Amazon Misses Deliveries: Bloomberg West (12/26)

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Dec. 26 (Bloomberg) –- Full episode of “Bloomberg West.” Guests include Wedbush's Michael Pachter, What Goes With This CEO Mona Safabakhsh, HandUp's Rose Broome and Stanford's Vivek Wadhwa. (Source: Bloomberg)

Live from pier three in san francisco, welcome to the early edition of "bloomberg west". i am emily chang.

Our focus is on the future of business.

Let's get to the rundown.

A day after amazon's failed to deliver after ups and fedex get an avalanche of orders, it offers refunds and gift cards to make good on its holiday delivery promises.

From deliveries to missing the mark, up to a third of online sales may be returned.

How online retailers are trying to change that.

And we are counting down the top trends, everything from the rights of robotics to the return of the space race from companies like spacex.

First to the lead.

The explosive growth of online shopping has made for a not so merry christmas for countless customers due to a rush of orders before the holiday.

Companies like ups and fedex were unable to deliver on time, including ones for customers paid extra for fast shipping.

Add has amazon trying to -- that has emma gone -- amazon trying to make a good.

Amazon is studying its shipping options.

Joining us for more is julie hyman.

Amazon is blaming ups.

Ups says volume outpaced capacity.

That who really dropped the ball?

It looks like it was a combination of more than anticipated demand that also the weather.

There were a couple of days where bad weather basically grounded planes and just like if you are at an airport, if you get enough planes that are grounded, things start to back up and it takes a while to cleared out of the system.

If you have a lot of packages, it takes a while to clear that.

That may have been part of what was responsible for this.

It is curious what we're hearing in terms in the higher than estimated demand.

Ups prepared for a lot of demand saying that in this final week until christmas it was going to ship 132 million packages and i had hired 55,000 people and also planes and basically doubled its ground shipping fleet of trucks.

It had prepared for a surge in demand.

We are just getting numbers that say the final online shopping week was actually softer than anticipated.

A little bit confusing in this first day following christmas as we figure out what happened.

Ups is that most of the packages not delivered on christmas should be delivered by today.

We also know that fedex says it had some issues but they were limited.

It is interesting because bloomberg television went inside ups and they expressed a lot of confidence in their delivery of these packages.

Talk to us about the reaction from amazon and other retailers.

Amazon saying it is not our fault but we are going to give you a break.

Giving a break but looking at is what is going on.

We have a statement from amazon, fulfillment centers intended to deliver on time for delivery.

We are reviewing the performance of the carriers, ups and fedex.

Amazon trying to make good on its end, offering those $20 gift cards and shipping refunds.

Koh'hl's said it would refund the price of the item if it was not delivered on christmas.

The question is, is there any threat to amazon and ups and fedex?

Analysts are saying not really.

Amazon is very dependent on these carriers.

There are not others with a nationwide system that will help it get the packages to where they need to be and if amazon wanted to build its own network, that would take time and money.

Julie hyman, thank you for bringing that does have date -- for bringing us that update.

I want to bring in my compactor.

He covers amazon -- bring in my compactor.

He covers amazon.

I think i got a gray hair every day as i was waiting stuff to arrive.

Who do you think dropped the ball and how badly?

Emily, i think that amazon is a victim of its own success.

Amazon has lulled us into believing we can wait until the last second.

I actually did some online shopping on sunday and i was guaranteed delivery by tuesday and all of my packages showed up.

I have no idea why i was shopping online on sunday.

Amazon has trained me it is ok.

I think that it is amazon's fault for guaranteeing it and they are guaranteeing something they do not control, which is the third-party characters -- carriers.

The only way to remedy this is to negotiate capacity which means they have to forecast precisely how many packages they're going to ship or they're going to have to reserve excess capacity and pay ups and fedex.

But this, happen next year.

I will guarantee will plan better.

And when you read the press release, they signed up one million prime members in the week before christmas.

Nobody signs up for prime until the time they are making that order on amazon.

I think they had a surge in orders and i think they exceeded their own expectations and they certainly did not plan very well with ups to manage ups's capacity.

Said you think amazon should say we can't get to you in time for christmas?

You know, the thing that troubled me was the number of parents who were tweeting that the kids had a bad christmas because the parents were so lazy and procrastinated as to order two days before christmas and then the parents blamed amazon.

I think the parents are to blame.

I bought one meaningful presents this year for my wife and trust me, i ordered it two weeks before and i still paid for two day shipping.

You know, i think it is bad planning on the part of consumers and i think it is kind of silly to rely on amazon who has to rely on ups and fedex to get it in two days.

We should all plan or get up off our butts and go to a real pill store and actually purchase the item ourselves.

We have become so complacent about amazon and now we have this expectation they will do it no matter what.

Amazon is going to manage those expectations.

What they are doing today with the gift card, refunding shipping, is really smart and consistent with the customer first focus.

It is a great company that slipped up a little bit.

Jeff bezos recently unveiled jones that would deliver packages to your house.

At some point in the future everybody says this is years off, if it ever happens but what about the -- what about amazon not relying on outside providers?

There has been talk of this -- has been talk of buying the u.s. postal service.

What about some other options like that?

Even though the margins are thin.

I think amazon is doing it stealthily with amazon fresh.

As you get local grocery delivery in san francisco, they can pack those trucks full of anything you happen to purchase from amazon and they are building 500,000 distribution centers in places where they have grocery delivery.

No reason why they can't throw diapers and tvs in the truck as well.

I think they're going to experiment with the delivering in themselves and those market.

Fedex and ups live and thrive because they are so good at this.

Amazon does not have critical mass every place to accommodate its own delivery fleet.

So i do not think we will see this before we see drones.

Probably 10 years off.

We will be watching to see if you are right, michael pachter.

Also apparently a very good christmas planner, buying your wife or gift in time for the holidays.

Have a merry christmas and thanks for joining us.

If the holiday giftgiving out- of-the-way, it is time for the annual rush to return the ins that did not work out.

How big of a problem ever turns become online for online retailers?

That is next on "bloomberg west." ? this is "bloomberg west," streaming on your phone and tablet and on bloomberg.com.

I am emily chang.

The chinese government has awarded wireless licenses.

The move will allow the companies to sell mobile services and may boost competition.

However the companies will have to lease the airways and the three state run telecom providers.

Online shopping this holiday season was rejected to generate more than $78 billion, but that makes this the third year in a row with double-digit growth in online holiday sales.

What with all of the gift buying, what happens to those packages that are not a perfect fit?

As much as one third of internet purchases are returned every year.

I'm joined now from pittsburgh by the ceo of what goes with this.

Her company helps customers make decisions when buying clothes from online retailers like nordstrom and bloomingdale's. first of all, is it true a third of online stuff is returned?

Absolutely.

We are looking at 40% return rate.

That is about a $12 billion cost of lost sales, $5 billion of extra shipping.

It is a big deal.

What is the number one people return stuff?

Sizing?

It is actually really a style preference.

That can include sizing but what you are looking at, in the old days we used to go to the store and we could ask, does this look good in terms of everything?

The style, the color.

So it can be any of these.

It is really the entire person that is so hard to shop for.

Sizing is one element, in addition to color and style.

You guys used to be more focused on a sizing algorithm to help the companies you work with that now your strategy has changed.

Tell me about that and how that is focused on consumer behavior.

What we found doing our algorithm was that humans were always better.

When we had a professional stylist looking at someone or even a human, they were able to give a better recommendation than any technology outgrew them.

And so was -- technology algorithm.

How can we improve customer service and use innovation online?

So we look at ways to give those kinds of style recommendations so now a user can ask about a particular sweater or a pair of jeans they want to buy and get recommendations while they are shopping.

You are expecting people to stay online for longer.

Is in the point of online shopping to reduce the amount of time it takes?

Are people going to spend more time talking to stylists?

So what we found his people actually start shopping for things before they make the transaction.

They will think i want to buy something for this holiday party and they will start to browse.

Rousing is a huge part of the online shopping experience.

It is the way we used to browse in a store.

The transaction process needs to be fast and one click, the way we are building it but the discovery is still there.

We are finding his people will go on and say i am thinking about this dress or the skirt.

How should i wear it?

They are not going to wait for those two minutes to pass for somebody to respond.

They will come back the next day, maybe later on and see what results they got.

Interesting.

Ceo mona safabakhsh, thanks for weighing in.

I have a few returns myself.

Twitter's ipo was one of the biggest tech stories of the year but could mobile payments company square fill the public spotlight in 2014? we hear from a founder on its potential to go public next.

? this is the early edition of "bloomberg west." i am emily chang.

One of the big stories this year was the twitter ceo.

His other company, square, which he founded with jim mckelvey, may also be headed to the public market.

He spoke about its future as a potential public company.

I do not think it is a goal.

If it happens, it is a step along the way.

The vehicles we used to do that, whether a private or public company, as long as we have resources, we are going to be doing the right thing.

If a public offering as appropriate, we will do that.

If not, it does not matter.

Jim mckelvey has also found success from founding new start ups in his hometown of st.

Louis.

He also spoke about the area he is most excited to invest in.

Most excited right now is education.

Because if we train more people who are creative, tool builders we will have more tools and society will advance further.

While many leaders are investing in new ways to bring classrooms into the digital age, others are turning to take allergy to tackle another problem.

In san francisco, more than 7000 people are homeless.

The nine percent have no source of income -- a 39% have no source of income.

It is according to handup, which helps the homeless population.

Handup artist to give homeless people and online profile where they can share their stories and explain their needs and donors can send aid through the web or on their smart phone.

Nonprofit organizations can convert donated funds into credit for people to use for health-care expenses and more.

Here to tell us about it is rose broome, the ceo of handup.

Thank you for joining us.

You can see someone on the street and you can give to that person directly.

That is right.

People often want to make a direct connection.

How does it work?

You are giving them credit they can use for actual needs.

That is right.

You can donate to the person you want to help on our website, handup, or through sms, text messaging.

They get a notification of your donation then they can go into our nonprofit partner and redeem your donation for food, clothing, or medical care.

You are in san francisco as of now but obviously any have criticized or accuse the tech industry of making it more expensive for people to live here and you're taking another tack in terms of technology being able to help.

It is no secret that the cost of living has gone up in san francisco and we do need affordable housing.

We believe that tech can be a force for good in make a difference in the community.

We have already seen a family out of homelessness and another gentleman who had been homeless 15 years into housing.

The rate of homelessness has stayed constant but the number of homeless families continues to go up.

I think a lot of people have that experience of seeing somebody and wondering how they got there.

Why do people end up on the streets and are the reasons changing?

There are a lot of factors that go into homelessness.

You can go on our website and actually hear from people, their story, what happened to them.

What you will find is that homelessness is diverse.

All kinds of people are homeless.

You would not recognize people as homeless walking past them on the street.

How are you canvassing the streets trying to get people signed up?

What is the reaction from the people?

We partner with nonprofits who are working with the homeless community, and so they sign up their members in their community and really -- and we build the technology.

The response has been positive.

A lot of people want to find out more.

We have heard from organizations across the country and the world who are eager to administer our technology with their community.

You are in sf, where does the rollout go from here?

We launched in august.

We are still iterating on the product.

We are focused on san francisco for now.

Did you see a spike in the holiday?

We did.

Thousands of donations in the last couple of weeks.

Hundreds of e-mails from people who want to help us.

And have great support from the tech community.

We have supporters like ron conway.

So the holiday season definitely does remind people to reach out and try to help somebody.

I encourage everybody to go to our website and learn more about somebody and give them a hand.

What is the website?

Handup.us.

Rose broome, thank you for joining us today.

It is time now for on the markets, a look at what is moving on the market.

Julie hyman is in new york.

If you look at stocks today, we have them rising once again.

The s&p and the dow are at record again.

The so-called santa claus rally in the final day of the trading year.

And also fueling the gains today, jobless claims better than estimated although those numbers tend to be very variable in the final couple of weeks during the holidays.

We want to highlight two individual movers, tesla is up again.

It is expanding into china.

The company said it will open more showrooms in china's cities next year.

And twitter, this one is up several days in a row now on optimism about the future of mobile advertising.

That has been fueling the gains.

Twitter is up more than 20% this week, 75% since the ipo last month.

We are also seeing an increase in short interest in twitter.

We will be back once again in 30 minutes' time.

More "bloomberg west" after the break.

? i am emily chang.

You can also catch us at our later time.

Now for your headlines, shinzo abe is facing backlash after he visited a war memorial in tokyo.

The u.s. says it could further damage relations between china and japan which are already on edge.

He is the first prime minister to visit the shrine since 2006. shanghai is warning children and the elderly to remain inside as pollution is high.

A yellow haze blanketed the chinese city.

Heavy industry, cars, and ships are being blamed for the smog.

In consumer confidence is on the rise in the united states.

The comfort index hit a four- week high as the improving job market improved awesome is him -- improved optimism.

Now to our special year-end series, the bwest top five, as we wrap up 2013 we look ahead to what we might see into the coming year.

Today we are talking about the top five trends of 2013. my next guest says these were overlooked.

Vivek wadhwa is with me from palo alto.

Vivek, leave it to you to what we missed in 2013. let's start with number one, computing.

Number five, actually.

Computing has become smaller and cooler.

The ipad mini, about a year ago people were laughing at it.

Now it is a runaway success.

Also tablets, tablet numbers are trumping the pcs in the desktops.

My prediction is over the next few years, companies like dell, microsoft, acer, all of these companies are in serious trouble.

Here is another thing that is happening.

There is a $25 tablet is available in the united states now for $38. it will not be long, and within a euro or two, jeff bezos will not say, if people buy amazon prime, why not give a tablet away?

You will see a shift in the tablet industry with people losing -- using smaller computers.

This seems to me to be a trend every year.

Is this really something that has been overlooked?

Are people focusing on the wrong thing?

People do not understand how fast things are changing.

Who uses a desktop anymore?

People either use a tablet or a laptop.

Even tablets are looking for -- are getting smaller.

Macau pataca or the mini is.

My wife loves it.

-- look how popular the mini is.

My wife loves it.

You will have billions more people coming online.

Another billion people online, seven years another 3 billion people.

This changes the world.

It is happening faster than we can imagine.

Number four, electric cars are proving themselves.

Tesla has a lot of problems.

Issues with cars catching fire.

It was not an easy year.

The new york times trashing tesla for having its car run out of electricity.

Yet tesla defies the odds and the stock price continues to rise and now tesla is going into china.

When year ago we were talking about the end of electric cars.

Now you have people fearing the rise of electric technology.

I drive a tesla.

I am biased but i tell you i can't drive a regular car anymore.

It is like going from an ipod to a cassette player.

Soon we will all be talking about electric car and wonder how we drove the old internal combustion vehicles.

Electric cars are happening and are here to stay.

It will not be long before we start to grow exponential.

We will see if you are right.

Number three you say tech knowledge he revolutionizing health care.

Which has taken a long time.

Or is still some doubt about whether it is happening.

We are pessimistic but my iphone has a heart monitor on it.

I do ekgs all the time.

I have other health care apps.

When we need medical advice, we go online.

A few years ago we could not have imagined being able to second-guess our doctor.

Now we go online and start reading about other people.

We go on social media to share our pains.

We are downloading apps.

Many people have contests, they have their employees compete with each other.

This movement is becoming a part of our everyday lives.

A lot more is happening in health care then we can imagine and this will be transformative.

Apple, there was an article about apple packaging and ekg sensor for their iphone.

Imagine every morning your iphone tells you that, hey, you need to do more exercise.

Take some vitamin c tablets.

Imagine your smartphone becoming your advisor, your medical doctor.

This is where we are headed.

We do not seem to realize how it is creeping up on us.

It is going to be an exciting decade because we will start preventing disease, that is the magic that is happening.

Everybody is waiting for apple to come out with an iwatch but our phones are already doing a lot of these things.

What did you think apple is going to do?

Do they need an iwatch?

I do not think so because this device we have is good enough.

I can't imagine that display this big on my wrist and frankly i want a bigger display.

So i think the iwatch may or may not happen.

This thing is becoming more powerful.

This has a quad core processor, more computing process than all about the -- then all of the computers the day i was born.

Think about what i just said.

Imagine what we could do with it and the technology that can be dealt with it.

We will see those technologies over the next few years.

It is going to be transformative, starting with health.

Vivek wadhwa, stick around.

We will be back with you after the break.

We will be right back.

? welcome back.

I am emily chang.

I wanted to get to our special series, counting down the top overlooked trends in technology with director of research vivek wadhwa.

You said smaller computing was becoming cooler, electric cars, finally proving themselves, technology revolutionizing and reducing the cost of health care, number two, robotics.

Google bought a number of robotics companies this year.

But what are they going to do with them?

When we were young we used to watch "the jetsons." you are younger than i am.

We dreamed about rosie the robot.

All of these amazing advances.

The reason that did not happen is because the computing power to do sophisticated movements was too great.

As i said, my phone has more computing power than the supercomputers of not too long ago.

Now we can build a sophisticated robot.

Children are building robots.

High school kids are building robots.

In the next five or seven years you're going to see robots serving us.

Google is getting one leg up.

It is buying all of these technologies, and a self driving car.

This era we ginned about is about a decade away.

The trend is happening right now.

The fact google bought these companies shows its vision and it understands what the vision is.

This is a huge trend, which is starting now.

You think they're going to be used on the production line?

Also in the home.

I am waiting for rosie to start serving the key in the morning.

I expected will happen in the next decade or so.

That is not far off.

Number one, your number one top trend of 2013, spaces back.

The space race is back.

Really?

Emily, think about it.

India has launched a spaceship to go to mars.

China is planning on landing on the moon.

This was unimaginable, india and china going to mars and the moon.

These are the stories of 2013 we did not really report on.

You have urgent galactic doing private spaceflight.

Elon musk was able to send a rocket to be spaced patient.

You have moon xpress talking about mining on the moon.

You have planetary resources, talking about mining asteroids.

This all happened in 2013. we do not seem to realize the magnitude of it.

There is going to be a space race and a lot of amazing and are going to happen when we have india and china going into the heavens.

I can't let you go without asking about the top vivkeek story, the whole kerfuffle about twitter having a woman board member or not.

Now twitter has added its first woman to the board but you were very vocal about them not having one.

The ceo sort of called you out on twitter calling you the care top of academic sources.

Are you satisfied with the move that twitter has made?

Do you think they have made good?

They have done a lot of good.

Why don't they have 50% women?

Half of the population is women.

Why shouldn't their board be 50% women?

What they did, i applaud them for.

What we need much more.

They should not be a debate.

We should not discuss why there aren't women in key positions.

It should be a level playing field.

We need to have women innovating and doing sensible things.

This is another trend we started talking about and now i know every ceo, every fortune 500 ceo is wondering why he does not have more women.

This is a good thing that happened.

I hope to see more of it.

So, you know, i should remind our viewers of who twitter added, but you think it should be 50% women?

Yes.

Also african-americans, latinos, we should have a diverse board because ultimately the board represents the interests of the public, of the users, of the consumers.

It is not a boys club.

It should not be a boys club should be looking after the interest of their consumers and getting a diverse board would get them in touch.

If twitter had a woman, i do not think it would have lashed out at a professor whose western in him.

-- who is questioning him.

Silicon valley had better wake up and start behaving in a more respectable, more balanced fashion.

We need to have diversity.

We need to be looking at the interest of consumers and being -- and doing good for the world.

That is what has to happen in 2014 and beyond.

I think that will continue to be a trend, vivek wadhwa, stanford law school fellow, thank you as always for weighing in.

Mobile access to facebook for free.

Coming to the united states for the very first time.

We will explain coming up.

? welcome back.

I am emily chang.

Starting next month, customers will get free access to facebook, even without a data plan.

It is a subsidiary of t-mobile that specializes in repaid phone plans.

It will be the first provider to offer free access to facebook for all of its wireless customers.

Is this a win-win?

T-mobile is getting a lot of props for really pushing the envelope.

Is this another example of that?

T-mobile needs a niche.

At&t and verizon on the market.

They are the devices we all use, iphone, samsung.

T-mobile has to find its way into the market.

They are doing it with price.

One thing is to do -- giving people free access to facebook, which is what they are doing.

For people who do not mind buying the data package.

Facebook presumably will be providing some sort of specific application or features that allow the app to be launched without a data plan.

The technology, how they are going to work the technology is not in the press release.

But it is an easy thing, it effectively means the carrier will be handling that data cost.

Imagine other websites aren't happy about this.

It is an interesting thought.

We don't really know who teen nubile -- who t-mobile has been talking to.

It is an interesting question.

If you don't have the resources facebook has, are you at a disadvantage?

There is an argument about innovation.

Sure, does the bigger company win because it has more users?

Shouldn't we be fostering these deals for smaller companies, there is a argument there.

Mark zuckerberg has been saying facebook should be available to everyone for free.

In the same way we have access to electricity and gas.

T-mobile has been taking a lot of risk.

We have seen the other carriers following suit in some cases but how is it working in terms of getting more subscribers to come over to t-mobile?

Certainly when you are offering a low-cost alternative to these high-cost packages, you're going to get some users.

You will see the migration happening.

The issue comes as a financing angle.

If you look at the operating margin, it is about 4.5% to 5.5%. so t-mobile is saying we are willing to operate at a thinner margin to be relevant, which they have to do.

Arotech editor, thank you.

We will be back with more of "bloomberg west" after this break.

? welcome back.

I am emily chang.

Coming up at 3:00 pacific, could uber's price strikes and drive passengers to other ridesharing services?

We ask the ceo at three clock p.m. pacific -- 3:00 p.m. pacific.

Bloomberg tv is on the markets.

Olivia sterns has more from new york.

You know we are heading into the end of the year so we thought we would take a look at how some of the wealthiest members of the billionaires index are doing.

Today we are looking at warren buffett.

He has been holding his fortune as a classic value investor ever since he became ceo of berkshire hathaway.

A majority of his fortune is tied up into the company.

He was added to the list in 1985 when its stock top to $2100 a share.

Since then it has gone up 83 times in value.

He added $12 billion to his savings just this year alone.

Matt miller took a look at how deeply the or call -- the oracle of omaha is investing.

This text has been automatically generated. It may not be 100% accurate.

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