Outback Tries Videotaping Everything, the RealReal May Not Be Real, and Shopify Challenges Amazon

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E-COMMERCE

Shopify now has one million businesses using its service: “Canada-based Shopify seems committed to giving Amazon a run for its money by continuing to grow at a fast clip. Over the past few months and years, Shopify has built tools that make it even easier to use the platform, from faster checkouts to chatbots to launching a fulfillment network. In Shopify’s Global Economic Impact Report, the company points out the main differences between itself and its gigantic competitor. While Amazon consolidates many brands and sellers within its marketplace, Shopify gives individual companies and entrepreneurs autonomy by allowing them to create their own branded store. … 

“Shopify is presenting itself as a fairer alternative to Amazon, giving brands the opportunity to control their own messaging, pricing, and supply chain. This may be an increasingly compelling message given that consumers and brands have been increasingly frustrated with Amazon’s monopolistic practices. … Shopify also says that it’s facilitating entrepreneurs and startups in places that historically haven’t been major hubs for e-commerce, including rural communities, small towns, and developing countries. Companies in India using Shopify generated $250 million in revenue between 2016 and 2018. And companies in the US Midwest that were outside the top 10 largest cities generated $4 billion in revenue during that same period. In other words, Shopify is making the case that small businesses don’t need to sell on Amazon in order to survive in the competitive world of e-commerce.”

Online retail fraud is getting worse: “According to a new LexisNexis study, overall retail fraud attempts doubled year-over-year and tripled since 2017. By its measures, merchants pay $3.13 per lost dollar on average, up from $2.94 last year, a 6.5 percent increase. The rise of mobile commerce and selling of digital goods has added to retailers’ fraud problems. The average monthly fraud volume rose 133 percent for mid- to large-sized retailers selling digital goods through the mobile channel. The rise in fraud is not going unnoticed by the Federal Trade Commission, however, which noted that Millennial consumers are especially vulnerable to fraud, losing $450 million to fraudsters in the past two years, of which $71 million was lost in online shopping scams.”

Strict quotas and a lack of training have kept luxury consignment shop The RealReal from keeping its signature promise—that everything it sells is real: “On its Facebook page, The RealReal proclaims ‘with an expert behind every item, we ensure everything we sell is 100 percent real.’ A CNBC investigation found real questions about that claim, after interviewing nearly three dozen former employees, speaking to unsatisfied customers around the country and obtaining an internal company document from 2018 that shows copywriters in the Secaucus, New Jersey, warehouse have been tasked with authenticating some of the items that go on The RealReal’s site. Copywriters said they had little training on how to spot fakes and were hired to write descriptions of the items to post on the website. … Other internal company documents clearly spell out strict quotas that employees have been expected to meet or face discipline. This means some obvious problems with merchandise can be overlooked.”

TECHNOLOGY

Outback Steakhouse is testing a video-monitoring system that uses artificial intelligence to analyze restaurant performance: “The company is using a product called Presto Vision, a tool built specifically for restaurants, that, according to a statement, ‘uses discreet cameras placed in the restaurant lobby and other areas where hosts, staff, guests, and other individuals are automatically tagged in real-time and their motion analyzed.’ The technology will be piloted at an Outback Steakhouse location near Portland, Oregon, where it will be focusing on ‘lobby analytics,’ which means gathering data on hosts, waiters and customers so that wait times, cleanliness and customer satisfaction levels can be better gauged. …

“Ultimately, the technology would be used to video monitor all areas of a restaurant’s operations, including back-of-house, exteriors and internal dining areas. How does this work? Presto’s algorithms are able to interpret events occurring on the captured videosa messy table left too long, a disgruntled customer, a growing crowd waiting to be seated, a server’s activityand turn those events into data which can be extracted and analyzed by management. As a result, performance metrics can be established and evaluated. Managers can be alerted to problems before they become bigger problems, coaching and training opportunities can be identified and fewer supervisors would be needed to monitor more areas. Using this information, it’s hoped that management can better forecast guest experiences and anticipate issues.” Of course, this may raise a few concerns about privacy.

SILICON VALLEY

Andrew Yang may not be winning the Democratic primary but he is raising a lot of questions about Big Tech: “Yang’s candidacy is something of a toxic bouillabaisse for the tech industry. He presents himself as someone of the industry, wearing a lapel that says ‘math’ instead of one with a flag. Pundits call him a tech entrepreneur, though he actually made his money at a test-prep company. He talks about breaking problems apart and finding solutions. He played D&D as a kid, read science fiction, and understands blockchain.

“He has run his campaign in the most modern of digital ways too. The guy is dynamite on Reddit, and he spends time answering questions on Quora. And that is part of why he’s going to win, he hollers from the stage. He can beat Trump on his own terrain—’I’m better at the internet than he is!’ But the tech-friendly trappings mask a thorough critique of technology itself. His whole message is premised on the dangers of automation taking away jobs and the risks of artificial intelligence. He lambastes today’s technology firms for not compensating us for our data. If there’s a villain in his stump speech, it’s not Trump—it’s Amazon. (‘We have to be pretty fng stupid to let a trillion-dollar tech company pay nothing in taxes, am I right, Los Angeles?’) If Yang is the candidate of Silicon Valley, he’s the one driving a Humvee up the wrong side of the 101.”

HEALTH CARE

America’s largest health insurer is saving money by giving apartments to the homeless: “[Jeffrey] Brenner shows me data on a patient named Steve, a 54-year-old with multiple sclerosis, cerebral palsy, heart disease, and diabetes. He was homeless before UnitedHealth got him into an apartment. In the 12 months prior to moving in, Steve went to the ER 81 times, spent 17 days hospitalized, and had medical costs, on average, of $12,945 per month. In the nine months since he got a roof over his head and health coaching from Brenner’s team, Steve’s average monthly medical expenses have dropped more than 80 percent, to $2,073. After testing the idea in Phoenix, Milwaukee, and Las Vegas, UnitedHealth is expanding Brenner’s housing program, called MyConnections, to 30 markets by early 2020.”

TRADE

According to the White House, the trade wars were meant to shrink the trade gap, but the opposite has happened: “The trade deficit for both goods and services in the first three quarters of the year jumped by 5.4 percent, to $481.3 billion, from the same period last year, according to data released by the Commerce Department on Tuesday. Total American exports fell by $7 billion from the previous year, while imports grew by $17.8 billion. … Peter Bragdon, the executive vice president at Columbia Sportswear, said his company was accustomed to navigating bad public policy but ‘nobody is used to navigating public policy that is this horrible. It’s chaotic and incoherent. It’s not surprising that investments have slowed in the United States because of the chaos,’ Mr. Bragdon said.”

STARTUPS

There is a high-stakes race shaping up to build the first air taxi: “Companies like Lilium are testing their machines, laying the groundwork for wider production and starting discussions to gain support from government officials. At least 20 companies are in the market, which Morgan Stanley estimates will top $850 billion by 2040. Larry Page, the billionaire co-founder of Google, is financially backing Kitty Hawk, a company run by the first engineers on Google’s autonomous car. Boeing and Airbus have projects underway. Automakers including Daimler, Toyota and Porsche are investing in the sector. Uber is developing an air taxi service, with plans to open by 2023 in Los Angeles, Dallas and Melbourne, Australia.

“Yet saying your plane could fly over Manhattan in five years doesn’t mean it will. Building durable jets at a reasonable cost still presents engineering and technical challenges. And a long process awaits with regulators, including the Federal Aviation Administration, that will need to weigh safety concerns. ‘The question is can we build a platform that is broadly accessible to everybody and is not just a rich person’s toy, and can we build it so quiet that people on the ground aren’t annoyed by it?’ said Sebastian Thrun, the chief executive of Kitty Hawk.”

Space Cargo Unlimited sent 12 bottles of wine to the International Space Station to age for 12 months: The company “is focused on what operating in a microgravity environment can unlock for research and manufacturing. … Wine samples taken from the same batch will be aged simultaneously on Earth … and then the results will be compared when the ISS wine shipment returns on a future cargo craft trip back. … Researchers predict there will be taste differences that result from the effect that microgravity and space-based radiation will have on physical and chemical reactions, but the only way to find out for sure is to give it a shot. … Space Cargo Unlimited says that their work is more ‘following in the footsteps of Louis Pasteur,’ who essentially developed pasteurization through experiments with wine fermentation. To that end, it’s hoping this experiment will produce results that could have broader applications across food preservation and the related technologies.”

Friended is joining the crowded social media space by emphasizing one-on-one interaction: “On Friended, users can post to the community about what they’re thinking or feeling. But rather than catalyze a ‘town hall’-style group conversation, members of the community can respond privately to that post, offering their insights, anecdotes or advice. The idea is to give people a chance to share how they really feel in a vulnerable, one-to-one setting. … Right now, users can only post a conversation starter every eight hours. The premium tier, which costs $4.99/week, allows users to post as frequently as they want, and also includes a few other premium features, like the ability to talk to people in your location. … Though the company won’t disclose monthly active user numbers, it did say that it has 500,000 registered users with an average of 11 sessions per day per active user during its beta. More than 2.5 million messages were sent last month.”

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PUBLIC RELATIONS

After Krispy Kreme told a college a student he couldn’t resell the company’s doughnuts, a social media firestorm broke out: “The uproar began when the St. Paul Pioneer Press in Minnesota profiled [Jayson] Gonzalez’s entrepreneurial spirit, documenting his 270-mile drive to a Krispy Kreme store in Clive, Iowa, where he loaded up on doughnuts to resell to customers in Minnesota. The state hasn’t had a Krispy Kreme store in 11 years, and Gonzalez, an accounting student at Metropolitan State University in St. Paul, wanted to meet the needs of doughnut fans while earning money to pay down his student debt. 

“After the newspaper article appeared, Krispy Kreme’s Nebraska office called Gonzalez and told him to stop, saying his sales created a liability for the North Carolina-based company. … But the company’s snub kicked off a protest on social media, including a hashtag on Twitter calling for a Krispy Kreme boycott. By late Monday, Krispy Kreme had reversed course. ‘We are happy to work with Jayson as an independent operator to ensure consistent delivery of our high-quality doughnuts to our fans in Minnesota,’ it said in a statement. ‘We wish Jayson great success and we’re thrilled to help him achieve it by donating 500 dozen doughnuts when he restarts his business.’”

And that’s what’s ahead.

Please send comments and suggestions to mattg@oxfordcenter.com and lfeldman@oxfordcenter.com

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