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Black Friday 2030

So, e-commerce is going gangbusters. Its inflection point was so profound that Retail Brew’s Halie LeSavage and I (Ryan) had to drop everything and get our Special Delivery guide out the door. 

But we didn’t cover all the e-commerce-adjacent changes afoot. On Black Friday, the unofficial American paean to buying things, we’re taking an even closer look at those changes. 

Food

Domino’s storied reinvention included different recipes, better marketing, and new tech. The pizza chain developed an app and a Pizza Tracker within said app. It enabled pizza ordering with voice assistants. Domino’s also piloted self-driving deliveries and a computer vision-powered overhead pizza inspector.

But the restaurateur’s turnaround had another key ingredient: Domino’s was (sort of) a ghost kitchen before it was cool. Ghost kitchens are characterized by lower overhead and customer engagement via digital channels. 

These digital “eateries” play nicely with food delivery apps, which have exploded in popularity this year.

• Unicorns like Reef Technology and CloudKitchens (led by Uber cofounder Travis Kalanick) provide the technological scaffolding for ghost kitchens. A source at one of these companies says their unit economics are shaky but improving. 
• The only sign you need that this trend is here to stay: This month, Chipotle opened its first digital-only restaurant. 

Cities

Walmart’s online sales jumped 79% year over year in Q3; Target’s rose 155%. The largest brick-and-mortar chains have deftly adapted to increased e-commerce order volumes. 

• Walmart is reconfiguring fulfillment centers for more online inventory. Apple is converting retail stores into mini-fulfillment centers. Whole Foods has designated some urban locations as online-only stores. 
• Some companies have forged alliances of convenience: Best Buy and Instacart recently said they were partnering to offer same-day gadget delivery. 

Credit cars? Car ownership levels in the U.S. are up this year. So are sales of new vehicles, which are increasingly connected. Theoretically, connected cars could become e-commerce portals.

Let’s think ten years out

With a ghost kitchen future, food discovery occurs in-app (or via wearable/smart assistant) and it’s mediated by personalization algorithms. Food preparation is consolidated in industrial warehouses—and in some cases, automated with robots. Orders are delivered by algorithmically managed gig workers or autonomous vehicles. 

The Amazonification of the economy will change the make-up of our cities and towns. 

• As storefronts fade away, the big-box stores that survive will look different. On average, they’ll have more space dedicated to e-comm vs. in-person shopping. 
• Cities will have more “dark” stores (i.e., mini-fulfillment centers) processing online sales, along with premium cashierless tech-laden stores (à la Amazon Go).

The diffusion of autonomous driving technology is the biggest unknown variable that could make some of these predictions look silly. Who knows? We’ll see you back here in a decade to check on how we did.

SPONSORED BY NASDAQ

Manage Your Board → Manage Crises

During our current societal crisis, it’s become more apparent than ever that boards play a significant role in whether or not companies are able to weather the storm. Read: The people on your board really, really matter.

So Nasdaq put together a report called, How Boards Responded to the COVID-19 Business and Societal Crisis. Here’s some key learnings:

• Boards are integral to crisis management.
• Diverse boards are more responsive.
• Human capital management should be a critical area of focus for boards and management moving forward.

 To learn more about how a diverse board can improve your preparation and management capabilities in times of crisis, read Nasdaq’s report here.

AI

Grand Scam

For most, there’s a positive correlation between time spent at home and money spent online. And today, Quarantine x Black Friday have teamed up for the ultimate collab. 

But the more your payment details are being sent back and forth in cyberspace, the more opportunities a fraudster has to intercept them. In Q1 2020, credit card fraud reports were up 104% from 2019. (From Q1 2018 to 2019, reports rose just 25%.) 

Teams of human analysts can only go so far. As of January 2019, 45% of financial institutions said investigations take too long to complete, and 40% cited too many false positives. 

• That’s where AI comes in. Financial institutions (FIs) are banking on the tech to save them major $$ on stolen funds. 

The perks 

Biometrics: “The hardest thing to spoof is human behavior,” Aarti Borkar, VP of product and strategy at IBM Security, told us. That’s why FIs use AI tools to create biometric profiles that note the times of day you typically shop, the speed at which you typically type your password, etc. 

• $217 billion: That’s the amount that AI could save banks by 2030 in areas like authentication, identity verification, compliance, and other data processing functions, according to data from Autonomous Next. 

Speed and accuracy: If fraudsters aren’t caught in real-time, investigations can be too difficult and expensive to justify. But slowing down a transaction in order to verify it could cost companies business, making machine learning’s speed critical. 

• “The volume of data that can be processed by that AI system in that split second between you hitting ‘enter’ on the password and it figuring out that ‘you’ may not be ‘you’ is where [fraud] is prevented,” says Borkar. “There’s no way to have a human being do that.” 

The biggest banks lean heavily on AI tools for fraud prevention, but nearly 95% of all FIs don't. As third-party solutions mature, we’re betting the adoption rate will rise. 

BITS & BYTES

Stat: Elon Musk became the second-richest person in the world with a net worth of roughly $128 billion earlier this week, overtaking Bill Gates.

Quote: “Farmers think it's really fashionable to use drones now, and they will tell their neighbors all about it."—The owner of a farm service company in rural China, from Blockchain Chicken Farm by Xiaowei Wang.

Listen: Check out Business Casual’s recent episode about e-commerce with Etsy CEO Josh Silverman.

SPONSORED BY GOODR

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WEEKEND READS

If you're looking for a few longer reads this weekend, fear not. We've got you covered. 

• A profile of Erdal Arıkan, a Turkish academic whose obscure theoretical breakthrough unknowingly laid the foundation for some of Huawei’s 5G technology. (Wired)
• An investigation into how Amazon hired Pinkerton operatives to surveil workers and monitor labor and union-organizing activity. (Vice)
• When it comes to social commerce, what can the U.S. learn from China? (Jess Li)
• An excellent and interactive slideshow about the growth of TikTok and ByteDance. (Matthew Brennan)
• State services were overwhelmed by unemployment claims this spring, and many cast the blame on COBOL, a 60-year-old programming language—but the truth is quite different. (Logic Magazine)
• As a true splinternet looms, Chinese and American tech remain as intertwined as ever. (New York Times)

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• Roblox’s vision of the metaverse 
• Amazon lays off dozens from Prime Air
• Reports: Uber in talks to sell self-driving division