Walmart Targets Amazon Prime; Coronavirus Disrupts Tech And Agency Travel

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Empire Strikes Back

Amazon Prime smashed brick-and-mortar retail with a combination of price discounts, speedy shipping guarantees and a raft of other benefits, with the biggest being the Prime Video streaming service. Now Walmart plans to launch a paid membership service with a focus on “perks that Amazon can’t replicate,” Vox reports. The core of the program, called Walmart Plus, will be Walmart’s existing $98 per-year same-day grocery delivery in the United States. Walmart may also bundle prescription drugs and fuel at Walmart pharmacies and gas stations. But can Walmart Plus really compete with Prime? Walmart’s current $98 per-year grocery service is cheaper than $119 for Prime, but Prime has same-day grocery delivery from Whole Foods and Amazon Fresh, on top of its other benefits. Still, Walmart needs to dent Amazon Prime’s growth. “Today, more than half of Walmart’s top-spending families are Amazon Prime members, according to sources.” More.

Disruption – Not The Good Kind

Global business travel is grinding to a halt at major tech companies as the coronavirus spreads. Google is preventing travel to Iran, Italy, South Korea and Japan after an employee tested positive in its Zurich office, Business Insider reports. The company also canceled its upcoming Google News Initiative Summit in Sunnyvale, Calif., per CNN. Amazon restricted “nonessential travel” domestically and internationally for its whole workforce and told its worldwide operations team not to plan any meetings that require travel until at least April, reports The New York Times. Agencies are restricting travel and closing global offices. Dentsu Aegis Network closed its Tokyo HQ after two employees tested positive for the virus, according to Adweek. Omnicom, IPG and Havas have also shuttered offices in cities with new cases. “At the moment, it’s really just unknowable,” WPP CEO Mark Read told investors on an earnings report this week when asked about the virus’s impact. WPP has restricted travel to China, Hong Kong, Singapore, South Korea, Japan and Italy. Digiday has more.

Creative’s Slow Payment Problem

Creative agencies are suffering a similar headache as the media business when it comes to delayed payments. It’s become common for advertisers to require 90- to 120-day payment terms with their agencies and production vendors, requiring some creative shops to front up to $1 million in advance costs for their clients. Some finance departments are trying to find workarounds, such as baking financing costs into an upfront fee. Agencies that aren’t able to negotiate such a deal have turned to factoring, when a bank pays off outstanding receivables for a fee. Finance companies see a growing opportunity for factoring with agencies and marketing vendors, such as by packaging loans into securities that can be sold as low-risk investments. “The unfortunate irony of all of this is that by simply aging payables across the board without any consideration of the particular nature of the creative execution process, advertisers are attacking the issue of payment schedules with a blunt instrument to serve a companywide payment policy,” T. Alex Blum, founding partner of Blum Consulting Partners, writes for Ad Age. More.

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