Managing Email

Managing email and the pursuit of Inbox Zero is a daily battle. For some unknown reason, I am determined to always seek ways to make managing email more effective and efficient. Whether on Office 365, Google Apps or another mail provider, each of today’s apps have different functionality and use cases and none of them are perfect. Here are the latest apps I am using by device:


Outlook - By far the best app I know of on iPad for email and provides. This has been my go-to since the days of Accompli (Microsoft acquired). Gmail doesn’t provide the individual email deletes in thread and really bugs me when filing that you can’t type in which folder in place of scrolling. 

Laptop/Desktop (Browser or App)

Superhuman - Gmail on steroids. Keyboard shortcuts are more intuitive and wide ranging so you literally never touch the mouse. Search is faster, everything based in Chrome in place of another program and definitely the closest I have come to Inbox Zero. Three downsides: only available for Gmail/Google, partial calendar integration and iPhone app is quite slow.

What have I tried? Mail, Newton, Airmail, Gmail, Outlook Web, you name it. None are perfect but Outlook continues to hang and Superhuman is definitely onto something.


Roku Advertising Powers Higher

Roku recently released their earning and their results are quite impressive as they shift into an advertising platform built on TVs and through streaming sticks. Some of the highlights for Q4:

  • Platform revenue grew 77% year over year for the quarter to $151mm, a total of $416mm for the full year.

  • Streaming hours grew close to 70% year over year for the quarter to 7.3 billion hours.

  • The average revenue per user is now just under $18 with over 27 million active users (40% growth rate year over year for the quarter).

The idea of more targeted advertising to consumers that are paying better attention as cords continue to be cut continues to shine. Roku seems poised to benefit for the foreseeable future.

Ecommerce Needs Competition

eMarketer outlined where they believe the 2019 e-commerce market share will fall by end of year. The major gainer is expected to be Walmart with a growth of nearly 33% to $27.81 billion or 4.6% share (earlier today they announced a year over year growth of 40%). Even with that impressive number, there is no comparison to Amazon who is projected to grow 20% to $282.52 billion or an astounding 47.0% share. EBay meanwhile is number 2 with 6.1% market share but not truly growing. 

Just look at the cliff in this bar chart to highlight the top 10 by market share. This continues each year and the gap only grows as the overall market grows faster and Amazon maintains its’ considerable lead.

Retail Online Sales Share (2019 via eMarketer)

I believe it is in the best interest of the e-commerce market to have at least two majors facing head to head followed by a long tail. That would at minium make this ecommerce race an oligopoly which not ideal but would be an improvement. With the current magnitude of separation continuing year over year and growing, I  have become convinced the market needs a massive consolidation of market share to see a true competition and overall market health.

Given the list of retailers, there are a couple of options for tie-ups:

  1. Walmart buying eBay - Extends their marketplace model with no further inventory needs. 

  2. Walmart buying Quarate (QVC, HSN, Zulily) - TV platform extension along with stable of brands to extend into stores and digital channels.

  3. Walmart buying Wayfair - Fast growing home goods retailer with growing stable of sellers and advertising revenue.

Beyond the three tie-ups above, no other scenarios provide a meaningful increase in market share or are unlikely. Apple wouldn’t tie up with other retailers and I can’t imagine Costco growing outside their warehouse comfort zone. What say you?

Note: An eBay or Walmart could potentially acquire a platform provider like Farfetch or Shopify to roll up the market share of several brands but the general idea here would be roll up individual .coms or a handful of .coms.


Retail.coms Selling Ads

The sting of driving traffic to retailer .com sites through advertising via the Facebook and Google duopoly is expensive. The cost of shipping orders in the age of “free shipping” is even more expensive. So how else can retailers drive a higher revenue per visitor? Ads.

Each retailer knows the value of their traffic and understands the value of either selling the promotion of products on their site or linking out to other sites. Each retailer is taking one of two approaches: 1) self help advertising tools allowing any brand or seller to purchase keywords using budgets; 2) middle man large agencies providing limited access to keywords using budgets.

Amazon realized the value of ads early and built an extensive platform for brands to self administer their ads similar to Google. That business which is part of the “Other” category drove over $3b in revenue in Q4 2018.

Wayfair recently released their platform allowing brands and sellers to self administer their ads. Watch as the Wayfair narrative shifts from owned sales to services revenue (marketplace, advertising, etc.)

Whilst Amazon and Wayfair are focused on allowing anyone to gain access to spend on marketing, Walmart (who currently earning the most traffic of any retailer in the US) still sells the majority of their ads via large agencies such as Criteo. This is surprising as Walmart is focused on becoming more of a marketplace for small and medium size businesses yet is so restrictive on new accounts and access to marketing.

Traditional retailers that do not employ the marketplace model such Kohls, Target and Macys are even more guarded. These retailers ONLY allow marketing via large agencies and to those brands who sell them directly.

As this space continues to evolve, we will see more and more ads as brands realize there are very few sales earned via organic searches and retailers understand the value of captive customers and what a brand is willing to pay for a click.

Walmart Google Facebook Amazon US traffic

Amazon Earnings Hot Take

As the Amazon earnings hit the news wire, the stock initially traded up after hours but after sifting through the nearly 20 pages, the forecast drove the stock lower. A few takeaways from the latest earnings release:

  • The overall revenue grew just under 20% which is a low for a number of years. 

  • Q4 typically sees the lowest growth rates given the large base of retail sales in Q4 in North America. 

  • North America sales saw one of weakest quarters in recent years. I believe this is likely due to Amazon adding in long term storage fees for 3rd party sellers that led to sellers pulling inventory and thus impacting sales. Amazon has since retracted those long term storage fees beginning February 15. 

  • The International revenue was up 15% which is a slight uptick from the 13% posted last quarter. Given recent Indian restrictions being announced, the Q1 forecast is a bit cloudy. 

  • The most profitable businesses continue to have the highest growth rates. AWS has now accounted for >10% of the revenue for the 4th consecutive quarter. The “Other” category that includes Advertising grew 90%+ year over year.  

  • 3rd party sales via the marketplace continue to gain share year over year as Amazon pullsback on 1st party owned sales. 

  • Whole Foods/store sales saw a decline as the company calendarized their results and highlighted that any sales driven by Amazon and delivered fall into the online sales bucket.

Bottom line: Whilst the revenue growth numbers were disappointing, Amazon’s key offerings (AWS, Services and Other) continue to grow rapidly and are bringing much desired profitability.

Ride-Hailing App Stats

Pew recently outlined the dramatic rise of ride-hailing services such as Uber, Lyft, Juno, etc. There were a few stats that stuck out to me:

  • Only 3% of respondents hadn’t heard of ride-hailing services, this is down from 33% in 2015

  • 36% of respondents have used ride-hailing, this is up from 15% in 2015

  • Within urban environments, >70% of college grads and high income households have used ride-hailing

The report doesn’t outline frequency of use but still impressive that awareness is nearly saturated across rural and urban locations and all age groups. Take a look at the full report screenshots below.

India Marketplace Smackdown

India recently launched legislation that has brought quite a bit of confusion but is clearly a setback for Amazon and Walmart (Flipkart stake):

“An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” the commerce ministry said in a statement.

E-commerce companies can make bulk purchases through their wholesale units or other group companies that in turn sell the products to select sellers, such as their affiliates or other companies with which they have agreements.

The ruling implies that marketplaces such as Amazon and Flipkart will not be able to offer their own private label products or exclusive products on their respective platforms. All vendors will have to be provided the same terms and no vendor can be forced to exclusivity. I would assume Amazon and Flipkart will contest the ruling before the February 1, 2019 enforcement date.


Reading Into Amazon Seller Fee Changes

As often pointed out, greater than 50% of the product sold on Amazon is sold by small and medium size businesses around the world. In fact, it is estimated that more than 2 million sellers on the US marketplace are selling more than >$1 million in retail sales annually. These sellers use Amazon’s customers/traffic, logistics network and marketing capabilities to sell their product on Amazon each and every day. This type of business is incredibly lucrative for Amazon as they never take ownership of inventory.

Just yesterday Amazon made some changes to those fees charged to sellers that typically provide a viewpoint on the type of product Amazon is looking to attract or how their current businesses are performing. Here are my thoughts:

  1. Storage Fees - Amazon surprised most sellers by eliminating the 6-12 month long term storage charges. This goes against their recent increase and monthly long term storage charge that began to charge monthly in Summer 2018. This leads me to believe that Amazon saw significant drops in inventory held by sellers that led to higher out of stocks and missed sales.

  2. Referral Fees - Three years ago Amazon led everyone to believe they cared most about Apparel. In reality that was a massive head fake as Amazon eventually realized that everyone’s wallet is spent on grocery, health and beauty. You can see that is evident in Amazon dropping the referral fees in both categories. Additionally, they are dropping the referral fees in Jewelry for items over $250. This tells me they are trying to recruit less trinkets and trash and more high end jewelry.

  3. Fulfillment Fees - Generally there were very little changes. Amazon did however simplify the Subscribe & Save fee structure showing their desire to build this business further.

Bottom line: All the above changes highlight Amazon doubling down on key categories like Grocery and Health along with an understanding that Sellers drive the overall marketplace with their consigned inventory.

Self Driving Is Here

Who would’ve thought it would come so quick? Who would’ve thought it would come from Google before Uber or Lyft? Incredible.

With little fanfare, the company has begun charging passengers to use its driverless vehicles in a roughly 100-mile (160 km) zone in four Phoenix suburbs - Chandler, Tempe, Mesa and Gilbert - where it has been testing its technology since 2016.

Waymo would not say exactly how many of its cars would be on the road in Arizona. It said its around-the-clock service initially would be limited to “hundreds” of people invited to sign up last year. For now, pricing is roughly in line with that of Uber and Lyft. A 15-minute, 3-mile (4.8 km) drive taken by Reuters last week cost $7.59, just above the $7.22 offered by Lyft.

The Retail Home Stretch: Thanksgiving to Cyber Monday

Ask anyone and they will give you a different answer as to what Thanksgiving, Black Friday and Cyber Monday means for retail. Answers range from the day in which lowest prices are to be had to the week in which retailers become profitable for the year. Neither of which is true. Before Black Friday came to be, the Macy’s Thanksgiving Day parade started in 1924 which was actually inspired by Canadian store Eaton’s way back in 1905. Retailers had a gentlemen’s agreement to hold their holiday sales until the Friday after the parade. The term Black Friday didn’t become famous until 1966 when the Philadelphia Police coined the term to describe the traffic jams and crowds in downtown stores.

Fast forward to today and the public largely views the Thursday to Monday as indication of the health of consumer spending and the economy. The Black Friday of 2018 has been labeled a calm, cool, collect and weak showing. So much so, some have labeled the death of Black Friday. We won’t know the truth until we see the full Q4 earnings from retailers but what we do know is…

Traffic per ShopperTrak was down approximately 1.0% to stores and specifically down 1.7% on Black Friday. This is versus the 1.6% they were down last year.

As for ecommerce, sales have been up >22% on Thanksgiving, Black Friday and Saturday thus far. In fact, the growth of 2018 exceeded that of 2016 to 2017 on each of the three days. Given the strength, I would expect Sunday and Cyber Monday to come in above expectations.

UPDATE: Sunday came in well ahead of expectations and grew 25% year over year.

Bottom Line: Black Friday isn’t dead, it has just shifted. The consumer is strong for now and this continues to illustrate the continued shift to ecommerce.

Headed into Black Friday...

With Black Friday upon us, I thought it would be worthwhile to provide a bit of context on what I believe we are seeing in retail with the latest quarterly earnings:

In general, retailers are posting strong results on a sales basis versus what we have seen in previous years. Low unemployment, generally positive consumer sentiment and wage growth are likely the major contributors. Specific niches of retail are seeing a shift of sales from bankruptcies and store closures which has also been accretive. With all of that said, I still believe most retailers still require further store grooming through closures and will face more difficult margins in the years ahead due to the growth of ecommerce.

Target - Strong year over year comp of 5.1% which was down from 6.5% in Q2 (best in 13 years). Of all the retailers, the year over year improvements is most evident in Target. Last year’s comps in Q2 and Q3 were 1.3% and 0.9% respectively. Looking ahead, Target guided a sales comp for Q4 of 5.0%

Walmart - The juggernaut reported a strong Q3 comp of 3.4% with ecommerce growing 43%. With Walmart coming off a 4.5% comp in Q2 (best in 10 years) and muted forward guidance of at least a 3% comp in Q4, investors weren’t that pleased. Walmart’s stake in also hasn’t helped with the CEO stepping down and some weaker than expected profitability and cloudy outlook. Lastly, the warehouse club arm, Sam’s Club posted a 3.2% comp which was down from 5.0% in Q2. I don’t see anything particularly alarming just believe the stock price got ahead of itself and Walmart’s ability to grow ecommerce share in the US is still a concern especially as the profitability remains difficult.

JC Penney - Disastrous quarter for this retailer who had posted four consecutive positive quarters prior to the -5.4% Q3 comp. I still see plenty of pain ahead marking this chain as the next “on watch” retailer.

Kohls - Another strong year over year comp but deceleration has set in with a Q3 comp of 2.5% versus >3% in previous quarters and 6.3% in Q4. I still find this to be the best mid-tier department store when you compare Kohls to the likes of Dillards, JC Penney and Macys.

Macy’s - 2nd best comp over past several years with a 3.3%. Management was especially rosy on the call about Q4 but only provided slight increases to the low end comp guidance of 2.3%. Ecommerce is firing with additional product added to site and extensive use of buy online, pick-up in store. Macy's is definitely benefiting from a strong consumer but also seeing margin pressure from ecommerce.

Nordstrom - Full line continues to struggle despite last quarter’s pop of 4.1%, their upper end offering posted a measly 0.4%. Their off price offering Rack on the other hand continues to perform well with a 5.8% comp. Nordstrom’s total online business now accounts for 30% of their sales, highest of all the retailers compared here.

TJ Maxx - Both the home offering and main line offering continue to outperform the overall off price sector with a 7.0% comp in Q3.

Ross - A respectable 3.0% comp but TJ Maxx continues to shine and take market share as inventories at Ross have struggled.

Costco - This warehouse chain is on fire, posting nothing lower than a 7.0% comp this year. Q3 was 7.2% and Costco is just starting to tee up their ecommerce offering. With the moat of memberships, this retailer looks poised to continue their assault on retail market share.

Resurgent Retail?

Recent headlines in retail have shifted the narrative from retail is dead to retail is strong and alive. Some headlines over the last few weeks included:

  • Walmart posts the best store comp in 10 years
  • Target posts the best comp in 13 years
  • Macy's return to a positive store comp and increases annual guidance

While this is all great news for retail, be reminded that high tides lift all boats. Wages are growing at the fastest rate in 9 years and unemployment remains below 4%. The stock market continues to rally in the longest recorded bull market in history. Restaurants continue to see strong sales year over year and even amusement parks are posting their best months. Consumers are spending everywhere and providing much needed relief.

Bottom line: This is shaping up to be a rosy holiday period for retail. With that said, positive sales hide a lot of sins. Enjoy the party now, but the long term trends of shifting to online in an "overstored" environment will still be here when the champagne runs out.


Amazon: "Pay to Play" Search

In 2017, one of the key lines you would read, hear or see related to Amazon was how Amazon product searches outnumbered those of Google. Although this has become well known, Jumpshot recently revealed that 90% of pageviews come from the search box:

And within the search results, the first row on the first page of search drives 20% of page views:

The marketplace is becoming increasingly a "pay to play" marketplace where the page views are increasingly being driven from keyword buys:

Bottom Line: Amazon has the lion share of ecommerce growth captive, now it's all about extracting more services revenue from that base. Amazon's shift to "pay to play" is far from over. 

Amazon Earnings In Pictures

Another blockbuster quarter for Amazon with a few key takeaways:

Services revenue continues to grow at astounding rates and now account for 40% of overall revenue (up from 34% in last year's quarter)

AWS continues to grow at rates of 40%+ and international slowed a bit from previous quarter growth rates

Whole Foods is impacting store revenues. Online accounted for 51% versus 63% in the previous year's quarter

@ryanmcraver Amazon Earnings 3.png

The Story of How Google Maps Came To Be

Recently finished Never Lost Again: The Google Mapping Revolution That Sparked New Industries and Augmented Our Reality via Audible. Remember what it was like before Google Maps? Do you remember using a map? I certainly don't yet we take our location and turn based directions for granted. We are the first civilization that truly isn't ever lost geographically.

The story starts with the tiny startup Keyhole that developed the early version of Google Earth, a downloadable program that allowed users to punch in their address and magically be transported from space overlooking earth down to your actual neighborhood block in dramatic fashion. I remember using this program for the first time and being speechless.

The story evolves into the Google acquisition, Larry Page doubling down with no drive to monetize. Search in 2000 was rarely driven by the context of where someone was and where someone was looking to go. Over time, mashups with the data are made and Google decides to lessen their reliance on the archaic and poorly updated road databases of Tele Atlas and Navteq to build their own. GPS evolves the offering via mobile phones to provide turn based navigation and the eventual acquisition of Waze brings traffic patterns. The story helps to illustrate the number of service offerings spawned. The other services we now take for granted include home searches via Zillow, transportation via Uber and ratings via Yelp. Truly a remarkable story that has cemented Google as our data hub for all things search using geography.

Pick it up and read it, amazing story. Truly one of the most influential acquisitions Google has ever made. 

PS The founder of Keyhole eventually moved on to launch Niantic Labs, developer of Pokemon Go, the fastest growing app of all time and first true augmented reality app.

Amazon Doesn't Care About Private Label

Amazon has and always will make more money providing services to 3rd party sellers and not buying and selling their own inventory of goods. While building Amazon brands is a focus, the much larger focus is increasing the size of the product offering through 3rd party sellers using Amazon for logisitics and selling. eMarketer is projecting Amazon 3rd Party or Marketplace Ecommerce sales to account for $229 billion in the year 2019. 

That total will equate for 70% of the overall US annual 2019 Ecommerce sales. That is up from 64% in 2017. Amazon continues to shift to the eBay/Alibaba services marketplace model despite the media focus on private label/Amazon brand offerings. There is a lot more money in being the platform rather than the owner of inventory.

New Age Retail: Three-Legged Stool

We have spoken at length here regarding the evolution of brands and how new age retail requires the 3 legs of a stool (in no particular order): 1) wholesale; 2) etail or DTC; 3) retail. I was reminded of this need as I reviewed Merkle's latest Digital Marketing Report outlining a cost per click on Google up 10-12% year over year and CPM on Facebook up 70%. Buying eyeballs and clicks sure ain't cheap. 

Brands that start in wholesale eventually crave the high margins of etail. Once the brand acquires the captive loyal brand aware customers, they start to desire the allure of a store and justify the new expense as a new channel and marketing awareness vehicle. Key example is Canada Goose.

Brands that start in etail or DTC aggressively purchase ads via Google, Facebook (Instagram) and justify any acquisition through lifetime value as a customer. Once the growth slows, the brand will focus on wholesale opportunities that provide large orders they can typically buy and sell "hand to mouth." Key example is Casper or Harry's.

Unless you are a private company with investors not requiring growth, you must have 2 of the 3. This need will only compound as the cost of acquiring customers becomes more expensive with duopolies controlling the largest ecommerce markets. 

The MoviePass Bet

I have always been a movie buff and loved the experience of a theater versus the convenience of watching at home. The crushing sound, obnoxiously large screen and popcorn easily outweigh all the negatives for me.

A few years back, I came across MoviePass via angel investment site Microventures. At the time, the subscriptions were $49.95 per month for unlimited movies at a handful of theaters. At that time, the service just wasn't compelling enough for me to sign up or invest. 

Fast forward to today. The service is as low as $7.95 per month, there are 5 theaters within a 20 minute walk of my apartment in NYC and stock is trading at <$0.20 a share. Surely compelling enough for a trial and maybe even a bet.

Last weekend, my wife and I used MoviePass to view Three Identical Strangers. As we were walking, we opened the app, reserved seats and made our way to the theater. At the theater, we input our confirmation code into the kiosk and tickets came right out. Cost was $7.95 for the monthly rate versus $18.50 each. The theater was a Landmark theater, clean, cool and comfortable. No complaints.

I like to experience a brand, product or service before ever investing. Based on my experience, MoviePass is onto something. Yes, they have been in the news for surge pricing, modifying the subscription service and limiting the movies. Remember how many times Uber changed their service? Or how about when Netflix pushed out a price increase that included physical discs and streaming and had to pull back on the changes? Subscription models and service models require a test and learn approach. 

So how about all that debt and need for cash? Yes, MoviePass is losing money with every subscription today. On average, customers are watching 1.7 movies per month, more than the cost of the $7.95 to $9.95 per month. However, I believe there are opportunities to promote movies for studios and eventually use their customer base for other sales tactics. Let's also not forget that movie theater attendance hit a 25 year low last year...they need MoviePass and their 2-3 million customers more than ever. What's the best chance at pulling customers off their couches and into movie theaters? Low prices with a drive to make money on concessions. MoviePass is the equivalent of Spirit Airlines with fares offset by carry-on bag fees and marketing within planes.

Is MoviePass a good investment at this point? Absolutely not. Could MoviePass go bankrupt in less than 6 months? Absolutely. Do I mind placing a bet on a subscription service delivering an experience I enjoy in an industry demanding attention? Not one bit.

Enjoy the movies and go watch Three Identical Strangers.

Global Ecommerce Duopolies

Ecommerce is growing at a scale we have never seen. That growth is only coming in a few buckets. The graphic below shows how in 3 of the top 5 global ecommerce markets, Alibaba, JD, Amazon and eBay own close to 60% of the ecommerce market share in their respective markets. Alibaba and JD in China with Amazon and eBay in the US and Germany.

This is staggering. Retail has never witnessed this level of concentration and it will likely increase with Alibaba and Amazon growing the fastest. One can only hope others will come along to improve the competitiveness of these markets in the rapidly evolving digital shopping space.

World Cup Madness

There is nothing like the World Cup. A coming together of 32 countries every 4 years. To get into the spirit, I recently finished Red Card: How the U.S. Blew the Whistle on the World's Biggest Sports Scandal

Over the last decade, hundreds of millions of dollars determined host cities of various Cups and qualifying teams through an elaborate system of bribes and kickbacks. Many believe that this World Cup would suffer due what was exposed. While ratings are down, I believe very few care or even recall what the guilty parties were convicted of. 

A number of the majors have been eliminated. Germany, Spain and Argentina are all already out. Italy and the US didn't even make the qualified teams. Even with some of the favorites out of contention and the fraud overhang, I can't help but be excited for each of the knockout stage games.