Walmart's free-shipping mic-drop

Wednesday, May 15, 2019 by Robinhood Snacks | Disclosures

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Hey Snackers,

Subtle. Uber stealthily released "Quiet Mode" — full-zen ride silence with your driver (sadly for UberBlack only).

Its shares made noise with their first positive day yet (up 8% Tuesday). So did most other stocks as the Dow rebounded by 207 points while investors relaxed mid-trade-war.

1. Walmart one-ups Amazon Prime: Free. One-day. Shipping. (boom)

Tou-freaking-ché… A month after Amazon announced it’ll cut shipping time in half for Prime members, Walmart countered: Free next-day delivery to anyone in Vegas or Phoenix on 220K items (as long as you spend $35). By next year, 75% of Americans will have access to 1-day shipping. Your move, @JeffBezos.

Speed kills... Walmart's move is expensive (for Walmart), but it could stop Walmart-faithful from defecting to Amazon. Here's the expected bill:

  • Walmart: UBS analysts estimate $215M in incremental costs to prep its warehouses for 1-day shipping (plus Walmart's promised that each order will arrive in 1 box).
  • Amazon: It's investing $800M to give Primers their goods by “EOD tomorrow.”
  • Fun fact: One reason it’ll cost Amazon more to do the same thing is it ships way more packages than Walmart — Walmart's ecommerce biz is just 7% as big as Amazon's.

Thank competition... Amazon liberated the world from late-night toilet paper runs, earning it 47% of all US online sales today. But Walmart has upped its ecommerce game — buying for $3B, renovating its website, launching online grocery pickup, and (now) free 1-day shipping. That keeps Amazon honest. Bezos can't just jack up Prime prices and lie back on 2-day delivery. When Amazon and Walmart compete, lazy online shoppers win.


Top 10 lists are fun... This one isn't. A California jury awarded $2B from Bayer to two non-Hodgkin Lymphoma suffers. Blame Bayer's Roundup weedkiller for causing it (according to the verdict). It’s the 8th biggest product-defect award ever, so Bayer’s appealing as its shares fell 2% Tuesday.

FYI, the World Health Org. thinks Roundup probably causes cancer. America’s EPA doesn’t.

What’s the return policy on Monsanto?… Germany’s top chemical company was built through the humble invention of Aspirin in 1899. A century later, Bayer dabbled in high-finance by acquiring US-based Monsanto last year for $66B. Here's what it's received from the St. Louis company:

  • Added profits: Bayer snagged Monsanto for the $2B in annual profits it was generating on genetically-modified crop seeds, plant fertilizers, and other blasphemies to organic eating.
  • Added lawsuits: It's lost three lawsuits connected to Monsanto's Roundup so far, with verdicts of $2B, $289M, and $80M. There are ~13K more suing.
  • The result: Bayer stock is down 44% since its Monsanto wedding day in June of ’18.

Look out for major baggage… The merger and acquisition process involves “due diligence” — pretty much a full corporate checkup to make sure there’s nothing unexpected in the company being acquired. Bayer missed this giant legal liability when it acquired Monsanto. Look out for weeds.


Unpop the collar... Ralph Lauren's latest quarterly earnings would impress Anna Wintour: Revenues beat analysts' expectations and profits hit $32M. It's even gift-bagging that all for Ralph Lauren shareholders by increasing the dividend they receive by 10%. Then shares fell 4% off the catwalk.

Malloting a croquet ball while riding a purebred steed... Doesn't really work for post-Millennial Gen Z. Ralph knows it needs to replace aging customers with young blood. Here's its approach, which its CEO calls the "Next Great Chapter Plan":

  • Extra influencer marketing: It just signed 23-year-old model Taylor Hill and her boyfriend to flaunt the polo horses on Insta. #powercouple
  • The "Drop": It markets limited edition streetwear stuff that can only be bought on the app. The kids these days love exclusivity and mobile shopping.
  • "Family is who you love": That's the name of the new ad campaign — TV spots nudging perceptions of the brand to a new direction. Less country club prep, more modern families.

Not all sales are created equal... Although investors were impressed by two of the big items (sales and profits), they were bummed to see sales drop in Ralph's home closet. That's a sign that the fundamental changes the company's working on might not be working.

  • 📉 Sales in North America (which is 50% of total company sales) fell 7%.
  • 📈 Sales in Europe (31% of total) rose 4%.
  • 📈 Sales in Asia (19% of total) popped up 6%.
What else we’re Snackin’
  • Overheard: Spotify is testing its own version of social media Stories called "Storyline" so you can truly follow Adele
  • Breakup: Grinder, Earth's largest LGBTQ social networking app, is 60% owned by a Chinese firm — So the US is making them sell their stake on "national security" worries
  • Owned: Disney takes "full operational control" of streamer Hulu from cable OG Comcast
  • Privacy: San Francisco becomes 1st US city to ban police from using facial recognition tech
  • Fire: Tilray jumps 5% as it pulls the "selling pot in Canada is a hard job (regulations, too much demand), but someone's gotta do it" move
  • Infiltrated: Facebook's Whatsapp was "targeted by an advanced cyber actor." Aka, it was hacked.
Snacks Daily Podcast

Today's 15-minute Snacks Daily pod:

  • Tinder-owner Match just launched a hotline for paid users to talk with human dating coaches. Now Match is all about testing, testing, testing, and testing it.
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