Amazon has an idea, reportedly: Starbucks. Business Insider has obtained an internal Amazon document showing that Amazon and Starbucks had planned a joint operation, a cashierless cafe of sorts. Code name: “Verde.” WiFi password: BarnesandNobleCanEatBoogers!haha
A rendering shows that the automat-style cafe looks like a Starbucks, with vending machines containing Amazon food, which Business Insider describes as an “assortment of pastries and baked goods.” According to Insider, the joint store was to develop a unique brand.
It was designed for busy 25- to 45-year-old urbanites, or “time-starved professionals,” Insider says. Striving Millennials. The demographic that’ll be the first to survive on Amazon yogurt cups in nursing homes while staring at Ring cameras if we don’t die of heatstroke in record-breaking temperatures on the way to the office. Sorry. SORRY.
The partnership is grimly logical, in the same way that Amazon accounts will someday be as essential (if not more essential) than social security numbers. Starbucks doesn’t have to make paninis anymore and correctly estimates that hitching its wagon to Amazon is the only means of survival. But Amazon already offers Starbucks at Amazon Go grocery/convenience stores, so why set up a new chain masquerading as a Starbucks? A big perk, maybe, is that Amazon comes one step closer to converting every upper-middle-class young urban professional on Earth into an Amazon customer.
This is because the lounges would reportedly implement Amazon’s no-touch cashierless checkout app, which forces shoppers to register for an Amazon account. Amazon uses the all-robot payment system in Amazon Go, another dystopian nightmare that asks customers to decide whether they’re hungry and lazy enough to sign up for a corporate surveillance state. Download the app and connect it to the mandatory Amazon account, then allow cameras to capture your face. As TechCrunch described it in 2018:
At this moment (well, actually the moment you entered or perhaps even before) your account is associated with your physical presence and cameras begin tracking your every move.
The cameras then track everything you do and what you pick up and put in your bag, in exchange for the convenience of walking out. The plan seems to be to make every store dependent on Amazon and every customer beholden to their accounts and subject to its spy system, via Insider’s excerpt from the document. Unnnghh:
“Verde is Amazon Go as a service, meaning that retailers incorporate an Amazon Go (where Amazon owns customer identity/authentication, catalog, merchandising, supply chain, planogram, fixtures, and P&L) into their store premises to offer customers new selection and shopping experiences, complementary to their own.”
Amazon owns customer identity…
Gizmodo stared into the middle distance and then asked Amazon what “customer identity” means. In response to the Business Insider piece, broadly, a spokesperson said: “We don’t comment on rumors or speculation.” Starbucks declined to comment.
In any case, the project may or may not move forward. Insider also reports that the companies missed their deadline to open the flagship, which was slated for late 2020 (granted, it was a pandemic). Amazon has opened a hair salon, it owns 500 Whole Foods, 26 Go stores, and 11 much larger grocery-sized Amazon Fresh stores in the US, with 28 more on their way, Bloomberg reports.
Will Starbucks survive? Or will Amazon start making heated milky pumpkin spice beverages? We’ll circle back in a few years.
Yesterday, Amazon launched its annual report into the activities and advances of small businesses on its platform: the 2021 Small Business Empowerment Report. Titled the “SMB Impact Report” in past years, it tracks metrics like overall sales volume from third party merchants, spruiks new initiatives that Amazon has launched, and provides snippets of insight into the retail behemoth’s priorities over the past year within the third party marketplace division.
In typical Amazon style, the data points don’t always match up like-for-like each year. For example, Amazon has defined its total universe of SMB’s (small to mid-sized businesses) differently in the past 3 years.
In 2019, a total universe of 1.9 million SMBs was identified in the U.S., not just including Amazon sellers but also content creators (authors using Kindle, for example), and developers (startups using AWS). In 2020’s report, a universe of over 2 million U.S. SMBs was identified, this time defined as ”independent sellers, authors, content creators, delivery providers, developers and IT solution providers in the U.S.” In 2021’s report, Amazon has narrowed the focus to Amazon sellers, of which there are now nearly 2 million.
The very definition of ‘SMB’ bears clarifying, as it is quite expansive. Amazon uses Gartner’s definition of Small to Medium Business: businesses with less than $1BN in annual revenues and up to 999 employees.
Those specifics aside, the report offers interesting insights for brands, merchants, and industry pundits. Here are some of the most surprising statistics from this year’s report.
Where sellers are located and how much they sell
There are nearly 2 million SMB sellers selling on Amazon’s marketplaces around the world.
Of this, there are more than 500,000 sellers are based in the United States.
For brands selling on Amazon who experience the landscape as becoming more competitive every year, you’re not just imagining it. In 2020, Amazon added 200,000 new sellers from around the world, a 45% increase on the prior year (2019).
But even in the face of more international entrants, US sellers are growing their business overall. For the period of September 2020 to August 2021, American sellers on the platform averaged $200,000 in sales. This is up from $175,000 in the prior 12 month period.
There are also more high-volume sellers. The number of US sellers who surpassed $1M in sales grew by nearly 15%, and the number of US sellers that surpassed $10M in sales increased nearly 40% over the prior period.
Usage of Fulfillment By Amazon (FBA)
Amazon says that half of American third party sellers take advantage of FBA. This means 250,000 US sellers are using FBA. The statistic that Amazon doesn’t share here is the number or percentage of international sellers, for example sellers located in China, who are using FBA.
Amazon did provide worldwide FBA usage in its 2020 report however, stating that more than 450,000 worldwide SMB sellers on Amazon.com (the US site) took advantage of Fulfillment by Amazon. Amazon correlates usage of FBA with a sales increase of 34% among this cohort.
This year, Amazon has aggressively grown the capacity of FBA, increasing square footage across its worldwide network of distribution centers by 50% worldwide. It also hired 450,000 new employees to expand capacity.
Amazon says that on average, shipping with FBA is more than 30% lower in cost compared with other shipping carriers. It’s inarguable that 30% lower costs on fulfillment is a great deal, and one that will attract many SMB’s to the program. But when the access to that fulfillment service is abruptly paused or throttled, it can leave these SMBs out in the cold.
In 2020, Amazon de-prioritized the fulfillment of non-essential items during the height of the pandemic, meaning that many sellers could not actually sell their inventory. And in 2021, I wrote how Amazon throttled the storage capacity for many sellers as it changed the parameters for inventory storage limits for merchants.
Amazon marketing programs
440,000 brands are enrolled in Amazon Brand registry, a program that’s accessible only to merchants who own their own trademark. Brand Registry allows brands to access a larger suite of marketing tools like enhanced product content capabilities and more sophisticated advertising campaign types.
Within this subset of brand-registered sellers:
- 300,000 sellers are using Amazon Stores, essentially home pages that can be set up by brands to showcase their product assortment, tell their brand story, and highlight deals.
- 500,000 sellers using Amazon Brand Analytics to glean market and product insights.
Amazon also highlighted a few new marketing capabilities for sellers that are ramping up.
“Brand Follow” is a relatively new program that allows Amazon shoppers to ‘follow’ favorite brands on Amazon, much like on social media platforms. The evolution of this program sprang from Amazon Posts which launched in late 2019. In yesterday’s report, Amazon says that brand followers spend more than double what regular shoppers do. This statistic behooves brands to develop their playbook around Brand Follow.
In 2021, Amazon also introduced the Brand Referral Bonus program, providing brands a rebate of up to 10% from sales of their products, when they send outside traffic to their Amazon product pages. No data points were provided in the report on the amount of bonuses paid out under this program or the number of sellers enrolled.
Finally, Amazon Explore is a new program that allows small business sellers to host customers at their physical premises for events.
Curiously, the report did not mention any statistics about the usage of Amazon advertising by its SMB cohort. Advertising is a significant and growing profit center for Amazon, and holds the mantle of the third largest advertising platform after Google