business news in context, analysis with attitude

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Brick Meets Click/Mercatus "Measuring the Online Grocery Market: eGrocery Share in the U.S." report is out, and says that "Walmart captured nearly 36% of all U.S. eGrocery sales in Q2 2023, up more than 5 percentage points from the prior year and its highest share to date …  In addition, the benefits that Pickup offers helped to drive its share increase, which finished at 48% for Q2 2023, almost two points higher than last year."

According to the report, "Total eGrocery sales were down 1.1% in Q2 2023 versus the prior year and the main driver of the sales decline was fewer orders completed per household, down 5% year-over-year for the quarter. In addition, consumer interest in buying groceries online declined slightly except for the most engaged households. The share of U.S. households that completed one or more online orders during Q2 2023 contracted by 275 bps compared to a year ago to just under 53%. The overall pullback was due to contractions across the three lower quartiles of online spending; meanwhile, the households who report doing at least 75% of their grocery spending online expanded by 292 bps versus Q2 2022."

•  From CNBC:

"Amazon has started increasing the free shipping minimum to $35 for non-Prime members in some markets … Until now, the minimum purchase for free shipping has been $25. Prime subscribers, who pay $139 a year for free shipping and other services, will see no change.  Shoppers who don’t subscribe to Prime will have to spend at least $35 to qualify for free shipping, up from a previous minimum of $25."

I have no problem with this adjustment.  Prime members are by definition Amazon's best shoppers - all 200 million of them.  In general, I'm a big believer that every retailer ought to give better service and prices to best customers, however they calculate that number and draw the line.

The result may be that non-Prime members who shop on Amazon may decide to sign up;  this will be good for Amazon since it knows that Prime members spend roughly twice as much on the site than non-members.  And if not, well, Amazon will be able to defray some of those shipping costs to people who continue to resist its siren song.

It all works out.

•  Amazon last week announced "Buy with Prime app for Shopify, a new app integration that makes it easy for merchants to offer Buy with Prime on Shopify stores. The Buy with Prime app for Shopify gives Prime members the option to select Buy with Prime on a product’s detail page before completing their order within Shopify’s Checkout. Buy with Prime offers Prime members fast, free delivery and easy returns through Amazon’s fulfillment network. After signing into their Amazon accounts, Prime members pay for their orders using a payment method from their Amazon wallets and Shopify Payments will process the payment through Shopify’s Checkout. The app will start rolling out as invite-only to select Shopify merchants today, and it will be available to all U.S.-based Shopify merchants who are already using or want to use Amazon’s fulfillment network by the end of September."

•  From The Information:

"Shopify is making peace with the threat posed by TikTok Shop.

"This week, the Canadian e-commerce software firm quietly began rolling out a way for merchants using its software to integrate more closely with TikTok’s small but growing online shopping service, according to a person familiar with the matter. The arrangement is a concession of sorts from Shopify, which sells software and services to more than 2 million online sellers to help them run their own websites and has seen TikTok Shop, which allows merchants to sell products directly on TikTok’s app, emerge as a growing threat.

"TikTok has been scrambling the e-commerce landscape with its push into online shopping, which threatens to cut Shopify out of the equation. The software giant is trying to find a middle ground.

"The new Shop integration will allow Shopify sellers to directly access order and customer information from sales made on TikTok through their Shopify dashboards. The new partnership will keep Shopify sellers who want to experiment with TikTok happy, which is increasingly important as Shopify’s subscriber growth has slowed. And it’s good for TikTok, because it will help it lure more merchants and expand its Shop service."

•  From the Financial Times:

"Travis Kalanick’s ghost kitchen start-up CloudKitchens has sacked workers this year and closed locations as it attempts to rein in its expenses amid low occupancy at a number of its warehouses, according to people with knowledge of the matter.

"The belt-tightening underscores the challenge facing many start-ups after rising interest rates brought an era of free money to an end last year, prompting an abrupt strategy shift from companies that had been prioritising rapid but costly growth. The company’s buildings were only about 50 per cent full at the end of the first quarter and several sources said CloudKitchens, which leases food preparation space to restaurants, had failed to win as many contracts with the restaurant chains it hoped would supercharge its sales. The company has closed some buildings it bought, including in New York and Tennessee. It has also been cutting staff numbers, which had grown into the thousands. In line with those cutbacks, CloudKitchens appears to have significantly slowed new building purchases, which are almost always conducted through shell companies, an analysis of property records for the Financial Times by CoStar showed. The company has also retooled its model, focusing on smaller warehouses, one of the people added."

However, FT writes, "A fourth person with knowledge of the company’s business painted a less dire picture, saying the occupancy figures shared with the FT did not account for leases that had been signed but where a new customer was not yet paying rent. That figure, known as the sold rate, was about 73 per cent at the end of the first quarter. They added that the company had been primarily focused on adding smaller restaurants to its rent rolls and that even with the location closures it would be adding more kitchen space in the coming year as CloudKitchens makes previously purchased properties available to rent."