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Loblaw’s drugstore business, Shoppers Drug Mart, has started to offer same-day delivery through the company’s partnership with Instacart.

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Amazon is reportedly shutting down its domestic ecommerce marketplace business in China by mid-July. It will focus on cross-border business.

A challenging ecommerce market

Amazon has been facing fierce competition from Chinese ecommerce companies. Alibaba and JD.com can deliver a larger range of products to Chinese customers faster with their scale and infrastructure. There are also smaller players like Pinduoduo, which are growing fast with their price advantage. 

At the start of Amazon’s journey into China, it had the advantage of good reputation and offering authentic products, however, as the Chinese ecommerce companies continue to build their strengths and guarantee product authenticity, the advantage has diminished.

Focusing on cross-border ecommerce

As the Chinese consumers increasingly demand good quality products around the world, cross-boarder ecommerce has been on the rise. Amazon is better positioned in this area benefiting from its global reach. It is also helping Chinese merchants to sell to overseas consumers via its Amazon Global Selling service. It has set up Global Selling parks in Hangzhou, Xiamen and Ningbo. 

Kroger has gone live with the expansion of its self-driving grocery ecommerce delivery pilot to the Houston market.

Partnering with Nuro

Kroger is working with self-driving vehicle company, Nuro, for the expansion of this programme, following an earlier test in Scottsdale, Arizona. It currently operates from one store in the Houston market, making deliveries into two zip codes. A further store will join the programme later this spring, adding another two zip codes. The pilot has started using Nuro's self-driving Toyota Prius fleet. Nuro’s next generation driverless vehicle will be introduced later this year.

Source: Kroger

Potential to significantly scale-up in Houston

The initial pilot confirmed for Kroger the flexibility and benefits provided by autonomous vehicles. Customers have also been very receptive to having their groceries delivered in this way. Through moving the test to Houston, where Kroger has a significant presence, there is an opportunity to significantly scale up the programme in the future.

Improving the economics of grocery ecommerce

Self-driving vehicles could be an important component in improving the economics of grocery ecommerce. Last-mile delivery represent a significant proportion of overall costs. Retailers in North America are currently testing several fulfillment and delivery models as they look to reduce channel costs. These include hyper-local robotic fulfillment, third-party crowd-sourced delivery platforms and shared centralised distribution models.

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Amazon has increased the price of Amazon Japan’s Prime membership.

Fee flat for 11 years

Amazon Prime was launched in Japan 11 years ago and the 3,900 yen cost has remained unchanged up until now. Amazon has increased the cost to 4,900 yen (US$44), a 26% increase. The company cited the growing number of services available to members. In recent years, Amazon has improved its offering in Japan, including adding services such as Amazon Fresh, Prime Wardrobe, music and video. Whilst the cost of Prime membership has increased, the price is still lower in comparison to the US, where the annual cost is US$119.

Profitability

Amazon’s annual report shows that the retailer’s international business saw a loss of US$2.1bn in 2018. The move by Amazon to increase its Prime subscription fee in Japan highlights the company is increasingly prioritising profitability. In April 2018, Amazon increased the Prime membership fee in the US by 20%. In addition to increasing the cost of Prime, Amazon is also looking to improve profitability through the expansion of private label; creating a more efficient supply chain, for example, working with vendors to develop Frustration Free Packaging (FPP) and growing its Amazon Advertising business. For more information on Amazon’s strategic priorities, please read our Amazon Strategic Outlook.

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