• Whole Foods and Instacart are breaking up—an inevitable move ever since Amazon acquired the grocery chain in 2017. The breakup is mostly about Amazon tightening its reins on Whole Foods, so that it can enforce Prime delivery, which offers free two-hour delivery for members. Instacart, which recently cut prices for its annual Express membership and delivery fees, making its Whole Foods delivery cheaper than Prime’s, likely catalyzed the end of the partnership. Losing Whole Foods will reduce Instacart’s revenue by less than 5%, and the company seems to have prepared for it by growing its roster of delivery partnerships from Aldi and Sam’s Club to Walmart Canada and Kroger.
  • Amazon is striving to cut its losses on low-margin products such as cumbersome bottled beverages and snack foods that are expensive to ship, known internally as “Can’t Realize a Profit” (CRaP) items. Some SKUs are seeing a price increase or evolving their packaging, while others are only available in larger shipments or with Prime Pantry orders to improve delivery efficiencies. This has raised operation costs for the brands themselves, but they continue to meet the etailer’s demands, not willing to lose the stream of revenue stemming from sales on Amazon. The move comes in tandem with last week’s news that the ecommerce retailer is pushing vendors to streamline packaging for shipping.
  • AmazonBasics teased its first private-label toys, adding to its growing bucket of owned brands (the listings were subsequently taken off the site). Amazon’s interest in the toy market surfaces just after the company sent out its first printed holiday toy catalog, reminiscent of Toys R Us, putting additional pressure on toy companies like Hasbro and Mattel, which are struggling to stay afloat, especially as more children turn to electronics (interestingly, all of Amazon’s listings were traditional toys).
  • Amazon opened a small-format Amazon Go store in one of its Seattle offices. At only 450 square feet, the concept could easily be transplanted into other office buildings, and harkens back to last week’s news that the company is interested in bringing the cashierless store to airports.