"Ecommerce Briefs" is my occasional series on the news and developments of online merchants. In this article, I will address: Amazon's new partnership with Kohl; activity in the US market for online food delivery; and the implications of the recent bankruptcy filing by Toys "R" Us.
Amazon and Kohl form a partnership
Amazon reaches further into the brick and mortar arena. It has partnered with the Kohl's distribution chain, which has agreed to accept returns of merchandise shipped by Amazon in 82 of its stores in Los Angeles and Chicago, starting this month. Kohl will pack and ship the return items at no cost to the customer.
Kohl announced that it would also provide space for an "Amazon Smart Home Experience" in 10 Kohl stores in the Los Angeles and Chicago areas. Customers will be able to purchase Amazon devices, accessories and services from a dedicated 1,000 square foot area made up of Amazon employees.
This arrangement, which is a test, allows customers to touch and use Amazon devices, which the online merchant can not currently provide. The benefits for Kohl, however, are not as well defined.
Kohl's wants to increase attendance at his stores, but this solution could be risky because Amazon has a habit of competing with its partners. Brick and mortar chains that have already collaborated with Amazon have closed their doors – the Borders bookstore chain, for example – or have gone bankrupt, like Toys "R" Us (see below).
The activity in the food segment is propelled by the idea that Americans are no longer preparing meals for themselves.
In September, Amazon teamed up with Olo, an on-demand online food delivery company, which serves 200 multi-location restaurants, such as Applebee's, Chipotle, Five Guys and Jamba Juice. Amazon will provide delivery via its Amazon Restaurants service. Limited to core members, the service was established in 2014, but has never gained traction.
The integration of Olo's platform at Amazon Restaurants will allow restaurants to easily change menus without having to deal with multiple delivery companies.
Another food delivery acquisition was announced by the Albertson & # 39; s grocery chain. He bought Plated, a provider of online meal kits, for around $ 200 million, to better compete with Amazon, which registered a meal-preparation brand in July. Albertson will sell plated dining kits in its stores and possibly deliver them with its trucks. Albertson has 2,300 stores in the United States under several different channel names.
Meal kit manufacturers spent a tremendous amount of money trying to attract new subscribers and Plated might not have had enough resources to compete. In its IPO file, Blue Apron, a meal kit supplier, revealed it had spent $ 144 million on marketing in 2016.
Costco has just launched two new delivery services this month. He launched a two-day national delivery service for 500 non-perishable goods. Free shipping is available for orders over $ 75 and products are delivered via UPS. Costco also extended its grocery delivery service on the same day with Instacart. Available in 376 locations, it includes 700 items fresh and dry.
Toys "R" Us goes bankrupt
Just prior to the key holiday shopping period, Toys "R" Us filed for bankruptcy under Chapter 11 of the United States. The toy retailer hopes to obtain $ 4.9 billion in debt relief from its $ 6.6 billion acquisition in 2005 by private equity firms. The company is expected to pay interest of $ 400 million in 2018 and $ 1.7 billion in 2019. Toys "R" Us achieved a turnover of $ 460 million in 2016, but virtually all was paid. The company is too heavily indebted to continue operating according to its current structure.
This is a warning for companies that engage in highly leveraged private takeovers. Over the last 12 years, the deal has cost Toys "R" Us more than $ 5 billion – $ 470 million in advisory fees and interest to private equity firms and $ 4.8 billion in interest on the debt of acquisition.
The forecast for the holiday season of Toys "R" Us is uncertain. Suppliers may be reluctant to ship products in the current circumstances. The company owes about $ 300 million to various toy manufacturers and some of the smaller ones may have to declare themselves bankrupt if the court only grants dollars to what Toys "R" Us owes them. . Inventories of several toy makers dropped after the announcement of Toys "R" Us. Amazon and Walmart will both benefit if Toys "R" Us can not stock up on its shelves during the holidays .
"R" Us C.E.O. Toys Dave Brandon said that prior to the holiday season, the company would redesign stores with a focus on interactive play areas and augmented reality. It is expected that some of the company's 880 US stores will close in 2018.