Monthly Archives: July 2017

Why Apple has to make inroads in the autonomous self-driving car space, and fast.

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Autonomous vehicles; not wearables will be the new mobile platform.

Autonomous self-driving vehicles (AVs) will be the new mobile platform, on top of which a host of new products and experiences will be developed. Like Apple’s iOS and Google’s Android mobile operating systems, on top of which multi-billion dollar iTunes and mobile advertising businesses have been built, connected autonomous vehicles will enable a multitude of new products and experiences that the consumer will be purchase and/or consume during the ride.

Ride-monetization opportunities are valuable competitive advantages to a robot taxi platform.

As we have learned first-hand in the ride-hailing business, any ability a ride-hailing platform possesses to keep ride fare prices low is a strong competitive advantage. The reason for this is simple. Consumer demand for a given platform’s rides is highly sensitive to ride prices/fares it charges. That is, the platform that offers the lowest prices and wait-times will enjoy the most demand. The ability to generate revenues on AV rides — on top of the ride fare — provides extra margin and room for the robot taxi service provider to lower ride fare prices and still be profitable.

Waymo, Apple, Amazon and Uber possess the best ride-monetization opportunities.

Google’s Waymo is the AV team arguably best positioned to create in-car ride-monetization experiences. Nest, Google Express, Youtube, and of course the digital ad business provide a multitude of opportunities for Waymo and its parent. Perhaps the next best-positioned providers of ride-monetization experiences are Apple and Amazon.

Apple needs to move fast in the autonomous vehicle space.

The smartphone will continue being a key tool in our lives, but Apple must play a role in this future mobile platform otherwise it risks massive declines in its enterprise value. Apple may be late to AV game, but there is hope for Apple to win. With its suite of entertainment, content, and home-system products, Apple is one of the best positioned to create ride-monetization solutions. Seamless cross-product integrations and experiences are what Apple does best. The autonomous vehicle will be just another one of the products with which Apple products will need to integrate. If Apple doesn’t win a major stake in the AV future, Google’s Android — through its integrations into the autonomous vehicle ride experience — could create a better-integrated mobile OS and capture not only Apple’s share of that market but also share of adjacent markets in hardware and content.

As it stands now, Apple has made its AV strategy clear, and it will partner with car manufacturers to provide the autonomous hardware/software technology needed to make a car drive from point A to point B. The challenge will be for it to get the technology working fast enough and to set up the manufacturing partnerships before other teams beat them to it, and there aren’t many car manufacturers left who haven’t already partnered with an autonomous vehicle technology team.

Very strong network effects will be at the core of the autonomous vehicle revolution, which will hinge largely on robot taxi platforms instead of direct-to-consumer vehicle sales. The first teams to get a working product to market will have significant advantage over late bloomers, who will struggle to profitably create a product that offers value in excess of the significant switching costs that the would-be customers would incur to leave its existing AV tech provider.

 

The future of Whole Foods: Why Amazon’s acquisition makes so much sense

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Amazon’s acquisition of Whole Foods makes sense. I enjoyed deconstructing why below.

1. Amazon will leverage their expertise in warehouse automation and delivery to eliminate the need for the ever popular “Task Rabbiter” shoppers who assemble pickup and delivery orders in the store. Visit a Whole Foods today, and you will see many contractor

In-store shoppers are extremely common and have been asked to stop wearing Instacart t-shirts so as to not change the feel of the shopping experience for other customers.

workers shopping for delivery-platform customers such as Instacart and Whole Foods own delivery service. These shoppers are extremely common in Whole Foods, and they have been ever since Instacart started doing deliveries from their stores. While they no longer wear t-shirts that indicate the platform for whom they are working (this isn’t an accident), these shoppers are pretty easy to pick out from amongst the crowd. They wear headphones, stare intensely at their phones as if reading a off a list, fill grocery carts with large orders, talk with store clerks as if they are colleagues, and move briskly from one item to the next. They become efficient shoppers, knowing where everything in the store is located and they have their own checkout lines in the store so that they can complete as many orders as fast as possible. But watching these shoppers go around and pick items to assemble orders, you can’t help but see this labor force as very replaceable by warehouse robots and machinery that Amazon already uses to assemble orders from large warehouses with thousands of SKUs.  Now that Whole Foods offers its own delivery service (delivery.wholefoodsmarket.com), expect Amazon to put its mighty marketing and operations competencies behind the delivery service to not only make them less dependent on Instacart going forward but to also move all assembly of delivery orders to a warehouse environment so as to improve the in-store shopping experience for  customers.

 

2. Overlapping customer bases enables better customer experiences for the Amazon and Whole Foods customer of the future.

Whole Foods stores are located in affluent neighborhoods of metropolitan areas.

Like Whole Foods stores, Amazon customers are located in more affluent neighborhoods in metropolitan areas. Walmart’s core customer lives in rural areas. Whole Foods and Amazon customers value convenience and a higher-quality experience over rock bottom prices; and they are willing to pay a higher price for it. Both Amazon and Whole Foods customers value pleasant and efficient shopping experiences that save them time. Amazon’s entrance into various product categories means that customers can efficiently procure many services and goods from a  single entity. Like Amazon customers, Whole Foods customers are accustomed to the convenience of high-quality, curated stores and SKU availability. As a result, many Amazon customers are already Whole Foods customers, so this acquisition will mean that Amazon can gain greater share of these existing customer’s wallet. With greater data collection and insight into each individual customer and their shopping history, Amazon will leverage this data to make better recommendations and inventory management decisions, both of which will also potentially lead to increasing total expenditures by each customer.

 

 

3. Massive cross-marketing opportunity to create new Amazon customers. Within the Whole Foods customer base, there a few segments who may not be Amazon customers yet. Imagine the older, not-so-tech-savvy segment of Whole Foods customers who shop there purely for the higher quality food and shopping experience. These customers are the type of people who don’t do a lot of e-commerce but regularly procure their food from Whole Foods because they have grown to trust the Whole Foods brand. Amazon will be able to leverage this brand equity, and cross market to these segments to attract new Amazon.com and Prime customers. And once the customer is brought into the fly wheel, there is a high likelihood that the customer will become a consumer of Amazon’s other stores and products, such as Amazon Video, Audible.com, etc.