French drone company Parrot recently announced significant layoffs and will shift focus away from their recreational drone business.
French company Parrot has had a rough year and missed its sales expectations. That’s why the company will lay off 290 employees who were working on drones. In total, Parrot currently has 840 employees on the drone team and more than a thousand employees in total.
While the company isn’t just selling drones, it represents a good chunk of the business. But it looks like other companies, such as DJI, are doing better in this market. Parrot expected to report $105.9 million in sales for 2016. It reported $90 million instead (€85 million vs. €100 million expected).
Even though the company is still selling quite a few drones, Parrot says that it doesn’t generate healthy margins. So here’s the new plan: focusing on commercial drones.
Well, this explains my holiday shopping difficulties with Parrot. Ollie asked for a drone for Christmas and after doing some research, I decided on the Parrot Swing. Amazon was out of stock, so I decided to buy directly from Parrot. They had stock and the site said they’d ship in plenty of time for Xmas. So I ordered one. The next day, I get a call from Parrot saying I need to “verify my order”. So, I call them back, give them some info about my order and where it’s being shipped and the very nice woman on the phone tells me that I’m all set and they’re shipping it out.
Two days go by, no shipping confirmation email in sight. I get another voicemail: you need to call us to verify your order. I call back, give them the same info and tell them, oh by the way I’ve already done this once. Profuse apologies were offered, that was a mistake, and the very nice woman on the phone tells me she’s going to tell the shipping people to send out my order “right away”. It will still arrive in time for Xmas. The next day I get an email from Parrot:
Hello! We have refunded your order No. XXXXX-XXXXX placed 12/15/2016. We are sorry that your order did not meet your expectations and hope that you will visit us again.
Obviously, I am done with them at this point but still need that drone. Amazon is still out of stock, but Walmart has them. I order one, it arrives two days later (with free shipping), and on Christmas morning, after some reflection, Ollie says it was the best present Santa has ever gotten him.
I did quite a bit of holiday shopping this year…went a bit nuts making up for some not-so-great efforts the past two years. The kids and I shopped for Toys for Tots (twice), I bought gifts for them from me and from Santa, I bought non-holiday stuff like clothes for myself,1 and I shopped virtually for the gift guide. I shopped every which way: small, locally, at big box stores, and online at 4-5 different retailers. My main takeaway from that experience? Amazon is miles and miles and miles ahead of everyone else. It is not even close.
Sure, Walmart had the drone in stock, but when I’d tried shopping with them earlier in the month, the product page threw a 404 error. I switched to Safari and was able to put the item into my cart, but then a form in the ordering flow wouldn’t work, so I had to get that item elsewhere. (When I did finally create an account while ordering the drone, Walmart thought my name was “Ashley”?!)
Target’s site was so slow that it was nearly unusable (like 30-40 seconds for a product page to start loading). But I persevered because they had an item I really wanted that no one else had in stock. I got an email two days before Xmas saying they were out of stock and couldn’t ship until Jan 4 at the earliest, but that if I still wanted the item, I would have to log in to my account to verify the new shipping date. I didn’t want the item later, so I did nothing. Guess what arrived on my doorstep last week?
My troubles with Parrot I shared above. The local toy stores are expensive (Lego sets are $5-10 more than if you buy online) and ran out of popular items 2-3 weeks before Xmas. Very few online stores outside Amazon, Walmart, etc. had clear holiday shipping policies, so relying on them more than a week or two out was risky. Zappos was great (Amazon owns them) and Patagonia was pretty good, although their shipping estimates aren’t that great and returns aren’t free.
And Amazon? The site is always fast, I have never seen a 404’d product page, the URLs for their products haven’t changed in almost 20 years,1 each product page was clearly marked with holiday shipping information, they showed the number of items in stock if they were running low, shipping was free (b/c I’m a Prime member), returns are often free, and the items arrived on time as promised. More than 20 years after the invention of online retailing, how is it that Amazon seems to be the only one that’s figured all this out? How come massive companies like Walmart and Target, whose very businesses are under immense pressure from Amazon, can’t get this stuff right despite having spent hundreds of millions on it? I’m not a financial analyst, but unless something changes drastically, Amazon is just going to continue to eat more and more of the US retail pie and at this point, with all these advantages they’ve accrued and their razor-sharp focus on low pricing, it’s difficult to see how anyone is going to compete.1
After freezing my ass off wearing improper clothing the last few years (because, to be clear, I am an idiot), I made myself a promise this year that I was not going to be cold this winter. So in November and December, I spent a bunch of energy outfitting myself with the proper gear: sweaters, thermal layers, coats, mittens, boots, etc. I am both warm and happy now.↩
Just for fun, let’s take a quick stab. Stripe and Shopify are arguably better than Amazon in some ways and when the one-click patent expires this year, those payment flows will get even easier. And anyone can use them to sell anything. So the problem becomes stocking and shipping. Who’s going to build/provide the third-party fulfillment infrastructure so that shipping and returns are cheap and reliable…like Amazon’s fulfillment warehouses but for anyone to use? UPS? FedEx? The USPS? (Hahaha.) Uber? Can that company offer a Prime-like or Costco-like shipping membership? What is the rationale for everyone involved (the retailers, the payment company, the online store service, the fulfillment company) to keep prices as relentlessly low as Amazon does? There are a lot of different reasons why a collection of interchangeable third-party services could succeed against a fully integrated solution, but price does not seem like one of them…there’s just too much margin lost because of the friction between services.
(And we haven’t even talked about AWS here. It’s profitable by itself but is also turning out to be a massive competitive advantage. The likes of Walmart and Target can’t use it even if it would be better than their home-grown infrastructure because that’s like the Trojans paying the Greeks to invade. AWS also potentially insulates Amazon against competitors like Shopify and Stripe. Imagine if Amazon got serious about integrating AWS with their payment and fulfillment systems…a low-cost, bulletproof, integrated system that almost anyone could use to sell almost anything would put an enormous amount of pressure on every other retail experience, particularly if they continue to ramp up their real-world retail offerings.)↩