—— Amazon Merchants Squeezed; WFH Costs NYC $12.4 Billion Annually; NatWest Acquires Pension App Firm; Twilio Announces Second Round of Layoffs; NYC Tops Nation in “Singles Tax”; UK Telecom Firm Buys Stake in Vodafone; Self-Driving Taxis Begin Passenger Testing
1. Amazon Merchants Squeezed
As Amazon faces slowing sales growth and rising costs, the company is trying to extract more profit from its base of over 2 million platform merchants.
According to data from Marketplace Pulse, which tracks e-commerce sellers, Amazon charged merchants an average of around 50% of their sales revenue in 2022.
Although merchants can voluntarily use Amazon’s logistics and advertising services, many sellers view them as essential.
Statistics show that fees paid by merchants to Amazon have increased each year over the past six years. During the pandemic, a surge in Amazon platform shoppers helped merchants absorb these rising costs. However, with the economy reopening and online shopping no longer booming, Amazon’s 2022 revenue growth hit a historic low.
Due to a range of factors, many Amazon merchants are now unable to break even. Some are turning to third-party logistics providers and cutting back on advertising expenses.
Juozas Kaziukėnas, founder and CEO of Marketplace Pulse, said that while Amazon’s strategy of “self-preservation” is understandable, the company needs to strike a balance that benefits both the platform and its merchants.
With revenue growth sharply slowing, Amazon has increased merchant fees to maintain profitability.
______
2. WFH Costs NYC $12.4 Billion Annually
According to new research led by Stanford University economist Nicholas Bloom, the economic impact of work-from-home (WFH) is significantly greater in New York than in other regions.
The data shows that with the rise of WFH, time spent in the office has dropped by 30%, leading to an annual reduction in spending of at least $12.4 billion. Office workers in Manhattan are now spending $4,661 less annually on meals, shopping, and entertainment near their offices—much higher than the $3,040 in San Francisco and $2,387 in Chicago.
Cities with a high proportion of white-collar jobs and long commutes are experiencing greater economic impacts.
WFH has reduced public transit revenues and government tax collections in large cities. Falling real estate values have also affected property tax revenues. Many are questioning: if workers no longer need to commute into the city, what value do cities still offer?
Daily consumer spending in Manhattan now lags behind both New York City and the national average.
______
3. NatWest Acquires Pension App Firm
UK-based NatWest Group announced today that it has agreed to acquire an 85% stake in pension-focused fintech company Cushon for $174 million. The deal is still subject to regulatory approval and is expected to close by the end of 2023.
Cushon provides mobile applications that help employees of client companies invest their pension and savings funds.
After the deal closes, Cushon’s products will be offered to NatWest’s mid-market clients.
Following the 2008 financial crisis, NatWest received a government bailout. The UK government still holds a 44% stake in the company.
If finalized, the acquisition would be one of NatWest’s largest transactions since 2008.
Cushon’s investment app will help NatWest expand its B2B offerings and improve customer experience.
______
4. Twilio Announces Second Round of Layoffs
Twilio Inc., a provider of customer communications and marketing software, announced this week that it will lay off about 17% of its workforce and reduce office space in a bid to boost profitability.
Twilio is now among the first tech companies to implement two consecutive rounds of layoffs. Last September, the company announced an 11% workforce reduction. Combined, the two rounds could impact up to 2,350 employees, bringing the total workforce back to its mid-2021 level of 6,642.
CEO Jeff Lawson wrote in a blog post that the company must cut costs and improve efficiency. According to a recent filing, Lawson’s own base salary will be halved to $65,535, representing less than 1% of his total $14 million compensation package.
Twilio expanded too quickly over the past two years. After the second round of layoffs, its workforce will return to mid-2021 levels.
______
5. NYC Tops Nation in “Singles Tax”
According to data from real estate firm Zillow, single New Yorkers living alone spend $19,500 more annually than couples living together. The “singles tax” in New York has now climbed to $24,000 per year.
Zillow calculates the singles tax by comparing the median annual cost of renting a one-bedroom apartment for a solo tenant to the cost of splitting the rent with a partner. The data shows that cohabitating couples in New York save an average of $39,000 a year.
In California’s Bay Area, the cost of solo living is also very high—San Francisco has a singles tax of $14,114, followed by San Jose at $12,401.
Amanda Pendleton, Zillow’s housing trends expert, noted that while living alone offers more freedom, it also comes with a steep financial cost.
In New York, cohabitating couples save $39,000 annually compared to living alone, making the city’s singles tax the highest in the U.S.
______
6. UK Telecom Firm Buys Stake in Vodafone
Today, Liberty Global Plc. announced that it has acquired a 4.9% stake in UK telecom company Vodafone Group Plc., expressing hope that Vodafone will revive its business and stock performance through mergers and acquisitions.
Liberty Global stated that it has no current plans to acquire Vodafone outright.
Over the past 12 months, Vodafone’s stock has dropped 32%. In recent months, it has attracted interest from several strategic investors, including French billionaire Xavier Niel and Emirates Telecommunications Group, a UAE state-owned firm.
Liberty Global CEO Mike Fries stated that Vodafone’s current stock price does not reflect its long-term potential or the benefits of industry consolidation. He added that the funds spent on the purchase could soon be offset by selling Vodafone’s non-core assets.
Liberty Global will finance the stake acquisition by issuing $273 million in new shares. Vodafone stock rose 2.1% today.
Liberty Global believes Vodafone’s stock is undervalued relative to its growth potential and synergies from consolidation.
______
7. Self-Driving Taxis Begin Passenger Testing
Last week, Amazon-backed autonomous vehicle company Zoox Inc. conducted its first public road test carrying passengers in its self-driving shuttle.
During the test, the autonomous vehicle transported multiple employees over a one-mile route between the company’s two main buildings in Foster City, California. Going forward, the company plans to operate an employee shuttle service along the same route. Zoox hopes to obtain regulatory approval and commercialize the service in the future.
Zoox stated that this marks the first time a self-driving electric shuttle has carried passengers on public roads.
Amazon acquired Zoox in 2020 for an undisclosed amount. The company is competing with General Motors’ Cruise to lead the autonomous taxi market.
On February 3, Cruise also received DMV approval, allowing its Origin shuttle to begin public road testing.
Zoox’s latest test represents the first time a self-driving electric vehicle has transported passengers on public roads.
______
This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.