Business Observations On A Family Trip

We took a family vacation trip in Colorado last week and had a fantastic time. With pandemic restrictions being almost out of the way, it was a much needed time to release some of the stress accumulated from the year long lockdown. We had the chance to go up to the 14,115 ft Pikes Peak at Colorado Spring and 14,271 ft Mt Evans near Boulder. We also spent some time hiking in the beautiful Rocky Mountain National Park and Great Sand Dunes National Park. Along with some photos I took from the trip, I thought I would share some business observations for amusement.?

Amazon vs FedEx

On my way driving back and near the town of Amarillo, We saw two trucks side by side on the highway, not just any trucks but one with big iconic FedEx sign being passed by another truck with the prominent Amazon logo with a curved arrow leading from A to Z, representing that the company carries every product from A to Z, with the arrow shaped like a smile. It would have been a fantastic photo opportunity if I were not driving.

During the holiday season a year ago, Amazon blocked its third-party sellers from using FedEx a few weeks before Christmas — ahead of the busy holiday season.?While shipping and delivery are the core business for FedEx, they simply became a feature of Amazon prime as part of Amazon customer growth strategy.?As a result of the conflict, FedEx lost about 40% of its value after the Amazon move. However, it has recovered well since then. More generally, what do you do when a giant customer like Amazon vertically integrated into your business space?

Freight Shipping Containers from China

On the way between Texas and Colorado, we saw many trains carrying hundreds of large shipping containers across the heartland of America. One of the trains I came across had about roughly 70-80% of the containers with logos of either China Shipping to COSCO (China Ocean Shipping Company). Political tensions between the two countries have obviously created barriers for businesses on both sides, but things have not slowed nearly as much at the consumer levels who have benefited from the low cost goods. I remember a study done twenty years ago that at the time about one percentage of China’s GDP went through Walmart. With China GDP has increased by more than ten times since then, I wonder what that number look like for Walmart today. Import from China to the United States in 2020 at about $393.6 billion was only slightly lower than previous year even with all the tumultuous events. On the other hand, since the great majority of China’s trade with the US is still denominated in dollars, the recent strengthening of Chinese Yuan will force Chinese exporters to decide whether or not they are willing to absorb the cost of the stronger currency.

Who Are Your Customers?

We stopped by the city of Trinidad Colorado for a lunch on the way at “Tees me Treat me” which had a good review for its food on Google and Yelp. It turned out Trinidad was a town with some interesting history and the restaurant was located inside a beautifully decorated historical building built in 1879. The owner brought over a framed document which described the history of the building including visits by two presidents and associations with other celebrities including Virgil Earp, Doc Holiday, and even Al Capone. The once prosperous town due to coal mining suffered several natural and man made disasters in early 1900. The current population is only at about 9100.

I wondered about the main customers for the restaurant. Are they mostly local residents or travelers passing through town? The decoration and setup are very nicely done including a small gift shop which is clearly geared towards tourists. The food service might have been perfect for locals who want to enjoy a good meal in a nice building but somewhat slow for passing tourists who simply want to get on the road. Indeed I saw the review on Google reflect the customer segments. Most people give good reviews for the food while a number of reviews complained about the speed of service.?Every business needs to understand who their customers are and misalignment of your offering with customer needs can create misplaced expectation. With that said, the Reuben sandwich was excellent.

Marriott Hotels

Although Airbnb has gained increased popularity for travelers with its almost unlimited options to choose from, I, being a life time premium Marriott Bonvoy member, still use Marriott often. We booked a Fairfield Inn through the Marriott app directly for an overnight stay in the city of Longmont but accidentally put a different Marriott address into Google map for driving direction. We arrived at the hotel which naturally did not have our reservation. Fortunately, the app showed that the intended hotel was only 2.6 miles away from where we were. Interestingly, we passed two more Marriott hotels during the three minutes drive, indicating at least four Marriott facilities within a three mile distance.?

Right before the pandemic, Marriott went on a growth sprint through acquisition. According to its annual report, Marriott now owns about 16% of US hotel rooms and 4% worldwide. Pandemic has had a devastating impact on both business and personal travels and obviously on Marriotts’s business with revenue per room down by 60% from 2019. Even without the pandemic, I still wonder the wisdom of owning four hotel facilities in the same neighborhood.

U-Haul Truck Advertisement

I am sure many of you have seen the distinctive U-haul moving trucks. One thing which always stands out is the advertisement on the back of the trucks. Those advertisement always very specific and customer focused. I often find myself reading through the advertisements even though I have only used U-Haul a number of times in my life. If I need a rental truck, there is no doubt which one would come to mind first. The cost of those advertisements is nothing other than the design and painting work since U-Haul likely owns those assets. I wonder why not more companies take similar approach in leveraging their work vehicles to double as a marketing tool.

Blurred boundaries between business and time off can be bad for your health and vacation is supposed to be a time to relax. However, we do not have to stop learning. In fact, every second our brain is processing all kinds of inputs. The brain learns things and makes associations that we are not even aware of.?As humans, we survive by learning.??Some things that were useful immediately and other things that were not useful until years after they were learned.

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