Amazon.com Inc. began offering one-hour delivery in Manhattan Dec. 18, the retailer’s latest effort to connect consumers with products they order online as quickly as possible.
The “Prime Now” program covers shipments of tens of thousands of household goods, including shampoo, paper towels, toys and books, the Seattle-based company said in a statement. The service will expand to additional cities in 2015, with the program available to Amazon Prime members who pay $99 annually for fast delivery.
Prime Now raises the bar in online delivery as Amazon competes with Google Inc.’s same-day Shopping Express service and EBay Inc.’s same-day EBay Now program.
Amazon, which has added grocery deliveries and Sunday deliveries in recent years, is working to lock in customers to buy things online that they need immediately rather than rushing to the store. CEO Jeff Bezos has also said the Web retailer is testing drones for same-day package service.
The new service will hurt convenience stores selling batteries and paper towels and is unlikely to make Amazon profitable in the near term, said Michael Pachter, an analyst at Wedbush Securities in Los Angeles.
“Their prices are so low on convenience items that it won’t offset the incremental delivery cost,” Pachter said. “It will help in the long term, as it is another reason for consumers to sign up for Prime, which brings in $99 per year and drives higher overall purchase activity.”
Amazon’s new building on 34th Street in Manhattan, which the company has said will be primarily office space, will serve as a delivery hub for Prime Now orders.
“There are times when you can’t make it to the store and other times when you simply don’t want to go,” Dave Clark, Amazon’s senior vice president of worldwide operations, said in a statement. “There are so many reasons to skip the trip and now Prime members in Manhattan can get the items they need delivered in an hour or less.”
Two-hour delivery is free to Prime members and one-hour delivery is available for $7.99. The service is only available to the 10001 ZIP code, a commercial area around Madison Square Garden with roughly 20,000 residents. Amazon said it plans to expand the area to more ZIP codes, without providing specifics.
The company keeps adding perks to its Prime program, which has tens of millions of subscribers in the U.S. who are its most active shoppers. In October, the company reported a third-quarter loss of $437 million, its worst since at least 2003.
November 19, 2014: Teamsters spoke out at the annual shareholders meeting of Sysco to defend Teamster jobs and contracts in the face of the proposed merger of Sysco and US Foods.
Last December, Sysco announced it would buy its competitor US Foods for $8.2 billion. Both companies sell food products to restaurants, hotels, hospitals, and schools.
More than 7,600 Teamsters work at Sysco and another 4,000 Teamsters work as US Foods.
The proposed deal threatens as many as 2,500 Teamster jobs. Sysco management says it will save $600 million over the next four years. The threat is those savings will come at the expense of Teamster job loss as the company consolidates its operations.
Sysco has not agreed to honor Teamster contracts if the deal goes through.
The Federal Trade Commission has not approved the purchase. Sysco has twice announced delays in closing the deal since it was announced in December 2013.
A merged Sysco-US Foods would control 25 percent of the market. The danger for customers is if there are few other options, Sysco will be able to raise prices.
In other news, Teamsters Local 848 is threatening Sysco Foods with strike action and launching a customer outreach campaign. The company is demanding healthcare cuts and to put half of all drivers on four ten-hour schedules.
Contract talks between Teamsters Local 117 and Fred Meyer were scheduled to resume Monday with a federal mediator.
The union said issues include health care and the desire by Kroger, Fred Meyer’s parent company, to include language that would allow the company to outsource worker jobs to a third-party subcontractor.
Click here to read more at Supermarket News.
The combined company will have increased leverage selling and distributing food goods from manufacturers to restaurants, hospitals, hotels, schools and other institutions. That middleman role already makes the companies important players in the service economy: Sysco alone has about 425,000 customers.
Sysco estimates the combined company will have about 25% of the U.S. food distribution market, up from about 18% now for Sysco alone.
Sysco Chief Executive Bill Delaney said that the company might need to sell parts of its business to satisfy antitrust regulators, though it has no such plans yet.
The antitrust discussions "will be a review process and it will take several months, and there could very well be some divestitures, but even with some divestitures this is still a very good deal," he said on a conference call.
Sysco's shares rose sharply in early trading Monday morning. The shares, listed on the New York Stock Exchange, had gained only about 8.4% this year as of Friday's close.
The deal has been approved by the boards of both Houston-based Sysco and US Foods, of Rosemont, Ill., the companies said in a statement. In addition to paying about $3 billion in stock and $500 million in cash, Sysco will assume or refinance US Foods debt of about $4.7 billion, they said. The companies expect the deal to close in the third quarter of 2014.
US Foods main shareholders—private firms Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts KKR & Co.--will join Sysco's board.
Sysco and US Foods said their combination is expected to generate "synergies" of at least $600 million after three-to-four years, in part from supply chain efficiencies and reducing administrative overlap.
Mr. Delaney said that the industry will remain competitive. "It is a very dynamic market," he said. "There are 15,000 to 16,000 distributors out there, and more nontraditional competitors." But the purchasing power, combined innovation efforts and cost savings on the merger will position the new company well, he said.
Sysco considered buying US Foods almost seven years ago but didn't. Mr. Delaney said the change of heart comes now that US Foods is focused more on innovation and improving efficiency.
He said US Foods has technology related to customer ordering and a mobile application that Sysco is interested in.
Restaurants and other customers tend to want more than one supplier, and Mr. Delaney acknowledged that the merger could cause customers who use both Sysco and US Foods to go elsewhere for some of their products.
"In our model, we have factored in that risk," Mr. Delaney said. "We have been a little more conservative on our sales growth for the first couple years…but we are going to do everything we can to minimize customer flight."
Founded in 1969, Sysco now has grown to have $44.4 billion in revenue last year, with 48,100 employees world-wide. About 60% of its customers are restaurants.
Sysco has struggled in recent years with higher prices for food and relative weakness in the restaurant industry, as consumers dialed back spending on eating out. Sysco's net profit in the fiscal year ended June 29 fell 12% to $992.4 million from $1.12 billion.
Corrections & Amplifications
An earlier version of this story gave an incorrect location for US Foods' headquarters.
Teamsters Local 118 has agreed to put its Wegmans Food Markets contract to another union vote, reports said Wednesday.
The union, which represents more than 900 warehouse workers and truck drivers, has twice voted to reject contract offers from the retailer, reportedly over concerns about proposed changes in a pension plan.
The Buffalo News Wednesday said that Wegmans and the Teamsters met with a federal mediator earlier this week, and that Teamsters were expected to vote again on Thursday.
June 11, 2013: On June 2, Teamsters turned out in force to picket and demonstrate at the newly opened Sysco warehouse in Riverside, California. But they weren't on strike – they were protesting a sweetheart deal which undermines other Southern California contracts with Sysco and other grocery companies.
They made their voices and solidarity heard loud and strong, and they collected an initial kitty of $4,000 to continue the battle in court and at the NLRB, as well as in the street and the union halls.
The demonstrators, most of them Sysco drivers in Local 848, were calling for a fair vote on the pre-cut substandard deal which was made by San Diego Local 683 well before the new facility opened.
Drivers in Local 848 and warehouse workers in Local 630 will be transferring from the Los Angeles warehouse to the new Riverside facility, but a sneak-attack quick vote was held to approve the weak contract before they could get on board to reject it.
And reject it, they would. The rank and file are battling to save good Teamster standards, wages, and job protections, while Teamster officials like Joint Council 42 president Randy Cammack hide in their offices, saying nothing. The principal officer of Local 630 did venture out to the protest, to stand across the street, probably to spy on the concerned Teamsters.
The fight continues. The rank and file are united.
Click here for background on the struggle and why Teamsters are standing together.
May 24, 2013: Teamsters employed by Sysco in Southern California are standing up against a substandard deal negotiated for the new Sysco Riverside distribution center slated to open in June.
"We are not going to accept this. We want to be involved. We deserve to be involved in these negotiations," said Ralph Sistos, a Sysco driver in Los Angeles. Members are organizing for a no vote to get the bad deal renegotiated.
The whole situation with the new warehouse smells bad. San Diego, 100 miles away, mysteriously got the Teamsters jurisdiction and promptly signed a substandard contract without any workers yet at the facility.
Last September, Joint Council 42 awarded the jurisdiction to Local 63, which covers Riverside and is headed by Joint Council president Randy Cammack. For unexplained reasons Cammack turned it over to Local 683 principal officer Todd Mendez, who cut the substandard deal.
Teamsters from the L.A. (Walnut) Sysco warehouse and from the San Diego warehouse will be transferring there. The L.A. Teamsters are organizing for a contract rejection, and they will be the majority of the workforce.
They have filed NLRB charges against the deal, are organizing among themselves and reaching out to brothers and sisters in San Diego.
The company wants to button up a deal quickly. The San Diego contract expires in November, and the last thing management wants is common expiration dates.
The contract is inferior to the L.A. contract on an epic scale: it gives away lots of union jobs to nonunion (office, clerical, checkers, produce repack, routers, dispatchers, inventory control, check-in, janitorial); it gives away job protections and working conditions; and provides for lower wages and pension contributions. It is very similar to the substandard contract in San Diego. L.A.'s contract should be template, not San Diego's.
January 23, 2013: While under trusteeship and controlled by a Hoffa appointee, Local 630 signed a side-agreement that created a new job classification paying $10 per hour below the contract wage. The agreement is with US Foods, a company that employs Teamsters all over the country, and undermines Teamster standards in the warehouse division.
The cut-rate wage is in regards to a new machine called a Robo Wrapper. The new machine does work currently performed by Teamster order selectors who make the contract wage.
"New technology is constantly being introduced into the warehouse industry and we can't allow it to destroy good Teamster jobs," says Ricardo Huitron, Local 630 member employed at US Foods-Los Angeles.
No vote of the members was permitted on this wage-cut agreement made in November 2012.
The International Union needs to maintain Teamster warehouse standards and prevent sell out deals—not allow them to happen under their watch. The Hoffa administration should repudiate this deal now, before it spreads like cancer.
You can see the side-agreement for yourself by clicking here.
In federal mediation on January 8, Teamsters Local 117, the Union that represents 168 warehouse workers and drivers on strike at United Natural Foods, Inc. (UNFI), encouraged the company to put its best foot forward and present workers with a reasonable contract proposal that would put an end to the month-long strike. UNFI committed to present a proposal the following day.
Three days later, on January 11, UNFI contacted the Union with its proposal. Unfortunately, instead of making a reasonable, good-faith offer that workers could accept, UNFI presented a proposal that left workers with no choice but to reject it.
With its latest offer, UNFI:
- Refused to reinstate all 72 workers that it permanently replaced in violation of federal law;
- Eliminated health care protections for workers by removing caps on premium increases;
- Insisted on the withdrawal of all of the Union's unfair labor practice charges and important grievances;
- Undermined workers retirement security;
- Fired a worker for alleged strike misconduct and insisted that the Union relinquish its right to take action against replacement workers who violated their membership obligations.
After careful consideration of the company's offer, workers voted 104-26 to reject the proposal at a meeting at the Teamsters building on January 11.
UNFI's latest contract proposal shows that the company is not genuinely interested in resolving the dispute. Instead, in presenting an offer that had no chance of success the Company appears to be intent on dividing workers, maximizing profits, and destroying the Union. That is not a responsible position for any company to take, especially one that touts "social responsibility" and "sustainability" as UNFI does.
Ever since the start of negotiations last March, workers at UNFI have held strong, stood together, and shown tremendous courage, integrity, and solidarity in the face of a lawless, adversarial billion-dollar employer that is driven only by its own greed.
By rejecting the company's latest offer, workers at UNFI have shown that they will not be bullied. They have shown remarkable resiliency and that they will continue their fight for justice, not only for themselves and their families, but for all working men in women employed in the grocery distribution industry in this country.
In order for workers to continue their fight, they need your support. Please donate to the Teamsters 117 UNFI Workers' Hardship Fund today! The UNFI Workers' Hardship fund was established by Teamsters Local 117 to benefit striking workers and their families. All proceeds from the fund go directly to the families of workers with the greatest financial need. Your donations will help a worker pay the rent, keep the lights on, and put food on the table.
IMPORTANT COMMUNITY MEETING: On Saturday, January 19, there will be an important community meeting to discuss the ongoing labor dispute at UNFI. The meeting, which will involve union members, faith leaders, community co-op activists, and other concerned community members, will take place at the Teamsters Building in Tukwila starting at 10 A.M. All are invited! You can RSVP for this event here. Please contact Brenda Wiest at 206-441-4860 ext 1256 for more information.