Investing in Enjoy

We’re investing in Enjoy as a counter-automation play on the future of retail. Read our thesis on retail’s future here. In short: retailers must either embrace full automation or compete on experience by focusing on uniquely human capabilities: creativity, community, and experience. We call it “empathic retail.” Enjoy delivers the future of retail by focusing squarely on empathic retail. Enjoy hand delivers products bought online from the world’s premier companies and delivers them with an experience. The service comes at no additional cost to consumers and it’s fast, with nearly 50% being delivered the same day.

Amazon is changing consumer expectations related to the price, availability, and delivery of products and services. But the in-person retail experience is outside of Amazon’s core competencies. Enjoy offers its premier companies (including AT&T, Sonos, DJI, and others) a high-touch, personalized delivery and setup service. Enjoy optimizes the customer experience, reduces returns, and increases customer satisfaction.

At the same time, automation technologies are already replacing retail jobs. Enjoy offers its team of Experts (delivery and setup employees) flexible work, salaried, with benefits – a transformative employment model for the new retail workforce. In our view, Enjoy is creating the optimal go-to-market channel for premium brands in the automation age.

Enjoy’s CEO, Ron Johnson, has spent his career innovating in retail. His experience as VP of Merchandising at Target, SVP and head of retail at Apple, and as CEO of JCPenney, along with his network of leaders at consumer electronics and luxury goods brands, uniquely positions Enjoy for success in these markets and beyond.

We’re excited to be a part of delivering retail’s future with the team at Enjoy.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

3 Reasons Amazon Will Buy Target This Year

Amazon is the world’s largest online retailer, about five times bigger in that space than Walmart and its Jet.com subsidiary. Yet despite Amazon’s deep online roots and dominance over Internet shopping, I believe it will buy Target in 2018.

After digging into the realities of both companies, it becomes clear that Amazon buying Target isn’t as bold of a prediction as one might think. Here are three reasons why a merger makes sense.

Offline sales will always be a big part of retail.

It’s no secret that online retail is slowly killing offline. My firm, Loup Ventures, estimates that in the fourth quarter of 2017, about 10% of total U.S. retail sales, or about $125 billion, were online. The longer-term question is: How much of total retail will eventually happen online? Based on our analysis of U.S. retail sales by category (excluding gas and restaurant expenditures), 55% of total retail sales should eventually happen online.

Even if half of commerce shifts to online, that still leaves a massive market offline at 45%. People in the future will still want to pick up groceries at a local store. As retail changes dramatically going forward, the biggest winners will promote both online and offline opportunities.

They both pursue affluent customers.

 Amazon’s acquisition of Whole Foods last year confirmed that the online giant’s focus is on the high-income consumer. Market research firm GfK MRI estimates the median household income for an Amazon shopper is $90,100, similar to Whole Foods at $95,200. Target reports its average shopper earns $87,000. These far exceed the U.S. median household income of $55,322.

By buying Target, Amazon would solidify its dominance of the high-income consumer. Conversely, if Amazon were to acquire a company targeting lower-income customers, such as Dollar Tree, Amazon would steer its focus away from its core consumers. In my years of observing tech companies, I’ve seen that owning a demographic usually yields the best results.

Brick and mortar will get more advanced.

Over the following 10 years, I’d expect Amazon to convert Target and Whole Foods stores to an automated model with few employees. Stores would be monitored by computer vision systems; shelves would be stocked by robots; customers would be helped by service robots that understand natural language; and checkout would resemble Amazon Go locations, where customers simply walk out with their purchases. In this future, the lines between online shopping and automated brick and mortar stores would blur, as cost-focused stores become more like smart warehouses. The few employees working in stores would focus on delivering personalized service based on mutual understanding and empathy, which would enable retailers to differentiate themselves.

Any number of factors could derail such a combination, including government intervention. But sometimes mergers make too much sense to ignore. Amazon buying Target is one such situation.

This note was originally published on Fortune.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Cyber Monday: Premium Brands Scale Back

Absent from Cyber Monday and Black Friday promotions were premium direct-to-consumer brands. We checked the websites of 27 premium brands (and brands styling themselves as premium) on Black Friday and Cyber Monday and found only 7 of them offered promotions befitting the event (20% off or more). Below is Warby Parker’s landing page today.

Spend a lot, get a small free product. In general, fashion brands like Warby Parker, lululemon, birddogs, YETI Coolers, and Stitchfix offered little and less in terms of discounts. Instead some opted for a small product giveaway. For example, birddogs gave a free eyepatch with shorts purchase, YETI Coolers a free icepack with cooler purchase and Tecovas (hand made cowboy boots) a free bottle opener. Tim Murphy, CEO of Branch Basics (non-toxic cleaning products), elucidated the strategy shift to a small product giveaway, “they want to participate, they want to show up in your inbox, but they don’t want to cheapen the brand with a discount.” The giveaways cost the brands almost nothing, but consumers perceive the value of the giveaway at full retail price.

Walmart weighs in on Bonobos. An entertaining insight from our checks: One of the seven brands that was aggressively promoting was Bonobos. They’re a premium clothing brand, high price point, targeting young male professionals, but were offering 30% off site-wide. This level of discounting was out of place when we compare it to similar companies. Separately, looking back to 2015, Bonobos on Cyber Monday had a progressive discount that was not as aggressive as they’re running this year.  Our guess, Bonobos is now owned by Walmart (purchased in June of 2017 for $310m), and Walmart is taking a more promotional approach. Good news for young male professionals looking for “red merlot chinos”.

Below are landing pages today for sample of 6 e-commerce brands that are not discounting.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.