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Takeaway: AMZN increases qualifying free shipping items, basket size matters for the rest. Parties at bargaining table on w. coast port issues.


RETAIL CALLOUTS (1/28): AMZN Free Shipping, Port Dispute Progess, WAG, H&M - 1 28 chart2


AMZN - Amazon triples number of ‘free shipping’ items


Takeaway: Despite what the headline suggests - this effects AMZN shoppers more than the industry. The free shipping threshold for non-Prime users is still $35, but now items purchased from 3rd party fulfillment can qualify to reach that hurdle.

  1. It seems like a logistical nightmare to have to coordinate corresponding orders from different sellers into one system. So kudos to AMZN for having the logistical capabilities to support that.
  2. It's all about basket size. We looked at the math for 4 different retailers to get a sense of the dilutive effect of free shipping (table below). Because of the differences in basket size JWN gets up 1,500bp higher gross margin than KSS on a straight on-line sale.
  3. No way this isn't a margin killer. Now instead of shipping one box full of items for a $35 order - AMZN (or maybe the 3rd party sellers) are left holding the bag for multiple packages shipped from a non-centralized group of sellers.

RETAIL CALLOUTS (1/28): AMZN Free Shipping, Port Dispute Progess, WAG, H&M - 1 28 chart1

Employers: Agreement made on key issue in port labor dispute


Takeaway: A port shutdown would have been a  catastrophe for a few dozen industries, as well as the balance of US/Asia trade if the West Coast Ports shut down. But that's exactly why they will not shut down. The key bargaining chip -- the Holiday season -- passed without any major hiccups so its not a big surprise to see the two sides sitting at the bargaining table.

Keep in mind that Nike is on the verge of rolling out broader footwear production for FlyKnit product (non-labor intensive) in the US, and closer to the point of sale in other developed markets.  We can only think that problems with product delivery at the ports only hastened Nike's plan to diversify its manufacturing base.


WAG - Walgreens Boots Alliance Appoints George Fairweather as Global Chief Financial Officer


BABA - China Accuses Alibaba of Failing to Curb Fakes, Bribes


AMZN - Amazon to collect sales tax from almost three-quarters of US consumers


H&M - Fashion retailer H&M plans 400 new stores this year


SWY - FTC clears Albertsons, Safeway merger