Costco or Amazon Prime? More shoppers are choosing both. How about you?

Originally published February 20, 2018 at 10:15 am Updated February 20, 2018 at 4:54 pm

This Jan. 31, 2018, photo shows a Costco in Homestead, Pa. (Gene J. Puskar / The Associated Press)

More people than ever have both a Costco membership and pay for Amazon Prime, according to a new survey, underscoring the direct competition between the two Seattle-area retail giants.By 

Benjamin Romano 

Seattle Times business reporterThe number of people who both pay to shop at Costco and pay for free shipping from Amazon has grown rapidly in the last five years.Fifty-seven percent of Costco members also pay for Amazon Prime, up from 13 percent in 2013, according to a survey of 2,500 consumers conducted last month for boutique research firm MoffettNathanson.The membership overlap underscores the increasing cross-town competition between two of the world’s largest retailers.

But so far, Amazon Prime, which charges $99 a year for free two-day shipping and a suite of digital services, isn’t convincing people to cancel their Costco memberships, which cost $60 a year for individuals after last June’s $5 increase.

“Over those five years, as membership overlap exploded, Costco has shown steady revenue and membership growth,” write MoffettNathanson analysts in a research note. They add, “Americans appear to be buying into the concept of owning two ‘shopping’ memberships as the value proposition is fundamentally different.”Walmart, battling both companies, recently announced that its warehouse club unit, Sam’s Club, will offer free shipping to its Sam’s Plus members, who pay $100 a year for membership. Walmart began to offer free two-day shipping for online orders of $35 or more last year.

MoffettNathanson estimates there were 80 million people in the U.S. and Canada with access to Amazon Prime in 2017, 62 million Costco cardholders, 64 million at Sam’s Club, and 15 million at BJs.Oliver Wintermantel, a MoffettNathanson retail analyst, is one of the millions of Americans with a Prime subscription and a Costco membership.

“These are probably the two retailers I go to most,” he said.

He regularly tracks his purchases on Amazon, an enlightening exercise he suggests everyone try. “People are always very surprised, how much they spent, how many products they got,” he adds.Wintermantel says he likes his Costco membership for the “shocking value” he finds on products that are sold at very low or no markup – Costco makes most of its profits from membership fees, which are a fundamental part of its business model – and the serendipitous discoveries he makes shopping there.

MoffettNathanson, which conducts these surveys periodically, has also found that more current Costco and Amazon Prime members intend to renew than did in 2016. At Costco that was true at all income levels, and for people age 35 and older. But fewer Amazon Prime members with incomes below $45,000 a year said they were likely to renew their memberships in 2017 than did in 2016 – although the renewal intention rate is for this group remained above 90 percent. (The Washington Post’s technology columnist recently questioned the value of a Prime membership.)

For both Costco and Amazon, renewal intention was down from 2016 to 2017 for one key age group: millennials. The declines were small, and the vast majority of people 18 to 34 still told survey takers they plan to renew.But it was enough to catch the attention of the MoffettNathanson analysts. Costco, in particular, is under pressure to show how it is attracting younger members. At the company’s annual shareholder meeting last month, CEO J. Craig Jelinek said more than 40 percent of Costco’s new members are millennials.

The analysts offer a couple of potential explanations for the dip in millennial renewal rates: “Maybe millennials are just less loyal than their parents when it comes to retailers, or perhaps more of them joined on a limited trial basis (i.e. Living Social promotions). It’s a trend that we haven’t seen in our surveys before so worth watching, especially as the stickiness of membership is such a critical attribute of the model.”

First Thoughts     Dan Gilmore    Editor    Supply Chain Digest Feb. 15, 2018 Supply Chain Comment: Is Amazon Really Building its Own Parcel Network? New Shipping with Amazon Program Says Yes, but How Far Can it Take It?

I had planned to wrap up my supply chain predictions series this week with some additional prognostications from the analyst at Gartner and IDC, but the major news late last week about Amazon’s apparent real entry into the parcel delivery market has caused me to delay that planned column in favor of this more pressing development. In early 2016, I wrote a column title Amazon – The Most Audacious Logistics Plan in History? that was based on a series of reports that seemed to indicate Amazon’s interest in developing an end-to-end global logistics capability. That column came after news that Amazon had just leased 20 cargo planes for unclear purposes, as it was testing some cargo flights out of the old Airborne Express terminal in Wilmington, OH. Bloomberg had also reported that “A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment by Amazon (FBA) service, which provides storage, packing and shipping for independent merchants selling products on the company’s website,” Bloomberg reported. “The report envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London.” The project’s name: Dragon Boat – and it was said then to be proceeding apace. “Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates,” Bloomberg said. “Merchants will be able to book cargo space on-line or via mobile devices, creating what Amazon described as a ‘one click-ship for seamless international trade and shipping.'” Around the same time, Amazon received a license to act as a wholesaler for ocean container shipping from the US Federal Maritime Commission and a similar license from the Chinese Ministry of Commerce. Consistent with that, as a I reported at the time, a senior executive at a major freight forwarder told me at a Fall 2017 retail industry conference that Amazon already brings in about 60-80,000 containers from offshore into the US right now, and that this number could grow to some 250,000 in five years, likely pushing Amazon past Walmart as the largest container importer. Many of Amazon’s recent moves, he said, are simply due to its insatiable search for more capacity, as it is strained almost everywhere with its still mid-20 percentage growth in merchandise sales. That executive did not expect, however, that Amazon will actually get into the global logistics business directly, because the returns on such an investment would be very low compared to what Amazon can get from say building more fulfillment and sorting centers around the globe. But what he does expect is that Amazon will put together a complete, end-to-end global logistics service that manufacturers and merchants around the globe will be able to leverage to ship goods cheaply and quickly from their locations to consumers in the US and Europe. So, it would indeed be an offshoot of Fulfilled by Amazon, in an “asset light” model. But Amazon may have a more direct strategy for US parcel shipping. Early last year, it announced of plans for a major $1.5-2.0 billion air shipping hub at the Cincinnati airport, with more than 200 flight departures and landings per day to be scheduled. Amazon then denied it plans to enter parcel in a big way, saying facility was being built just to help meet peak demand requirements. My reaction: who on earth would spend $2 billion on a facility and still more on planes, etc., that would only be used occasionally, in peak periods. My answer: no one, even spend-happy Amazon. So last Friday, the Wall Street Journal reports that in a few weeks, starting with the Los Angeles area, Amazon will launch new program called Shipping with Amazon (SWA), in which Amazon will take direct control of shipping for its Marketplace sellers in the area, in which it will pick-up packages at those company’s facilities, get them into its network, and in some cases take those parcels all the way to consumers’ homes. It is similar to, but different from, another service Amazon announced in 2017 called FBA Onsite. With this, Amazon will again take shipments from its third-party Marketplace sellers into its network, but only to leverage its volumes and scale using traditional carriers such as FedEx, UPS and the USPS for last mile delivery. The theory was that scale gives Amazon more options for the shipper in terms of cost and delivery times, and enable more Marketplace orders to participate in the Amazon Prime program that offers free two-day shipping for a set fee per year. The SWA program takes that program ever further, with Amazon not just taking the shipment into its network, but taking care of final deliveries where it can. It turns out that Amazon already performs some last mile delivery in close to 40 markets. It is assumed it will take care of last-mile delivery in those areas, filling up its trucks and providing higher delivery “density,” the key factor in cost per delivery. In other markets, it appears Amazon will often get packages close, say via truckload carriers or air, and then use the traditional carriers for the last mile. Now, of course, the purpose of the hub under construction in northern Kentucky makes a lot more sense. The Wall Street Journal reported that while the program is being piloted with the company’s third-party sellers, Amazon envisions eventually accommodating other businesses and that Amazon plans to undercut UPS and FedEx on pricing, Wow. There are two key questions: (1) Can it work?; and (2) What does it mean if it can? As always in such situations, I turned to our friend Jerry Hempstead, a former DHL executive and now parcel shipping consultant, for his insights. “I don’t think it’s a threat to FedEx or UPS,” Hemptead told me. “The parcel world does not revolve around nor depend on the deliveries of sweaters to your favorite nephew or niece.” He says that while Amazon is a huge fulfillment business it’s just a fraction of the world that UPS and FedEx operate in, noting that the core business of the carriers is actually B2B, not B2C, and by a large margin. “My take on what Amazon is up to is to gain greater routing control over transactions coming from its suppliers and to reduce handling costs and a leg of transit when orders can originate from a supplier rather than transiting from an Amazon DC,” Hempstead adds. “The shipments will appear as if they come from Amazon but will actually drop ship directly from the supplier.” This is “surgical” and “not some threat on the vast amorphous market served by FedEx and UPS,” Hempstead says, adding “The articles last week are way ahead of reality and the press (and Wall Street) made way too much of this.” As UPS and FedEx have been saying for years, Amazon’s ability to one day haul and deliver packages for other retailers and consumers at a national scale would require tens of billions of dollars, requiring thousands of trucks, hundreds of planes and to build many sorting centers to handle millions of packages a day. I agree generally, but have a slightly different take. While B2B may dwarf B2C at the moment, B2C is growing 15% per year, far faster than B2B. It inevitably will become a bigger factor in the mix. Second, Amazon is taking the long view – a building options. Third, the obvious strategy to me is for Amazon to take over the highest volume lanes – and let UPS/FedEx/UPSPS handle last mile in say Montana. This point was also made earlier this year by our friend John Larkin of Stifel, who wrote that the fear on the part of carriers is that the company Amazon will skim off the base load volume and leave the end of week, end of month, end of quarter, and/or holiday surges to its outside service providers – who are investing heavily in their own networks on the premise that “base load volume will cover fixed costs and that the surges will afford the opportunity to make a profit.” How this plays out should be fascinating and high stakes for Amazon and the carriers. I think it is great for Amazon to continue to compete on logistics – which many thought had become a commodity function before ecommerce and Amazon.

Here Are The Top 10 Breakthrough Technologies For 2018

 

Bernard Marr , CONTRIBUTOR Opinions expressed by Forbes Contributors are their own.

MIT Technology Review unveils its breakthrough technology list for 2018 – a rundown of 10 awe-inspiring scientific and technological advances that have the potential to change our lives in dramatic ways.

I spoke to editor David Rotman about why these particular breakthroughs made the cuts, what makes them exciting – and why some of them raise important ethical concerns that will need to be addressed in the near future.

He told me “We select the list by asking each of our journalists what are the most important new technologies they wrote about this year? And which will have a long-term impact. We’re looking for fundamentally new advances in technology that will have widespread consequences.”

Technology Trends 2018 (Source: Shutterstock)

1. 3D Metal Printing

We’ve all become used to 3D plastic printing over the last few years, and the ease it has brought to design and prototyping. Advances in the technology mean that instant metal fabrication is quickly becoming a reality, which clearly opens a new world of possibilities.

The ability to create large, intricate metal structures on demand could revolutionize manufacturing.

“3D metal printing gives manufacturers the ability to make a single or small number of metal parts much more cheaply than using existing mass-production techniques,” Rotman says.

“Instead of keeping a large inventory of parts, the company can simply print a part when the customer needs it. Additionally, it can make complex shapes not possible with any other method. That can mean lighter or higher performance parts.”

2. Artificial Embryos

For the first time, researchers have made embryo-like structures from stem cells alone, without using egg or sperm cells. This will open new possibilities for understanding how life comes into existence – but clearly also raises vital ethical and even philosophical problems.

Rotman told me “Artificial embryos could provide an invaluable scientific tool in understanding how life develops.  But they could eventually make it possible to create life simply from a stem cell taken from another embryo. No sperm, no eggs. It would be an unnatural creation of life placed in the hands of laboratory researchers.”

3. Sensing City

At Toronto’s Waterfront district, Google’s parent company, Alphabet, are implementing sensors and analytics in order to rethink how cities are built, run, and lived in. The aim is to integrate urban design with cutting edge technology in order to make “smart cities” more affordable, liveable and environmentally sustainable.

Rotman says “Although it won’t be completed for a few years, it could be the start on smart cities that are cleaner and safer.”

4. Cloud-based AI services

Key players here include Amazon, Google, IBM and Microsoft, which are all working on increasing access to machine learning and artificial neural network technology, in order to make it more affordable and easy to use. Rotman told me “The availability of artificial intelligence tools in the cloud will mean that advanced machine learning is widely accessible to many different businesses. That will change everything from manufacturing to logistics, making AI far cheaper and easier for businesses to deploy.”

5. Duelling Neural Networks

This breakthrough promises to bestow AI systems with “imagination”, through allowing them to essentially “spar” with each other. Work at Google Brain, Deep Mind and Nvidia is focused on enabling systems that will create ultra-realistic, computer generated images or sounds, beyond what is currently possible.

“Dueling Neural Networks describes a breakthrough in artificial intelligence that allows AI to create images of things it has never seen. It gives AI a sense of imagination,” says Rotman.

However, he also urges caution, as it raises the possibility of computers becoming alarmingly capable tools for digital fakery and fraud.

6. Babel Fish earbuds

Named for the science-fiction comedy concept introduced by Douglas Adams in The Hitchhiker’s Guide To The Galaxy, these are earbuds utilizing instant online translation technology, effectively letting humans understand each other while communicating in different languages, in near real-time.

Rotman says “Google’s Pixel Buds mean that people can easily carry out a natural conversation with someone speaking a different language.”

Although the ear buds themselves are still at an early stage and, reportedly, do not yet function too well, anyone can access the underlying technology today through Google’s voice-activated translation services on computers and mobile devices.

7. Zero-carbon Natural Gas

New engineering methods make it possible to capture carbon released during the burning of natural gas, avoiding greenhouse emissions and opening up new possibilities for creating clean energy. Currently, 32% of electricity used in the US is produced by burning natural gas – a process which accounts for around 30% of carbon emissions from the power sector. 8 Rivers Capital, Exelon Generation and CB&I are highlighted as key players here.

“The clean natural gas technology holds the promise for generating electricity from a cheap and readily available fossil fuel in a way that doesn’t generate carbon emissions,” Rotman says.

8. Perfecting Online Privacy

Blockchain-based privacy systems make it possible for digital transactions to be recorded and validated while protecting the privacy of the information and identities underlying the exchange of information. This means it is easier to disclose information without risking privacy or exposure to threats such as fraud or identity theft.

9. Genetic Fortune Telling

Huge advances are being made in predictive analytics using genomic data by players including Helix, 23andMe, Myriad Genetics, BK Biobank and the Broad Institute. This is making is possible to predict chances of diseases such as cancer, or even IQ, by analyzing genetic data. This promises to be the next quantum leap in public health protection, but also raises huge ethical concerns, including the risk of genetic discrimination.

“Nothing like this has been possible before,” says Rotman.

“Genetic fortune telling will make it possible to predict the chances that you’ll be smart or below average in intelligence. It will also make it possible to predict behavior traits. But how will we use that information? Will it change how we educate children and judge their potential?”

10. Materials’ Quantum Leap

Using a seven-qubit quantum computer designed by IBM, researchers at Harvard have created the most complete simulation of a simple molecule.

The molecule – beryllium hydride – is the biggest yet simulated by quantum computing.

Rotman says “The promise is that scientists could use quantum computers to design new types of materials and precisely tailor their properties. This could make it possible to design all sorts of miracle materials, such as more efficient solar cells, better catalysts to make clean fuels, and proteins that act as far more effective drugs.

MIT Technology Review’s full report on the list of breakthrough advances can be seen here.

Amazon is quietly coming after dollar stores — and it's a brilliant move

 

Dennis Green

 

 

 

24h

 

 4,748

Amazon is selling items like these for $10 or less.

Amazon.com

• Amazon has a new area on its website for "$10 and under" items that come with free shipping.
• The merchandise is offered by third parties, and the section is full of kitschy items.
• This is usually the domain of dollar and off-price discount stores, which have been thriving in recent years.

---

Amazon is famous for its low prices, but not even it could compete with dollar and discount stores.

A new section on the website attempts to change that by curating and displaying items that cost $10 or less, all offered with free shipping. The merchandise is offered by Amazon's third-party merchant partners and in most cases does not ship directly from the company.

Though it launched quietly, the initiative is a clear move in on dollar and discount stores' turf. The kitschy assortment of women's and men's clothing, electronics, gifts, home decor, household items, and watches looks very similar to what you might find at a Dollar Tree or Ross store. It's mostly decorative pillows, phone cases, and logo T-shirts.

The recent success of dollar stores and discount stores proves that there's a market for these goods when marketed appropriately. It makes sense that Amazon would attempt to move in this direction, even just slightly.

Dollar-store sales grew in the US from $30.4 billion in 2010 to $45.3 billion in 2015, according to the Wall Street Journal. Dollar General is planning on opening thousands of more stores, whileDollar Tree has beat earnings consistently. Ross — famous for its "dress for less" slogan — has beenhailed as a "retail treasure."

Dollar General is opening 900 stores in 2018.

AP

Walmart, the biggest discount retailer in the country, has also posted 13 consecutive quarters of sales growth in the US.

Dollar General CEO Todd Vasos told the WSJ his theory to explain the proliferation and success of dollar stores — and it's not good news for America's struggling middle class.

"The economy is continuing to create more of our core customer," he told the paper in December. "We are putting stores today [in areas] that perhaps five years ago were just on the cusp of probably not being our demographic, and it has now turned to being our demographic."

How to Create Loyal Retail Employees

February 17, 2018

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You don't want the reason you have loyal retail employees to be because they don't ask for a raise or they've been there for a long time without challenging you. You want loyal retail employees who are passionate about your business and you are constantly working to develop.

This past week I discovered Mr. Steve, a guy who tweeted, “Barnes and Noble just fires almost every single receiving manager as a cost cutting measure. I worked with them for over 17 years and my weekly Storytimes are massively popular. And in the blink of an eye, I'm fired.”

He was featured in this article he posted on Twitter as,The King of Storytimes.
The location he worked at commented on his Facebook page, “The Norman store loves Mr. Steve and is mourning in the light of corporate staff cuts. There simply are no words for what Mr. Steve has meant to our store and to the Norman community.”

How do you develop trust and loyalty in your employees so they add to your brand like Steve?  

Here are 15 ways to create loyal employees:

1. Have a Winning Company Culture. You have to model respect for everyone from the janitor or busboy, to the warehouse clerk to the salesperson on the floor, to your vendors. When respect is given while managing employees, it is usually respected. An additional bonus is loyal employees spread the word and potential new hires will share similar values.

2. Guard The Doors. You can’t just hire whoever will work a shift once a week and expect them to sign-on to your values. You need to make sure it is a cultural fit and not just a convenience fit.

3. Find Out What Interests Each Employee. Sit down with your new hires and ask them about their favorite projects, what they’ve done that they love, the moments when they’ve felt most energized at their previous jobs, and the passions they have outside work. Armed with that knowledge, you can build loyal employees right from the start. is one of the most useful ways to drive loyalty especially when managing Millennials who need a greater purpose than just selling stuff.

4. Lead the Team. You can’t hang out in the back office and hope people do their jobs. Leading means being seen, creating goals and promoting passions and opportunities, but it also means correcting bad behaviors and letting go.

5. Give Back. Younger employees especially are concerned and motivated by how your business is making your community a better place, not just a paycheck. Whether through ongoing programs or even a day when you all go and pitch in at a non-profit, your mission has to be bigger than just selling stuff.

6. Clear Communication. You can’t manage by email. Taking the time to make sure everyone understands exactly what their job is and how to do it is crucial. Those who are really with you need you to communicate boundaries, not just goals.  If you’re not comfortable leading and communicating, join Toastmasters and get some practice.

7. Review, Reward, and Recognize. Employees want to know how they are doing. Younger employees have grown up with constant reinforcement. While that is not practical in many settings, if you don’t give it to them, they won’t feel good about working for you.

8. Pay Better Than You Have To. It’s simple, people with greater work ethics generally won’t work for less than they feel they are worth. Hiring at minimum wage and resenting paying new minimum wage laws makes it a them versus us which employees pick up on. Good people cost more if you want them to sell more. And...when they are out there doing amazing work, other companies will try to poach them with more money.

9. Perks. The most common perks in retail are employee discounts. Finding out what is meaningful to your crew is easy – ask them. While it might be a 401K for some, a membership to SoulCycle or free parking might be motivating too.

10. Training. No one comes to your store fully formed. A culture of training means change and upgrade is a way of life. Investing in your crew shows them you care and gives them new tools to keep from becoming jaded.

11. Cross Train.  Your employee development plan should include working other departments or other jobs, if only for a few days, can help employees make connections between what they do and how other departments support or work together as well. Pigeonholing someone to one job or one department can make them grow bored and look for better opportunities to grow elsewhere.

12. Proper Tools. Frustrated employees are ones most likely to leave. Broken fixtures, old POS systems based on DOS, scanners that don’t work - all must be taken seriously if you want employees to stay.

13. Open Door Policy. Being heard is a big one for all of us. It shouldn’t have to take an appointment or a once a year review to talk to the boss. Be generous with your time, understand your employees, and encourage them; they may not have the same coping mechanisms as you do. You can also give them career coaching – it’s never in your best interests to let someone become stagnant.

14. Don’t Micromanage. It’s one of the hardest things not to do as an entrepreneur because you think no one can do it like you. But they could do it better if you let them. Give them proper training and mentoring and let them show you what they can do.

15. Keep A Wall. The best managers keep the pressure off the crew and remain positive. If sales are down, they aren’t sharing the worry and stress. That goes for personal lives as well. Let them do their jobs.

See also, 9 Secrets To Effectively Managing Retail Employees

In Sum

I had a boss who once said, “Your job is when I say jump, you say ‘How high’?”

Employees aren’t animals, they are vital to any business success. And while I understand Barnes & Noble’s sales dropped 6% during the holiday quarter, a wholesale purge of employees like Steve who obviously added to customer delight seems short-sided.

Especially since Barnes & Noble, the one-time book-selling juggernaut, has been struggling to compete with Amazon by providing a better in-store customer experience.

And especially because those longtime and loyal employees still there saw the capricious actions of management and will re-examine their own loyalty to such a management team.

Retailers lose loyalty from employees because they often forget that it is about what the individual brings to the brand, not just the cost of their employment.

Use these tips to grow loyalty with your employees because when you make their day, they can make your shoppers’ day.

And that’s what drives customer loyalty and profitability.