Betting on One Big Client
Today’s Highlights: TikTok embraces personalized ads. Amazon builds its B2B marketplace. And a listener asks: Can Stuckey’s and Jimmy Beans Wool be both retailers and wholesalers?
MANAGEMENT
Small vendors are blind-sided by a retail chain’s bankruptcy: “For small businesses, one wholesale partnership with a large retailer unlocks the promise of a broader customer base and a bigger payday. That’s why Julie Stewart, owner of the Los Angeles-based stationery company Kiss and Punch, waited three years to land her partnership with Paper Source—the paper goods chain that recently filed for bankruptcy. ‘From anyone else I knew in the stationery business, Paper Source was the one retailer that you wanted to be in,’ Stewart told Retail Brew. When she scored her shelf space, ‘it felt like I finally got into my dream store.’”
“While Paper Source’s footprint is small by some retail standards (158 U.S. stores), industry insiders told Retail Brew the chain is often their largest partner.”
“On March 2, Paper Source filed for Chapter 11 bankruptcy, avoiding on-time payment obligations to its vendors and tarnishing its ‘golden’ reputation along the way.”
“Now, a half-dozen independent paper goods business owners told Retail Brew the abrupt restructuring has forced them to reassess how they partner with national retailers, if at all.” READ MORE
MARKETING
Preventing users from opting out, TikTok makes it easier for advertisers to target consumers with personalized ads: “TikTok has been steadily increasing its ad business. According to a recent Reuters report, advertiser interest and spend on the platform ballooned once President Trump, who tried to ban the app over its perceived connections to the Chinese government, lost the election. Advertisers spend more on targeted ads, so giving users the ability to opt out of them means TikTok makes that much less revenue. Forcing them on users means TikTok makes that much more.” READ MORE
PURCHASING
Amazon is pouring resources into its B2B marketplace, Amazon Business, which has reached $25 billion in sales: Amazon Business, launched in 2015, is a marketplace that sells to corporate buyers — everything from office supplies to lab equipment. It's a separate marketplace from the main Amazon shopping site used by consumers. Amazon said over 5 million business customers have used the corporate marketplace, including more than 80 of the Fortune 100 companies.” READ MORE
HUMAN RESOURCES
Amazon is opening its telehealth service to other companies: “Amazon said it has started to offer its Amazon Care program to employees and other companies throughout Washington state and plans to make the program available throughout the U.S. this summer. Launched in 2019 at its Seattle headquarters, Amazon Care started by offering virtual primary-care services to Amazon employees in the city. The service also has an at-home care option, where medical professionals are dispatched to perform medical services such as blood draws or listening to a patient’s lungs. Amazon Care operates on an app that facilitates video or chat appointments with medical professionals, as well as prescription delivery. Amazon said it intends to expand the in-person-care component to Baltimore, Washington, D.C., and other cities in the coming months.”
“Telehealth took off a year ago when the pandemic shut down some medical offices and made many patients fearful of seeking in-person care.”
“An Amazon spokeswoman said companies can purchase Amazon Care as an add-on service to their healthcare plans. Amazon declined to provide the cost of their service.” READ MORE
REOPENING
Businesses in Texas are still struggling with their masks: “When Texas Gov. Greg Abbott said he would lift the statewide Covid-19 mask mandate, he left businesses in charge of setting and enforcing their own policies. H-E-B, a beloved Texas grocer and a stalwart during past crises in the state, waffled. The company, which had experienced a string of altercations in its aisles over mask policy, initially said it would urge customers to wear masks, but require them of employees. A few days later, after some shoppers and workers criticized the grocer, the chain clarified its stance. It would leave up signs and keep making announcements stating that masks are required, and offer them to maskless shoppers. H-E-B also said it would continue its policy of not escalating situations in which a customer refuses to wear a mask.”
“The shift in H-E-B’s message reflects the balancing act that many businesses in Texas now face after the state put them in charge of setting and enforcing mask policy.”
“Since the mandate was lifted on March 10, some H-E-B employees and customers say they have noticed more maskless customers shopping the aisles.”
“Some of the biggest retail, theater, hotel and restaurant chains said they planned to continue requiring masks in Texas, Mississippi and other states that lifted restrictions.” READ MORE
THE MORNING REPORT
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STARTUPS
OpenStore is looking to roll up ecommerce businesses: “Venture capitalist Keith Rabois has teamed up with Atomic's Jack Abraham as founders of OpenStore, a stealthy company that plans to acquire a number of small e-commerce businesses, Axios has learned. The last startup Rabois formed was Opendoor, a home buying and selling platform that was initially ridiculed by some top real estate industry execs. Then companies like Zillow copied the model and Opendoor eventually went public via SPAC, with a current market cap north of $15 billion.”
“OpenStore will be based in Miami, where Rabois loudly relocated to last year from Silicon Valley, and already has hired around a half dozen employees.” READ MORE
Dutchie is trying to be the Shopify for cannabis companies: “Dutchie, a nearly four-year-old, Bend, Oregon company that charges cannabis dispensaries a monthly fee to create and run their websites, process their orders and track what needs to be prepped for pick up, has raised $200 million in Series C funding at a $1.7 billion valuation. That’s roughly eight times the valuation the company was assigned last August, when it closed on $35 million in Series B funding. In fact, $200 million is exactly how much backers thought it was worth last summer.”
“Why the massive jump in so short a period?”
“Aside from general frothiness in startup investing, Dutchie just acquired two companies, Greenbits and Leaflogix, that will enable it to become even more of an all-in-one tech platform for its customers.” READ MORE
Introducing a backyard ski lift: “This winter, Will Mayo hit the road with his girlfriend, two dogs, and a cat, all packed into a van, to try to sell customers on his new-and-improved version of a product that has been used in New England since 1934: the rope tow. To skiers and snowboarders, rope tows are known as glove-degrading, shoulder-yanking conveyances that pull you up a short stretch of the mountain — often the bunny hill. But they’re also the least expensive type of ski lift, and Mayo and his business partner, Kyle Roy, have developed one so inexpensive that a consumer with disposable income can install one in a hilly backyard.”
“They call it the Towpro, and last fall they were offering it on the funding site Kickstarter for $5,800, a fraction of the cost of most systems.”
“The Kickstarter pre-orders collected nearly $100,000 for the Fremont, N.H., company.” READ MORE
THE ECONOMY
Has gasoline use peaked? “The world’s thirst for gasoline may never return to pre-pandemic levels, the International Energy Agency said on Wednesday. Greater fuel efficiency, the growing shift toward electric vehicles and changing transportation habits are expected to weigh on gasoline use in the years ahead, even as consumption recovers from last year’s 11 percent drop caused by lockdowns and other restrictions. Fatih Birol, the agency’s executive director, has used his role to push for a shift to cleaner energy to help tackle climate change. He said at a news conference Wednesday that it would be ‘very unlucky’ if gasoline use returned to 2019 levels.”
“The agency said that gasoline consumption was expected to increase strongly in emerging markets like China and India in the next few years, but that beginning in 2023 it would likely decline in the large industrialized economies.” READ MORE
THE 21 HATS PODCAST
Jim Kalb, founder of Triad Components Group, had the following reaction to this week’s episode: “Just finished this week’s podcast and wanted to make some comments about selling on Amazon (or other sites). I think that Stephanie and Laura need to figure out if they are in the retail business or the wholesale business (yes…I know…they are in both). ... The problem exists (in their world) because they are trying to be both retailers and wholesalers. They are trying to keep retail prices high so they can maximize their retail profits, but at the same time try to create a retail distribution channel through wholesale operations. This is a fool’s errand. In order to succeed, I think that they need to pick one or another. Seems simple to me, but I’m not living in their world.”
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