🎯 Target's anti-Amazonian strategy

Wednesday, March 3, 2021 by Robinhood Snacks |
_If Target launched streaming: "Let's go with Omnichannel+"_

If Target launched streaming: "Let's go with Omnichannel+"

Yesterday’s Market Moves
Dow Jones
31,392 (-0.46%)
S&P 500
3,870 (-0.81%)
Nasdaq
13,359 (-1.69%)
Bitcoin
$47,736 (-2.21%)

Hey Snackers,

The first-ever space hotel is slated to open by 2027. The "cosmic chic" resort will include a spa, gyms, and themed restaurants. Make sure to ask for the off-continental breakfast.

Stocks edged lower yesterday after Monday's rally. Meanwhile, in DC: the $1.9T stimulus bill (which was passed by the House) is now in the hands of the Senate. The minimum wage increase isn't included.

Omni

Bullseye... If you're feeling down, just Google pictures of Target's bull terrier puppy mascot. Target's sales jumped a record 20% last year to $94B. Wild stat: 2020 sales grew $15B+ from 2019 — that's more than Target's total sales growth over the last 11 years. Tarjay says it snagged $9B in sales from competitors. Online order pickup and delivery crushed it: 18% of sales came from digital channels in 2020, doubling from 2019.

Omnichannel is thriving... and thankfully, it's not a new streaming service. Omnichannel = the fancy retail term for a synchronized shopping experience that unites stores, websites/apps, and services. Think: virtually trying on Warby Parker glasses, then picking them up in-store (or vice versa). Target has been working on its omni strategy for years, and stores are a key part of that:

  • 1.9K: Instead of splurging to build warehouses, Target mainly uses its 1.9K US stores as hubs for shipping and pickup (unlike Amazon).
  • 95% of sales came from stores in 2020, including online orders. That sweatsuit you ordered likely came from the Tarjay down the street.
  • $4B: How much Target will invest into brick-and-mortar stores each year to speed up its online-order capabilities.
THE TAKEAWAY

Stores are Target's leg up over Amazon... Target customers who shop in multiple channels (like in-store and delivery) spend ~4X more money on average than customers who shop only in-store — and nearly 10X more than online-only customers. There are cost benefits, too: in 2019, Target's move to store fulfillment slashed costs by 40%. Walmart has been leaning into this strategy, turning some of its 4.7K US stores into fulfillment centers. Stores give Target and Walmart an omni edge that Amazon mostly lacks — especially as people start to leave the house.

Vax

Cold towel, hot water... One Medical is kind of like the Equinox of primary care ($200/year membership fee). The app-based concierge healthcare company went public last year, with the goal of "making people fall in love with their doctor's office." We know it loves Millennials, since it mentioned "delight" seven times in its IPO filing (more than "doctor"). Now it's dealing with some undelightful attention.

  • The bad: One Medical has allegedly been letting ineligible patients and wealthy VIP clients cut the Covid vaccine line, according to NPR.
  • The ugly: Congress is now investigating the allegations. One Medical stock has plunged 15% since the NPR report dropped mid-last week.

The response... One Medical pushed back, saying that it doesn't "broadly and knowingly disregard eligibility guidelines." It also says it fired staff members that had glossed over eligibility rules. That didn't spare it from backlash: Washington state and five Bay Area counties have stopped sending vaccines to One Medical. The SF Department of Public Health went a step further, asking it to return 1.6K doses of the Pfizer vaccine.

THE TAKEAWAY

Vax distribution already has an equality problem... If One Medical is exploiting the (federally funded) vax rollout for its own biz interests, it's making the inequality worse. The vaccine is still scarce, and 67% of people who have been vaccinated in the US so far have been white. On the bright side: Johnson & Johnson's game-changing one-shot vaccine has started rolling out, and President Biden just said the US will be able to vax all adults by the end of May. But if the One Medical allegations are true, that could limit (or end) its vax involvement. That could hurt its growing biz and its stock price.

What else we’re Snackin’

  • EV: Tesla’s Chinese rival Nio says the global chip shortage will hurt its electric car production this quarter.
  • Vax: Pharma giant Merck will help Johnson & Johnson scale production of the J&J one-shot Covid vaccine.
  • Bagged: Instacart's valuation doubles to $39B after a fresh funding round, making the grocery deliverer the 2nd most valuable startup in the US.
  • Gate: Airport convenience legend Hudson opened its first Amazon-powered cashierless store, so you can grab Cheetos mid-sprint to the gate.
  • Sour: Lemonade shares plunged 16% after the Millennial-friendly insurance startup reported lower quarterly sales (and a loss).
  • Zon'd: Kohl’s added at least 2M new customers in 2020, thanks to its Amazon returns service — come for the returns, stay for the jeggings.

Wednesday

  • Earnings expected from Snowflake and Wendy's

Authors of this Snacks own shares of: Amazon, Square, and Walmart

ID: 1547372