SNAP Recipients In NY Can Now Buy Groceries Online

While the race for the consumer’s whole paycheck between Walmart and Amazon was somewhat quieter this week than it has been in the for the last several weeks, things started picking up rather notably, and then rather dramatically toward the end.

The big news of the week, the USDA’s decision to start officially moving forward with digital ordering and delivery capacity for 38 million or so Americans enrolled in the Supplemental Nutrition Assistance Program (SNAP), hit both retailers, as they are two-thirds of the grocery participants in the initial New York-based pilot round.

But while the big news was in grocery, there were also subscription rollouts, hatchets buried and new advertising frontiers explored.

But first …

The Big Play of the Week: The Digital SNAP Expansion

The idea of allowing SNAP recipients to purchase their groceries digitally has been on the horizon for some time — in 2014 the Farm Bill essentially instructed the USDA to design a pilot program. In early 2017 the USDA  pushed out a pilot program that allowed SNAP enrollees to buy groceries online with their card in seven states and with seven grocery partners: Amazon, FreshDirect, Safeway, Dash’s Market, Hy-Vee, ShopRite and Hart’s Local Grocers.

And as of yesterday (April 18), the USDA announced that its last round of pilots before the program goes nationwide for recipients is starting up in New York State, with support and participation from Walmart, Amazon and ShopRite. The program is scheduled to expand to Alabama, Iowa, Maryland, Nebraska, New Jersey, Oregon and Washington, and additional grocery partners will be reportedly joining the effort as it expands through the end of 2019. This last round of piloting is set to take another two years.

“People who receive SNAP benefits should have the opportunity to shop for food the same way more and more Americans shop for food — by ordering and paying for groceries online,” said Agriculture Secretary Sonny Perdue. “As technology advances, it is important for SNAP to advance, too.”

The expansion is something of well-trodden ground for all three of the initial final round participants. ShopRite and Amazon were in the last round of pilots, and though Walmart is new to the USDA mix, it has been sponsoring its version of allowing SNAP customers to pay at Walmart locations. That program allows food stamp holders to purchase groceries online and pick them up in store, with something similar to a COD model that allows SNAP customers to buy online, and swipe their benefits card in store. That is currently available at 40 U.S. locations, but does not include delivery as an option.

In tandem with the newly announced New York pilot, Amazon is waiving its Prime membership fee for food stamp customers who want to shop for groceries and household staples through AmazonFresh and Prime Pantry.

“What we’re trying to get out of it is furthering our commitment to making food accessible,” said Kristina Herrmann, who oversees Amazon’s participation in the USDA pilot.

And accessibility is surely a goal — particularly for customers living in so-called food deserts where access to fresh grocery products can be limited. But it is also potentially a powerful revenue stream, as the 38 million Americans currently receiving SNAP benefits spend a collective $63 billion per year on groceries, according to CNN. Today those dollars  flow nearly entirely to big-box chains and grocery stores — about $52 billion in food stamps was spent in those locations in 2017, or about 82 percent.

And Walmart has every reason to want to protect its SNAP customer base, as according to UBS Analyst Michael Lasser, Walmart pulls 4 percent of its annual revenue from SNAP sales. Walmart has not confirmed that figure, though there were concerns a few years ago that an overhaul to the SNAP system could take a major bit out of Walmart’s bottom line.

It is also interesting to note how the territory in New York has been divided up in this first round. ShopRite and Amazon will service the New York City area, while Walmart will cover upstate locations.

Where it ends up being more popular — or if it ends up being popular at all (SNAP benefits won’t pay delivery costs, which might discourage some users from trying it) — will be well worth watching for both Walmart and Amazon as one tries to protect its flank while the other charges at what looks like a new opening.

In other news …

Amazon

Burying the Hatchet: YouTube is Coming Back

After a long and at times rather pointed phase of disagreement, it seems the teams at Amazon and Google have made peace. The firms mutually announced earlier this week that they are gearing up for the launch of a new  YouTube app on Amazon Fire TV devices and Fire TV Edition smart TVs, as well as the Prime Video app for streaming to Chromecast and Chromecast built-in devices. The firms further announced Prime Video is coming to Android TV device partners and on YouTube TV and YouTube Kids apps.

“We are excited to work with Amazon to launch the official YouTube apps on Fire TV devices worldwide,” said Heather Rivera, global head of product partnerships at YouTube in a press release. “Bringing our flagship YouTube experience to Amazon Fire TV gives our users even more ways to watch the videos and creators they love.”

Notably, this deal leaves out Amazon’s smart display, the Echo Show, so YouTube won’t be arriving on that device anytime soon — though sources speaking anonymously to The Verge noted negotiations are ongoing.

Vertical Jumpers Pt. 1: The New Ad-Supported Amazon Music

Shares in Spotify sunk this week as reports emerged that Amazon would be muscling in on its turf more directly. Reports this week indicated the eCommerce firm is contemplating the launch of a free and ad-supported music streaming service to further enrich its Alexa offering.

The service could be coming soon, as in next week, if reports are accurate, and will start with a limited music supply that could scale out as Amazon can negotiate rights with record labels.

Amazon has a service in Prime Music that is available for members who pay $119 a year for free delivery, free movies, discounts and access to streaming music. For $9.99 a month, customers can also subscribe to Amazon Music Unlimited. Amazon is reportedly planning on dropping the fee for the music streaming service to $7.99 a month for Prime members and $3.99 a month for those who only access music via an Echo device.

Amazon hasn’t said how many customers pay for the music streaming service, though 2018 estimates placed the figure around 20 million subscribers.

And while Amazon was expanding by moving out of a subscription-only model this week, Walmart was moving in the opposite direction, and nosing into one.

Walmart

Vertical Jumpers Pt. 2:  Summoning the Power of the Subscription Box

Walmart is taking its first pass at subscription retail apparel via a pair-up with kids’ clothing subscription service KIDBOX to offer curated style boxes via Walmart.com.

The children’s apparel collections come in four seasonal variations with two bonus boxes for Christmas and back to school. Brands featured include Butter Super Soft, C&C California, Puma and BCBG, and boxes carry a price of $48  apiece. According to Walmart, that is “approximately 50 percent off the suggested retail price for the group of bundled items.”

“We are thrilled to partner with KIDBOX to introduce our first kids’ subscription apparel service offering premium fashion brands at a substantial savings. Over the last year, we have significantly expanded our portfolio of kids’ fashion brands as part of our broader effort to establish Walmart.com as a destination for fashion. Our partnership with KIDBOX enables us to round out our offering with additional national and premium kids’ brands,” Walmart U.S. eCommerce Head of Fashion Denise Incandela said in an announcement for the offering.

Boxes are curated by a shopping quiz, and shoppers have the options of keeping all of the items or returning all for a full refund.

It’s a big move, and Walmart is entering an increasingly crowded subscription field that includes Rent the Runway, Stitch Fix and startups like Rockets of Awesome. According to Euromonitor research, the global children’s apparel industry is worth $203 billion and said to be growing 5 percent a year. At the same time, children outgrow clothes fast — by the age of 2, kids have already been through an average of seven clothing sizes.

Out of the Box Ideas: In-Store LED Advertising

This last entry is all about thinking inside the box, the second notable move of the week in a rather metaphorically outside-the-box idea about in-store advertising: shiny lights.

While Walmart has not gone full Vegas, much to our disappointment, it has begun piloting LED projectors that display ads on the floor of the Supercenter on South Walton Boulevard in Bentonville, Arkansas.

The colorful ads are designed to draw consumer attention to sale items as well as everyday low prices of specific toys such as Hot Wheels and Nerf products.

Fayetteville-based Field Agent sent agents to the store on Wednesday (April 17) to chronicle their reactions to the ads, according to reports, and early indications are the LED signs “definitely grab your attention.” When surveyed, about half of all shoppers said they found the ads very influential, while about half reviewed the signs as moderately influential.

“That’s a lot of advertising space there … a really, really big billboard that you can walk on,” Field Agent noted in the blog post.

But whether that really big billboard will then guide customers’ feet to items they didn’t even know they were there to buy? That remains to be seen.

Because even in a slow week a lot happens in the race for the whole paycheck, because there isn’t one main path — though SNAP acceptance is a big common checkpoint — and a lot of side routes to try.