Amazon to Buy US Grocer Whole Foods Market for $13.7 Billion

HIGHLIGHTS
Amazon to acquire Whole Foods Market for $13.7 billion
Whole Foods Market will continue to operate stores under its brand
The deal is expected to close in the second half of 2017
Online juggernaut Amazon is buying Whole Foods in a deal valued at about $13.7 billion (approximately Rs. 88,300 crore), a strong move to expand its growing reach into groceries.

Amazon.com Inc. will pay $42 (approximately Rs. 2,700) per share for Whole Foods Market Inc., including debt. That marks an 18 percent premium to Whole Foods’ closing price on Thursday.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. The grocery store operator was also under pressure from activist investor Jana Partners.

The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe’s.

Amazon to Buy US Grocer Whole Foods Market for $13.7 Billion

Amazon, meanwhile, has been expanding its reach in goods, services, and entertainment.

Whole Foods will keep operating stores under its name and John Mackey will as CEO, with headquarters in Austin, Texas.

The company, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods, and has said customers may be choosing “good enough” alternatives closer to home. In addition to other natural and organic grocers, it has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets such as Kroger.

The deal is expected to close in the second half of 2017.

Lenovo's Global PC Shipments Fall 1 Percent, Slower Than Market Decline

HIGHLIGHTS

  • Revenue from PC and smart device business fell 2 percent to $30.1 billion
  • Lenovo blamed a 4 percent drop in revenue on difficult macro environment
  • Lenovo said its worldwide PC market share rose to 21.4 percent

China’s Lenovo Group, the world’s largest personal computer maker, said its global PC unit shipments fell 1 percent in the year ending in March, against a market decline of 3 percent, as consumer demand continued its downward trend.

Revenue from its personal computer and smart device business, which accounts 70 percent of total revenue, fell 2 percent to $30.1 billion (roughly Rs. 1,94,226 crores).

Lenovo blamed a 4 percent drop in total revenue to $43 billion (roughly Rs. 2,77,450 crores) on difficult macro environment, its own business transformation efforts, and component supply constraints in the second half of the year.

Lenovo's Global PC Shipments Fall 1 Percent, Slower Than Market Decline

For the full year ended March, Lenovo posted a profit of $535 million (roughly Rs. 3,451 crores), reversing a loss of $128 million a year prior. The result compared with the $569 million average of 24 estimates.

According to market intelligence firm Gartner, worldwide PC shipments totalled 62.2 million units in the first quarter of 2017, the 10th consecutive quarterly decline and the first time since 2007 for the figure to drop below 63 million.

Lenovo said its worldwide PC market share for the full year rose 0.4 percentage point to a record high of 21.4 percent, though that is down from 22.4 percent in the previous quarter.

“Despite market conditions that will remain challenging in the short term, the Group exited the year with stronger organization allowing for sharper customer focus and more compelling product portfolio across all our business,” Chairman and Chief Executive Officer Yang Yuanqing said in a filing.

PC competition took a step up this week when China’s largest mobile phone maker, Huawei, said it would enter the market for premium consumer models.

 

Lenovo also competes with Huawei in mobile, which accounts for 18 percent of its revenue. The business’ loss widened to $566 million last year from $469 million a year prior on a 10 percent drop in revenue to $7.7 billion, though Lenovo said the business had strong growth in markets outside China, especially Latin America and Western Europe.

The company’s smaller data centre business, which includes servers and enterprise services, incurred a loss of $343 million, with revenue down 11 percent to $4.07 billion.

Yang said Lenovo’s core PC business remained solid, transformation for mobile businesses is on track, while it is accelerating efforts to improve its data centre business.

He said last week Lenovo will reorganise domestic operations in response to the changing PC industry. Lenovo China will split into two divisions: one focused on consumer PCs and smart devices, and the other on data centres.

Lenovo’s profit for the three months through March dropped 41 percent to $107 million. That beat the $93.8 million average of 11 analyst estimates in a Thomson Reuters poll.

Revenue rose 5 percent to $9.58 billion, against an estimate of $9.6 billion.

These 5 Tips Will Change the Way You Market Your Online Store

So, you’ve put together a beautiful eCommerce store and are eagerly anticipating traffic to start trickling in.

At this point, many eCommerce merchants start to realize that, without doing the right types of marketing, this traffic may never come. It’s easy to feel frustrated or confused at the wide variety of different marketing channels available to you, but don’t fret. This guide is designed to present you with 5 of the most effective eCommerce marketing strategies.

eCommerce Marketing Strategies

Invest in a High-Quality Content Strategy

Many eCommerce merchants view content only as an effective marketing channel but, for some, content is the lifeblood of their entire business.

Content is one of the most effective and rewarding marketing strategies out there because it connects with virtually every other marketing endeavor. For example, a simple blog post could be used in your email marketing, social media accounts, and SEO keyword targeting strategies while simultaneously helping to build your brand and position your site as an authority in a specific niche.

Your content strategy should primarily focus on creating valuable content that speaks directly to your audience. The backbone of your content strategy involves researching:

  • A target audience. Come up with a persona that encapsulates your target audience’s needs and motivations. This makes it easier for your content team to visualize for whom they’re creating content.
  • Your audience’s problems. This research can be found anywhere, from in-person interviews with stakeholders to browsing niche-specific forums such as Reddit. What are the pain points and problems your target audience is having? What are some roadblocks that cause people to hesitate before purchasing your products?
  • Content audit. This assessment involves conducting an evaluation on your site’s current content. There’s no need to have a clunky site filled with mediocre content. Here are a few questions you should ask:
    • Is it consistently good?
    • Are there any lackluster articles?
    • Are people engaging with your content on social platforms?
    • Does this content do your brand justice?
    • If the content is meant to convert, is it doing a good job?
  • Competitive analysis. Once you have a firm understanding of where your content stands, take a gander at your brand’s competitors to see how they’re doing. You’ll likely find that many of the top brands do a phenomenal job at producing high-quality content. If they aren’t, you’re in an even better position. There could be a huge opportunity to create value that your competitors are failing to provide.

Create Facebook Ads Around Your Best Pieces of Content

Content is just the gift that keeps on giving.

Merchants that create extremely good pieces of content are able to receive much more value from these pages if they advertise them rather than just leaving them. This not only allows merchants to drive traffic to pages and inspire likes and shares, but it also allows them to provide new users a valuable experience.

By creating content around your audience’s needs by answering questions, offering guidance or providing value in a variety of creative ways, merchants are able to make a positive first impression.

For example, let’s assume your store sells shoes. Instead of creating a Facebook ad campaign to blast out a product page for a few of your shoes on clearance, you could create a single piece of content titled “The 14 Best Athletic Shoes for Summer Under $50.” Now, instead of having to create multiple ads around different product pages, you only have to create a single ad for that specific piece of content.

On that piece of content, you could have links to your product pages and let the sales trickle in. Alternatively, a more value-driven piece of content could be “How to Find the Best Deal on Shoes,” with a guide that includes several options that aren’t sales-driven, and one or two links to your product pages.

Marketing has evolved past the point of constantly hard-selling, and the new age of digital marketing requires merchants to provide their users with value every step of the way. By advertising your most valuable pieces of content, you will be able to drive traffic that is interested in solving a certain issue.

This gives you the opportunity to insert calls to action (CTAs) throughout your content to either collect email addresses to keep the conversation going or to direct interested traffic toward a product page.

Email Marketing for Retention

Email marketing has been around for over 40 years for a reason: it works.

Merchants who are able to build a healthy list of subscribers can segment this list based on specific categories to send out effective messages for specific promotions. For example, if you’re a shoe site, you could send out an email that advertises your discounted sale to shoppers who have a higher propensity to buy from your clearance category, and another email to your customers who tend to spend more money per order.

Email marketing in 2017 involves enticing your potential subscribers with potential value and then delivering it. By setting expectations of what they will be receiving and how often, merchants will be able to effectively set a foundation that will allow them to consistently drive traffic to new pieces of content and product pages.

This strategy not only allows you to reach your audience at any given time, but it also makes building a long-term relationship possible. By consistently providing value to your list through useful content, you will be able to build brand loyalty. The more effective your email marketing is, the more efficient your overall marketing strategies will be. Statistically, email marketing yields 4,300 percent ROI for businesses in the US.

Perhaps the most valuable component of email marketing is the ability to retain your traffic. This reduces the inherent risk associated with primarily relying on a single source for traffic that could potentially change its algorithm.

For example, a minor tweak in Facebook’s algorithm could drastically increase the cost of reaching a specific number of people. If a business is overly dependent on any one source, these algorithm tweaks could be lethal. Thankfully, email marketing has stayed relatively consistent while maintaining its effectiveness for nearly five decades.

eCommerce Marketing Strategies

Leverage Product and Social Media Reviews

Merchants often completely overlook their product reviews as a source for marketing inspiration. Organic and fair product reviews play a huge role in forming trust with your shoppers, and they shouldn’t be tucked away in some obscure corner. First and foremost, you should make sure that they are present on your product pages and every other page that is relevant to the buying decision.

However, the value of reviews doesn’t stop there. Integrating your product reviews in your email marketing and social media strategies in order to convince people that your products are worth a first or second look can help you bring in traffic that would have otherwise overlooked your email or ad.

It’s important that these reviews are user generated and genuine because, if they look falsified, your brand could end up making a negative impression.

Use Ad Retargeting

A shopper clicks through your site and finds a product they like. They add it to their cart and continue shopping. Suddenly … pop! A Facebook notification. The previously committed shopper rapidly changes tabs to check their Facebook alert and gets sucked into a conversation. The minute that customer ventures off your site, the chances of them completing a purchase greatly diminish.

Ad retargeting allows merchants to get another crack at making a sale. Dynamic retargeting allows merchants to send an advertisement based on a user’s certain actions. These ads can be personalized down to the specific action (i.e., cart abandonment) or be just a kind reminder of your site to a user who has spent a significant amount of time clicking around in the past. This strategy helps to fill in the gaps the short attention span of the average internet shopper.

There are a few more reasons that may have caused shoppers to bounce, other than distractions. There are likely a handful of products similar to yours, and the convenience of online shopping allows shoppers to browse different options with relative ease.

Retargeting ads are useful because they are 70 percent more likely to convert than any other type of advertising. This allows merchants to get more out of all their other marketing strategies by creating a retargeting net that helps to bring some shoppers back.

Final Thoughts

The strategy behind these marketing tips is to allow merchants to be able to reach new audiences while also building in a retention-based component. These two high-level strategies paired together play off each other in beautiful harmony.

The retention-based component lets merchants get another chance by retargeting missed traffic and, also, to “own” their audience through email marketing. This also makes the customer acquisition component much more effective and less expensive to run on a larger scale.

Utilizing these 5 marketing tips, along with other effective ways to add value to your eCommerce site, will not only help you to make more sales but provide an overall better experience for your shoppers.

Money market rates may limit Fed's balance sheet shrinkage: BAML

NEW YORK (Reuters) – The Federal Reserve’s plan to start reducing the size of its balance sheet later this year may be limited by the resulting upward pressure on money market rates, according to a Bank of America Merrill Lynch (NYSE:BAC) strategist.

The U.S. central bank has signaled its intention to reduce the size of its $4.5 trillion balance sheet later this year as it remains on track on a gradual path of interest rate increases amid an improving economy.

© Reuters. A police officer keeps watch in front of the U.S. Federal Reserve in Washington

“Given our expectation that most of the Fed balance sheet decline will be concentrated from foreign bank reserve holdings and lower Fed repo activity, the Fed may only be able to reduce their balance sheet by $1 (trillion) before funding markets materially tighten,” Bank of America Merrill Lynch’s head of U.S. short rates strategy Mark Cabana wrote in a research note on Thursday.

As the Fed pares its balance sheet, it will to reduce the amount of excess reserves in the banking system, which would likely put upward pressure on borrowing costs in money markets.

The Fed has yet to offer details on the amount it plans to taper its reinvestments in U.S. Treasuries and mortgage-backed securities and a desired size for its balance sheet.

The Federal Open Market Committee, the central bank’s policy-setting group, will hold a two-day policy meeting which will begin next Tuesday. [FED/DIARY]