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Despite criticism, Amazon’s acquisition of Whole Foods has proved to be a key catalyst to the fledgling grocer-e-commerce market a year later. How Amazon’s Whole Foods acquisition pushcarted the grocery e-commerce biz It’s been a year since Amazon acquired Whole...
By: Wes Schlagenhauf
August 23, 2018
Despite criticism, Amazon’s acquisition of Whole Foods has proved to be a key catalyst to the fledgling grocer-e-commerce market a year later.
How Amazon’s Whole Foods acquisition pushcarted the grocery e-commerce biz
It’s been a year since Amazon acquired Whole Foods for $13.4B and set the grocery world ablaze, leaving every old school retailer wondering how they would build anew.
But, as the dust settles, it turns out Amazon’s Scrooge McDuck-dive into groceries has kickstarted the grocery e-commerce world, forcing brick-and-mortar retailers to forge online partnerships with up-and-coming startups.
Meanwhile, TheNew York Times reports that Amazon’s own grocery service, AmazonFresh, has ironically struggled to gain ground.
Giants helping (future) giants
Food shopping is one of the final holdouts in major online retail, and the industry’s major players -- big and small -- owe Amazon (and the panic they caused) a thank you card.
Like Ocado, an online grocery company, who recently pushed its stock market value to $6.8B after it inked a partnership with Kroger for its robotic labor services in fulfillment centers.
Or Parcel, the same-day delivery startup Walmart acquired last October. And who could forget Alert Innovation, a small company that Walmart partnered with to use automated cars for pickup and transport of store orders.
Then there’s Boxed…
NYT reports that it took the CEO of Boxed, Chieh Huang, years to get grocery industry executives excited about the grocery e-commerce company’s autonomous warehouse technology.
But, all of that changed after the Whole Foods acquisition: On Tuesday, Boxed announced it had sold a minority stake to Aeon Group, one of the largest retail chains in Japan, valuing the startup at $600m.
Whole Foods was a wake-up call to old school retailers
Global food retailing is a $5T business and, while just 3% of the world’s grocery spending happened online last year, online grocery sales are expected to double over the next 4, to reach an estimated $334B by 2022.
Talk about a Supermarket Sweep...
Always grab the ham
Mattress Firm is no good in the sheets, so Serta got in bed with Tuft & Needle
Serta Simmons Bedding, the mega-mattress makers that have been slingin’ springs since 1870, just bought a 6-year-old bootstrapped mattress startup called Tuft & Needle.
Since direct-to-consumer mattress startups like Tuft & Needle and Casper swiped 20% market share out from under Big Mattress companies while they were sleeping, Serta is looking to even the score.
Not your typical mattress matrimony
Mergers between traditional mattress companies (e.g., Serta and Simmons) are common, but the Serta-Tuft & Needle deal marks the first time old mattress and new mattress have shared a bunk.
Yet, this unusual merger is crucial for both partners. Serta has struggled since sales at partner Mattress Firm have gone dormant, and Tuft & Needle has struggled to challenge younger and better-funded rival Casper (which has 50.4% market share to T&F’s 18.7%).
Tuft & Needle’s founders are on snooze control
Unlike rival Casper (which has raised $239.7m), Tuft & Needle is bootstrapped -- meaning the Serta sale (estimated between $200m-$800m) netted the company’s co-founders hundred of millions.
And, there’s another big winner: Casper. After years of fierce competition, the mattress startup landscape is starting to thin out: Purple went public in an acquisition and Tuft & Needle has joined the dark side of the mattress.
With plans to roll out 200 brand-focused retail stores over the next 3 years -- and revenue up 50% since last year -- Casper seems to have set themselves up for sweet dreams in the $17B mattress industry.
Right on Target: The big-box retail chain hit a bull’s-eye in Q2
Not done with big-retail? Good, because shares of Target shot up yesterday, after the retailer reported “unprecedented” growth in foot traffic at its stores, along with better-than-expected second-quarter profit, revenue, and in-store sales.
The company had such a successful Q2 in fact, that it raised its earnings outlook for the year.
The retailer has been reinvesting in its business ever since it disclosed its game plan at the start of last year to toss $7B toward its e-commerce platform, beef up its in-house brands, start new small-format stores, and renovate existing locations.
According to Target’s CEO Brian Cornell, the company reported its strongest same-store sales growth in 13 years.
Looks like those investments are paying off
Target shares are up about 27%, bringing the retailer’s market cap to roughly $44.1B (still miles behind their main competitor, Walmart, at $282B).
According to CNBC, The company’s Q2 net income was $799m, compared to the expected $671m, with revenue climbing nearly 7% to $17.8B from $16.63B a year ago.
To encourage reading, the New York Public Library posts classics as ‘Insta Novels’
The New York Public Library has officially launched ‘Insta Novels,’ a feature that adapts great books like Alice in Wonderland to extended Instagram stories that read like e-books (check it out here).
Given the library’s limited resources, the program is a good effort to engage socially native users -- even if it doesn’t quite make sense.
From grammar to ’Grammer
In order to fulfill its mission ‘to provide access to information,’ the NYPL must increasingly turn to new information formats. The NYPL first offered e-book rentals in 2005, and now stocks 300k free e-books.
But, young readers scroll through Instagram more than they browse the Kindle store. So, the library wants to put books where kids will actually read them: Instagram.
Bookin’ on a budget
Unlike other educational institutions like National Geographic that have millions to invest in social media strategy, the NYPL is a nonprofit with limited money to spend on social influence.
The entire NYPL system has a budget of $345.9m and annual expenses of $342.228m -- leaving just $3.67m to improve 92 branches for 17m annual visitors. But, thanks to pro bono creative help, the NYPL developed the entire ‘Insta Novels’ program with just $10k.
Insta Novels lets users read classics by holding their thumb down to read and releasing it to advance -- like an e-reader, but a lot worse. But hey, before everyone fell in love with Dewey’s Decimal System, they probably called him crazy, too...
Partners in wine: bored MIT grads create wine matchmaking algorithm
After picking another bottle of bad wine, MIT grads Richard Yau and Joe Laurendi realized what the wine world was missing: guidance.
The duo knew nothing about their wine preferences -- and learning through trial and error was cutting into their wallets. So, the two MIT grads did as any former mathlete would do: they created a wine matching algorithm and raised $5m to share it with the world.
Today, that algorithm powers Bright Cellars and delights mouths across the country.
Dip your toe in the waters wines of sophistication
Instead of asking snobby wine questions about “tannins” and “legs,” the Bright Cellars quiz asks, “What type of chocolate do you like?” or “How do you take your coffee?”
They ask questions anyone with a tongue can answer -- plus, it’s totally free to see your matches.
Bright Cellars’ algorithm uses your answers to map out your preferences and suggest wines that’ll tickle your t-buds.
Then, Bright Cellars handpicks six bottles each month and sends them directly to you. It’s like your personal guide through the vineyards of the world, all from the comfort of your apartment.
Discover wines you’re sure to love and get them delivered directly to you. For the next 48 hours, Hustle Readers can use our link to get 50% off your first shipment.
COVER: Your brain basket in baseball heritage, $49
Ebbets Field scours the depths of baseball history to surface classic cap designs from teams long forgotten. Big fan of an obscure 1950’s club from Sacramento? Well, they’ve got your hat, and about a few dozen others.
MAKE: Better decisions while drinking with the BACtrack C8 breathalyzer, 30% OFF
Fun fact: 70% of Americans don’t know what 0.08% (the legal driving limit) feels like. Happy hour? More like danger hour. The BACtrack C8’s patented ZeroLine technology gives you police-grade BAC readouts, tells you when you’ll be sober again, and even helps you call an Uber if you’ve had too much. Use code HUSTLE for 30% off.
PREVENT: Hangovers with a shot of ZBiotics, 50% off a 12-pack
Don’t let “Fear of Hangover” -- AKA FOHO -- keep you from living your full adult life. Unlike other “vitamin-cocktail” hangover remedies, ZBiotics is a first-of-its-kind bioengineered probiotic that targets acetaldehyde (the toxin that causes the worst parts of a hangover), so you can make it to happy hour and your morning meeting.