Category: Business News

This summer, a group of Democrats in Congress urged the Federal Trade Commission to conduct a review of Amazon’s plan to buy Whole Foods. The lawmakers asked that the review include consideration of what effect the $13.7 billion deal might have on our access to healthy foods.

Related: Amazon Is Buying Whole Foods for a Whopping $13.7 Billion — Is It a Good Deal?

This may seem like an overreaction to a deal that Wall Street analysts say will have no significant immediate impact on Amazon’s overall valuation. However, an examination of the deal within the context of Amazon’s strategy starts to paint a picture of an industry on the brink of a massive disruption.

The nature of that disruption? It’s clear Amazon is not merely expanding into the grocery business, but is seeking to fundamentally change the way we buy and receive our food.

Amazon’s pursuit of value vacancies

If you define Amazon’s market as the home delivery of products, goods and services, how does this acquisition fit the company’s strategy? Simply put, by purchasing Whole Foods, Amazon is pursuing a value vacancy, or market opportunity that can be exploited through a digitally enabled business model.

Value vacancies, as defined in “Digital Vortex: How Today’s Market Leaders Can Beat Disruptive Competitors at Their Own Game,” are those categories in which the competition hasn’t caught up to opportunity. Amazon has exploited these opportunities time and time again in publishing, apparel and sporting goods — with well-documented success. Now, the groceries segment, too, has fallen squarely into Amazon’s crosshairs.

Related: The Winners and Losers in Amazon’s Whole Foods Deal

In the grocery industry, competition is lagging while the size of the opportunity is immense — potentially $668 billion, according to some estimates. Consumers are able to go online and click once or twice to order everything from clothes to cars, but a vast majority still drive to stores, navigate crowded aisles to find items and then stand in line to pay for their food.

On the other end of the value chain, grocers — the middle men between food producers and consumers — must establish and service chains of stores nationwide. This system is hardly the most convenient or economical, and that makes it ripe for digital disruption.

While groceries are not new to Amazon, this particular acquisition is the company’s first significant investment in the industry. In spite of Amazon Fresh, groceries is one of the last large retail sectors where Amazon does not have a significant share. At the same time, the food-delivery market represents a significant revenue opportunity.

According to a recent research by Morgan Stanley, the delivery market could reach a value of $210 billion annually in the long term, rising dramatically from around $11 billion today. A report by Whole Foods itself shows that online ordering represents less than 1 percent of the company’s current revenue. This is probably true for the retail grocery sector overall, meaning that the market is still nascent and fragmented, with no established business value model.

Why Whole Foods?

The most limiting challenge to date for home delivery of groceries has been the ability to deliver perishable foods quickly. However, the short shelf life of fresh food is a competitive advantage for a leader in fast delivery. Amazon, through its logistical expertise, has been able to dramatically reduce delivery time over its competitors’. However, quicker delivery is still needed to make online food shopping a reality and one-day delivery remains an exception.

To achieve this, Amazon needs a presence closer to its customers. And Whole Foods fills that vacuum. Its hundreds of stores offer a hyper-local presence in areas with the highest density of high net worth individuals. This high-end positioning is the best fit in the industry for Amazon’s pursuit of consumers with discretionary income.

What can Amazon bring to the industry?

Amazon has made its fortune by selling products at prices most competitors can’t match while driving revenue through membership programs and other services. In essence, Amazon doesn’t have to operate at a profit as others in the industry do. If Amazon operates the fresh groceries business at a very low margin, while driving profitability through its Prime membership and cash from other areas, many grocery chains won’t be able to compete.

This model has been proven elsewhere in the grocery industry through membership-only warehouse clubs. Costco, the largest of such retailers, extends deep savings on bulk items to its members, deriving most of its revenue from annual membership fees. In fact, in 2017, membership fees accounted for 73 percent of the company’s operating income.

In addition to this advantage in cost savings, Amazon can also provide customers with an unparalleled shopping experience. Those who have been to a grocery store the day before a holiday have likely felt the pain of a business competing primarily on cost rather than experience. Stores offer promotional prices to lure as many customers into the building as possible, but pay little mind to how the customer feels when inside.

Amazon will not only save the post-deal customer time; it will be able to apply its established services of automated checkout and “intelligent shopping.”

Further, Amazon will maximize the spend of customers in a way brick and mortar retailers are simply unable to do. This will be possible through use of its analytics capabilities, to predict just what customers will need plus its one-click replenishment through its Dash Buttons, and its ability to suggest additional, complementary products.

Time is of the essence.

Amazon’s unique model and position in the marketplace afford it many advantages in entering the grocery industry. However, the behemoth must act quickly to maximize the value it gets from the acquisition. Value vacancies like this one are notoriously fleeting. Disruptors will soon attack any profitable new market, so companies must win them and maximize revenue and profit margin while they can.

Competitive players are already experimenting and growing their revenue in this area: Instacart, Uber EATS and Google Shopping Express are all disruptive players in the market that could pose a competitive threat if they establish leadership in this segment before Amazon does.

Amazon appears to be taking this threat seriously, though, with rumblings of more acquisitions planned in the grocery industry. Supermarkets with membership business models similar to that of Prime will be able to help an Amazon-fueled Whole foods expand on a private label brand. They’ll provide more brick and mortar bases from which to improve delivery times.

Related: With Its Whole Foods Purchase, Amazon Just Bought a Playground for Big Data

Although all this is just speculation right now, one thing is certain: Amazon is not nearly done with its plans to reshape how we buy food.

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A Manchester-based company that pretended it was linked to Google has been closed following an investigation by the UK’s Insolvency Service.

The agency said Movette had used “deceptive methods” to bill clients for the use of Google My Business – a free service provided by the US search firm.

Movette had been in business for two-and-a-half years before being wound up in the High Court.

It had received more than £500,000 in fees before the intervention.

Google My Business is a service that encourages companies to share information and images about themselves to help the tech firm display relevant listings in its Search and Maps tools.

Movette had charged its victims between £199 to £249 a year to manage their entries.

The Insolvency Service said the firm had:

• falsely implied that it represented or was affiliated to Google when speaking to clients
• falsely implied they would lose their listings if they failed to pay it
• failed to make clear its contracts auto-renewed after a 12-month period
• used “offensive and threatening” debt collection methods

The agency said its probe had followed “a significant volume” of customer complaints.

Several clients had also posted their concerns online.

“This company contacted me telling me my Google page was about to expire and following a conversation claimed I had bought their services,” wrote one on the Who Called Me site.

“Now they hound me every day demanding money and threatening to send in bailiffs. They always ring on withheld number but the number to call back on is a premium number. Clearly it’s a scam.”

Another posted on business reviews website Trustpilot: “Complete liars, rude arrogant… they claim the verbal contracts are legally binding and cannot be cancelled. Do not believe them.”

The Insolvency Service noted that Movette had operated a “very similar business” to another company – Online Platform Management Consultants Ltd – which had shut in April 2015 after operating from the same Manchester address.

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Supermarket group Morrisons has pledged not to sell own-label “fake-farm” food.

It defines this as brands that can give a misleading impression that food comes from a British farm, market or farming town which may not even exist.

It said a meat brand it had created called Hemsley was a play on the name of a North Yorkshire farming town.

The National Farmers’ Union (NFU) is unhappy about fake-brands, particularly when it implies the food is British.

A number of big supermarkets, including Morrisons, have come under fire for using farm-like labels for some of their produce.

The issue came to a head in 2016, when market leader Tesco created a range of brand names for its own produce, including Rosedene Farm and Boswell Farms.

At the time, Tesco told the BBC that some of these were indeed fresh produce suppliers but conceded that not all the items sold under those brand names came from those farms.

Poultry in motion

The Hemsley brand, which Morrisons dropped last year, had been fiercely criticised by the NFU.

The union said that despite sounding like Helmsley, a market town in Yorkshire, Hemsley used poultry imported from abroad, which was produced to less exacting welfare standards than those met by British suppliers.

Morrisons said on Wednesday that 70% of UK adults it polled in a survey objected to the use of fake farm brands.

Instead, consumers wanted products to use real place names on packaging and branding.

A Morrisons spokesman said that its pledge not to use fake farm names would not apply to the third-party brands it stocks.

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US airlines have reported a sharp downturn in the share of passengers they force on to other flights because of overbooking.

The so-called bumping rate for the first half of the year is now the lowest it has been since 1995, the US Department of Transportation says.

The decline comes after widespread outcry over viral videos of passenger ejections earlier this year.

The backlash led airline leaders to pledge improvement.

Overall, more than 213,000 people had to take different flights because of overbooking in the first six months of the year, down from 2016 despite an uptick in total travellers, according to the report.

That figure includes flyers who agreed to give up their seats in exchange for compensation and people bumped involuntarily, whether they received compensation or not.

Why do airlines overbook?

The improvement was driven by a fall in passengers forced off their flight involuntarily, a group that is a much smaller subset of the total – 17,330 people in the first half of the year.

Pressure to improve

About one in every 19,100 passengers was denied boarding involuntarily in the first six months of the year, compared to one in every 16,000 in 2016, according to the report. That’s the lowest rate since 1995.

Delta Air Lines had the lowest rate of involuntary bumping of the 12 airlines tracked in the report, while budget carrier Spirit Airlines had the worst record.

There were more than 332 million travellers in the first half of the year, up almost 3% from 2016.

Scrutiny of overbooking and involuntary bumping increased after Dr David Dao was injured while being physically removed from a United Airlines flight in April. He later settled with the airline.

After video of his incident went viral, experiences on other airlines also drew attention.

US politicians called airline executives to a hearing, warning they would consider regulatory action if the companies did not improve.

Some airlines changed their policies after the incidents, for example, by boosting the amount of money staff can offer to persuade people to give up their seats.

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Reuters

The Dutch food watchdog has said allegations it knew about a potentially dangerous egg contamination as early as last year are “untrue”.

But NVWA inspector-general Rob van Lint did admit to receiving an anonymous tip-off that a harmful insecticide had been used in November.

The chemical in question, fipronil, can harm people’s kidneys, liver and thyroid glands.

It is used to treat lice and ticks in animals, and as a general insecticide.

It is not approved for use in the food industry.

In this case, it had been used to clean chicken pens in order to combat red lice, the NVWA said in a statement.

• Aldi pulls Germany eggs over poison fear

But Mr van Lint added: “At that time there was no indication of an acute danger to food safety. There was not a single indication that fipronil could also be present in eggs.”

The problem first came to public attention in August, when Aldi pulled all its eggs from sale in Germany.

It has since emerged Belgian officials knew about the contamination in June, but did not make the information public.

But Belgian Agriculture Minister Denis Ducarme turned the blame on the Netherlands during a hearing on the crisis in the Belgian parliament, saying the neighbouring country knew about fipronil in eggs as far back as November.

However, Dutch authorities had made “no official communication”, he said.

Belgian and Dutch authorities are categorising the destruction and recall of eggs as a precautionary measure.

The Netherlands is Europe’s biggest egg producer – and one of the largest exporters of eggs and egg products in the world.

It exports an estimated 65% of the 10 billion eggs it produces every year.

More than 100 poultry farms have been closed during the investigation.

When Belgium initially came under fire for not reporting its detection of the chemical in early June, a spokesperson said they had delayed reporting the contamination because the case had been referred to a prosecutor over a fraud investigation.

The cause of the contamination is not yet clear, but a number of reports have suggested fipronil may have been mixed with another insecticide to improve its effectiveness.

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A sudden rise in interest rates poses the greatest threat to the global economy, the IMF’s former chief economist has told the BBC.

Ken Rogoff, who famously predicted a big bank would collapse during the financial crisis, warned that people had got used to ultra-low interest rates.

He also said the economic policies of the Trump administration posed a risk.

Previously the economist had said China was the number one threat.

Talking to the BBC’s World at One Mr Rogoff said that levels of personal and corporate debt had risen in the global economy.

‘Start to unravel’

This was while interest rates had been held at historic lows in many countries, to encourage investors to borrow and spend after the financial crisis.

“If something was to happen that pushes interest rates up, we could see a lot of soft spots – places where there is high debt – start to unravel,” Mr Rogoff said.

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He also said that the economic policies of the White House were creating uncertainty, without naming specific policies.

President Donald Trump is pursuing a more protectionist trade agenda and trying to relax regulations brought in to protect the financial system after the crash.

He has also pledged to slash taxes and boost infrastructure spending.

“The risk is that the White House or the US will do something really irrational. That may seem hyperbolic but we are all holding our breath,” Mr Rogoff said.

‘Scarred generation’

He added that China, the world’s second largest economy, remains a threat due to its own debt problems, political instability and dependency on exports.

Speaking ten years on from the start of the financial crisis, Mr Rogoff said the US had substantially recovered from the downturn of 2007-8.

But he said a generation had been “scarred” by the crash and many young people had struggled to find work as a result.

“I think the crash greatly amplified this wave of populism that the world’s feeling right now,” he said.

“The US would not have had Donald Trump as president without the crash.”

Over 2.6 billion people currently use at least one social media platform. By 2021, that number is expected to increase 15 percent to over 3 billion people.

Social media marketing is a powerful tool for marketers to connect their online audience. Given the rich data businesses have access to thanks to social media networks, targeting ideal customers has never been simpler. LinkedIn offers rich employment data, Facebook and Instagram provide marketers with detailed demographic information and Snapchat makes it easy for marketers to share geographically targeted ads.

Many brands have built successful businesses thanks to social media. Many others have struggled without connect with their target audience online, often because they make one or more os this 10 costly social media marketing mistakes.

Related: How Social Media Marketing Generated $7 Million in Affiliate Sales for This Entrepreneur

1. Committing to too many platforms.

Becoming an expert requires practice and focus. This is true for most marketing activities, including social media marketing. Businesses with small marketing teams should avoid committing to too many social media platforms, and should instead dive deeply into one or two platforms that are well aligned with their business goals.

On Facebook alone, 300 million photos are uploaded per day. Every 60 seconds, 510,000 comments are posted and over 100,000 statuses are updated. Social media marketing requires platform-specific expertise to cut through the considerable noise. However, acquiring this expertise requires time and focus.

By carefully selecting the right social media platforms, even small marketing teams will be able to develop the necessary skills to optimize a handful of key platforms.

Related: 7 Marketing Tips to Help Grow Your Brand on Instagram

2. Neglecting loyal followers.

In his famous TED Talk about how movements get started, Derek Sivers showed that movements are started by the first loyal followers and not necessarily by passionate leaders. Passionate followers help to recruit new followers, and give those new followers reassurance that the movement is valuable.

Similarly, brands should remember to embrace loyal social media followers. If a handful of people are consistently engaging with content, and especially if they are re-sharing it, they should be rewarded. Send them shout-outs on social media or mail them a special thank you gift to encourage them to provide ongoing support.

Related: 10 Tips for More Instagram Followers

3. Copying the voice of other brands.

While it might be tempting to simply copy the social media strategy of an existing brand, social media marketers should resist the urge to copy another company’s brand voice. Social media platforms are designed to present users with novel and unexpected content, which is what keeps users engaged.

The psychological principles of social media networks mean that users are expecting variations in content and in voice. Brands that have created a unique voice online will naturally garner more followers and better engagement than brands that simply follow the herd.

Slack is a good example of a company that has worked diligently to create a unique social media voice. As a result, the company has amassed 311,000 highly engaged followers on Twitter alone. Compare this to Yammer, a competing product with a less compelling social media voice. Yammer has 78 percent fewer followers. In part, this is because Yammer has not created a clear brand voice online.

Related: 6 Ways to Convert Your Instagram Audience into Customers

4. Ignoring the data.

Modern marketing is a data-driven profession. This is true for both website optimization and social media marketing. It is important for social media managers to collect and analyze data to understand how followers react to content. Otherwise it can be hard to understand how to alter a social media strategy to improve results.

This is important across all social media platforms, but is crucial when it comes to Instagram. Investing in a powerful Instagram analytics tool will help social media marketers determine optimal post time and content type, among other variables.

Related: Instagram Analytics: Which Metrics Really Matter?

5. Misunderstanding the target audience.

In 2006, when Hubspot was founded, it was an unknown. Today, Hubspot is a $1.3 billion publicly traded company. Hubspot was able to find success thanks to a tenacious dedication to their customers. This dedication can be seen in their practice of bringing a teddy bear named Molly to meetings.

Molly represents Hubspot’s customer. The company knows Molly’s psychographic and demographic details, and by keeping Molly in mind they are able to make smart decisions that serve their customers best. This understanding has helped Hubspot develop the right content on social media (and in many other places) to attract their ideal customer.

Social media marketers, like business leaders in general, need to understand the target audience. This understanding will make it easier to select the right social media platforms to focus on in the first place. It will also help to clarify what the brand voice should be.

Related: A No-BS Framework to Having an Effective Mastermind Group

6. Underestimating the power of video.

According to a report by Social Media Examiner, 60 percent of social media marketers said that video content was the most important form of visual content. The reason video content is so popular among social media marketers is because it effectively engages followers.

A report by Hubspot showed that 55 percent of people “thoroughly consume” video content, making it the most engaging content type.

Related: How to Grow Your Online Business When You Don’t Have Any Money

7. Treating each social network the same.

No two social media networks are the same, and it is a mistake to treat them as such. Different people use different platforms, and expect to see different types of content on each. For example, it would be odd to see a social media post about an open position on Instagram, but on LinkedIn it would be normal.

Marketers should choose a handful of social media platforms and attempt to master each one to understand what kind of content performs best on each channel.

Related: 5 Steps to Creating and Monetizing a Million-Dollar Online Business

8. Assuming younger employees ‘get’ social media.

As a rule, younger people tend to use social media platforms more frequently. Just look at the data reported by PEW Research Center. But this does not mean that the youngest person on the marketing team should necessarily be entrusted with building a social media strategy.

Social media marketing should be treated like other channels that comprise your company’s marketing mix. A strategy should be built around what your team understands about your target customer profile. Competitive analysis should be conducted to see how you can best differentiate your brand voice. Then a savvy social media manager should be entrusted to bring this plan to life.

Related: This Entrepreneur’s Secret for Going From Bartender to 7-Figures a Year

9. Focusing solely on organic social media.

Paid social media can be an effective way to quickly increase target metrics like followers and engagement. Better yet, paid social media can serve as a complement to an organic social media strategy that is already working.

If, for example, a social media manager has stumbled across a piece of content that resonates with followers organically, it may make sense to increase the reach of this post through paid means.

Related: The Evolution of Influencers, From the 1700s to Today (Infographic)

10. Not training employees to become social sellers.

Each employee in your company has the ability to engage with prospects and customers through social media. Since employees are already using social media for personal reasons, it may make sense to train them to connect with potential customers through social media as well.

Related: 11 Ways Social Media Will Evolve in the Future

Social media networks will continue to grow, both in the United States and around the world. As targeting options become more powerful, they becoming an increasingly compelling channel for marketers.

To be successful, marketers should be sure to avoid the pitfalls outlined in this article, and should approach social media networks with a clear understand of what the goal for using the channel is and how the goal will be accomplished.

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An announcement is expected within days that would see Tata separate its UK pension scheme from the businesses.

It could mean the potential merger between the company and the German steel producer, ThyssenKrupp is more likely to move forward.

The £15bn British Steel Pension Scheme (BSPS) has been a significant barrier to any agreement.

Tata has been in negotiations with pension regulators and trustees of the scheme.

A deal was done between unions and the company that would see reduced benefits for current employees, but the decision would affect all members of the pension scheme including those already retired.

Other similar pension agreements have seen the companies involved pay money into the fund as well as giving a stake in the ongoing business to the new pension providers.

About 6,300 people are employed by Tata Steel across Wales, including 4,000 in Port Talbot.

Tata Steel UK has offered to pay £550m into its now-closed pension scheme and give the fund a 33% stake in its UK business.

It means Tata would no longer have any responsibility for the pension scheme.

This pension arrangement is only available to companies that would not be able to continue trading without the change.

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Reuters

Who are ThyssenKrupp?

• Krupp’s roots are in Germany more than 200 years ago and Thyssen was formed in the 1870s. The two steel companies merged in 1999
• The group employs 155,000 people in 80 countries across the world.
• The European steel division has 27,000 workers, producing 13 million tonnes of crude steel a year.
• There has been speculation about a merger with Tata Steel since last July.

Nearly three quarters of union members backed the new pensions deal earlier this year.

‘Well-funded’

A Tata Steel spokesman said parties involved in pensions talks were in “positive discussions and we are hopeful of reaching a final agreement shortly”.

The pensions regulator refused to be drawn on any speculation. It said progress was being made and an official announcement would be made in due course.

Pensions expert Stuart Price, partner with Quantum Advisory, said a deal has been done with a new pension scheme being set up, with better benefits than a “worse case scenario” of members relying on the safety net of the pension protection fund (PPF).

“Tata Steel will continue to sponsor the scheme and will stand behind it and pay in more money if needed to keep the scheme well funded,” he said.

“Going forward, members will be worse off than if the British Steel pension scheme had stayed in place but it’s better than the alternative with the PPF.”

More men than woman are more likely to suffer from mental health problems, according to a new report.

In a survey for mental health charity Mind 32% of men said work was to blame for poor mental health, compared to just 14% of women.

Mind asked 15,000 people about their mental health and what they felt affected their wellbeing.

Thirty organisations across the UK took part including Jaguar Land Rover, PepsiCo, Deloitte and Barnardo’s.

The survey also found that men were less likely to do anything about problems when they came up.

And 29% of men surveyed said they’d taken time off work due to mental health issues compared to 43% of women.

In the study more women believed factors at home had an equal impact on their mental health as work. They were also more likely to ask for help from their employer when problems arose.

Mind suggests than a “macho” work environment may contribute to poor mental health for many men.

“It is concerning that so many men find themselves unable to speak to their bosses about the impact that work is having on their wellbeing and even more worrying that they are then not asking to take time off when they need it,” says Emma Mamo, Mind’s Head of Workplace Wellbeing.

The charity’s survey also revealed fewer men than women believe their work makes it possible to speak out about their mental health problems or that their managers check their mental wellbeing.

Mind runs a Workplace Wellbeing Index 2017/18, to help advise companies on how to work with staff who are experiencing poor mental health.

“Our research shows that the majority of managers feel confident in supporting employees with mental health problems, but they can only offer extra support if they’re aware there is a problem,” says Emma.

“In the last few years, we’ve seen employers come on leaps and bounds when it comes to tackling stress and supporting the mental wellbeing of their staff.

“However, there is more to do and employers do need to recognise the different approaches they may need to adopt in how they address mental health in the workplace.”

Of the respondents 47% were men, 49% women and the rest preferred not to specify.

For more information on mental health visit the BBC Advice pages.

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