Lately, Amazon has been buying and doing #AllTheThings.
From acquiring Whole Foods for a cool $13.7 billion to its newly minted Amazon Prime Wardrobe, the online retail giant continues to gain momentum at every step.
Not to mention, it also continues to do business differently at each step so as to not become just another big retailer.
Consequently there’s been a lot of chatter about Amazon; some are saying it’s doing too much, some are saying other retailers don’t need to worry, and others are emphasizing its potential to take over everything.
It’s time to lay out some of the facts and pose a question or two.
This is what captured our minutes this week.
Here's how and where:
AMAZON + CLOTHES
What it is: Prime members get to pick 3-15 items across clothing, shoes and accessories on Amazon, try it all on at home, then return what they don’t like and keep what they do. Nothing is charged until the buyer decides what they do and don’t want.
Why it matters: Though it’s in Beta, if successful Amazon Wardrobe will basically solve one of the biggest problems to online shopping: being dissatisfied with the order. Not all online stores have great return policies (some only do exchanges… in 2017!!), but not everyone enjoys the in-store shopping experience. Not only do Prime members get more bang for their buck ($99 annual membership fee), but they also save money with the more clothing they keep from their orders (10% for 3-4 items kept, 20% for 5 or more). Free returns. Free shipping. ‘Nuff said.
And if you’re the type that wants to be shown the money, here’s how Amazon is actually doing in clothing/accessory sales:
Sales are expected to grow 30% by 2018, up to $28 billion
It currently holds onto 6.6% of the apparel market, but by 2022 that’s expected to jump by 10%
1million items will be made available for Prime Wardrobe
Questions we have: How annoyed will customers be that they have to facilitate the returns themselves (IE: they have to put the items in a box that they find, walk to the post office and mail it)? First world problems, but it’s all about the experience. Furthermore, Amazon has had issues with counterfeit goods before – how will it protect the integrity of the goods that people order through Prime Wardrobe?
AMAZON + FOOD
What it is: Amazon bought Whole Foods for $13.7 billion, or $42 a share in cash. Cha-ching.
Why it matters: Immediately, grocery chains Wal-Mart and Kroger Co. dropped by 7.1% and 17% respectively. Not to mention the fact that Whole Foods took a nice jump in price, by 27% to the $41.98 price tag per share. We all knew Amazon was interested in the grocery market with its retail plans, but this just solidifies everything. Amazon already changed how we shop online. Now it’s changing how we shop in real life.
Questions we have: How will Amazon integrate its web services and technology to update Whole Foods? There are talks of robots or self-checkout technology replacing cashiers. Also, Amazon is known for its distribution abilities – if it could help Whole Foods become less “Whole Paycheck” by cutting delivery costs through utilizing smarter technology (ahem, Amazon Web Services) there could be a lot more growth here. At the very least, Amazon could somehow integrate Prime into the Whole Foods shopping experience and make it more accessible.
AMAZON + TECH
What it is: Amazon’s POS devices include Echo, Dash Button, Dash Wand. There’s also Amazon’s version of cloud-computing (Neflix, NASA and the C.I.A. use it). With the push of a button, swipe of a barcode, or voice command, people can reorder exactly what they need when they need it.
Why it matters: This is all explained in a very good New Yorker article, which describes Amazon as “dividing the world of commerce up into building blocks, [called] ‘primitives’.” Basically, Amazon makes stuff that works for business and makes other stuff that works for consumers. It’s an ecosystem whose branches feed the greater tree. They all connect, but they each serve a different purpose. This is what makes Amazon’s far reach make sense, instead of just being some crazy buying spree.
Questions we have: This is undoubtedly where a lot of the good money comes from, especially when it comes to big accounts like NASA (freaking out casually). Hence, this is where we will see some potential for big growth. It’s just a case of how will Amazon handle that growth? Make new subsidiaries? How will they achieve some sort or synergy between it all? And will it be for straight growth, or purpose before profit?
So far, it looks like each move Amazon is making is for specific goals that the company hopes to achieve (which should always be the case). Now it comes down to how this retail giant will actually manifest that differentiates it from other retailers.
What are your thoughts on Amazon’s spending spree? Let us know @TheTiteReport.
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