🥬 Walmart's big e-grocery bet

Wednesday, February 19, 2020 by Robinhood Snacks | Disclosures
_When the curbside pick-up takes less than 10 minutes_

When the curbside pick-up takes less than 10 minutes

Yesterday’s Market Moves
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Hey Snackers,

Smart watches, smart speakers, smart fridges... In an Internet of Things world, everything gets connected — even diapers.

The Dow dropped for the 3rd straight day, hit by Apple's coronavirus-related revenue warning.


1. Walmart's online grocery is thriving

XL-sized cart full of "meh"... Walmart's disappointing earnings. Physical store sales for the world's largest brick-and-mortar retailer rose barely 2% (a slowdown from last year's 4.2% growth). But there's light at the end of the aisle: ecommerce sales popped 37% for the year. The star? Walmart's online grocery biz.

  • Milking it: With its 265M weekly global customers, 11.5K physical stores globally, and reputation for the lowest prices (outside Amazon), Walmart has the loyalty and locations to scale online grocery.
  • Lettuce rejoice: So Walmart's speedily expanded online grocery — 3.2K locations will bag your groceries ahead so you can just pickup curbside, while another 1.6K spots will cruise the aisles, bag, and deliver to your door. But...

Walmart's overall ecommerce biz is still unprofitable... E-sigh. It's leaning into online grocery — which it thinks has profit puppy potential — while leaning out of its e-acquisitions:

  • Like an Innovation Vampire, Walmart scooped up hip ecommerce startups to compete with Amazon, sucked the valuable digital lifeblood out of them, and threw them to the curb when they didn't live up to expectations. It's the Twilight Saga, but for retail.
  • After splurging on innovative companies since 2015, Walmart's recently sold off ModCloth, laid off hundreds at Bonobos, ended Jet.com's grocery biz, and just announced it's shutting down shopping service JetBlack.

Cash in the (e-grocery) bag... Grocery shopping is a habit. And owning habits means $$$ — Over 1/2 of Walmart's US sales are from food. The US online grocery market is still in toddler stage, but it's predicted to take 20% of all grocery sales by 2025. Since 90% of Americans live within 10 miles of a Walmart, its curbside/delivery grocery game boasts a critical foundation. That's how it can stay ahead of Amazon, Instacart, and Target.


5 Stars for Convenience... 0 stars for congestion. The Uber and Lyft-led ride industry has made life easier for many: whether it's having a few too many margaritas with dinner, visiting a new city, or needing a ride to the airport. It's also never been harder in one way: traffic. Here's the low-down, based on studies summed up by the WSJ:

  • The Pitch: Uber/Lyft pitched themselves as ride-sharing apps (picture 4 strangers in a Prius heading the same direction). Five years ago, Uber founder Travis Kalanick said it would end congestion: "If every car in San Francisco was Ubered there would be no traffic."
  • The Reality: Congestion got worse. Most riders hail private cars — an estimated 70%-80% of rides in major metro areas are non-pool. Drivers in NYC and California cruise without passengers ~40% of the time. Though Lyft estimates 500K Americans gave up personal cars thanks to ride-hailing (not ride-sharing).

Negative effects take a back-seat... When you can get contact solution delivered to your door same-day by Amazon, you're probably not thinking about delivery vehicles congesting streets. Similarly, users of ride-hailing services are likely to think more about convenience than traffic or pollution.


Fibbing about your mission can be a (disturbingly) successful strategy... The reality of ride-hail apps is more driving, more traffic, more pollution, more horn honking, more air fresheners. If we were woke sooner to Uber being part of a problem, not part of a solution, we may be less likely to have started Ubering. But now Lyft/Uber are here to stay, despite years pitching a mission that wasn't accurate.

What else we’re Snackin’

  • Eliminated: No more quiz breaks with coworkers — HQ Trivia is shutting down after its core trivia game turned out a fad, but it might live on with a new buyer
  • Cereal Killers: General Mills hopes to revive its declining cereal sales with a fancy $13 box (almonds are key)
  • Pier None: Home furnishing chain Pier 1 Imports files for bankruptcy and will continue to close up to 450 of its stores
  • Billions: Jezz Bezos pledges $10B (7% of his net worth) to fight climate change with his "Bezos Earth Fund"
  • Open: Body Shop becomes the 1st large retailer to use "open hiring" — the 1st person who applies gets the job
  • Downsize: HSBC plans to slash 35K jobs — the UK-based bank is trying to cut a whopping $4.5B in annual costs in the face of plunging profits (but it still covers every airport terminal we've ever seen)

Snacks Daily Podcast

Molson Coors isn’t just a beer company anymore — it's a "beverage" company. And it's finally launching a spiked seltzer in its portfolio: Vizzy.

Our 15-minute pod is looking at how Vizzy can stand out in a post-White Claw Summer (or is it Pre-Vizzy Spring?).

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Snack Fact of the Day

The oldest company in the world that's still in business today is over 1,400 years old — Kongo Gumi is a Japanese construction firm that has specialized in building temples since 578 AD


Disclosure: Authors of this Snacks own shares of Amazon and Uber

ID: 1093917