Good morning,

Amazon plans to deploy 5,000 smart glasses to its delivery drivers this year, with plans to expand the rollout to more than 20,000 units by the end of 2027. The glasses display navigation, gate codes, and customer delivery preferences directly in drivers’ field of view, reducing their reliance on handheld devices during deliveries.

The technology also helps verify package drop-offs, capture proof of delivery, and flag potential issues, such as pets near delivery locations or packages left at incorrect addresses.

Let’s dive into today’s edition.

Amazon will increase Fulfillment by Amazon (FBA) fees by an average of $0.19 per unit sold starting January 15, 2027, equivalent to about 0.8% of the average selling price.

Key Details: The increases vary by product category, size, and price. Small standard-size products priced between $10 and $50, for example, will see average fulfillment fee increases of $0.40 per unit, while small standard-size products priced above $50 will rise by $0.70.

Amazon says the adjustments are intended to bring individual fees closer to the cost of fulfilling each product. It will also retain its fuel and logistics surcharge, citing elevated fuel and line-haul trucking costs.

Storage Change: The changes also affect inventory storage and Amazon’s wider fulfillment network. From February 1, the company will eliminate its storage utilization surcharge and combine aged-inventory charges with monthly storage fees into a single age-based rate.

Big Picture: Beyond FBA, Amazon will raise Multi-Channel Fulfillment fees by an average of 3.5% for standard-speed orders and increase palletized-load fees under its Multichannel Distribution service by 8%. The changes will affect sellers using Amazon's logistics network across fulfillment, storage and distribution.

Amazon and Walmart face a growing challenge to their retail advertising businesses as AI shopping agents begin changing how consumers discover and buy products.

Key Details: The two retailers command a combined 88% share of the U.S. retail media market, estimated at $74.4 billion by eMarketer. But as AI assistants take over product searches and purchases, brands could become less reliant on sponsored listings and advertising placements on retailer websites.

Morgan Stanley estimates that AI agents could account for 10% to 20% of U.S. e-commerce spending by 2030.

What’s Happening: The retailers are taking different approaches. Amazon has blocked third-party shopping agents, including Meta’s Muse, from accessing its platform, while Walmart has partnered with Meta and introduced systems that allow AI agents to shop through customers’ accounts. Both are also experimenting with ads inside their own AI assistants.

Big Picture: The shift could eventually change how brands compete for visibility: instead of optimizing campaigns for human shoppers browsing websites, they may need to structure product data to appear in AI-generated recommendations.

Small and midsized retailers are facing a difficult holiday season as higher fuel prices push up shipping costs, threatening to erode already thin profit margins.

Key Details: Some retailers are now considering raising shipping fees, ending free shipping, or passing return-shipping costs on to customers. The pressure is particularly acute for smaller businesses that lack the shipping contracts and delivery networks available to larger retailers.

Expense Everywhere: The increase spans the transportation network. Global air cargo rates have reached about $3.37 per kilogram, up 43% from a year earlier, according to Freightos, while Amazon reported an 11% year-over-year increase in shipping expenses in the third quarter. UPS, FedEx and USPS have also introduced peak-season surcharges.

Big Picture: With holiday retail sales forecast to grow 4.2% to $1.01 trillion, the combination of strong demand and higher fulfillment costs could leave some smaller retailers facing financial strain after the season.

Shopify reported a 32% year-over-year increase in third-quarter revenue to $3.74 billion, while gross merchandise volume (GMV) rose 29% to $119.1 billion.

Key Details: Merchant solutions, which include payment processing and other services used by merchants, generated $2.91 billion, up 35%, and accounted for nearly 78% of total revenue. Subscription solutions revenue increased 20% to $836 million. Operating income climbed 66% to $568 million, while free cash flow rose to $816 million, lifting its margin to 22% from 18% a year earlier.

Big Picture: The results reflect continued growth in the services Shopify provides to merchants beyond its core storefront subscriptions, as more transaction activity flows through its payments and commerce infrastructure. Monthly recurring revenue also increased to $230 million from $193 million.

Walgreens has opened a 68,000-square-foot robotic micro-fulfillment center in Allentown, Pennsylvania, expanding its network of centralized facilities that automate prescription picking, packing, and distribution to stores.

Key Details: The facility will serve nearly 650 Walgreens locations across the region and is expected to process 28 million to 29 million prescriptions annually. It brings the retailer’s U.S. micro-fulfillment network to 15 centers, supporting more than 5,500 stores and handling over 18 million prescriptions each month.

What’s Next: The expansion is part of Walgreens’ effort to centralize routine prescription fulfillment, allowing in-store pharmacists to spend more time on patient care and clinical services. The company says stores served by its micro-fulfillment centers already account for more than 40% of its total prescription volume.

Costco Wholesale reported net sales of $24.5 billion for the four weeks ended November 1, 2026, up 12.6% from $21.75 billion a year earlier.

Key Details: Comparable sales increased 11.1% across the company, or 7.3% after excluding the effects of gasoline prices and foreign exchange. The U.S. market led with comparable sales growth of 8.1% on the adjusted basis, while Canada grew 3.5% and other international markets rose 6.9%.

Digital Future: Digital sales continued to outpace the broader business, increasing 22.5% year over year in October, or 22.6% excluding foreign exchange. For the first nine weeks of the fiscal year, net sales reached $54.52 billion, up 12.8%, while digitally enabled sales rose 20.5%.

Big Picture: The results point to continued momentum across Costco’s warehouse and digital channels, with online sales growing considerably faster than comparable in-store sales.

Drone delivery startup Zipline has raised $1.5 billion in fresh funding, more than doubling its valuation to $21.5 billion from $7.85 billion earlier this year, as demand for autonomous delivery gains momentum.

Power Partner: The funding comes alongside an expansion of its partnership with Walmart, with the companies planning to establish 300 additional delivery sites under a new multi-year national agreement. Zipline also has a partnership with Uber to facilitate drone deliveries for restaurant, grocery, and retail orders through Uber Eats.

What’s Next: The company plans to use the new funding to expand U.S. manufacturing facilities, increase hiring, and improve its drones' capabilities, including quieter operations, higher flight altitudes, and the ability to carry heavier orders over longer distances.

CVS Health is considering spinning off its retail pharmacy business into a separate publicly listed company, potentially dismantling the $117 billion healthcare group created by its $78 billion acquisition of Aetna in 2018.

Key Details: The pharmacy division operates around 9,000 stores and is projected to generate roughly a third of CVS’s expected $417 billion in revenue this year. Under the proposal, Aetna, the health insurer, and Caremark, the pharmacy benefit manager (PBM), would remain under a single corporate entity, while the retail pharmacy business would operate independently. The plans are still under discussion, and the structure and timing may change.

Backstory: The potential separation comes as CVS faces growing political and regulatory pressure over the same companies owning pharmacies and PBMs. PBMs manage prescription drug benefits on behalf of insurers and employers, and lawmakers in several states have moved to restrict common ownership.