By Alec Hogg
On the latest quarterly results earnings call, Amazon CEO Andy Jassy told investors the operation highlight of his group’s past three months was a 20% drop in the “number of touches” of a delivered package and a 19% reduction in “miles travelled to deliver packages”—incredible numbers for a business which now delivers 1.6m packages daily.
Jassy said this was a big deal because it speeds up the time between when a customer clicks and when purchases are delivered. To whit: “When we make faster delivery…customers purchase more often, not just a little higher, meaningfully higher.”
___STEADY_PAYWALL___The continued improvement of the Amazon steamroller has relevance for South Africa’s non-food retail sector, which has only recently started to feel the impact of online competition. Amazon itself is poised to enter the SA market. It’s not just the US giant that will hurt JSE-listed stalwarts like Truworths, Woolworths, Pick n Pay and Mr Price.
I had a fascinating chat last week with Sharenet’s Martin Strauss (above), who pointed out that Chinese online retailers Shein and Temu have recently entered SA and are growing fast. Working on a thesis that avoiding losers is even more critical than finding winners, Strauss says there’s much more pain on the horizon for SA retailers.
Warren Buffett’s right hand, the inimitable Charlie Munger, loves telling shareholders at the annual Omaha gathering that Berkshire’s success comes primarily from avoiding stupid mistakes. Inspired by German mathematician Carl Jacobi, he advises that every problem is more easily answered when inverted – i.e. knowing what NOT to do.
Sharenet’s Strauss is from the same school. The high risk of doing business in SA has kept most foreign competitors away. As a result, local corporates have enjoyed a relatively easy ride, with productivity, cost and employment falling ratios out of line with global norms. Amazon, Shein and Temu are a different proposition entirely.
Sterkte
Alec
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