Can Rivals Take Advantage of Amazon’s Pandemic Woes?

From The Wall Street Journal:

When coronavirus lockdowns sent Americans into a frenzy of panic buying, the bad news came almost as quickly as the good for online organic grocer Thrive Market.

In March, the company that aims to compete with Amazon.com Inc. in the health-food sector suddenly found customers flocking to its site as its giant rival struggled to handle its own pandemic business surge. Thrive notched record sales and membership sign-ups.

Then it buckled. Orders ballooned to five times what Thrive could handle. Delivery times for some customers reached two weeks. About 30% of items were out of stock on some days. To keep delivery times from slipping further, Thrive made the previously unimaginable decision to throttle demand by limiting shopping hours.

“It was excruciating,” recalled co-founder and Chief Executive Nick Green. “It felt like a pick-your-poison moment.”

Thrive Market, based in Los Angeles, is one of a host of retailers that have spent years trying to compete against the Amazon retail juggernaut. The coronavirus pandemic provided a fleeting window of opportunity. Amazon, overwhelmed by a wave of orders, temporarily reoriented its business toward essential items, leading consumers to begin looking elsewhere.

But capturing that opportunity—and trying to ensure it is more than a temporary blip—brought extraordinary challenges for Thrive and others, demonstrating the difficulty of competing with even a weakened Amazon.

. . . .

The pandemic has accelerated the shift to online shopping and devastated traditional retailers, including Neiman Marcus Group Inc. and J.Crew Group Inc., which have filed for bankruptcy protection. Financial-services firm UBS Group AG recently predicted the percentage of groceries sold online will rise from 3% this year to 15% by 2025.

. . . .

Mr. Green calls Thrive the “un-Amazon” because, he says, it offers a curated selection of merchandise. Early on, many reluctant investors had the same question: How would it compete with Amazon or Whole Foods Market?

Mr. Green was betting that consumers would try it out for its carefully selected inventory and competitive prices and stick around because they feel good about shopping there. He also billed the company as socially conscious by adhering to such practices as not offering genetically modified products.

Thrive, which is privately held, eventually raised more than $160 million. It now has more than 800,000 members who pay $60 a year. Although Thrive doesn’t disclose sales, Mr. Green said they were in the hundreds of millions of dollars annually.

On March 11, Mr. Green was preparing to leave work when he glanced at a computer monitor showing the company’s financial metrics. That day’s revenue line shot up like the handle of a hockey stick.

He messaged an executive to make sure there wasn’t a bug in the system. There wasn’t. Checking CNN’s website, he learned the World Health Organization had declared the coronavirus a pandemic. People were buying in a panic.

. . . .

Days later, the country shifted into lockdown mode. Within a week, Amazon was struggling to meet orders promptly. On March 17, it said it was prioritizing the shipments of medical supplies, household staples and other high-demand products. Toilet paper and many cleaning supplies became unavailable, and shipping was taking weeks for some products. Amazon retooled its website to encourage shoppers to buy fewer items.

A survey by investment bank Jefferies Group LLC showed that almost one-third of respondents said they turned to non-Amazon sites during the pandemic because of delivery and inventory problems.

At Thrive, new paid membership sign-ups in March and April were up threefold from the prior year. But the same problems that plagued Amazon ravaged Thrive. Customers rushed to buy cleaning supplies, canned food and other essentials. A six-month supply of toilet paper ran out in three days. Mr. Green wasn’t sure how quickly the company could address the backlog.

Earlier in March, Chief Financial Officer Karen Cate had asked Thrive’s supply-chain director to order five times the usual amount of canned goods and cleaning supplies. She left out toilet paper. “If I could go back, I would change that one,” she said.

. . . .

To some, limiting online store hours seemed a sensible middle ground. Ms. Cate, the CFO, was skeptical. She said she felt Thrive could gain control of its order backlog without limiting members to ordering during working hours. She worried that members who worked during the day—including her daughter, a nurse at a hospital in Pasadena, Calif.—would be shut out.

She relented after seeing internal metrics that showed delivery times would only increase. “OK, I surrender,” she recalled thinking.

On a midnight call, Mr. Green and co-founder and Chief Technology Officer Sasha Siddhartha decided to move forward with limiting the hours. They told other executives the next day and instituted the new policies on March 25.

. . . .

The stress mounted for Mr. Green, whose wife had just given birth to their second child. He was getting a handful of hours of sleep per night and didn’t shave for a month. He stopped working out. Outside of work hours, his time was consumed by his newborn son and late-night emails and calls with executives.

It was difficult to concentrate from his setup in the family’s guest bedroom. He took two monitors and his MacBook Pro and set up an office in his closet, placing the equipment on shelves near his T-shirts and jeans. He scrapped a strategic plan and built a new one, staying up one night until 3 a.m. to finish it. The plan re-examined hiring goals and when the company should expand its fulfillment network, among other things, to ramp up faster.

. . . .

Holding on to customers became harder as Thrive struggled to handle the order influx. Online, customers were threatening to leave over the delays. Members were frustrated and questioned why Thrive was taking on new customers.

. . . .

By early April, Thrive Market was hiring as many as 30 warehouse workers a day. Using several recruiting agencies, it hired more than 300 warehouse workers in less than two months, adding to the roughly 500 it had. Labor costs jumped 20%.

The company also removed nonessential items such as water bottles and yoga mats from its website to concentrate on delivering essentials like food and cleaning supplies. It tinkered with its fulfillment processes, processing orders for high-demand products in one section of warehouses. It prioritized orders with the longest delivery times. It stopped selling low-demand items in the back of the warehouses, partly so workers wouldn’t have to waste time fetching them.

. . . .

Higher costs have reduced the percentage of profit made on orders, Mr. Green said. And the store has had to dip into its cash reserves to pay for a spike in inventory expenses. But the year’s revenue projections have risen, and the company is in a strong cash position, he said, although he declined to provide details.

Thrive’s goal to reach profitability by the end of 2022 hasn’t changed, he said. “With our growth accelerated,” he said, “we expect to get profitable even faster.”

. . . .

The lessons from the pandemic have changed its fulfillment processes. Mr. Green said the company will hold 20% more inventory and will work with a larger number of suppliers. Its technology team plans to roll out improved recommendation functions on the website for when items are out of stock.

Link to the rest at The Wall Street Journal (sorry if you run into a paywall)

PG has a soft spot for scrappy young tech startups and was heartened by the apparent survival of Thrive as depicted in the OP. For PG, a couple of smart young gals/guys who put it all on the line to start their own internet business is the cutest thing since puppies. That’s one reasons why he appreciates indie authors.

PG remembers when he first heard about Amazon from a friend and read an interview with Jeff Bezos. Later, PG created quite a few posts as the illegal Apple/Big Five Publishers scheme to kill Amazon fell apart.

Of course, Amazon has probably been the best single thing to happen to authors and readers in the last twenty years. Gatekeepers of dubious ability knocked back on their heels. Talented authors who want to move fast and write a lot of books unchained. Indie authors who know their readers because they pretty much are their readers instead of believing most people are more like their classmates at Swarthmore and Princeton than anything else.

Literati will go to their graves without admitting it, but Amazon has also helped Big Publishing to avoid becoming Semi-Big or Largish-Medium Publishing during the same time-frame. Since a great many publishing executives fall into the category of smartish, Amazon may have even prevented Big Publishing from becoming Chapter 11 Publishing.

Based upon a whole bunch of authors that he knows and carefully monitoring of what authors, particularly indie authors, are sharing about the business side of their art, PG feels comfortable in stating that Amazon’s self-publishing programs have made it more possible for many, many more authors to quit their day jobs than any other organization or collection of organizations on the planet.

As he has mentioned before, PG hopes JB’s style and savvy doesn’t slowly fade away at Amazon since he’s becoming less and less involved in the management of the company. Amazon works in a tough neighborhood. The list of huge, well-known retailers that have lost their mojo and disappeared into Chapter 11 or, at best, irrelevance is a long one and if Amazon ever starts taking its customers for granted, it might join the Wikipedia throng of giant retailers that are no more.

How to balance full-time work with creative projects

From Fast Company:

“Teacher burnout” refers to a state of chronic physical and emotional exhaustion brought on by prolonged periods of stress. Combined with low wages, inadequate funding, and disheartening educational policy, burnout has resulted in eight percent of teachers in America throwing in the towel over the past decade.

As a teacher myself, it’s been interesting to reflect on what keeps me coming back to the classroom, five years into this difficult yet ultimately rewarding job. What it comes down to, I think, is that teaching is not the only thing that keeps me going. In my opinion, relying solely on a day job or career to fulfill your ambitions and keep you mentally stimulated is risky business. Instead, I like to incorporate a smattering of fulfilling creative projects within my day-to-day life to help me keep my teaching job in perspective. And while it isn’t always easy to do it all, there are ways to balance things out.

Over the past few years, in addition to teaching full-time, I’ve managed to finish a master’s degree, start a record label, contribute to various publications, and release/perform music as Nassau. Through it all I’ve practiced, failed at, and re-tooled strategies for balancing full-time work with multiple creative side projects. In this guide you’ll find a handful of takeaways for staying sane, organized, and intentional while trying to do it all.

BE HONEST ABOUT YOUR 9 TO 5

Your day job matters a lot

It really does! The average person will spend over 90,000 hours, or about a third of their lives, at work. With another third of our hours spent sleeping, the time we actually have for “living” seems modest at best. If you’re holding down an unfulfilling 9-5 with the primary ambitions of supporting yourself and your creative work (versus building a career in that area), ideally this job should provide you with at least one of three things: more time, more resources, or a skill set that will help you be successful in your creative endeavors.

As you contemplate what type of day job might make sense for you, consider the feelings you’ll want to have after completing a shift, or after heading out from the office. Probably “drained, grumpy, and sick of everyone” are not feelings that are on your list. So think about it: What type of work or situations might you seek out that wouldn’t leave you in a bad mood after working? By spending some time brainstorming about the job that could be a nice complement to your personality and side projects, you’ll put yourself in a better position to find the right type of gig.

. . . .

Finding the right gig to nicely balance with your personality and creative work isn’t going to happen overnight. As you work towards finding the right role, pause and reflect on your thoughts and emotions whenever possible. In each type of positions, ask yourself: Were there new trends in your behavior? Did you notice an uptick in your creative work and productivity outside of your 9-5?

As you think about what type of day job might make sense for you, a simple exercise to try starts with taking inventory of your skills and passions. Write them down. Go for quantity here: What are you good at? What comes naturally? Anything goes. Then look for patterns or themes. You may even group your skills into categories including “things I love doing,” “things I get paid the most for doing,” “skills I want to improve,” or “skills I haven’t used in a long time, but would like to use again.” Identifying patterns will enable you to honor and recognize the expertise you already possess, and can help you find employment that complements not only you as a person, but your creative practice as well.

As you do the above exercise, you should also be honest with your intentions, and even name them. Would you like a job that makes you lots of money? Expands your network? Gets you working with your hands? Trust your brain and your body–you’ll thank yourself when you’ve landed the right job that’s actually helping you get what you want (not just what you think you should want), and are also able to have time and energy to produce creative work you’re proud of.

Link to the rest at Fast Company

Indie Authors Quitting Their Day Jobs – 2017 Edition

TPV visitor Devyn suggested it was time for another invitation for authors who have been able to earn enough money from writing to quit their day jobs to share their stories.

PG’s first invitation on this topic was in 2014. Devyn pointed out that the last invitation was in April of 2016.

Here’s the original 2014 invitation:

PG received the following suggestion from Dennis:

What if you put up a post that asked anyone who has recently been able to go “full time”, quit their day job and write, to post their name. Maybe they could also put when or how soon they are planning to do it.

That would be anecdotal evidence to support what Howey and Data Guy have been showing since their first report.

If you care to contribute such anecdotal evidence in comments to this post, please do.

If you think it’s your private business, don’t be offended. Just don’t post anything.

Feel free to post anonymously or under an online pen name if you like. If someone points out a trollish comment, PG will probably delete the comment when he gets around to it.

Please share your experiences in the comments to this post. If you posted in response to earlier invitations, feel free to post an update here if you like.

If you would like to review stories in response to previous invitations, you can click on the Quit Day Job category link.