Tag Archives: amzn

Amazon.com, GrubHub Under Fire From Uber Restaurant Delivery

Ride-booking firm Uber announced in a blog post Tuesday that it was expanding its restaurant delivery service and spinning it off from the main Uber mobile app. Called UberEats, the food delivery app will add competitive pressure to Amazon.com ( AMZN ) and GrubHub ( GRUB ), both of which have competing restaurant delivery offerings. GrubHub stock was down 5% in early afternoon trading in the stock market today , while Amazon stock was flat. UberEats is an expansion of the company’s “instant delivery” service, which offers a fixed menu and deliveries in “as little as 10 minutes.” UberEats is partnering with “hundreds” of restaurants to make food delivery available seven days a week, according to the company’s blog. Cowen analyst Kevin Kopelman conducted tests of UberEats in Santa Monica, Calif., and found that the app’s estimates — 30 minutes or less, with a midpoint around 11 minutes — beat Amazon Prime Now Restaurants’ nationwide average of 39 minutes. GrubHub does not provide precise timing information because it doesn’t make the delivery itself, Kopelman pointed out in a research note Monday. Amazon offers estimates “within the hour.” Kopelman says that UberEats has changed to curbside delivery only, which means that drivers will not meet customers at the door, as is the norm in food delivery. Kopelman says that changing to curbside lets the company more easily integrate existing drivers for UberX — its taxi-like service, where drivers use personal cars to ferry passengers — which the firm is using as a primary source for delivery recruitment. An Uber spokeswoman told IBD that the company’s “instant delivery” is curbside, but she added that its regular restaurant delivery “in most cases” is door-to-door. Unlike Amazon and GrubHub, UberEats does not allow tipping within the app — though customers can give the driver a cash tip — and its fees are among the lowest among its competitors, according to Kopelman. Amazon does not charge a delivery fee, at least for now. “Our initial impressions of UberEats in Los Angeles make us incrementally more cautious on the competitive environment for GrubHub,” Kopelman wrote. The UberEats app and curbside restaurant delivery are set to roll out in Chicago, Houston, Los Angeles, San Francisco and Toronto, according to the company’s blog. Seven other major markets are set to open “around the corner” — including Melbourne, New York and Paris. Troubled Market But if startups are any indication, then UberEats, Amazon and GrubHub are vying for a market that is looking at a troubled future. Tuesday, TechCrunch reported that SpoonRocket, a food delivery app, is shutting down amid the “on-demand apocalypse,” referring to the big challenges of the food deliveries business. And Monday, the Wall Street Journal published a report  saying that grocery delivery app Instacart, valued at over $2 billion, is slashing its driver pay 63% in a bid for profitability. The WSJ also pointed out that such on-demand delivery companies are attempting to avoid repeating history. In the dot-com bust, heralded grocery delivery startup Webvan Group burned through $800 million before shutting down in 2001.

Groupon Could Get More Users From Facebook In New Social Media Push

Groupon ‘s ( GRPN ) pledge to trim down and over-deliver as it transforms its operations drew praise Tuesday from investment bank William Blair. Groupon interim CFO Brian Kayman and investor relations chief Tom Grant said in meetings with William Blair last week that the company “had a tendency to ‘get ahead of its skis’ in terms of priorities and financial targets,” wrote analyst Ralph Schackart. That “overly-broad approach … led to some mis-execution,” Schackart said. “Going forward, the company is focused on executing against a narrower set of priorities to regain investor confidence, and it is attempting to set less ambitious guidance targets.” In a restructuring expected to be completed by September, Groupon is shutting down in unprofitable countries and scaling back low-margin goods. Groupon reported Q4 earnings that beat consensus, Schackart said, and now Groupon shares “are up 35% year-to-date — the highest of any company on our coverage list.” But it’s now up just 25%, with Groupon stock down 7% in midday trading in the  stock market today , near 3.80. Schackart said “the company will need to show consistent execution against stated guidance for multiple quarters to regain increased investor confidence.” William Blair maintained a market perform rating on Groupon stock. Will Groupon’s Marketing Spend Produce Results? A key focus for investors is Groupon’s $150 million to $200 million incremental marketing investment for 2016, he said, especially since executives “noted that price, frequency and active customers are the three primary revenue drivers, and the incremental marketing spending will be focused on adding new customers.” On Tuesday, Groupon announced a series of website, mobile and tablet enhancements designed to make it easier for merchants to track and manage their Groupon campaigns. Groupon’s plans to use social media and search engine marketing in new ways drew praise. “For example, it might target people on Facebook ( FB ) who do not have the Groupon app with a mobile installation advertisement or bid on higher-level search words than in the past,” Schackart wrote. Other analysts have been more skeptical. “While Groupon has recently shown signs of progress in its transformation to an e-commerce marketplace and its core initiatives (including streamlining its international operations or customer acquisition), we believe there is still a long road ahead in strengthening the company’s positioning in the local ad and/or local e-commerce market,” wrote UBS analyst Eric Sheridan in an industry note on March 9. “Meanwhile, larger Internet companies, predominantly Alphabet ( GOOGL ) subsidiary Google and Facebook, are increasing their efforts to capture local ad dollars, while Amazon ‘s ( AMZN ) same-day delivery service reduces the benefit of a local marketplace.” Sheridan downgraded Groupon to sell from neutral and set a price target of 3.20. Sheridan sees several “key weaknesses” in Groupon’s competitive position, including marketing spend that will pressure near-term margins, rising competition, a shift to lower-margin business and slowing customer and engagement growth. Sheridan blamed those troubles on Groupon’s international retrenchment and its “lack of operating profit scale to drive additional investments in innovation that might counteract the platform strength of Google and Facebook.” Groupon’s changes come as others are also tweaking their strategies. Last week, Angie’s List ( ANGI ) got a revenue outlook boost from Pacific Crest Securities, which praised the online review site’s recent decision to drop its current membership model and replace it with free access to its business ratings and reviews as part of a tiered subscription plan. The addition of the free tier “should reignite user growth,” wrote Pacific Crest analyst Evan Wilson in a research report last week.

Apple’s Virtual Reality Absence Would Be Like ‘Missing The iPhone’

Loading the player… Top technology players are gathering at the Game Developers Conference this week to discuss new developments in virtual reality, but one big name is missing from what could be the next big thing: Apple ( AAPL ). Facebook ( FB ), Sony ( SNE ), Alphabet ( GOOGL )-owned Google, Amazon ( AMZN ) and Microsoft ( MSFT ) are racing to stake claims in a medium that looks to revolutionize consumer technology. Meanwhile, Apple is planning a March 21 spring product event where it’s expected to launch slightly different versions of existing products. “Apple needs to do something (in VR) at some point, because if they don’t . . . it would be as significant as them missing the iPhone, as hard as it is to believe,” Piper Jaffray analyst Gene Munster told IBD. “But that’s how big of a deal VR is going to be.” Billions of dollars of investments in hardware, software and content provide evidence that virtual reality isn’t a far-off dream, but the “next computing paradigm,” according to analysts. Yet for now, Apple is selling more of the same and remains dependent on the iPhone, as its smartwatch, tablet and set-top box have failed to be catalysts for major, sustained growth. Apple Prefers Waiting Apple typically takes it slow when it comes to entering new markets. Munster says the tech company learns from and improves on what other companies have produced but haven’t “figured out,” such as the music player, the phone and wearables. He thinks Apple is actually doing the right thing by letting the basics of the VR market get figured out first, and expects that the company will offer a consumer-level headset in about two years. He also sees more third parties creating headsets that utilize the iPhone, much like Samsung Gear VR, for lower-quality applications as soon as this year. But there’s a potential disadvantage for Apple in letting others be the first movers in the virtual reality market. “If one of the other competitors gets it right (has explosive growth), right out of the gate, then it’s playing catch-up and that’s a difficult position to be in,” Munster said. And not only is Apple absent from VR headsets, its high-end desktop computer can’t handle other companies’ 360-degree viewing gear, according to Palmer Luckey, founder of Facebook-owned Oculus. The Oculus Rift headset would have Mac OS support “if they ever release a good computer,” he told Shacknews . To be sure, the Cupertino, Calif.-based company has made investments in the augmented reality space over the past few years, with the acquisitions of Metaio and Flyby Media, and has hired VR talent. But Apple’s efforts to enter a new market seem focused more on developing a car, rather than something that’s in a more similar product category as its other gadgets. Facebook Leaves Opening Apple still has a window of opportunity as its rivals’ VR products require steep up-front costs from consumers. Oculus will begin shipments of the $599 Rift headset on March 28. The HTC Vive will launch in early April at $799. But consumers will also need to have gamer-level PCs, which can cost more than $1,000. That barrier to entry that may leave some breathing room for a late move from Apple. Abi Mandelbaum, CEO of interactive VR-content platform YouVisit, says that Oculus’ strategy is stifling VR’s ability to go mainstream to all consumers. “It’s surprising that Facebook would leave such a big segment of the market out from an initial standpoint,” Mandelbaum told IBD. “They’re not only excluding Apple, but most of the PCs that users own, leaving the vast majority out.” He says his company has been working on algorithms that improve lower-end VR viewing. This could further the use of iPhones for VR in the interim, before Apple comes out with its own headset. “You don’t need to have a high-end VR headset to have a premium VR experience, because the software is doing the heavy lifting,” Mandelbaum said. Apple’s Mixed Reality While its rivals rush into VR, Apple could skip it altogether and instead pursue mixed reality (MR). Munster says there’s a camp that believes VR is just the “appetizer” to a bigger opportunity with MR, which goes beyond entertainment applications to be integrated within daily life. Munster says home designs could incorporate virtual flowers and pictures, for example. And a display containing the weather forecast could be grabbed and manipulated. That would be more in Apple’s wheelhouse, as iPhone applications like the calendar, maps, and photos have become necessities. It could also decide the company’s fate. “Over the next 20 years, the screen as we know it will slowly go away,” Munster said in a Feb. 9 research report. “Given Apple’s business in screens (iPhones, iPads and Macs), Apple needs to have leadership in MR to stay relevant long term.”