|From: Glenn Petersen||7/26/2020 1:28:25 PM|
Shopify Saved Main Street. Next Stop: Taking On Amazon
The Canadian e-commerce company is breathing down Silicon Valley’s neck as the next great enterprise behemoth
David H. Freedman
Marker via Medium
Jul 22 · 16 min read
Photo illustration: Jon Han, sources: Lonely Planet Images / Photolibrary / Getty Images
In late March, 15,000 gallons of beer were sloshing around in Peter Bulut’s tanks and barrels with nowhere to go. Bulut, the owner of Great Lakes Brewing Co., first started working in his father’s tiny craft brewery in Toronto almost 30 years ago, when he was 21. Since taking over five years ago, Bulut, now 50, had transformed it into a model small-scale brewer — quintupling its production capacity, opening an onsite restaurant and retail store, and building up a force of nine full-time salespeople who landed the company’s beer into bars, restaurants, and liquor stores all over Ontario.
Back on March 13, when Covid-19 was creeping its way into Toronto, Bulut started taking small precautions, like suspending in-store beer tastings. Then the full weight of the calamity struck with stunning speed. Two days later he closed the restaurant and store. Most of the bars and restaurants he supplied beer to were closing, too. Five days after that, facing a 50% drop in business, he laid off a quarter of his 52 employees. “I didn’t sleep for two weeks after that,” recalls Bulut. “When you’re the owner, it’s your fault.”
He didn’t want to do more layoffs — but what was he going to do with the tens of thousands of gallons of beer piling up? Maybe he could sell it online and do home delivery? One of his employees had set up an online shop to sell T-shirts and caps with the company’s logo. Bulut had the employee call Shopify, the company powering the site, to find out what it would take to convert it into an online beer-sales-and-delivery store. Bulut was surprised by Shopify’s response. “They jumped all over it,” he says. “They wanted to help us hit big sales volumes.”
Two days later Great Lakes transformed into a fully functioning e-commerce operation, taking home delivery orders on its website. They made a few dozen sales the first day. Within a week they were up to 500 orders daily. There was so much business that Bulut kept all of his nine salespeople busy full time delivering the beer to customers’ homes. Meanwhile, Shopify helped Great Lakes set up a contactless credit-card reader and a point-of-sales system that tied into the home delivery system, so it could also offer curbside delivery. Shopify told Bulut it was working on an app that could find the most efficient delivery routes, and let him use a pre-released version, too. Not only was Bulut able to hold onto his remaining staff, he has since rehired most of the people he laid off. “I feel guilty saying it,” he says, “but sales-wise we’re about 15% ahead of where we were before the pandemic.”
Only Amazon takes in more money online, dollar-wise, than Shopify’s sites, which in aggregate brought in more than $60 billion in 2019, $20 billion more than the year before.
Bulut was just one of hundreds of thousands of small business owners desperate for a lifeline this spring when the pandemic hit. While offices everywhere were able to pivot en masse to Zoom, retailers on Main Streets all across the globe were getting crushed. Many had never before processed a single online transaction, now needing to somehow flip a digital switch in order to stay alive.
Many of them ultimately discovered, like Bulut, that switch was Shopify, the e-commerce platform that has quietly mushroomed from a home-grown website into a publicly traded tech behemoth over the past 14 years. It now powers the online shopping carts for millions of companies, from buzzy startups like Allbirds and Bombas to big brands like Heinz and Nescafe. Only Amazon takes in more money online, dollar-wise, than Shopify’s sites, which in aggregate brought in more than $60 billion in 2019, $20 billion more than the year before. The company’s prospects have seemed limitless, with its own revenue increasing nearly 50% last year to $1.6 billion.
The pandemic has accelerated that already rocket-ship growth, with analysts predicting an average 75% annual rise in the next five years. In early July, Shopify’s stock price surpassed $1,000 per share, more than triple its mid-March price. Aside from Zoom, arguably no other tech company in the pandemic has had such a massive groundswell than Shopify. Now, with an even more intense grip on the small-business landscape, the low-key Canadian company is plotting to go head-to-head with platforms from Amazon to Facebook.
At its center is an unlikely foil to the Silicon Valley tech titans — Shopify founder and CEO Tobi Lütke, a German coder who first started the business a decade and a half ago after trying to launch an online snowboard shop. If Lütke can continue toeing the line between friendly hero to small businesses, and viable threat to Big Tech platforms, Shopify could be on its way to becoming the most dominant retail engine powering the economy.
In early January, an unsettling agenda item popped up at a meeting of senior managers at Shopify’s headquarters in Ottawa, Canada: Its Hong Kong office was warning that the severe outbreak of a flu-like illness in China had the makings of a pandemic. Throughout the month, that concern rose higher and higher on the agendas at successive meetings. How big would this thing get? How badly would this affect businesses around the world?
By March, hundreds of thousands of small business owners would realize that their only shot at staying alive during an indefinite, unprecedented shutdown would be e-commerce.
By the beginning of February — as President Trump was claiming the coronavirus would disappear by April — Shopify realized helping retailers move their operations online in the face of a possible shutdown had to become the company’s top priority. “We knew we had to be two steps ahead of this thing,” says Lynsey Thornton, Shopify’s vice-president of user experience and general manager of core product.
They made the right calculation. By March, shoe stores, bakeries, boutiques, toy stores, cafes, card shops — basically any business that had never before sold a thing online — were faced with one option to stay alive: to sell anything they possibly could virtually.
These businesses had alternatives to Shopify, of course. There were sites like Squarespace and Wix, which make it relatively easy to whip up a website, but don’t specialize in e-commerce. And there were thriving marketplaces like Etsy and eBay that offered a large built-in customer base but less control of the shopping experience. But by removing all the barriers to setting up a slick-looking website with all the e-commerce trimmings — from site design to tracking inventory to taking payments to capturing customer data to promotion to customer service — Shopify was by far the most comprehensive and streamlined.
Shopify doesn’t push merchants to mention its name anywhere on the site; the branding is all the customer’s, at a cost of as little as $29 a month for the most basic Shopify plans, plus a 2.9% cut of sales. It’s why the company has managed to power retailers that account for about 6% of all online sales in the U.S. — ahead of all other e-commerce channels, like eBay and Etsy, though trailing behind Amazon’s staggering two-thirds share.
With the number of new Shopify customers growing between March 13 and April 24, spiking 62% above the previous six weeks, managers throughout the company — most of them working from their homes in Canada — put their regular day jobs aside to personally handle calls from small businesses. The conversations were wrenching, recalls Thornton, with many business owners left reeling after letting most of their employees go. One owner simply sobbed into the phone. “We wanted to be in the trenches with the entrepreneurs, to feel what they were feeling firsthand,” says Thornton.
Shopify quickly rolled out a series of changes. The free trial it normally offered for two weeks was extended to three months. It added $200 million to its Shopify Capital service, which loans money to customer businesses that can be repaid out of online sales. As local sales among Shopify merchants doubled over the next six weeks, it beefed up features that support local pickup and delivery, such as online tipping, and connecting to local delivery services that could stand in for overburdened postal, UPS, and Fedex facilities. The excess server capacity it typically reserved for flash surges in sales like Black Friday and Cyber Monday would help it handle the rapidly climbing volume of e-commerce transactions.
Employees throughout the company — from sales to product development — helped onboard the deluge of new business customers. Shopify merchants that had previously or entirely relied on brick-and-mortar sales would later report they were able revive nearly 95% of that revenue online. For now, at least, Main Streets all across America had a decent shot at stopping the bleeding.
Shopify has become the de facto e-commerce platform for small businesses, but with massive corporate retail customers including Nestle, Unilever, and Pepsi, it’s also now in the crosshairs of the e-commerce marketplace giants, from Amazon to Facebook.
Shopify doesn’t compete directly with these marketplaces; in fact, its platform works well with all of them, including via recent partnerships with Facebook and Walmart. But to continue to grow, Shopify needs consumers to buy directly from its merchant-customers’ websites where it provides a full range of services, rather than buying on Amazon or Facebook and letting Shopify merely track inventory and do the accounting. That means Shopify is now locked in a battle with the big platforms not so much to be the primary choice of merchants, but to attract more consumers to its online-shopping ecosystem.
“Big companies think, ‘How hard could what Shopify does be?’ Then when they try to do it, they find out.”
The driving force behind Shopify’s massive ambitions is its enigmatic founder, 40-year-old German-born Tobias Lütke — or Tobi, as he goes by. For a company holed up in what by Silicon Valley standards is a backwater, and that is run by someone who seems to have little in common with his tech-giant counterparts, Shopify’s success has been a fairly quiet phenomenon. Virtually no one seems to say a critical word about either Lütke or Shopify. “It’s a genuinely brilliant company with a great culture and a great product,” says Ruslan Fazlyev, CEO of Ecwid — a direct competitor to Shopify. (Lütke, who declined to speak to Marker, also rarely grants interviews and has seemingly managed to inhibit almost anyone who knows him from talking to the press about him.)
In Shopify’s early years, Lütke, a world-class coder, tried hard to duck the CEO job, until his backers insisted on it. He first became interested in computers in 1986, when, at age six, he received a bare-bones hobbyist computer as a gift from his parents in Koblenz, Germany. He was diagnosed with a learning disorder, which included signs of ADHD and dyslexia. A doctor prescribed medication, but Lütke instead found liberation at the keyboard, particularly through video games. By the time he was 12, he was coding his own games. At 16, he dropped out of school to become an apprentice programmer for high-tech giant Siemens.
On a snowboarding trip to Canada in 2000 he met the woman he would soon marry; two years later at the age of 22, he left Germany and moved to his wife-to-be’s home town of Ottawa. Unable to get a job without a work visa, he teamed up with Scott Lake, a friend of his wife’s family, to start that online snowboard company. But Lütke was appalled by the services available for setting up e-commerce and spent two months writing his own software. Soon Lütke and Lake were getting as many inquiries about the software behind their site as they were about snowboards, and realized they were in the wrong business.
Shopify was born in 2006. Friends and family staked the cofounders $200,000, though Lake left in 2008. As the company grew, Lütke headed to Silicon Valley in 2010 to hit up VCs. He biked to meetings, using his time before each appointment to Google the unfamiliar financial terms that were thrown at him at the last one. He ultimately raised $7 million. It’s been nothing but crazy growth since.
Based on the few interviews Lütke has done over the last decade, you can piece together a picture of his management style, and how it has shaped Shopify’s culture. His approach was influenced in large part by video games and poker playing, domains that, he points out, call for situational awareness, a need to read other players, and a willingness to take risks. It’s their repetitive nature — letting you try your hand at these skills hundreds of times in a single evening — that enable immediate feedback with direct results. The rest of his entrepreneurial philosophy, he says, he picked up from reading business books. A particular favorite, High Output Management, by legendary former Intel CEO Andy Grove, frames all the challenges that a manager faces, including dealing with people, as problems that can be solved with the right analytics and algorithms.
Having chafed at authority, expectations, and routine since childhood, Lütke seems to have cultivated a culture that downplays them, at least to hear Thornton tell it. “It’s gloriously different here from any experience I’ve ever had,” she says. When she joined the company in 2013 as a market researcher, she immediately bailed — with her boss’s blessing — from her first assigned project in back-end software, and instead started researching how merchants were using Shopify’s various products, because she thought it would be more helpful. (She was right.) The company has repeatedly made Glassdoor’s 25 Best Places to Work in Canada list, based on employee input, including the 2019 list.
None of this is to say that Lütke is all soft edges. He had to learn to stop routinely telling people their work was “shit” when it didn’t meet the sort of high standards he sets for his own work, he admitted in an interview last year. Many employees have learned not to take his harsh criticism to heart, and they’ve come to respect Lütke’s instincts — because he so often turns out to be implausibly right. He built the company’s original software in a then-obscure programming language called Ruby on Rails, which ended up becoming a huge favorite of programmers everywhere, giving the company a significant edge. By 2009 he was steering the company to a mobile-first position, years before most companies recognized how dominant phone-based shopping would be.
Lütke’s tendency to downplay his accomplishments may be one reason why competitors tend to underestimate what he has managed to pull off with Shopify. “Big companies think, ‘How hard could what Shopify does be?’” says Ken Wong, technology analyst at Guggenheim Partners, a financial services advisory firm. “Then when they try to do it, they find out. All the bits and pieces behind the scenes from payment to fulfillment are complex, but Shopify does it seamlessly and packages it in a way that’s simple for users. They’re the Apple of e-commerce website builders.”
When Ralph Montemurro and his wife decided to start a business making and selling nursery room furniture in 2005, they immediately considered selling on Amazon. Montemurro observed that half of all online purchases start with an Amazon search, yet Amazon didn’t feel right for his high-end furniture, including his rocking chairs that can cost well over $1,000. “On Amazon all the product listings are in the same cluttered format, with the same low-quality photographs,” he says. “We wouldn’t be able to differentiate ourselves there, or have any control over our placement in searches.”
Shopify’s efforts to keep its customers in the limelight stands in stark contrast to Amazon’s rigid domination of the shopping experience.
Nor, Montemurro adds, would they be able to get much data on their customers, including their email addresses, because Amazon’s system is designed to keep customers loyal to Amazon, not to any of the individual third-party vendors who sell there. Indeed, Amazon often seeks to siphon away its successful merchants’ sales by bringing out and promoting its own versions of popular products under the AmazonBasics brand. Montemurro’s Toronto-based company, Monte Design, eventually went with a Shopify website, and hasn’t looked back.
Shopify’s efforts to keep its customers in the limelight stands in stark contrast to Amazon’s rigid domination of the shopping experience. “There’s distrust among third-party vendors toward Amazon,” says Guggenheim’s Wong. “Amazon promotes its own value at the expense of merchants.” Add on the typical 15% cut that Amazon takes from sales, he notes, and it’s no wonder that merchants are increasingly driven to try to sell directly to consumers instead of going through Amazon or other platforms, including eBay and Etsy.
The advantage to merchants of controlling customer communications and data, as opposed to ceding that control to a marketplace platform like Amazon’s, has been telling during the pandemic. Shopify merchants are able to email customers about what products and services are or aren’t available in the face of disrupted supply chains, what sort of delivery delays might be involved, and what they’re doing to try to keep running smoothly — challenges that most people can relate to these days.
Many Amazon merchants, in contrast, are losing ground with their customers, notes George John, a professor of marketing at the University of Minnesota who studies e-commerce. “Merchant customer ratings have been plummeting to historic lows over the last three months, as out-of-stocks have increased and delivery times have lagged,” he says. And those merchants have no way to tell their story on Amazon. In fact, when in March Amazon increased delivery times on non-essential items shipped from its warehouses, it didn’t show shoppers that in many cases other merchants who sold through Amazon could ship those same items faster. (The company later claimed that was an accidental oversight.) These problems may partly be why the pandemic has seen Amazon’s share of the online commerce market fall from 42% to 34%.
Of course, retailers don’t have to choose between Amazon and Shopify; they can do both, with Shopify neatly integrating the Amazon inventory and sales data into the software, as it does for most e-commerce platforms. But many companies find that making goods available on Amazon can end up steering customers away from their own website, making the customers less profitable and anonymous.
That was the case for Manuel de la Cruz, whose toothbrush company, Boie USA, sold $2 million worth of products on Shopify last year. He set up his business on Amazon, too, but after two months he pulled the plug on that, even though it was accounting for a fifth of his sales. “I wanted to know who my customers were, and you can’t do that on Amazon,” he says. Still, Amazon remains by far and away the leader in where Americans go to buy online, with the company’s Prime membership hitting 112 million households last year.
“Shopify has come out for the little guy trying to fight against Amazon’s domination. Tobi has given entrepreneurs voices and power.”
Shopify merchants’ relationship with Facebook, on the other hand, has long been more mutually beneficial. Advertising on Facebook to its 2.6 billion active monthly users, as well as on its subsidiary Instagram, has been the leading way to bring customers to Shopify merchants’ sites. But in May, Facebook announced its own Shopify-like service, called “Shops,” which enables merchants to build their own online stores within the Facebook platform, complete with payment capabilities. As with Amazon, Shops integrates smoothly with Shopify’s software, but the prospect of consumers staying on the Facebook platform through the entire purchase cycle is an ominous one, threatening to cut Shopify out of some of the most important and lucrative elements of the business, including payment processing.
Shopify is now striking back at its giant rivals by adding a range of new services, including small-business bank accounts, its loan business, and email marketing tools — as well its own logistics network that will allow the company to provide Amazon-Prime-like two-day delivery, potentially erasing to some extent a key Amazon advantage.
Though there was little fanfare around it, three weeks before Facebook’s “Shops” reveal, Shopify also rolled out a new app called “Shop,” which lets you find, “follow,” and make purchases from businesses that use Shopify to power their e-commerce. Shop is not quite a marketplace like Amazon or Etsy (you can search for a specific business but not for specific items like “jewelry”). For now, Shop’s main function is tracking packages from any vendor — it scans the user’s email (with permission, of course) to get the tracking info. But the app has the potential to deliver something much bigger, and something Shopify’s merchants need more than anything else: new customers. Funneling consumers to third-party merchants is where Amazon and Facebook shine, and Shopify whiffs. The Shop app could narrow the gap.
It’s a critical move, because more than anything, Shopify’s customers look to it to provide an alternative to Amazon’s powerful marketplace. “Shopify has come out for the little guy trying to fight against Amazon’s domination,” says de la Cruz. “Tobi has given entrepreneurs voices and power.”
The Shop app could in theory bring in millions of consumers to the Shopify ecosystem of networks to funnel them to its merchants’ websites. In other words, it could eventually create an online marketplace, which would go a long way toward leveling the playing field with Amazon — as well as reducing its merchants’ current dependence on Facebook ads and Google search results. “The vision is that Shop can provide a list of Shopify stores that right now many consumers have no way to discover,” says Thornton. The ability to highlight local stores will be a special strength of the app, she adds.
For now, however, the company is officially downplaying that grander vision. After Thornton’s comments, a Shopify spokesperson wrote to say that “at this time, there’s no plans today to add product search to Shop.” The hesitation to promote Shop as a marketplace is understandable. For all the extra business a Shopify marketplace might be able to funnel to its merchant sites, the move would set Shopify up for complaints from merchants over search placement. And it would start establishing Shopify as a visible brand in its own right among consumers, something the company has bent over backwards to avoid since its birth. “Shopify has always been the Switzerland of online commerce,” notes Wong. Gaining the power to steer consumers toward one merchant over another would undercut that reputation.
There is currently no end in sight to the pandemic’s devastation of indie retailers. Hopes of smoothly reopening millions of U.S. businesses were dashed in June and into July by soaring infection rates that have been leading to more and more about-faces in state and local policies. All of this also suggests there is also no end in sight for the continued Shopify surge.
To support this—and what comes next—will require Lütke to hold onto and attract the best talent. In May, he tweeted that Shopify “will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely.” And in June, immediately after Trump signed an executive order suspending foreign work visas, Lütke tweeted with a wink, “If this affects your plans, consider coming to Canada instead,” along with a link to Shopify’s career pages.
There’s no way of knowing if Bezos or Zuckerberg saw those tweets. But it’s quite possible that many of their employees, always on the lookout for the next great tech company to work for, took note.
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|From: Glenn Petersen||7/30/2020 6:30:34 PM|
|Amazon sales soar as pandemic fuels online shopping|
PUBLISHED THU, JUL 30 20203:32 PM EDT
UPDATED 25 MIN AGO
Annie Palmer @ANNIERPALMER
-- Amazon reported its second-quarter results after the closing bell on Thursday, trouncing earnings expectations and reporting double-digit revenue growth year over year.
-- Amazon will spend billions of dollars more on coronavirus-related initiatives in the third quarter.
-- The company confirmed this year’s Prime Day shopping event will take place in the fourth quarter.
Amazon reported blowout second-quarter results on Thursday, including a huge beat on the top line and double-digit revenue growth year-over-year. The stock climbed about 4.9% after hours.
Here’s how the company did:
Earnings: $10.30 vs. $1.46 expected, according to analysts surveyed by Refinitiv
Revenue: $88.91 billion vs. $81.56 billion expected, according to analysts surveyed by Refinitiv
Amazon said it expects to spend more than $2 billion during the third quarter on additional coronavirus-related measures, including procuring personal protective equipment, deep cleaning its facilities and wage increases for employees, among other things. Last quarter, Amazon said it would spend all of its estimated $4 billion profit between April and June on similar efforts.
“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Amazon CEO Jeff Bezos said in the release. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand.”
Amazon CFO Brian Olsavsky told CNBC’s Deirdre Bosa that consumer demand continues to be strong, especially among Prime subscribers. The company saw a shift in consumer demand during the second quarter, after shoppers flooded the platform with purchases of consumables and groceries, categories that aren’t “super profitable” for the company.
Amazon, like many other retailers, was caught off guard by the influx of online orders hitting the platform during the pandemic, resulting in delivery delays and supply chain shortages. One- and two-day shipping have since recovered somewhat but are “probably considered behind the going in rate,” Olsavsky said on a call with analysts.
Amazon usually sees softer sales during the second quarter compared to peak periods later on in the year, Olsavsky said.
The company was able to secure additional capacity in its fulfillment centers to absorb demand, pulling “capacity we didn’t think we’d need until 2021,” but it’s still running out of space heading into the third and fourth quarters, Olsavsky said. “We’ve got our hands full on that challenge,” he added.
Amazon also confirmed it will hold its annual Prime Day shopping event in the fourth quarter. Earlier this month, Amazon confirmed it would postpone this year’s Prime Day as a result of coronavirus concerns, but it stopped short of providing a date. The company previously told third-party sellers to use the week of Oct. 5 as a “placeholder date.”
For the third quarter, Amazon said it expects net sales to come in between $87 billion and $93 billion, representing year-over-year growth between 24% and 33%. The company anticipates a range of an operating income of $2 billion and $5 billion, which factors in additional coronavirus-related investments.
Consumers have increasingly ordered their groceries online as many continue to stay indoors during the pandemic. Amazon said online grocery sales tripled year-over-year in the second quarter. The surge in demand caused it to increase grocery delivery capacity by more than 160%, while it added additional grocery pickup locations around the country to fulfill more online orders.
Revenue for Amazon’s cloud-computing unit, Amazon Web Services, came in at $10.81 billion for the quarter, up 29% year over year, but decelerating slightly from the 33% growth it reported in the first quarter. Cloud services like Amazon’s have become crucial to organizations during the pandemic as many of their employees have shifted to remote work.
Amazon’s “other” category, which is primarily made up of its advertising business, generated $4.22 billion in revenue, up 41% year over year. Subscription services, which includes revenue from Prime memberships, were up 29% year-over-year to $6.02 billion.
Third-party sales grew 52% year-over-year during the quarter, outpacing growth in Amazon’s first-party sales, which increased 48% year-over-year.
This is breaking news. Please check back for updates.
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|To: Glenn Petersen who wrote (164102)||7/31/2020 9:15:51 AM|
|From: Glenn Petersen|
|Amazon vows to invest $10B in Kuiper satellites after getting FCC’s go-ahead|
BY ALAN BOYLE
on July 30, 2020 at 2:47 pm
The Federal Communications Commission has authorized Amazon’s plans for a Project Kuiper constellation of 3,236 satellites that would provide broadband internet access across a wide swath of the globe — but on the condition that it doesn’t unduly interfere with previously authorized satellite ventures.
In response, Amazon said it would invest more than $10 billion in the project. “We’re off to the races,” Dave Limp, Amazon’s senior vice president of devices and services, said in a statement. (We’re passing along the full statement below.)
The FCC’s non-interference requirements and other conditions are laid out in a 24-page order that was adopted on Wednesday and released today. The ruling addresses objections registered by Amazon’s rivals — including SpaceX, OneWeb and Telesat.
Project Kuiper’s satellites are to be launched in five phases, and service would begin once Amazon launched the first 578 satellites. Under the terms of the FCC’s order, Amazon will have to launch half of its satellites by mid-2026, and the rest of them by mid-2029.
Amazon had sought to vie on an equal footing with constellation operators whose plans had been previously authorized by the FCC, but the commission said that in fairness, Project Kuiper would have to give deference to those plans. The FCC said that it expected Amazon’s mega-constellation rivals to act in good faith to resolve radio interference concerns.
Although Amazon has said in the past that the design of its system is still under consideration, the order released today provides some insight into that design. The satellites will be built to deorbit themselves within 355 days after they complete their mission, so as to reduce orbital debris. Also, the beams used to send and receive data will be focused directionally, so as to minimize interference.
The details will have to be cleared with the FCC as well as the International Telecommunication Union once they’re available. The FCC also urged Amazon to work with the National Science Foundation to minimize impacts on radio astronomy.
Amazon revealed its plans for Project Kuiper just last year. It’s currently listing more than 100 open positions for the team, with most of those jobs in Bellevue, Wash. The company plans to move the team to a new headquarters in nearby Redmond once that space is ready.
It’s not clear when Project Kuiper aims to start service, but the FCC’s authorization suggests it’d be sometime before 2026. And although Amazon hasn’t specified how its satellites would be launched, it’s worth noting that Amazon CEO Jeff Bezos owns a separate space venture called Blue Origin.
Amazon plans to use Project Kuiper not only to offer broadband internet service to billions of potential customers around the globe who are currently underserved, but also to facilitate Amazon’s other lines of business, ranging from online retail sales to Amazon Web Services’ cloud computing platform (and most likely Amazon Prime’s streaming-video offerings).
This week’s order enables Amazon to move forward with its ambitious plans, but Project Kuiper will have to navigate a careful regulatory path. It’ll have to accommodate previously approved satellite projects as well as the ITU’s requirements for the Ka-band frequencies that Kuiper plans to use.
Some of Amazon’s rivals in the mega-constellation race have already started deploying satellites in low Earth orbit, or LEO. That’s an appealing frontier for broadband internet service, because the orbits are low enough to provide ultra-fast signal response times.
SpaceX has launched more than 500 satellites for its Starlink constellation, and is planning to launch 57 more satellites within weeks. Starlink is already being tested for U.S. military applications. and SpaceX says it could start limited commercial service within the next few months. The FAA has approved further plans that would allow SpaceX to put tens of thousands of satellites in LEO.
OneWeb, meanwhile, has launched 74 satellites for a broadband constellation that could eventually amount to hundreds of spacecraft. The venture recently asked the FCC to authorize putting as many as 48,000 satellites in orbit. OneWeb declared bankruptcy in March, due to the economic disruption caused by the coronavirus pandemic — but now it’s back in business, thanks to a billion-dollar deal involving India’s Bharti Global and the British government.
Canada’s biggest satellite operator, Telesat, is also working on a LEO broadband constellation. Tim Farrar, a satellite industry consultant at TMF Associates, said in a message to GeekWire that Telesat may play the pivotal role in Amazon’s plans.
“The FCC is requiring Amazon to demonstrate that it will not cause any interference to previously licensed systems from the November 2016 processing round. That might be possible under certain circumstances for systems like OneWeb and Starlink that only use Ka-band for their gateways, but would be much harder for a system like Telesat that intends to use Ka-band for its user links,” Farrar wrote.
“As a result, decisions about whether Telesat moves forward with its constellation will have significant consequences for Amazon’s ability to deploy the Kuiper system,” he said.
Update for 4:30 p.m. PT July 30: Another twist to the FCC’s order is that Amazon is receiving a waiver from the requirement that satellite service will have to be available in all 50 states plus Puerto Rico and the U.S. Virgin Islands. Project Kuiper’s system design leaves most of Alaska out in the cold. Fortunately for Alaskans, OneWeb aims to make the Arctic region its first priority.
Meanwhile, the fact that Telesat could loom so large in Amazon’s future plans has already sparked speculation:
Update for 6:15 p.m. PT July 30: Amazon discussed the FCC’s approval and its commitment to Project Kuiper in a blog posting. Here’s the full text:
Last spring, we announced Project Kuiper, an initiative to build a low earth orbit (LEO) satellite constellation capable of providing reliable, affordable broadband service to unserved and underserved communities around the world.
Today marked a key milestone for the project, with the Federal Communications Commission (FCC) granting Amazon approval by a 5-0 vote to deploy and operate our constellation of 3,236 satellites. The authorization allows Project Kuiper to deliver satellite-based broadband services in the United States, helping expand internet access to households and communities across the country.
A project of this scale requires significant effort and resources, and, due to the nature of LEO constellations, it is not the kind of initiative that can start small. You have to commit. Amazon will invest more than $10 billion in Project Kuiper. This investment will create jobs and infrastructure around the United States, build and scale our ground network, accelerate satellite testing and manufacturing, and let us deliver an affordable customer terminal that will make fast, reliable broadband accessible to communities around the world.
“We have heard so many stories lately about people who are unable to do their job or complete schoolwork because they don’t have reliable internet at home,” said Dave Limp, Senior Vice President, Amazon. “There are still too many places where broadband access is unreliable or where it doesn’t exist at all. Kuiper will change that. Our $10 billion investment will create jobs and infrastructure around the United States that will help us close this gap. We appreciate the FCC’s unanimous, bipartisan support on this issue, and I want to thank Chairman Pai and the rest of the Commission for taking this important first step with us. We’re off to the races.”
Project Kuiper will deliver high-speed, low-latency broadband service to places beyond the reach of traditional fiber or wireless networks. It is inspired by customers in every corner of the world: by families working and learning together from home; by scientists and researchers operating in remote locations; by first responders providing disaster relief; and by companies of all sizes moving their business online. Project Kuiper will serve individual households, as well as schools, hospitals, businesses and other organizations operating in places without reliable broadband.
“We are doing an incredible amount of invention to deliver fast, reliable broadband at a price that makes sense for customers,” said Rajeev Badyal, Vice President of Technology for Project Kuiper. “LEO-based broadband systems like Project Kuiper present a huge number of challenges, and we have assembled a world-class team of engineers and scientists who are committed to delivering on our vision for Project Kuiper and keeping space a safe, sustainable environment for everyone. Combine that with Amazon’s deep expertise in networking and infrastructure and its ability to finance such a huge undertaking, and I am optimistic about the impact we can have for these unserved and underserved communities.”
We are also committed to working with public and private sector partners that share our vision for the project. In addition to providing ground station service directly to customers, Project Kuiper will also provide backhaul solutions for wireless carriers extending LTE and 5G service to new regions. Together, these projects will expand broadband access to more households in the United States and around the world.
Project Kuiper will be designed and tested in our all-new research and development facility opening in Redmond, Wash. The Kuiper team is growing quickly, and those inspired by our mission and interested in joining a diverse, world-class team can view open roles here.
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Glenn Petersen who wrote (164105)||7/31/2020 4:07:28 PM|
|From: J.F. Sebastian|
|Loved watching these CEOs get raked over the coals for their business practices.|
Unfortunately it's probably just congressional posturing and little will really be done about the egregious problems brought up in the hearing, but at least a guy can dream.
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|From: Glenn Petersen||8/9/2020 8:18:03 PM|
|Amazon reportedly discussing using former J.C. Penney and Sears stores as fulfillment centers|
PUBLISHED SUN, AUG 9 20202:34 PM EDT
UPDATED 3 HOURS AGO
Todd Haselton @ROBOTODD
-- Amazon is in discussions with mall-owner Simon Property Group about using some closed J.C. Penney and Sears stores for Amazon fulfillment centers, The Wall Street Journal said on Sunday.
-- The Wall Street Journal said it’s unclear how many of the stores inside Simon malls are under consideration.
-- The Sears and J.C. Penney locations could give Amazon more fulfillment center space, closer to customers, where delivery drivers could come unload and pick up packages.
Amazon is in discussions with mall-owner Simon Property Group about using some closed J.C. Penney and Sears stores for Amazon fulfillment centers, The Wall Street Journal said on Sunday.
“For Amazon, more fulfillment centers near residential areas would speed up the crucial last mile of delivery,” The Wall Street Journal said. “For Simon, turning over what was once prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.
Simon Property Group declined to comment on the report. Amazon has a policy of not commenting on rumors or speculation, according to an emailed statement.
Amazon has long focused on its so-called “last mile” of delivery. In 2018, it started to recruit drivers to deliver goods in neighborhoods, for example. It has also tested and explored the use of drones to deliver packages. Amazon Lockers are in some other retail stores around the country where customers can go to pick up the items they deliver online.
The Sears and J.C. Penney locations could give Amazon more fulfillment center space, closer to customers, where delivery drivers could come unload and pick up packages. That may help speed up the time it takes to get an order delivered from Amazon.
The Wall Street Journal said it’s unclear how many of the stores inside Simon malls are under consideration.
In June, J.C. Penney said it’s closing 154 retails stores this summer. J .C. Penney filed for bankruptcy in May and is moving toward a sale sometime this fall. Sears announced in Nov. 2019 plans to shut down 96 stores.
— CNBC’s Lauren Thomas contributed to this report.
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|From: Glenn Petersen||8/13/2020 3:11:03 PM|
|Amazon is delivering nearly two-thirds of its own packages as e-commerce continues pandemic boom|
PUBLISHED THU, AUG 13 20202:28 PM EDT
Frank Holland @IN/FRANK-HOLLAND-B9657883/ @FRANKCNBC
-- Amazon shipped 415 million packages in July, topping its three-month average between April and June
-- Amazon delivered 66% of its own packages in July, compared with 54% in July 2019
-- July volume growth for FedEx and UPS is higher than it was between April and June
The pandemic-fueled e-commerce boom doesn’t appear to be slowing down in the second half of the year as July package volumes exceeded the average monthly volume in the first three months of the outbreak.
According to data from ShipMatrix, Amazon shipped 415 million packages in July compared with a monthly average of 389 million between April and June. The e-commerce giant also delivered 66% of its own packages in July, compared with 61% between April and June.
“Amazon is such a huge player in the e-commerce space, they have to manage their delivery themselves to handle the increased demand for online orders, especially during the pandemic,” said Satish Jindel, founder of ShipMatrix.
“They will continue to deliver more of their own packages, potentially reaching 80% of their own packages by next year. It means UPS and the [U.S. Postal Service] will be looking for more business to replace the Amazon business,” he said.
Despite Amazon’s surge in volume and the gains it made in self-delivery, UPS and FedEx also saw a boost in volume in July, according to ShipMatrix.
UPS saw volume grow 26% in July compared with average monthly growth of 23% in the April to June period.
FedEx volume rose 22% compared with 19% growth, on average, in the first three full months of the coronavirus pandemic.
According to an eMarketer forecast, the third quarter will be the all-time peak for e-commerce with about 23% of all retail purchases being made online.
“E-commerce is continuing to grow because businesses have started to come back and that volume is coming back,” said Jindel. “This third quarter will definitely surpass the volume of the 2019 holiday season. However, consumers should expect on-time performance to be lower.”
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|From: Julius Wong||8/14/2020 7:09:17 AM|
|Amazon suffers big court loss over product liability|
Amazon (NASDAQ: AMZN) has been successful in the past at shielding itself from lawsuits surrounding third-party sellers, but a new court decision could make it harder for the e-commerce giant to avoid such legal action.
The California Fourth District Court of Appeals has ruled that Amazon can be held liable for damages caused by a defective replacement laptop battery that gave a San Diego woman third-degree burns after exploding.
"Amazon's own acts, and its control over the product in question, form the basis for its liability," the opinion reads. "Nothing aside from Amazon's own choices required it to allow Lenoge Technology to offer its product for sale, to store Lenoge's product at its warehouse, to accept Bolger's order, or to ship the product to her. It made these choices for its own commercial purposes. It should share in the consequences."
Amazon's marketplace, which hosts millions of third-party sellers, now accounts for approximately 60% of the company's e-commerce sales.
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