Companies that want to reach the market increasingly have no choice but to ride Amazon’s rails.
Amazon has the potential to meet the expectations of investors. But success will bring a big problem
What more fitting place for retailers to discuss the store of the future than Seattle, home to Amazon. Against a backdrop of store closures and job losses, retail and brand execs tried to remain upbeat about the future of the physical store. Brick-and-mortar stores aren’t dead, only in need of being rethought. After all, Amazon just bought 431 Whole Foods stores — and now has stores of its own..
This week Amazon became the fourth company in the U.S. worth half a trillion dollars. The online retail giant is in the exclusive club with Apple, Microsoft and Google’s parent company, Alphabet. Americans clearly love Amazon: one of every two dollars spent online goes to the e-retailing giant. But customers and lawmakers are also spending more time picking on Amazon these days. As the online shopping company branches out, it’s rubbing some people the wrong way.
Amazon presents a conundrum for retailers. It can crush retailers — but it can also bolster them.
On Wednesday, sources told Bloomberg News that Amazon will begin selling Nike through its brand registry program, following a Goldman Sachs analyst note that said Nike is “close” to selling directly on Amazon.com.
With spending on Amazon accounting for 43 percent of all the online revenue in the U.S. last year, the choice for brands is no longer whether they work with Amazon — it’s how they do it. And the kind of data Amazon sends back to retailers — or lack thereof — is what makes most brands seethe.
Amazon is a juggernaut. Not just in retail, but in disruption, innovation and understanding consumer behavior. Don’t think — for a second — that the media play is not going to quickly become a significant component in everything that Amazon does.
Influencer Marketing Program
Despite a quiet entrance, Amazon’s foray into influencer marketing sent shock waves across the entire marketing industry this past month.
Beneath the placid surface of product pages lies an unseen world of bots, algorithms, flash crashes and fierce competition.
After decades of selling products—and knowing exactly what people are buying, and when they are buying it—Amazon has started cutting out the middle-man by selling self-produced items. Through its AmazonBasics house brand, it sells all sorts of small items, from iPhone chargers, to batteries, power strips—even foam rollers, backpacks and washcloths.
Fulfilled By Amazon
Tens of thousands of Amazon sellers might have just sold a whole bunch of their items in one go…to the e-commerce titan itself. According to CNBC, the Fulfilled by Amazon team has emailed thousands of sellers in the US, offering to buy their goods at full retail price so it can have them in store in its warehouses. The Fulfilled by Amazon program already keeps and ships paying customers’ items for them.
For years, retailers have been haunted by the thought of Amazon using its technological prowess to squeeze them into powder. That battle has mostly played out on Amazon’s home turf, the world of online shopping.
Now the fight is coming directly to retailers on actual streets around the globe, where Amazon is slowly building a fleet of physical stores. And while most of the attention has been focused on Amazon’s grocery store dreams, the company has a more ambitious collection of experiments underway.
NYC debut underscores showrooming potential
Whole Foods was quick to point out, in a statement, that its stores will continue to operate under the Whole Foods Market brand, that its headquarters will remain in Austin, Texas, and that John Mackey will stay on as CEO.
Nonetheless, a lot is about to change. NPR spoke to food analyst David Portalatin of the NPD Group, a market research company.
Amazon closed its $13.7 billion purchase of Whole Foods Market today, kicking off a new chapter not only for these two players but for the entire retail industry.
The companies, which outlined their plans in a joint statement last week, are wasting no time making changes that will affect their customers. Starting today, Whole Foods will offer lower prices on a range of produce, meat, and other staples, and Amazon will start upgrading the stores’ point-of-sales systems to offer its Prime members special savings and in-store benefits.
“This, then, is the mistake Mackey made: while he rightly understood that Amazon was going to do everything possible to win in groceries — the category accounts for about 20% of consumer spending — he presumed that the effort would be limited to e-commerce. E-commerce, though, is a tactic; indeed, when it comes to Amazon’s current approach, it doesn’t even rise to strategy.”
The retailer’s $14 billion bet isn’t just about the future of food. It’s about the future of commerce—especially for rich urban consumers.
Walking around Amazon Books, you feel as if you are not in a bookstore but a marketing experiment and, to suggest a human hand was involved (and not an alien species or cold digital empire), a calculated randomness had been factored in.