Whole Paycheck Tracker: The Brawl In California
A good bit of the Amazon and Walmart bid for the U.S. consumer’s whole paycheck this week was at the top of the news feed. Amazon plowed ahead into the wearable device market. Walmart teamed up with Microsoft in a bid for TikTok. And that was only Thursday.
The Whole Paycheck tracker team is working on a big quarterly report with exclusive data to be delivered next week, so we’ll spare the repetition and focus on some of the stories behind the scenes.
The first is an important but completely unpredictable battle taking place in the California state legislature. Online retailers, ad groups and tech companies are watching a proposal that would hold online marketplaces liable for defective products. It stems from a California case in which a woman sued for damages after a replacement laptop battery she purchased from Amazon exploded. Amazon argued that the battery’s Chinese manufacturer, Lenoge, is responsible for her injuries – but an appeals court ruled last week that Amazon could also be held liable.
Currently, brick-and-mortar retailers are liable in a similar fashion. But on the digital side, the case is different. “The bill strikes at a fundamental question in the digital economy: What does a facilitating platform owe to the main parties involved, whether they be an online retailer or rideshare app, without which a transaction would never have occurred?” says Politico.
Time is running out in the legislative session in California, where the bill is being sponsored by state assembly member Mark Stone. It is being contested by eBay, Etsy and other marketplace-oriented companies. But get this: Amazon is supporting it, which caused Etsy CEO Josh Silverman to accuse Amazon of trying to wipe out its competitors.
“eBay is not a store,” the company said in a statement on Tuesday (Aug. 25). “… While the court recently found that retailers with marketplaces, like Amazon, are liable for the products sold on their sites, AB 3262 goes far beyond the court’s decision and applies the same standard for Amazon to dozens of third-party marketplaces that simply enable small businesses to reach customers.”
This all happened early in the week. Some financial and legal reinforcements were brought in on Thursday (Aug. 27) after a slew of advertising trade groups, led by the American Association of Advertising Agencies, urged that the bill be amended to remove conflict with “the bill’s stated intent to exempt online advertising from new and unprecedented liability exposure.”
The groups argued that the bill has been amended to cover businesses “placing or facilitating the placement of products into the stream of commerce in this state.” The original language, according to the ad groups, “covered businesses engaged in ‘placing’ products into the stream of commerce,” per a CNBC report.
“Ad groups argue the term ‘facilitating’ is not defined and could potentially apply to any business that receives any direct or indirect financial benefit from the sale of products deemed to be defective,” states the report. “The groups said the amendments to the bill threaten online content and [the] economy.”
Lawyers, of course, love the bill.
“In a time when online purchasing has become more prevalent than ever, AB 3262 will level the playing field when it comes to the safety of the products sold between online retailers and mom-and-pop stores while providing remedies to consumers who are injured or killed by dangerous products sold online,” said the law offices of Aitken and Cohn. “The items sold online are often sold from other countries that do not have the same safety procedures or protocols required of items sold on store shelves in California.”
Amazon Says: Let’s Luxe Again
“The e-tailer has plans to introduce a platform for luxury fashion brands on its marketplace,” stated a report, per Quartz. “Participating brands will reportedly be able to control the appearance of their sections on the site as well as their product selection and pricing, though Amazon will still provide them with its logistics capabilities.”
Wait. That was from Jan. 8, 2020, when the world was safe and simple. The best-laid plans of every company on the planet exploded just two months later. Even though the world is infinitely more dangerous and complicated than it was on Jan. 8, Amazon is bringing its luxury plans back.
According to Women’s Wear Daily, Amazon will partner with 12 high-end accessories and ready-to-wear fashion brands from the U.S. and Europe. The new platform will reportedly launch sometime in September, possibly mid- to late-month to coincide with major fashion shows (virtual and in-person).
The development begs the question as to why Amazon failed at the launch back in January. It certainly took some heat for the attempt. For example, Manny Chirico, the CEO of PVH Corp — the parent company of Tommy Hilfiger and Calvin Klein — said during an earnings call on March 29 that Amazon is “just not where it needs to be right now.” Amazon’s fashion sales, he added, are weak on both “metrics” and “presentation” at this stage.
Let’s assume they learned from the Q1 failure – after all, not many people in any vertical have been validated by doubting Amazon.
Report: Online Grocery Isn’t Worth the Trouble
Talk about a contrarian viewpoint. As Amazon and Walmart duke it out for the grocery dollars in the U.S. consumer’s paycheck, a new report says it’s not worth the trouble.
Despite spikes in online shopping, the economics behind online grocery make it unsustainable, said Kurt Jetta, founder and chief analyst of TABS Analytics, a consumer products industry research company.
But whether Walmart or Amazon reigns as the top online grocer, Jetta said he’s done the math, and “online grocery will never be profitable under the current business model,” he told Winsight Grocery Business.
“For one, the paradigm [Amazon and others] have bought into with next- or same-day delivery is so self-destructive,” he said. Jetta pointed to the razor-thin margins that take an even bigger hit when delivery and pickup are in the mix. What’s more, he noted, orders arrive in multiple shipments, further eroding profits. “[Online grocery] is such a misallocation of effort,” he said. “eCommerce is less than 10 percent of the market, and it’s unlikely food and beverage will ever represent more.”