The Best One Yet - Amazon knocks off Allbirds — Target’s shipping nirvana — PayPal buys $4B of Honey

Episode Date: November 25, 2019

Allbirds’ CEO noticed that Amazon’s been knocking off its go-to shoes — Amazon calls them “equivalents,” we call them “knock-offs”. Target is enjoying shipping nirvana and shares are up 91% this year because it’s pulled off same-day shipping magic. And PayPal splurged $4B for deal-snagging pioneer Honey, but Wall Street ironically thinks it overpaid.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks Daily. Welcome back. It is Monday, November 25th. Nick and I are coming at you live from my dad's law office in Vermont and Nixon Upstate New York. I'm going to have a studio audience today. I'm looking at like a deer in a tree right now.

No, Nick and I are settling into our Thanksgiving week digs a little bit early. In the meantime, we've got our special remote pod equipment, and this happens to be the best snacks podcast ever. For this T-boy, we got three great stories. we're kicking it off with PayPal, which just made its biggest acquisition yet. Los Angeles-based Honey, the deal-finding website feature. You should have used Honey to not spend so much for Honey, PayPal. This seems like an easy win. Yeah, a 10% off code for that $4 billion acquisition that would have saved you some pennies.

It's big. Second story, what do we got? Amazon is selling Allbirds knockoffs, and we're not just talking about some Chinese brand that's knocking off Allbirds. We're talking about Amazon knocking off Allbirds. Jack and I jumped in snack style to the world of algorithmically inspired knockoff businesses over at Amazon. Third and final story, Target is the big box retailer that is surviving the retail apocalypse. We're going to promote this to thriving the retail apocalypse.

And its latest earnings report messed with our heads. Target is actually saving money. When you do one day shipping, it doesn't make sense. It doesn't make sense. One day shipping is cheaper than two day shipping. Now, Snackers, before we jump into all that, we got to talk about the situation going over at Tesla, which Jack and I have to be shareholders of, because they just released a new thing. We mentioned this on Friday's pod, but we need to dive deeper. Tesla has a new electric pickup trapezoid that it launched on Friday.

It's supposed to be a pickup truck, but it looks more like a robocop and like a steak knife, had a baby together. They designed this thing completely from scratch. They didn't look at the Ford F-150 and make a minor tweak. it's as if an alien described this to another alien and then they made a pickup truck. Elon Musk must have a flatbed on this thing. Now, the thing everyone's talking about, including Nick and me, is when they brought on this skinny guy on stage next to Elon Musk, his name was Franz von Holthausen, and they wanted to test out the bulletproof windows. Yeah, this is the bulletproof window to Tesla's new pickup truck. And so what this engineer did is he picked up like a rock and he threw it at the wind.

window. It's kind of an awkward motion. And, you know, these things are supposed to withstand a 9mm bullet so you'd think they can handle a metal ball that an engineer threw. Turns out this tiny engineer broke the window. Elon Musk is like, oh my God, I think you threw that a little too hard. Here, try it again, like on the back window. So they try it a second time.

He breaks the second window on the bulletproof glass new pickup truck. He breaks it again. It shatters everywhere. Most awkward moment ever. This is embarrassing. Snackers, Jack and I rarely do this in an intro. But Jack, what is the takeaway here for our buddies over at Tesla's, like, expose showing off this brand new truck? I got three takeaways.

First, Tesla needs a skinnier engineer who's not going to throw the ball as hard. Second, maybe the engineer should throw it with his left hand, so it's a little softer. And third, I'm just shocked he hit the window both times. We're impressed. Let's hit our three stores. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something illegal out the way. The snacks are about to hear rain.

It's air candy. They don't reflect the views of the Robberhood family. It's all informational just so you know. We're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security. Right.

Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, PayPal just made its biggest acquisition yet. $4 billion for the deal snagging. promo code delivering website feature called Honey. This is also the largest tech acquisition in Los Angeles County history. Yes, and it's not Silicon Beach, which is the combination of Venice, Los Angeles, and Santa Monica.

They're trying to call it Silicon Beach next to Silicon Valley. It's different. This was actually in DTLA, which is Los Angeles speak for downtown Los Angeles. Yeah, it's like right near Venice and Santa Monica. But depending on the time of day, it can take 10 minutes to get there or four hours. Here's what you need to know about Honey. It wants to make every moment of every day like Black Friday. This is like, Honey's like one of those French truffle dogs that like goes out,

sniffs out, they're like, wear the good deals, and then they bring them home for the shifts. French truffle dogs, I'm going to have to Google this for a second, like most of the other Snackers. This company has saved customers $2 billion so far sniffing out deals, sticking them on their own website and pushing them into your plug-ins. Let me give it an example. Snackers, holiday seasons coming up. Friday is when like it kicks off officially. You might want to buy a cheeseboard for your aunt because your aunt can't have too many

cheeseboards. Right. They have 12 cheeseboards, but a 13th one, no one's going to argue with that. There's a lot of cheese out there. Here's what you do. You download the Honey plug into your Chrome browser. The extension is right there. And when you're at William Sonoma's checkout for the marble cheeseboard, you push the button

and you get surprised. What then pops up is a little thing from honey that says, hey, put the code popcorn in and you're going to get 20% off this lovely marble cheeseboard. Unbelievable deer. Then you pay 20% less. It's like free money. They're doing the sourcing for you. But here's the thing about honey.

It feels illegal, but it's actually profitable. I actually felt like honey is basically Napster. It's an unbelievably good deal, but it must be illegal and it's probably going to get shut down. But that's not the case for honey because it's working with companies like William Sonoma, because they hate it when you get to the end of the checkout. You see that final price for the marble cheeseboard, and you don't end up buying. it's actually called shopping cart abandonment it's a big problem in online retail William Sonoma can't stand it you are so close to completing the sale all you have to do is push confirm

right there now you're more likely to actually press confirm and buy it and forget about abandoning your shopping cart if you know there's a deal like 20% off that's why William Sonoma is actually happy to hook honey up with some promo codes because it helps them finalize those sales instead of losing them so if you're PayPal and all you're doing is helping the transaction action occur at the end of the shopping process, having honey like in your game plan means that you're helping consumers discover deals on the honey website. That's because honey is not just a browser extension. It also has an app. It also has a website. And some people are going there to start their shopping process because they'll be shown all the deals that are going on right now. Plus, if your PayPal,

you're like, hey, maybe we'll merge honey with one of our other companies like Venmo to get people using Venmo to actually purchase things from stores. That's pure speculation. but I do think a merger of the Honey and Venmo app would be brilliant. So Jack, what's the takeaway for our buddies over at PayPal? Wall Street thinks PayPal overpaid by like a couple billion dollars. We just went over what a good, healthy fit, honey is for PayPal, but that's not what we saw when the news was announced. PayPal shares dropped by 4% after the new news,

so clearly Wall Street's like, I'm not that into this deal. And the reason they may not be that into honey is because while honey is powerful, is it more of a company or is it a feature? There are a lot of questions here. I mean, PayPal's got great relationships with William Sonoma and all the other retailers. Could they have just developed this feature in-house instead of paying $4 billion for Honey? Honey's got 17 million members. Is PayPal's 300 million member user base really going to benefit from having 17 more?

What's the best use of $4 billion? Wall Street thinks it was not buying honey. For our second story, Target's latest earnings report reveals its achieved shipping Nirvana. Let's go to Mirren Webster on this one, Nirvana, a transcendent. state in which there is neither suffering nor desire. They are feeling the zen over a target based in Minneapolis. Jack, the stock up 15% last week after its earnings. Dude, it's up 91% this year.

Jack and I were shocked by these numbers. We jumped in snack style. Notice a kind of an interesting, a kind of cool number. Online sales are up 31%. That was last quarter. 31% is a pretty good quarterly jump, but that's not insane. It's not worth a 15% stock jump. It's not your favorite child.

The number that Jack and I found fascinating. was this. 80% of that online growth came from same-day delivery. Because you just heard it's snowing in Vermont. It's snowing in the Sierra Nevadas and you need that everywhere. Ski-Wansy suit, parka thing ASAP. Now, when it comes to Target, they have built out like a same-day delivery franchise that should have its own logo and mascot and everyone should be friends with it. If you order online, you can pick up curbside. You can pick up in-store, which is just like 30 steps further than curbside. Boop, boop, boop, walking over there. Or you can get it. it shipped to your front door via shipped, drop the ED, replaced with a T, shipped, which it acquired

in 2017. Now, here's the thing with same-day delivery. Not only is Target same-day delivery growing, they're making money off of this thing. We know on Snacks Daily, we've covered it before, same-day shipping is expensive. Walmart's profitability has been squeezed. Amazon's profitability has been squeezed because of this same-day shipping wars. Meanwhile, Target CEO shows up after the earnings in a Zen-Ly. state to claim that magically his company has cut same-day shipping costs by 90%.

Nick told me that headline on Friday and I said that must be a mistake. I don't believe it. That's too good to be sure. Jack had to sit down. I got him a glass of water or kombucha. I had to massage him back to get ready to cover this story. All right. So we unpeeled this thing. And the CEO claims that they cut 40% of the shipping costs just by finding the closest target store to you, which already had the item in the back. And they're delivering it like, couple miles instead of across the country from like the Frankfurt Kentucky Shipping Center. We've all heard of these fulfillment centers. You pass them on the highway. They're in the middle of the nowhere and they ship random things that you need at random times. That's not what

targets doing. But here's the catch. Based on that explanation that they're shipping it from their own inventory at the store near you, that means they must only have same day shipping available for the items in the store closest to you, which is limiting. So the catch is you're limited. Amazon's got 10 million objects that could actually sell you and ship you. Target probably is like 80,000 in a single store. 80,000 is the average number of items Target has in the same day store, which is nothing compared to Amazon's 10 million eligible for same day. So that's the catch, but in the meantime, Target's enjoying shipping Nirvana.

So, Jack, what's the takeaway for our buddies over Target? Target shares look pretty hot right now, but let's remember the lows. Remember that Canada debacle back in 2015? The Great Galatial Retreat, Jack? Nick, I just heard you say debacle. Was that intentionally a Canadian accent there? Sometimes it just flows out of you. You never know.

Snackers, we hadn't launched this podcast yet. But back in the mid-20 teens, Canada was getting invaded by Target. It shut down that invasion, though, after two years and retreated back to the United States. Here's what happened. They opened 133 stores. They hired 18,000 employees to man those stores, but they did it too quickly. They didn't understand Canadian customers, and the stores were all, like inconsistent. The result was $11 billion in losses for Target and kind of the embarrassment of leaving

Canada. That was one of the biggest corporate F-ups we've ever seen, but the stock is now at a record high just a few years later. Our third and final story is so good. It is so wild. You're going to want to copy this thing and do it again yourself. We're talking about Amazon, which is engineering knockoffs using super data. And the latest victim of Amazon's knockoffism is Albert's shoes. All right, Snackers, Jack and I, we got to do this. We got to take a moment. We got to talk about Amazon basics here, aka the world's worst gift idea.

If you want to break up with the person you're dating, buy them an Amazon Basic birthday pressing. It's a really subtle way if you're afraid of confrontations of telling someone, I hate you and I have no interest in spending you the rest of my time. We've all bought Amazon basics before, but you only buy them for yourself. It's basically cheaper version of basic stuff. We're talking coffee mugs, extension cords, iPhone chargers,

not the things you're going to wrap up. You don't care about the brand. You just want to pay the lowest cost, but that little Amazon logo makes you think it's somewhat reliable. Now, it turns out that Amazon is knocking off less generic products, and it's got 100 of its own Amazon brands doing exactly this. These are Amazon brands, and they only account for 1% of Amazon's total sales as of April. But that's like a lot. Like 1% of Amazon's sales is like the economy of Croatia. And that 1% is growing fast-neck. Now, the latest victim here is a really interesting unicorn company called Allbirds that makes direct-to-consumer shoes. They're $95, and if you're not wearing them in the Bay Area, then you're not really a person.

Nick, are you talking about the 206 collection I'm seeing on Amazon for $45? I'm not, but that is the exact problem that we're talking about here, and it's why Allbirds is really angry at Amazon. There was an interview with the CEO of Allbirds last week, and he stated that Amazon has been the top-biddered. for the Google search term, Albirds. In other words, if you search for Albirds on Google, you're not going to find Allbirds at the top. You're going to find an ad for Amazon's 206 collection.

Now, in response, Amazon's retail head has come up with the most corporate, boring, in-helpful conversation piece we've ever heard. Yeah. Amazon was basically called out by Allbirds for making knock-off shoots of Allbirds. And this is what Amazon says. We actually like these knock-offs because, quote,

it saves customers money by offering private label equivalents. Now, there are a couple of issues here we've got with the term equivalence. The first being, they're not equivalent. No, Albert sources their wool and sources their soul from like recycled, ridiculously sustainable, earth-saving ways. Right. So the second issue we've got with the term equivalent is that we're going to need to update the dictionary right now because in corporate speak, equivalent means something else.

It means knockoff. That's what equivalent means in corporate speak. So Jack, what's the takeaway for our buddies over at Allbirds and Amazon? Amazon search tells Amazon what it should knock off next. Here's the thing about Allbirds. It doesn't sell on Amazon because just like Nike, it doesn't want to be ranked alongside like a lot of other stuff that looks just like it and is way lower price. Snackers, you can test this right now.

Go to Amazon and search for Allbirds. You'll find the Urban Fox Wool Runner, which is a truly identical knockoff of Allbird shoes. Here's the funny situation for Allbirds. People want Allbirds on Amazon. They're searching for it on Amazon. But Amazon is noticing they're searching for it and that it's not available. That's a signal to Amazon. We have an opportunity to serve Amazonians, Amazon customers, something like Allbirds because people want it.

And so what they end up doing is something called algorithmically inspired knockoffs. They see what you want from the data and then they build the physical thing because they know you'll want it. This is the messed up way that Amazon could do knockoffs better than any company in the world. This is Jack. I own stock of Amazon. Jack, and you'll whip up the takeaways for us to start the week. PayPal just acquired honey for $4 billion so it can be more than just a payment company. But Wall Street thinks PayPal got ripped off. Second story, target stock is at a record high as it's managed to get the best of both worlds.

It's got same-day shipping and profitability. It's shipping Nirvana. Third and final story, Amazon is offering customers lower priced equivalents of name brand items. You may know these as knockoffs, and it's the data that lets them get knocked off. Snaggers, time for our snack fact today. This one sent in from a legendary podcast producer. His name is Richard Cook, and he hails from basically Connecticut, Vermont, and Los Angeles simultaneously. Born in Connecticut, snowboarded in Vermont, and now he lives in L.A., but I got to say, I have a personal connection with Richard.

not only does he work at the podcast company that produces snacks daily, he also used to shred at Corinthia in Mount Snow growing up. Now, he wanted to point out something that we should all take a moment for, which is Jake Burden Carpenter, aka Burden's founder, who died of cancer, unfortunately, last week. Jake arguably invented the snowboard, and he definitely commercialized it with Burton Snowboards, which was based in Burlington, Vermont. And here's the thing about snowboarding. It was banned in the 1980s from all resorts.

it was Suicide Six and Stratton that were actually allowing snowboarding the first times round. Now, according to the University of New Hampshire, snowboarding, skiing, and snowmobiling add $200 billion of economic value to the U.S. every year. A lot of that is just like sitting down in the snow, not really doing that much. Huge fan of Burton, huge fan of Vermont companies. Richard, thank you for this great snack fact. Snackers, great to start the week off with you. We should definitely do this again tomorrow.

back tomorrow. Then Wednesday, you got our Max Cutler interview with Spotify, and then we're taking a few days out for thanksgiving. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.