraat explained. His company did an independent analysis of Amazon’s existing distribution facilities. Whole Foods has 11 food distribution centers already working around the country, which helps explain the rationale for Amazon to buy the company. Rather than starting from scratch near major metro areas, Amazon has just purchased a nationwide network of warehouses equipped to handle food.

They aren’t large warehouses, though. Whole Foods runs lean distribution operation, with considerably smaller warehouses than its competitors use. It accomplishes this in part by relying on United Natural Foods for its fresh produce. Wulfraat said Whole Foods keeps its warehouses just “big enough to have a limited number of high velocity items.” Still, by adding nearly a dozen more food distribution centers to its network, Amazon can more quickly expand its Amazon Fresh services.

Amazon Prime in many cases builds facilities inside cities in order to quickly get products out to customers more quickly. “These Prime warehouses, they’re sourcing from the green grocer down the street,” Wulfraat said. “This way they can become a viable food retailer because they can purchase from the nearest Whole Foods distribution center.” This shaves a layer of markup off many sales.

“They are accelerating the pace they are getting to market,” Wulfraat said.

Amazon did not reply to a request from the Observer for comment.

INGLEWOOD, CA - JUNE 27: An Amazon Fresh truck arrives at a warehouse on June 27, 2013 in Inglewood, California. Amazon began groceries and fresh produce delivery on a trial basis to select Los Angeles neighberhoods free of charge for Amazon Prime members. AmazonFresh lets you order groceries and have them delivered on the same day. (Photo by Kevork Djansezian/Getty Images)

It’s unlikely that Amazon will stop there. Tech industry tracking firm CB Insights reported in a blog post last week that Amazon’s patent application activity in logistics has dramatically accelerated in the last few years, setting a company record 78 applications in 2016. The patents cover everything from underwater warehousing to drone charging stations on lightposts.

Automation will be key to making the economics of new services work. “Fulfilling orders out of a store is something everyone is delivering on,” Wulfraat said. However, the numbers are overly optimistic. Grocery works in part right now by customers doing part of the labor for free. If stores have to pay someone to go around and pluck a customer’s orders off the shelves, that could eradicate the store’s already thin margins. A typical $100 order only represents about $2 in profit. If the typical grocery store worker makes about $10 per hour, then assembling someone’s order needs to take less than 12 minutes.

That is, of course, exactly what Instacart does. It sends staff into stores to buy customers groceries on their behalf. “From the beginning, we’ve been committed to helping grocers compete online. That’s more important than ever given Amazon just declared war on every supermarket and corner store in America. We already work with over 160 retailers across the country and look forward to partnering with many more,” the company wrote in an emailed statement, via a spokesperson.

Instacart has recently added the popular Florida chain, Publix, and stores owned by Ahold-Delhaize, which also owns Peapod—the company that initiated the computer-ordered grocery delivery sector. Whole Foods represents less than 10 percent of Instacart’s revenue.

In May, Amazon was granted a patent for “Systems and methods to facilitate human/robot interaction,” which looks like a way to let lots of robot pickers scramble around a space grabbing stuff, while also working alongside unpredictable humans. The MIT Technology Review called Amazon Warehouses a “carefully coordinated harmony” of humans and machines.

Automation is exactly what alarmed unions about the proposed merger, as we reported last week, but if Jeff Bezos’ team can translate the symbiosis of bots and bodies to grocery stores, that $2 margin might be more than enough to make store pickup and delivery pay.

From A&P to Amazon

From the A&P to Amazon: The rise of the modern grocery store

The history of grocery stores — from the A&P to Amazon’s surprise purchase of Whole Foods — can be traced back to a common kitchen product: Baking powder. Really.

Back in the late 1800s, the proprietors of the Great Atlantic & Pacific Tea Company faced a problem. The tea industry they had controlled for decades had become widely available. Prices fell. It appeared Great Atlantic & Pacific would too.

The Hartford family, the owners of the company, decided to diversify. They added a controversial product: baking powder. Housewives loved the stuff, which made bread rise faster. Baking powder became so popular that unscrupulous producers, in rushing the product to stores, weren’t exactly delivering the real deal. Also, the prices were high.

The Hartfords decided to make their own baking powder. They even hired a chemist. And then they packaged the powder in red tins, labeling it A&P — leveraging the company name to denote quality.

 

 

 

“A&P Baking Powder was an important product in the history of retailing,” Marc Levinson wrote in “The Great A&P,” a  history of the company and grocery stores. “With it, the Great Atlantic & Pacific Tea Company, and many of its competitors, began a transition from being tea merchants to being grocers. It was a transition that would dramatically change Americans’ daily lives.”

The branding of baking powder was important because most merchants back then were just essentially selling, as Levinson wrote, “generic products indistinguishable from what was for sale down the street.” And in selling their powder in a tin, the owners were ahead in another important way — packaging.

The invention of the cardboard box changed everything.

The company could now make, brand and sell its own condensed milk, butter, spices — just about any staple of the kitchen.

“By the early 1890s,” Levinson wrote, “Great Atlantic & Pacific was making the shift from tea company to grocery chain.”

Its name: A&P.

There was difficult, transformative work ahead. The company needed to upend an entire culture of shopping built around neighborhood stores, a history detailed in a fascinating 2015 paper titled, “The Evolution of the Supermarket Industry: From A&P to Walmart,” by Paul B. Ellickson:

Before 1900, American shoppers purchased their groceries through a wide array of specialty shops and general stores. Meat was purchased from a butcher, fish from a fishmonger, bread from a baker, and produce from a vegetable stand. Mostly sole proprietorships, these stores were often run in a haphazard manner with little use of modern accounting practices or scientific management principles. There were certainly many stores, likely well over half a million, although accurate historical statistics do not exist for this period. Because most people arrived on foot, grocers needed to be close to their customers, so the stores were small and ubiquitous. They often delivered what was purchased and sold many goods on credit. The small sales volume of these tiny shops led to high costs and sizable markups.

A&P built big stores, stocking as many products as possible, many made in their own warehouses. Products were stored in shelves, not behind a counter for an employee to distribute. No credit — cash. Manufacturers liked the model, selling products directly to the company, not through wholesalers. This kept product costs down for A&P, which passed those savings on to shoppers.

The company become obsessed with prices. In the early 1900s, its profit was 3 percent of revenue. This was too high. A new profit goal was set: 2.5 percent.

A&P’s business model began to sound a lot like the one pursued by its retail descendants — Walmart and Amazon — though it would later fall prey to mismanagement and two bankruptcies that shuttered hundreds of stores.

“Their basic strategy was so extraordinarily simple it could be captured in a single word: volume,” Levinson wrote. “If the company kept its costs down and its prices low, more shoppers would come through its doors, producing more profit than if it kept prices high.”

Amazon’s tea was books. Then it diversified. On Friday, Amazon disrupted yet another sector of retailing with its $13.7 billion deal for Whole Foods — linking the Internet retailer to the baking powder purveyor that started it all.