RetailTechNews’ weekly roundup brings you up-to-date research findings from around the world. In this week’s edition: Tesco & Carrefour Teaming up; Purchase of PillPack Represents Move into Healthcare; and Amazon Ending Part of Its Ad Business.
Tesco & Carrefour Teaming Up
Tesco says it is planning a “strategic alliance” with French retail giant Carrefour, as the two try to use their joint buying power to cut costs and offer lower prices to customers.
The two plan a “strategic relationship” when dealing with global suppliers, and the tie-up will also mean sharing their own-brand products. The move comes as retailers face an increasingly competitive environment, with tesco the UK’s largest retailer, while Carrefour is Europe’s largest.
The traditional big four UK supermarket chains – Tesco, Sainsbury’s, Asda, and Morrisons – have faced increasing competition from the rapidly expanding budget chains Lidl and Aldi over the past few years; and there is now the added threat of internet giant Amazon moving into the sector.
Last year, Amazon bought upmarket grocer Whole Foods. In the UK, Amazon offers food sales through its Amazon Fresh service, although currently that is still focused on Greater London and parts of the South East. In France, meanwhile, Amazon recently teamed up with Carrefour’s smaller rival Casino to sell groceries online in the Paris area.
Carrefour’s recent partnership with Google, and their use of the Google Assistant, Google Home, and Google Shopping interfaces, are also proof that the French giant is getting set to fight back against Amazon’s partnership with Casino.
Purchase of PillPack Represents Move into Healthcare
Amazon is buying online pharmacy PillPack – a move that could disrupt the drug store business. PillPack has pharmacy licenses in all 50 U.S. states and delivers medications to customers in pre-sorted doses designed to make it easier for people to take multiple medications a day.
The PillPack deal is already scaring investors in the top two drug store chains. CVS (CVS) fell 9% in early trading. Walgreens Boots Alliance (WBA), the newest Dow component, plunged more than 10%. Walgreens was already trading lower after reporting a drop in same-store sales at its U.S. pharmacies.
It’s not clear yet just what Amazon plans for PillPack. Will it eventually merge it into a broader health care platform on Amazon or keep it independent, as it has done with other subsidiaries like shoe retailer Zappos and video site Twitch? The fact that PillPack is already licensed to sell prescriptions may persuade Amazon to keep it independent.
The PillPack acquisition comes just a week after CVS announced it will start delivering prescriptions to people’s homes – a response to growing competition from PillPack and Capsule, another online pharmacy startup.
Amazon Ending Part of Its Ad Business
Amazon has quietly announced that it is retiring by the end of September an ad product called CPM Ads. CPM Ads was first launched in 2014 and represented an early foray into display advertising for Amazon, allowing smaller web publishers that were a part of the company’s Amazon Associates affiliate programme to run banner and other ads on a cost-per-impression (CPM) model on their sites.
Amazon’s retiring of CPM Ads comes at a time when many are predicting that the company wants to take a bigger, not smaller, step into the ad world. There have been reports that Amazon is gearing up to launch a retargeting ad product aimed to compete against the likes of Google and Criteo. Previously a big user of retargeting ads on other networks, it seems Amazon is now looking to build out its own capabilities here.
Amazon made some USD$4bn (£3bn) in advertising revenues in 2017, and it is projected to make USD$9.5bn (£7.2bn) this year. These are still modest numbers: as a point of comparison, Google pulled in USD$95bn (£72bn) in 2017.