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Business From The Editors

Swedish Furniture Billionaire Ingvar Kamprad is Dead: The IKEA founder was 91

Ingvar Kamprad, the founder of Swedish furniture behemoth IKEA, passed away peacefully at his Småland home in southern Sweden on Saturday.

Describing him as “one of the greatest entrepreneurs of the 20th century,” his company said that “he will be much missed and warmly remembered by his family and IKEA staff all around the world.”

“Ingvar Kamprad was a great entrepreneur of the typical southern Swedish kind – hard working and stubborn, with a lot of warmth and a playful twinkle in his eye,” said IKEA.

“He worked until the very end of his life, staying true to his own motto that most things remain to be done,” the company added.

Mr. Kamprad, who established the revolutionary furniture company as a seventeen-year-old with the money he received from his father as a gift for his good grades in school despite suffering from dyslexia, stepped down from IKEA’s board in 2013, when he was eighty-seven.

“I see this as a good time for me to leave the board of Inter IKEA Group. By that we are also taking another step in the generation shift that has been ongoing for some years,” he said at the time.

“Ingvar Kamprad was a unique entrepreneur who had a big impact on Swedish business and who made home design a possibility for the many, not just the few,” said Sweden’s Prime Minister Stefan Lofven in a statement honoring the pioneering businessman – as reported by the Swedish news agency TT.

“We are mourning the loss of our founder and dear friend Ingvar,” IKEA CEO Jesper Brodin said in a statement. “His legacy will be admired for many years to come and his vision –- to create a better everyday life for the many people -– will continue to guide and inspire us.”

Known for his thrifty and down-to-earth demeanor, Mr. Kamprad lived a relatively simple life despite being a billionaire many times over, driving an inconspicuous Volvo, traveling economy class more often than not and dressing rather unpretentiously.

Speaking to Sweden’s TV4 in 2016, the business icon said that frugality came naturally to the people of Småland.

“If you look at me now, I don’t think I’m wearing anything that wasn’t bought at a flea market,” he said.

“We have Småland in the blood, and we know what a krona is – even though it is not as much as it was when we bought candy and went to elementary school,” he said with reference to the Swedish currency.

Born on March 30, 1926, Mr. Kamprad exhibited aptitude and advanced business skills at an abnormally early age, selling matches to neighbors when he was just five.

From matchboxes he upgraded to selling other stuff he knew would fetch decent profits, including seeds, pens and pencils, and fish, etc. until he reached the age of seventeen; that’s when his keen entrepreneurial mind gave birth to IKEA with his father’s gift money, as mentioned earlier.

The first two letters (I and K) of the company name are his initials while the last two are the first letters of Elmtyard – the farm he grew up on – and his hometown Agunnaryd, respectively.

Initially, the company sold kitchen tables, which were basically replicas of Kamprad’s uncle Ernst’s designs.

Within five years, Kamprad had forayed fulltime into the furniture business, using a milk van to ferry his products to the local railway station for onward delivery to his growing mail-order clientele.

The big break, however, came in 1956 with IKEA’s groundbreaking flat-pack furniture, an idea that germinated in Kamprad’s shrewd business mind when he saw an employee remove the legs from a table to fit it in a customer’s car.

Fflat-pack furniture
Fflat-pack furniture

He realized that allowing customers the flexibility of assembling furniture themselves, rather than selling them pre-assembled pieces, would not only benefit the company in terms of savings on transportation and storage costs, but would also be much more practical and economical for customers using public transport, or their own vehicles.

Managing Director of GlobalData Retail Neil Saunders said that the idea of selling flat-pack furniture was, indeed, a pioneering effort by the Swedish billionaire that “left an indelible imprint on retail and on consumers’ lives.”

Saunders said that Mr. Kamprad “believed people should be able to buy quality furniture at accessible prices, as long as they were willing to do some assembly themselves.”

The pioneer’s life, however, was not without its fair share of controversies, having been on the receiving end of much criticism for staying outside of Sweden, mainly Switzerland, to avoid his home country’s high income-tax policy.

Also, following a report by Swedish tabloid newspaper EXPRESSEN that revealed Kamprad’s association with Nazi groups in the 1940s and 50s, including his contacts with Swedish far-right politician Per Engdahl, Kamprad said that he “bitterly” regretted that part of his life.

In a 1988 book, the furniture magnate acknowledged his close relations with Engdahl, saying that he had been a member of the man’s Swedish Movement between 1942 and 1945.

He confessed that he had been prejudiced in his support for Adolf Hitler having been greatly influenced as a child by his German grandmother who was an ardent supporter of the Führer.

“Now I have told all I can,” he said during a book release event in Stockholm. “Can one ever get forgiveness for such stupidity?”

According to the BBC, Elisabeth Asbrink accused Kamprad in a 2011 book of being much more actively involved in the Nazi movement than what he actually owned up to, saying that he served as a recruiter for a Swedish fascist group and continued his liaisons with far-right supporters long after World War II was over.

A Kamprad spokesman said at the time that the billionaire had long owned up to his indiscretions and had no lingering “Nazi-sympathising thoughts” in his head, whatsoever.

Kamprad is survived by his daughter Annika, whom he adopted with his first wife Kerstin Wadling, and three sons, Peter, Jonas and Mathias from his second wife Margaretha Kamprad-Stennert, who passed away in 2011.

After living for more than 40 years abroad, 38 of them in Switzerland, Kamprad returned to Sweden in 2014, to spend his twilight years at home in Småland.

Some reactions to the news of Ingvar Kamprad’s death:

And, here’s a rather nasty tweet, taunting at IKEA’s often difficult-to-follow assembling instructions.

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Business From The Editors

Billionaire Investor Warren Buffett Predicts a “Bad Ending” for Cryptocurrencies

During a Wednesday interview on CNBC’s “Squawk Box,” chairman and CEO of Berkshire Hathaway Inc. Warren Buffett, 87, said that he was almost certain that cryptocurrencies were headed towards a “bad ending,” without really giving a timeframe, or even how the so-called “bad ending” would come about.

“In terms of cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending,” said the third richest man on the planet, speaking from Omaha, Nebraska.

“When it happens or how or anything else, I don’t know,” the octogenarian billionaire said, adding, “If I can buy long-term puts, I could buy a five-year put on every one of the cryptocurrencies, I would be glad to do it, but I would never short a dime’s worth.”

Buffet’s longtime partner and Vice Chairman of Berkshire Hathaway Charlie Munger, 94, echoed his chief’s sentiments calling, not for the first time, Bitcoin and other cryptocurrencies “bubbles.”

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Munger said that young investors are “excited because things are going up at the moment and it sounds vaguely modern and I think I’m sure the computer science involved is difficult and interesting. So you can understand where they get excited. But I’m not excited.”

When asked if he had thought about “trading the futures to take a negative position of Bitcoin,” Buffett answered with an emphatic “No.”

“I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position of something I don’t know anything about!” Buffett said.

Both Buffett and Munger are known critics of Bitcoin and cryptocurrencies for some time, now, and have always been skeptical in their comments about digital currencies.

Back in 2014, Buffet had used the analogy of a “mirage” to describe the digital currency.

“It’s a mirage, basically. I mean it’s a method of transmitting money. The idea that it has some huge intrinsic value is just a joke in my view,” he had said.

Answering a question about the soaring value of cryptocurrencies last year, Munger had called it “total insanity.”

Addressing an audience at the University of Michigan’s Ross School of Business, Munger had said, “I think it is perfectly asinine to even pause to think about them. It’s bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work.”

Another known detractor of Bitcoin is the CEO of JPMorgan Chase Jamie Dimon who said in September that Bitcoin was a “fraud.”

“It’s just not a real thing, eventually it will be closed,” Dimon had said at the Delivering Alpha conference presented by CNBC and Institutional Investor.

“I’m not saying ‘go short bitcoin and sell $100,000 of bitcoin before it goes down,” he said. “This is not advice of what to do. My daughter bought bitcoin, it went up and now she thinks she’s a genius,” he joked.

Jamie Dimen - JPMorgan Chase CEO
Jamie Dimen – JPMorgan Chase CEO

In another appearance at a banking industry conference organized by Barclays earlier that same day, Dimon had compared the Bitcoin obsession to that of the tulip bulb mania of the 17th century.

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed,” he had said. “Currencies have legal support. It will blow up.”

He had also, reportedly, said that he would “fire in a second” any JPMorgan trader found trading in Bitcoin for being “stupid” and also because it was against the company rules. “It’s against our rules and they are stupid,” he said.

Again, in October, responding to a question at the Institute of International Finance conference he had said there would be a price to pay by anybody who was foolish enough to buy the cryptocurrency. “If you’re stupid enough to buy it, you’ll pay the price for it one day.”

Responding to Dimon’s “fraud” critique of Bitcoin in September, Viktor Shvets, head of global and Asia-Pacific equity strategy for the Macquarie Group, had written at the time that the cryptocurrency relied on a “durable technology that is likely to continue to evolve and strengthen,” despite any “extreme speculation.”

“If one describes Bitcoin as a fraud, how would one describe a ‘financial cloud’ that is at least 4x-5x larger than the underlying economies?” Shvetz had questioned.

“It is unlikely that US$400 trillion+ of financial instruments circulating around the world would ever be repaid and most are now backed by assets that are already either worthless or are diminishing in value. How does one describe rates and the yield curve that are either directly determined by CBs (BoJ or PBoC) or heavily influenced by them (Fed or ECB)? People living in glass houses should not throw stones,” wrote Shvetz.

While Dimon continues to remain an ardent critic of Bitcoin, and cryptocurrencies in general, he has softened up his stance a bit saying that he “regrets” calling the digital currency a “fraud” back in September.

“The bitcoin to me was always what the governments are gonna feel about bitcoin as it gets really big, and I just have a different opinion than other people”, he told Fox Business’ Maria Bartiromo during an interview on Wednesday, calling the blockchain technology “real.”

“I’m not interested that much in the subject at all,” he added.

Like Shvetz, there are others who also do not believe that the Bitcoin “bubble” is going to burst anytime soon, if ever at all.

Kodak’s Tuesday announcement that it is launching its own digital currency, KODAKCoin, doubled the company’s share value, somewhat revitalizing the company’s sinking fortunes.

“The KODAKOne image rights management platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform. KODAKCoin allows participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and sell their work confidently on a secure blockchain platform,” says the company’s website.

Another supporter who does not consider Bitcoin as “just a fad” is Morgan Stanley CEO James P Gorman, who said during a Wall Street Journal event in September last year that the cryptocurrency was “certainly something more than just a fad,” adding that “the concept of anonymous currency is a very interesting concept – interesting for the privacy protections it gives people; interesting because what it says to the central banking system about controlling that.”

Eric Schmidt, executive chairman of Google’s parent company Alphabet, had called Bitcoin a “remarkable cryptographic achievement” while speaking at the Computer History Museum in March 2014. He said that “the ability to create something that is not duplicable in the digital world has enormous value.”

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Business From The Editors

Single Ticket Wins Mega Millions Lottery Jackpot of $450M

The fourth-largest jackpot in the fifteen-year history of Mega Millions and the 10th largest in all lotteries in the U.S. was claimed by a single Quick Pick ticket matching all six winning numbers in Friday’s draw. The jackpot worth $450 million has a take-home cash option of $281 million.

According to lottery officials, the lucky ticket matching the winning numbers 28, 30, 39, 59, 70 and Gold Mega Ball 10 in the Friday draw was purchased in Florida at a 7-Eleven in Port Richey.

While the winner’s identity is still not known or announced, it cannot remain anonymous for long under Florida law. The Florida Lottery website clearly states that the winner’s name, the city of residence and the details of the win are allowed to be made public; however, the winner’s home address and telephone number are “confidential” information.

“The retailer will receive a $100,000 bonus commission for selling the jackpot-winning ticket,” the Florida Lottery announced in a Saturday news release.

The three Mega Million wins larger than the Friday jackpot in the lottery’s recent history have been $536 million in 2016, $648 million in 2013 and the 2012 record highest of $656 million.

Out of the 21 million tickets sold for all prizes, eight were Match 5 winning tickets sold one each in Tennessee, Massachusetts, California and Virginia two each in Oklahoma and Texas.

For the next drawing on January 9, the Mega Millions jackpot will be reset to the start amount of $40 million, with a cash option of $25 should the winner opt for the lump sum offer.

And, with Saturday night’s 10:59 p.m. (ET) draw results for the $570 million Powerball jackpot expected any moment, millions are waiting to be made. The lottery organizers have estimated the cash option for this fifth largest jackpot in the game’s history at $358.5 million.

Players can purchase Powerball tickets in 44 states plus Washington D.C, U.S. Virgin Islands and Puerto Rico. Rico, Mega Millions tickets are also sold in the same locations, barring Puerto Rico.

According to the National Association of Convenience Stores spokesman Jeff Lenard, long odds have not deterred people from queuing up at retailers to purchase the 2-dollar tickets – the “lottery fever” continues unabated.

The Association’s members account for about 60 percent of all lottery ticket sales across the country. “There’s definitely more traffic,” says Lenard.

According to Mega Millions, the odds of a single ticket winning its jackpot are 303 million to one, while the Multi-State Lottery Association estimates the odds of one ticket matching all six Powerball numbers at 292 million to 1.

The North American Association of State and Provincial Lotteries’ stats show that Americans spent a whopping $80.5 billion on lotteries in 2017.

The average American buys about $205 worth of lottery tickets every year across the country, with the exception of some East Coast states where the purchase per person is twice as much.

A study conducted by LendEDU, the online student refinancing company, reveals that a mind-boggling $735 is spent annually by the average Massachusetts resident, while Rhode Islanders are somewhat more cautious, spending $514 a year. Delaware and New York residents spend around $400 annually, on an average.

January 2016 was witness to the largest jackpot payout of $1.6 billion between winning tickets in Florida, Tennessee, and California and, as already mentioned, the highest single winning Mega Millions jackpot ticket was $656 million in 2012.

With no wins since October on both the jackpots, the combined total has exceeded $1 billion. A day before the Saturday announcement, not a single ticket had matched all six numbers for the Mega Millions JP.

Should a winner decide to go for the annuity payment instead of the reduced one-time cash option, both Powerball and Mega Millions will pay the winning amount over a period of 29 years. Understandably and sensibly, most winners go for the lump sum option.

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Business From The Editors

Is “Bitcoin” Really the Currency of the Future?

“Let’s start at the very beginning,
A very good place to start,
When you read you begin with A-B-C,
When you sing you begin with do-re-mi”

Julie Andrews sang these famous lines by Rodgers and Hammerstein in “The Sound of Music.”

And, that’s exactly what I suggest we do here – start with the A-B-C of bitcoin, to understand how the, much written and talked about, cryptocurrency works and where it’s headed.

So, what is bitcoin?

Bitcoin is a digitally encrypted, universal online currency that saw the light of day in 2009.

The brainchild of the intriguingly mysterious Satoshi Nakamoto, a name without a face, bitcoin is an intangible decentralized currency – a virtual currency, if you like – that boasts lower transaction fees compared to conventional online payment systems, like PayPal, for instance.

Unlike government currencies, bitcoin is not a legal tender regulated by a central monetary authority, or, for that matter, any single administrator.

It is a decentralized payment mechanism, where transactions happen peer-to-peer through, apparently, secure encoded messages, with no intermediary government-appointed controlling authority hawk-eyeing the monetary exchanges between users.

Bitcoin units

Named after its creator, a “satoshi” is the smallest bitcoin unit representing 100 millionth of a bitcoin, or 0.00000001 bitcoin.
The “millibitcoin” is the next highest unit worth 100,000 satoshis – a thousandth of one bitcoin, or 0.001 bitcoin.

The bitcoin currency abbreviation/symbol is BTC, also sometimes called XTB.

How does bitcoin work?

Again, bitcoin, being every bit a virtual currency with no physical existence, is recorded in a cloud public ledger referred to as “blockchain.”

The balances and bitcoin transactions in the blockchain go through verification processes with the help of a hugely powerful computing network – the virtual governing body for bitcoin, owned by independent individuals and companies known as “miners.”

Obviously, there has to be some type of revenue model for the miners to be able to do what they do. So, they are rewarded by new bitcoin releases, and, as custodians of the controlling network, earn fees for all bitcoin transactions, paid in bitcoin.

Miners can be looked upon as the decentralized authority responsible for the credibility and veracity of the bitcoin network.

The release of newly created bitcoin to miners will continue at a fixed, but periodically declining rate, until the bitcoin cap, set at 21 million bitcoin, is reached.

However, once the cap is reached and the rewards stop, “miners” will continue earning fees for their role as transaction validators in the blockchain.

As mentioned earlier, the blockchain is a virtual public ledger where bitcoin transaction records are maintained with the help of high-performance computers. Just like a physical ledger is made up of pages, the blockchain comprises individual “blocks.”

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A bitcoin block records all the recent bitcoin transactions, which have not already been recorded in a previous block. Once the data limit of a block is reached, a new block is added to the blockchain in order to record the latest transactions, while the completed “block” becomes part of a permanent block archive for all bitcoin transactions.

Now, in order to be eligible for bitcoin rewards, miners have to complete a current block. It, therefore, goes without saying that miners are always in competition with each other to be the first to complete a block.

The first entry or transaction recorded in a new block is invariably the reward given to the miner who completed the last block.

Mining

The record-keeping service provided by miners with the help of computer processing power is called “mining.”

It’s the responsibility of the miners to keep the blockchain updated and secure by consistently recording all new transactions into the current bitcoin block.

Each block in the blockchain is linked to the last completed block using a mathematical algorithm, thereby, completing the chain.

Each completed block is rewarded with 12.5 newly minted bitcoin (BTC), which decreases every four years. When bitcoin started back in 2009, the reward for each completed block was 50 BTC.

As more and more new bitcoin come into circulation and new blocks added to the blockchain, mining becomes increasingly difficult in terms of computing power required to keep everything up and running.

Initially, an ordinary desktop computer was good enough to handle the mining load. However, with the consistent increase in bitcoin and blocks and the consequent rise in the difficulty levels, newer and faster computers like Application-Specific Integrated Circuits (ASIC), more advanced processing units like Graphic Processing Units (GPUs), etc. are required by miners to tackle them.

It is the difficulty of the computing issues that determines the creation rate of new bitcoin; hence, the drop every four years as new blocks can’t become a part of the network without a solution to the computing problems.

On an average, it takes about 10 minutes to solve these mathematical issues and create a new block, which effectively means that 12.5 BTCs are minted every 10 minutes.

What is the monetary value of a Bitcoin?

According to the laws of supply and demand, which apply to bitcoin as well, the bitcoin price will keep going up with the increase in the number of people using the service.

Since the number of bitcoin users is still relatively small, the bitcoin value is subject to significant fluctuations on a daily basis but will keep increasing as more and more people start transacting in bitcoin.

The fact that bitcoin price was as low as less than a dollar in 2011 and now, as I write this, the bitcoin price in US currency is $14,176.40 having opened for the day at $15,378.28, testimony to its increasing value with more users coming into the world of bitcoin.

The bitcoin price is, also, directly proportional to the size of its mining network, which is consistently increasing with the increase in users and blocks.

To put it simply, as the network gets larger and more complex, it also becomes costlier to maintain, thereby increasing the cost of minting new bitcoin and, needless to say, as the cost of production increases, the price also increases.

Bitcoin wallets

A bitcoin wallet is necessary to transact in bitcoin. It, basically, “stores the digital credentials for your bitcoin holdings” and allows you to spend them using private keys.

While there are different types of wallets, what is important to know is that whoever controls the private keys controls the wallet.

There are some bitcoin wallets that function the way banks do, holding your private keys on your behalf. However, using such wallets is not recommended by bitcoin itself.

Here’s what the bitcoin website has to say about wallets:

“There are several different types of Bitcoin wallets, but the most important distinction is in relation to who is in control of the private keys required to spend the bitcoins. Some Bitcoin “wallets” actually act more like banks because they are holding the user’s private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your bitcoins.”

However, maximum number these wallets allow you to have control of your own keys, without the need of sharing with anybody, which effectively means you, and only you, can access your bitcoin holdings to spend them, as and when required.

There is a downside to this, though. If by chance, you forget your key/password, your bitcoin holdings are as good as lost, as the bitcoin network will not consider any other “evidence of ownership.”

A user lost 7,500 bitcoin in 2013, when he inadvertently discarded his hard drive containing his private key, without any back up to fall back on. The loss was worth $7.5 million according to the bitcoin price of the time.

The breaking news, however, is not good for bitcoin as its price took a steep plunge today on the South Korean exchanges, dropping from its Dec 27 trading price of $15,400 to $13,500 – an 11% decline in a single day, according to Coindesk.com. Bitcoin’s peak price this year had reached $20,000.

The drop is the result of South Korea’s announcement to curb irrational “cryptocurrency speculation” in the country even if it meant shutting down exchanges. South Korea, it must be mentioned, is a global hub for bitcoin trading.

“Cryptocurrency speculation has been irrationally overheated in Korea. We cannot leave the abnormal situation of speculation any longer,” the government statement said.

“The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility,” the statement further read.


Here’s what experts have to say about the South Korean impact on the future of bitcoin.

Naeem Aslam of Think Markets, who is optimistic about the future of bitcoin says:

“After forming a high of $16,416 this week, the cryptocurrency came under a selling pressure as traders showed their reaction to South Korea’s news. The country is determined to curb the speculative market and it would take measures to stop and review various crypto-exchanges.

The reality is that the market is way too overheated and no one wants the cryptocurrency popping on their door steps. However, this is surely not the first time that we have witnessed this kind of reaction in the Bitcoin price.

Throughout this years, we have heard many similar messages (followed by actions) from China and yet Bitcoin made a high of $19,338 [earlier this month].”

Craig Erlam of Oanda, on the other hand, has his doubts about a quick revival.

“Bitcoin is coming under selling pressure once again, with efforts by South Korean authorities to rein in speculation being blamed…

While this is likely a contributing factor, I wonder if given the pre-holiday drop, whether speculators have become more sensitive to negative news.

We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldn’t surprise me if we see prices heading back below $10,000 before they find their feet again.”

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Amazon Gears Up for a 14-Billion-Dollar Buyout of Whole Foods – It’s Biggest Ever

Amazon is all set to take over “Whole Foods Market” by the end of the year for a stupendous sum of $13.7 billion, its largest acquisition by far, surpassing its buyout of online shoe store Zappos in 2009 by a huge margin of $ 12.7 billion – more than 14 times.

As of now, Zappos continues to be Amazon’s biggest acquisition until the Whole Food deal, pending regulatory approval, is closed; it will then become a distant second – way distant.

The tit-for-tat buyout decision is seen by many as a direct faceoff with its long-time rival, Walmart, the largest grocery retailer in the United States.

In a bid to keep up with the internet shopping business, Walmart paid $3.3 billion for Amazon-competitorJet.com last year and made the chief executive of Jet, Marc Lore, the chief of Walmart’s complete e-commerce business. To further shore up its internet retail presence, Friday it announced its decision to acquire Bonobos, the Internet apparel retailer for $310 million.

With this deal going through, Amazon is looking to take a foothold in the $800 billion grocery industry, and a big one at that, what with over 400 stores spread across the United States, Canada, and Britain. If this is not a direct challenge to Walmart, what is?

“This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail,” Paul Cuatrecasas, chief executive of Aquaa Partners, a London-based investment banking firm said. “Amazon is effectively saying that if retailers are going to tool themselves up with technology, then they will tool themselves up with a physical presence and high-street brand.”

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As of now, Amazon is rather taciturn about it is plans for Whole Foods. However, the fact that it opened a prototype grocery store/supermarket (Amazon Go Store)in Seattle this year, with droids running the cashier-less store, is indicative of the automation plans Amazon may have for the 400+ Whole Foods stores.

The online giant’s announcement of the takeover does not come as a surprise as it has been testing the waters of the lucrative grocery business for over a decade. “Amazon Fresh” was launched in August 2007 delivering grocery and pantry staples through its fulfillment centers.

Yet, even after a decade, Amazon continues to see great potential in the grocery industry, evident from the massive takeover, to ensure a physical dominance in this area, as well.

Launched in March this year, “AmazonFresh Pickup” is another pointer toward Amazon’s growing interest in the produce business.

Walmart and Kroger have similar modules where a customer orders groceries online, drives to a company-run store, where an employee brings the bag/s right up to the customer’s car. However, they take to 2-4 hours to process an order whereas Amazon does it in fifteen minutes.

Both the business models, Amazon Go, discussed earlier, and AmazonFresh Pickup, are not only novel ways of ensuring a ‘minimum-friction shopping experience’ for customers but effective labor cost cutting tools as well.

“Amazon buying Whole Foods is a good fit with the company’s larger strategy for groceries,” says Jason Goldberg, vice president of commerce at the digital marketing company Razorfish. “Fresh groceries is the biggest category of consumer spending in retail that hasn’t been disrupted by online yet,” as reported by Wired.

Amazon may be all prepped up to give Walmart a run for its money but it must be pointed out that the competition will be restricted to urban areas as Whole Foods doesn’t take Amazon to rural America where Walmart rules the roost.

“Amazon is stronger in bigger cities, and the map of Whole Foods locations shows it is closer to these cities,” says Goldberg. “If this strategy proves out for Amazon, you could well imagine it could be opening a bunch more stores or doing more acquisitions just to cover the US,” says Goldberg. ”

The Friday announcement sent competitor shares crashing as investors tried to come to grips with Amazon’s big time incursion in the grocery industry. SuperValu, running a network of 2,000 stores across America, was the biggest casualty, with a 14 percent drop on Friday while Kroger saw its share value going south by 9 percent.

Shares of Whole Foods, on the other hand, took off by almost 30 percent and Amazon was up by 2.4 percent raising its share value to $987.71, adding a cool $11 billion to its market capitalization – almost covering the cost of the acquisition, in a way.

This is what Mickey Chadha, vice president and senior credit officer at Moody’s Investors Service, had to say about the acquisition:

“Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively.”

In a statement released Friday, Marc Perrone, the president of the United Food and Commercial Workers Union, said: “Amazon’s brutal vision for retail is one where automation replaces good jobs. That is the reality today at Amazon, and it will no doubt become the reality at Whole Foods.”

However, for now, Amazon has assured that the acquisition will not result in any downsizing.

If Brittain Ladd, former senior manager at Amazon, is correct in his assessment, the e-commerce giant may well build out non-grocery areas within the stores, particularly for pharmacy and Amazon devices, reports Reuters.

“There’s no value in Amazon keeping the status quo at Whole Foods. Whole Foods was losing market share to Kroger,” Ladd said, according to Reuters. “It’s pharmacy. It’s having the ability to put stores that are similar to Apple stores inside Whole Foods.”

Being the powerhouse that it is, Amazon is being looked at by some analysts to bring a massive buying strength to Whole Foods, although Amazon’s grip on the food market is not as firm as it is in other areas. Also a high and growing demand for organic food give farmers a bargaining edge.

About Amazon

Jeff Bezos founded Amazon.com on July 5, 1994, initially setting up his business in his garage.

Portfolio.com has very aptly described Bezos as “at once a happy-go-lucky mogul and a notorious micromanager: “an executive who wants to know about everything from contract minutiae to how he is quoted in all Amazon press releases.”

What actually inspired and pushed him into founding Amazon, leaving a lucrative job at a New York City hedge fund, was the “rapid growth in internet use.”

Jeff Bezos referred to it as “regret minimization framework,” which basically means he wanted to capitalize on the internet boom at the right time and not regret the delay in joining in sooner.

However, another factor that propelled him toward the Amazon idea was the U.S. Supreme Court ruling at the time that mail order companies were exempt from collecting taxes in states where they did not have a physical presence, such as offices, warehouses or any other physical property directly or indirectly related to the business.

Headquartered in Seattle, the company was initially named “Cadabra” by Bezos, changing it to “Amazon” a year later. The humor behind the name change is that a lawyer happened to have misheard the name as “Cadaver” which, as we all know, means corpse or a dead body.

The story goes that Amazon was named after the mighty Amazon River, “exotic and different,” which matched Bezos’ vision of making his company different, exotic and the biggest in the world.

From its rather humble beginnings as an online bookstore, Amazon has grown into an “electronic commerce and cloud computing company,” the largest internet retailer in terms of total sales and market capitalization.

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Of course, the growth of Amazon into what it is today went through different stages of diversification – from selling books online to DVDs, CDs, video downloading and streaming, Bluerays, MP3 downloading and streaming, audio books downloading and streaming, electronics, software, video games, furniture, apparel, food, toys, jewellery – you name it and they have it delivered to your doorstep! Amazing Amazon!

It does not end here; Amazon is also into manufacturing consumer electronics such as Amazon Kindle e-books, Fire tablets, and Fire TV, to name a few, in addition to being one of the world’s largest providers of cloud computing infrastructure services.

Amazon’s long history of acquisitions and mergers dates back to 1998 and has continued ever since.

Here’s a look at its acquisitions in the last 5 calendar years (source – Wikipedia).

2013:

* IVONA Software
* Goodreads
* Liquavista

2014:

* Double Helix Games
* comiXology
* Twitch

2015:

* Annapurna Labs
* 2lemetry
* ClusterK
* Shoefit
* Safaba Translation Systems
* Elemental Technologies

2016:

* Amazon increased its overall investment in India to $5 billion, and with that, reduced seller fees to take on its Indian competitor, Flipkart
* NICE
* Curse, Inc.
* Biba Systems

2017 (till date):

* Harvest.a
* Thinkbox Software
* Do.com
* Souq.com
* Whole Foods Market
* And now, it’s grocery!

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Business From The Editors

‪‪United Airlines‬‬ Denied Boarding of 2 Girls for inappropriate Clothing

An United Airlines gate agent barred two girls in the morning from boarding an airplane for wearing leggings.

Another girl who had been wearing gray leggings needed to transform before she was permitted to board the flight to Minneapolis from Denver, a witness said.

“She’s forcing them to change or put dresses on over leggings, or they can’t board,” Shannon Watts, who was at a gate at Denver International Airport, said on Twitter. “Since when does @united police women’s clothing?”

United, reacting to tweets in regards to the event tweeted that “United shall possess the right to deny passengers who aren’t correctly clothed via our Contract of Carriage.”

United Airlines spokesman Jonathan Guerin supported the two teenagers are not permitted on the flight.

While traveling an internal policy for workers utilizing the airline journey benefit, he explained expressly prohibits leggings.

Our frequent passengers aren’t going to be refused to board since they’re wearing yoga trousers or leggings,” Guerin said. But when flying as a pass Voyager, we require rules to be followed by passengers, which is among the rules.

Jonathan Guerin, a spokesman for the airline, told Patch that there was a party of three, all of whom were pass travelers, who were getting on a flight from Denver to Minneapolis. Guerin said of the three passengers, two teenage girls were not allowed to board because they were not in compliance with United’s dress code policy for company benefit travel.

The airlines, however, will not define “correctly clothed.”

He explained the airline reminds workers that when traveling privileges are being used by them, the dress conditions are reviewed by them. Guerin said the suit demand was causal, not proper. Nevertheless, he said leggings were expressly not permitted. Flip flops were not expressly allowed in by another garments thing.

Guerin said the rules do not apply to many travelers and a routine passenger boarding would never be denied by the airline for their dress.

Several customers have previously stated that they wouldn’t normally be flying using the airline.