Gannett sees the relationship as central: Membership, not subscription

Gannet recognizes the growing importance of relationships, too. CMO Andy Yost explained to Publishers Daily: “‘Subscription’ sounds transactional, ‘membership’ sounds like a two-way relationship that gives you access to things you can’t get elsewhere.” Consequently, the newspaper giant is offering $2.99/mo. memberships on its USA Today properties and utilizing its content archives and production capabilities to package new personalized or demographically targeted news experiences. The company also offers an Insider Loyalty Program that bundles subscriptions with special offers and discounts.

Here’s the key: Believing they are getting value back, members share information that helps to personalize and target content (the Gen Z teen who is loyal in exchange for exclusives, above, is engaging in the same behavior.

Teens and Commitment: It’s an Exclusive Thing

Piper Jaffray surveyed 1,100 teens about their spending habits and the results reinforce the importance of relationships with young buyers, according to MediaPost. As noted yesterday, Gen Z is more deliberative, less prone to impulse buying, and already saving for their future. The Piper Jaffray study also found that young consumers look for exclusive offers, which are based on an exchange of information that creates loyalty: 

Teen shoppers are savvier shoppers than you might think. Budget conscious, they look for low prices. They want to protect their investments by buying quality products, but if you want to gain their loyalty, they are looking for exclusives and membership benefits. The older the teen, the more important this value exchange becomes.

The exclusive offer/price as basis for commitment is important to understand and use when establishing customer relationships.

Amazon is big in online sales, but still only four percent of retail in U.S.

It was a very good holiday season for Amazon, with growing sales and the massive adoption of Alexa-enabled devices. However, keep in mind that after all this success and 20 years of investment to get to 44 percent of online commerce, Amazon still accounts for only 4 percent of U.S. retail sales in 2017. This suggests there is lots of room for growth at Amazon, as well as plenty of inroads for challengers to pursue. We think the brand service experience will be a keystone of expansion as Amazon enters the neighborhood. Target isn’t the solution for Amazon’s local challenge, but Target’s salespeople may be useful to the project. How to get those Target people out of the store and into the market, that is the question.

Replacement parts made where they are needed

A van containing a 3D printer arrives at your front curb, the plumber knocks and, granted entrance, checks your sink downspout, which is leaking. Problem identified, she calls up the broken part on her computer and prints it in the van, installs the new downspout, and finishes the job. No inventory to carry around, just a focus on service. Amazon received a patent this week that supports this scenario. The human is the critical factor here, as they translate the customer’s issue into a plan, identify the broken or missing parts, print them (though this is a machine’s job), then installs it.

Home Delivery: Gen Z, Millennials, and Their Values Define The Market

2018 will be a watershed year in local on-demand, particularly home delivery of food. The industry has set down roots in North America, Europe, Asia, and the Middle East. McKinsey projects 25 percent growth for food delivery companies in 2018. UberEats reportedly accounted for $3 billion in 2017 revenue, suggesting that its revenue could climb by as much as $750 million in sales this year. GrubHub could see more than $170 million in additional revenue.

In short, there is $1 billion in growth to be captured by food delivery companies this year.

UberEats, which is reportedly driving more revenue than the company’s car services in some markets, has carved out an early advantage in prepared meals by partnering with McDonald’s and smaller local restaurants in the U.S., Europe, Asia, and elsewhere in the world.

Deliveroo (restaurant delivery), GrubHub (restaurant delivery), DoorDash (restaurant delivery), Instacart (groceries), Amazon (groceries), Home Chef (meal boxes ready for cooking), Blue Apron (meal boxes), among others, are the chief competitors in UberEats’ markets. Deliveroo and  Peach have invested in centralized kitchens to prepare their own and local restaurant’s recipes for delivery. Multiple models for the preparation of food are emerging:

  • Distributed Restaurant Delivery Networks, such as UberEats and GrubHub;
  • Centralized Kitchen Delivery Services (office- and home-centric, which account for 16 percent and 82 percent of the market, respectively), a la Deliveroo and Peach;
  • Delivery of Prepared Ingredients for Cooking, and;
  • Grocery Delivery.

Generational progress is poised to reinforce the trend.

Millennials, who live at home in Depression-era numbers in their 20s and early 30s, and the 18-and-younger Gen Z, who have not had a chance to move out, are redefining the values that influence buying decisions. In particular, they want healthier, responsibly produced food and are more selective than older people, who weren’t offered as much information about their eating choices.

Source: USDA Economic Research Service; Information Resources Inc.

Where older Americans order less food at home, younger people are showing early signs that they have embraced the convenience of home food delivery. Millenial eat out in restaurants more than their parents. The quality and provenance of food, notably its sustainable production, are the levers of differentiation for these generations.

Given the growing values-based scrutiny young consumers apply to their decisions, which may trump convenience and price when deciding what to order, differentiation of services will be essential to food delivery services. Millennials prefer to eat out — for the experience — rather than stay in. However, they haven’t entered their parenting years en masse and we can expect home delivery to displace some dining out as they age. Even when living with their parents, Millennials tend to buy more prepared food, notably candy, than older Americans.

Gen Zers, on the other hand, may be even more home-centric. These 18-year-olds and younger save more,  exercise resistance to impulse buying, and already represent $44 billion in discretionary spending. They also seem to impact their family’s spending more than previous generations, based on their parents’ reported spending. Gen Z has embraced the frugality of the times with discipline and digital information, doing more research and tapping social sources of recommendations more than earlier generations.

Source: McKinsey & Co.

Millenials and Gen Z will account for more than 60 percent of the U.S. population when they have grown to their majority. They will transform food consumption from a commodity to a values-supported experience. Food and information will be combined to delight the customer and confirm the sustainability and healthfulness of meal tim. There lies the missing link: Human trust.

Usability is currently the focus on food delivery platform and app experience. Simplicity, however, does not remove the tedium from selecting meals day in and day out. So much new information, from calorie counts to organic certification, is involved in choosing the next meal. Ordering for children, as well as keeping within a food budget, are just two complexities that Choosing meals is work that will be outsourced, too.

The need for local curators or influencers to craft menus by customers’ personal and demographic preferences is the critical gap in this process. A story of why the food one buys and eats, that they feed to their family, is essential to food delivery success.

Food choices are strongly influenced by media, by tastemakers, and chefs. Especially chefs, who are brand unto themselves these days. The Food Network and its myriad competitors prove the importance of suggested meals and stories to support consumers’ embrace of new foods and unfamiliar cuisines.

A local food media and influencer network closely attuned to regional tastes, trends, and crop quality is the missing layer of this market. As infrastructure investment-driven growth tails off and people find the limits of their patience with meal selection tools, human contributions to the customer experience will transform food delivery from the current gradual growth rate to hockey stick adoption.

Changes to the Notebook in 2018

After three years of local on-demand research, including a year’s work launching Gig Economy Group, I’m making some changes to The Notebook. 

First, as noted, I am now writing from the position of a co-founder of a funded on-demand economy company. As such, I’ll be sharing the GEG team’s ongoing assessment of local on-demand opportunities for individuals, small business, and brands. In addition to the team’s views, my excerpts of useful news and research will continue to appear here.

Second, it is time to put an end to coverage of the baby steps phase of the on-demand/gig/sharing economy. There is very little value in tracking Uber’s almost daily embarrassments arising from its brosterous startup days. When Uber does something new, it will get coverage here. So too all the other companies and individuals contributing to the development of the next economy. It’s 1995 all over again, and the industry is growing up. We’ll focus on the maturing of on-demand here.

Third, it is time to focus more on people. People in local markets seeking to integrate their business with the world’s evolving supply chain to sell and service curated products and customer engagement are poised to transform their Main Streets into personalized markets. People are working to orchestrate and deliver great branded experience with intensely personal touches. People are working in on-demand companies to make the world a better place, often in the face of determined opposition. People are seeking to understand the world we’ve built and lead it to productive socioeconomic outcomes.

Watch this space for new features, too. Happy 2018, all.

Uber’s String of International Setbacks Continues in Israel — Fortune

Uber’s past keeps giving headaches to Uber’s present management. This time, the company is banned in Tel Aviv, Israel.

Uber has been ordered to halt a trial service in Tel Aviv that the U.S. ride-hailing company had hoped would pave the way for full operations in Israel.

Given that Uber is in more than 600 cities worldwide, at a banning a week, we’re only 11 and a half years from the end of this streak. 

Here’s what you need to know about SoftBank’s tender offer for Uber coming tomorrow — Recode

Tomorrow is the day existing Uber investors find out whether the drama has been worthwhile:

Tuesday is when a multi-billion dollar “tender offer” from Japanese investment giant SoftBank is expected to begin, according to sources tracking the process, giving Uber shareholders the chance to sell some of their stock or hold fast until the company goes public. The decision effectively asks every Uber insider to gauge their confidence in the company they built.

Curious to see whether Travis Kalanick sells any shares. Stay tuned.

Lyft Gains Permission to Test Autonomous Vehicles in California — MotorTrend

Everyone is testing autonomous vehicles in California these days: 

Ride-hailing company Lyft has received permission to test autonomous vehicles in California by the state’s Department of Motor Vehicles, according to a report from Reuters. Lyft is the latest to receive permission in California and joins companies like Waymo and Apple, as well as automakers Subaru, Ford, Volkswagen, Mercedes-Benz and General Motors.

Lyft and Waymo move to counter Uber’s autonomous aspirations. My prediction: Eventually, Alphabet will buy Lyft.

Uber’s Eternally Bad Weeks

Pity Dara Khosrowshahi, who has done yeoman’s work neatening the Uber business in the wake of its uproarious startup years. He can’t get a break from the previous mischief committed by the company’s founder. Yet, I suspect Khosrowshahi is satisfied with his work to date, as the Uber board probably is, as well.

Last week, after finally resolving board conflicts with founder Travis Kalanick, Khosrowshahi admitted the company had, under Kalanick, covered up a massive data breach and paid off the intruders without reporting the event to law enforcement or regulators. Having swept its juvenile behavior under the rug, Uber will be dealing with these malignant hairballs for years to come. How long will the company hand competitive advantages, brand confidence-building opportunities, and market share to its competitors? Forever, because it established a huge early advantage over competitors that, like Microsoft’s PC market share, is permanent and of dubious value — because it distracted Microsoft from new markets for more than a decade while Apple and Google sopped up the mobile market like gravy.

Uber’s view of local transportation markets was an incredible asset, but the insights generated by Lyft, Didi Chuxing in China, Ola in India and Grab in Southeast Asia, now rival those of Uber. This has given Lyft, in particular, an opening in the U.S. to move into enterprise services. For example, Lyft signed an agreement with corporate travel giant Carlson Wagonlit this week, giving it convenient expense management for enterprise travelers. Volkswagen today announced a Chinese on-demand transportation service (cars on demand) that mimics Cadillac, Audi, and other carmaker services that promise to change the auto purchase process over the next decade. Meanwhile, companies, such as Stratim, formerly Zirx, and others, such as Ford and GM, are jockeying for part of the on-demand automobile management market, hoping to carve out a share of transaction revenue to pay for vehicle cleaning, maintenance, and, ultimately, customer relationships with car users.

From AutoNews: Even EY is working on a software management platform, called Tesseract, to connect fleet operators, service providers and passengers. The firm is working with automotive partners to develop a system that can manage payments among all parties in a mobility service, from the car’s manufacturer to the rider — another aspect of ride-hailing services Schondorf says consumers will expect to be quick, easy and trustworthy.

This is a business Uber should own, but seems prepared to cede, along with the revenue, to competitors Not Currently Struggling With Brand Reputation. If Uber’s primary role will be the acquisition of vehicle fleets, such as its $1B Volvo deal last week and $10B Mercedes deal in March 2016, the company is taking on inventory risk that voids its earlier scale-free growth strategy: Drivers paid for vehicles until now, and Uber’s customer interface will need to be transformed from the face of the driver (and their vehicle) into a remote service business represented by the Uber app. This will be Uber’s biggest pivot, yet. The bad weeks must end for the strategy to pay off.