Great article. I’m familiar with the grocery industry, and I can attest to the difficult of ensuring produce quality. The biggest issue with quality is that while produce item might look fresh when you package it, there is no guarantee that the quality will remain optimal when it gets to the customers, even worse when the customer is about to use it. While you could make the argument that because the produce does not have to travel a long distance (given the local nature of the supplier) quality issues will not be as drastic, it will very difficult to replicate such a business model for all locations simply because not every city have enough farmland to support that population. I don’t think this is scalable outside the west coast, which has an abundance of farmlands (https://www.insidermonkey.com/blog/10-largest-farming-states-in-the-us-343286/2/).
Great article. I enjoyed your threat assessment of Amazon’s acquisition of Whole Foods on the grocery industry. While bringing food online could go a long way in helping some of the grocery players stay competitive in a fragmented business, I believe they need to be more concerned with how to get food to customers’ tables. Customers are becoming increasingly lazy and now want to be served right on their doorstep. Thankfully meal kit startups are already solving such a problem so these big grocery players do not need to reinvent the wheel. My recommendation is for them to acquire meal kit companies who clearly have the digital capabilities that most of them lack, the customer data on value perception, production facilities and food delivery supply chain capabilities. This would be a great way to counter Amazon’s threat. Amazon could offer Amazon fresh products at Whole food stores, and grocers getting into that market as soon as possible could reduce the first mover advantage Amazon accrued by purchasing a grocer.
Thanks for the excellent article. I want to respond to the author’s concern about recyclability of the packaging materials. A potential solution could be to have a free return policy for some of the materials that might be impossible to recycle, such as ice packs, bubble wraps, some of the ingredient bags, and possibly the box. Not only will doing this reduce the issue with some of the environmental issues raised by critics, but it would be a great cost savings benefit. If enough of these packaging materials are returned, the company should be able to break even on its recycle program
I don’t agree Macy’s will remain profitable even if they are put all their real estate holdings in a REIT. Given that real estate is approaching a historical high (https://www.bloomberg.com/graphics/2017-retail-debt/), even if Macy’s gets into a leasing agreement, they will be securing leases that are very high as of today’s rates. With omnichannel eating into the once booming brick and mortar retail stores, it will be hard for Macy’s stores to stay competitive enough to break even. For the sake of this mind exercise, it’s fair to assume that same store sales is going to shrink as more customers become digitial. Now when you couple that with Macy’s getting into long term leasing contracts through REIT, it’ll be difficult for the company to keep generating consistent cash flows. They are going to die and if I were them, I’d simply close down most of my stores and only keep the ones with the most traffic. Brick and Mortar is a dead business.
I agree with Boaty that this is an effective to lower hospital fixed costs but just to refresh the author’s concern, getting through regulations will be a pain. The U.S. states parliaments reception to health care laws have been notoriously slow. I cannot envision all 50 states passing laws that will aid telemedicine. I’d expect a conservative reception given how hard it’s historically been to pass healthcare reforms (Brady DW, Kessler DP. Why Is Health Reform So Difficult? Journal of health politics, policy and law. 2010;35(2):161-175. doi:10.1215/03616878-2009-048.)
This is a well written report on the threat of technology to drug delivery. Pillpack and CVS has been increasingly powerful, and as such have built a great data system on its customers. To your question about the threat of amazon, I don’t believe this is a core part of Amazon’s strength because of the nuances involved in drug delivery. There are many parties to attend to: doctors, regulators, drug suppliers, customers (more importantly data on customer behavior and value perception), etc., and I don’t believe Amazon has built those capabilities yet. You could argue that those could be built, but it’s going to take a long time to build such capabilities. One could argue that Pillpack and CVS are way ahead of that curve.