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1
Aug-18
Wednesday

The writing was on the wall

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Inside Retail reported that Coles has decided to reverse a decision to stop providing free plastic bags to shoppers. The grocer said some consumers need more time to adjust to the switch to buying reusable bags. Coles was meant to stop providing its reusable Better Bags for free on August 1 and start charging customers 15 cents per bag, but has now backflipped on that decision and appears set to provide them indefinitely. The plastic bag saga has several facets to it: calculations by the Queensland University of Technology estimate that an extra $71 million in gross profit is on the table for Coles and Woolworths from the sale of 15c bags, money Coles is now walking away from (for the time being), while experience from other countries clearly shows that switching to multi-use bags does not help the environment.

Fast moves to make out-of-state retailers collect tax

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Less than six weeks after the US Supreme Court's landmark decision in South Dakota v. Wayfair, more than half of US states with a sales tax have taken steps toward compelling out-of-state retailers to collect and remit sales and use tax.  It's good to see the playing field being levelled for all retailers.

Not everything on the web comes for free

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Law360.com reported that a Delaware federal jury on Friday awarded IBM Corp. more than US$82.5 million after finding Groupon Inc. infringed four e-commerce patents that date back to the early days of personal computing. Jurors returned the verdict following approximately six hours of deliberations in a Wilmington courthouse and found that Groupon willfully infringed the patents. The US$82.5 million that IBM was awarded is about half of what it had sought in the case. Two of the patents came out of the Prodigy online service, which started in the late 1980s and predated the Web. Another is related to preserving information in a continuing conversation between clients and servers. The fourth is related to authentication.
 
31
Jul-18
Tuesday

Appearance of Intelligence

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The AFR published a few articles today, covering the topic of 'Artificial Intelligence'. They included comments such as "the local business sector is well behind foreign competitors", "totally unprepared" and "we have to catch up". CSIRO's CEO was quoted urging businesses to think carefully about how to "invest savings from new technology". There was also an article about 'ethical' AI development. Unsurprisingly, none of the articles explained what AI stands for. It is disconcerting to see so much debate about a topic that is so poorly understood. To correct this, during last week's Online Retailer conference Retail Directions clearly defined the concept and debunked the myths that surround AI and its use in business, particularly in retail. We will soon be publishing the proceedings of our AI session - watch this space!  

Rideshares make traffic worse

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According to a report in The Hustle, a recent urban transportation study has found that Uber, Lyft, and other ridesharing platforms actually make traffic worse in urban areas, not better. Contrary to claims that rideshares reduce traffic by encouraging passengers to leave personal rides at home, the study found that sharing a ride adds an extra 4.1km driven for every 1.6km of personal driving reduced. Overall, 60% of rideshare users would have walked, biked, used public transport or skipped the trip if they hadn't gotten an Uber or Lyft. In recent times, both Uber and Lyft have started buying bike and scooter companies aplenty - maybe they see the writing on the wall?

Not everything at Lidl runs smoothly

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CIO.de reported that for the past seven years, Lidl has been working to replace its old merchandise management system with an SAP system based on HANA technology, but the initiative has now been cancelled.  Lidl stated that the project goals were “not achievable with justifiable effort”. So far, according to expert opinion, the project has consumed more than half a billion euros (nearly A$800 million).  Now Lidl apparently wants to revive its old system. We have always warned that three fundamental mistakes handicap retailers when it comes to systems: choosing the wrong architecture, opting for a non-retail-specific application, and spending too much money. We have heard about more expensive IT projects, but at A$800 million this must be a record in retail.
30
Jul-18
Monday

Court approves Oroton DOCA

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Inside Retail reports that accessories retailer Oroton has been given leave by the Supreme Court of New South Wales to transfer all of the company’s issued shares to Manderrah Pty Ltd at the previously agreed value of nil, fulfilling part of the Deed of Company Arrangement (DOCA). The accessories retailer entered into the DOCA with Manderrah in April in order to secure the future of the business, which fell into administration last November due to declining sales and high rental costs. Privatisation now frees the struggling retailer from the demands of the sharemarket, allowing it to focus on its long road to recovery.

Anti-trust pressure mounts for tech giants

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The AFR reported that the size of the tech giants, such as Google and Amazon, is becoming a problem in terms of fair competition. On Thursday, Amazon reported a revenue jump of 39% to US$52.9 billion (almost double analyst predictions) for the quarter ending June 30. A few days earlier, Google's parent company Alphabet posted quarterly revenue of US$32.7 billion. For perspective, BHP has annual revenue of around US$50 billion. Now it seems like the regulators are closing in. This week, a prominent Amazon critic named Lina Khan joined the office of the US Federal Trade Commissioner as part of the office's increasing scrutiny of tech companies from a competition point of view. Khan's central question will be: how do competition laws need to change to reflect the "realities of how dominant firms acquire and exercise power in the internet economy?"

Online retailers grapple with low trust rating

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The Herald Sun reported on the findings from the first annual Australian Consumer Trust Index, which assessed how consumers rate businesses to do right by them. The project leader noted that "public trust in institutions, including businesses, is at an all-time low." In retail, the study showed that supermarkets and pharmacies are the most trusted verticals, while online-only stores are deemed untrustworthy due to perceived product inferiority and information security vulnerability. This data reinforces the relevancy stores still have in retail, and many pureplay retailers, including Amazon, have recognised that having a brick-and-mortar presence reinforces their online efforts.
27
Jul-18
Friday

Australia’s best performing e-commerce websites

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Inside Retail reports that JB Hi-Fi is Australia’s most visited e-commerce website, according to a new study. The retailer drew in 74.02 million visitors to its site between January and June. Bunnings.com.au was second with 68.87 million visitors and Woolworths.com.au third with 53.65 million visits. However, when you add international players to the mix the results look very different. Ebay.com.au attracted 404.67 million visitors for the same period, Amazon.com pulled 111.82 million, more than double the 52.44 million visitors to Amazon.com.au marketplace.

FANG takes Wall St on a bumpy ride

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Reuters reported on Wall St's wild day yesterday with Facebook shares suffering the biggest one-day wipeout in US stock market history following executives forecasting years of lower profit margins. Facebook shares closed almost 19% down at $176.26, wiping more than $120 billion off the company's value. However, Wall St found relief after Amazon.com's quarterly results beat estimates, sending the online retailer’s stock to a record high and alleviating fears of deepening troubles across the FANG group (Facebook, Amazon, Netflix, and Google). Amazon said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. Analysts were expecting around $843 million.
26
Jul-18
Thursday

Gimmicks Max

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We just learned that Coles will be introducing a premium subscription to its Flybuys loyalty program, which will offer discounted groceries, free home delivery, and access to online video streaming. Known as ‘Flybuys Max’, the program is currently being tested with a small group of members before the subscription is rolled out nationally. Apparently, the membership will cost $10 a month or $99 a year and will entitle members to a 5% discount on all fresh produce at Coles supermarkets. We struggle to see how further increasing the cost base can help a business, which is already too expensive to run.