{"id":1073,"date":"2015-07-20T11:02:30","date_gmt":"2015-07-20T18:02:30","guid":{"rendered":"http:\/\/re-tales.net\/?p=1073"},"modified":"2015-07-20T11:02:30","modified_gmt":"2015-07-20T18:02:30","slug":"past-prime-the-great-disruptor-amazon-is-in-danger-of-being-disrupted","status":"publish","type":"post","link":"http:\/\/re-tales.net\/?p=1073","title":{"rendered":"Past Prime? The Great Disruptor Amazon Is In Danger Of Being Disrupted"},"content":{"rendered":"<blockquote><p>\u00a0\u00a0<img loading=\"lazy\" decoding=\"async\" class=\"\" src=\"http:\/\/media.graytvinc.com\/images\/amazon+logo2.jpg\" alt=\"\" width=\"299\" height=\"199\" \/><\/p>\n<p><span style=\"color: #000000;\"><strong>\u00a0 \u00a0 \u00a0Here&#8217;s an interesting article from Forbes, the author feels that Amazon has peaked and that customers are rediscovering &#8220;stores&#8221; (i.e. brick and mortar.) \u00a0 \u00a0I guess it&#8217;s the natural cycle of companies to hit a brick wall in terms of annual growth and ways to expand, but personally I think Amazon will be strong for a ways to come. \u00a0While not everyone I know shops there, most do and there is something just too satisfying about shopping for an item in the comfort of your living room, seeing multiple reviews to see if it&#8217;s the right item, knowing you have the best price and then having it on your doorstep in a couple of days. \u00a0 And no snotty retail clerks or long lines at some pesky store&#8230;<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">Time will tell if Amazon\u2019s Prime Day, <a style=\"color: #000000;\" href=\"http:\/\/www.forbes.com\/sites\/ryanmac\/2015\/07\/15\/amazon-gets-defensive-as-customers-criticize-prime-day\/\" target=\"_self\">roundly criticized<\/a> on social media as a bust, will have the intended effect of enveloping more shoppers into the Prime universe. Nevertheless, headline-grabbing events like this are part of Amazon\u2019s evolution, which is no doubt intended to maintain its status as a disruptor.<\/span><\/p>\n<p><span style=\"color: #000000;\">But this evolution may not be enough to save Amazon, the beast that ate retail, from being disrupted itself.<\/span><\/p>\n<p><span style=\"color: #000000;\">Why? Its current focus on online commerce runs counter to where global commerce is headed \u2013 a seamless blending of online, offline, personalized, social shopping. And without massive investments in offline retail that would further prolong profitability, the company risks losing the competitive advantage it has so long enjoyed.<\/span><\/p>\n<p><span style=\"color: #000000;\">\u201cAmazon cannot survive as a pure-play retailer,\u201d <a style=\"color: #000000;\" href=\"https:\/\/www.youtube.com\/watch?v=XCvwCcEP74Q\">said<\/a> Scott Galloway, founder of L2 Research and a professor at the NYU Stern School of Business, at the January DLD15 conference. \u201cStores are the new black in the world of ecommerce. We have discovered these incredibly robust, flexible warehouses called stores.\u201d<\/span><\/p>\n<p><span style=\"color: #000000;\">Amazon, having opened a college campus store and having reportedly expressed interest in acquiring RadioShack locations, clearly recognizes the threat posed by some traditional retailers, which are mastering the art of blending online and offline commerce.<\/span><\/p>\n<p><span style=\"color: #000000;\">Need proof that physical stores are a crucial part of the retail mix? Consider the following:<\/span><\/p>\n<ul>\n<ul>\n<li><span style=\"color: #000000;\">Occupancy rates at U.S. malls and shopping centers hit a 27-year high of 94.2% in 2014; shopping center base rents rose 6.5% in 2014, the third consecutive annual gain and the strongest level since 2008, according to the <a style=\"color: #000000;\" href=\"http:\/\/www.icsc.org\/press\/u.s.-shopping-center-occupancy-rates-hit-6-year-high-in-2014-according-to-i\">International Council of Shopping Centers<\/a>.<\/span><\/li>\n<li><span style=\"color: #000000;\">Hybrid retailers including <a style=\"color: #000000;\" href=\"http:\/\/www.fool.com\/investing\/general\/2015\/01\/13\/why-macys-inc-is-one-of-the-most-forward-thinking.aspx\">Macy\u2019s<\/a>, <a style=\"color: #000000;\" href=\"http:\/\/investor.nordstrom.com\/phoenix.zhtml?c=93295&amp;p=irol-newsarticle&amp;ID=2018387\">Nordstrom<\/a>, <a style=\"color: #000000;\" href=\"http:\/\/news.walmart.com\/news-archive\/investors\/2015\/02\/19\/walmart-announces-q4-underlying-eps-of-161-and-additional-strategic-investments-in-people-e-commerce-walmart-us-comp-sales-increased-15-percent\">Wal-Mart<\/a> and <a style=\"color: #000000;\" href=\"https:\/\/www.internetretailer.com\/2015\/03\/03\/slam-dunk-year-online-dicks-sporting-goods\">Dick\u2019s Sporting Goods<\/a> are just a few of the companies growing their ecommerce business faster than Amazon \u2013 and they\u2019re doing it profitably.<\/span><\/li>\n<\/ul>\n<\/ul>\n<ul>\n<li><span style=\"color: #000000;\">Digital interactions are expected to influence 64 cents of every dollar spent in retail stores by the end of this year, according to <a style=\"color: #000000;\" href=\"http:\/\/www.deloittedigital.com\/us\/blog\/retailers-its-time-to-capitalize-on-digital-influence\">Deloitte Digital<\/a>.<\/span><\/li>\n<li><span style=\"color: #000000;\">Two-thirds of retail CIOs say merging ecommerce, mobile, social, catalog and store selling channels is their number two priority, second only to data security, <a style=\"color: #000000;\" href=\"https:\/\/nrf.com\/media\/press-releases\/data-security-omnichannel-initiatives-top-retail-cios-priority-lists\">according<\/a> to the National Retail Federation and Forrester Research.<\/span><\/li>\n<li><span style=\"color: #000000;\">The 2015 State of the Online Shopper survey of 5,100 U.S. consumers found that 61% prefer to return items to stores versus 39% who want to ship an item back to a retailer; the survey also found that fewer than half made another purchase when returning online, while 70% make additional purchases when returning in store.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">With a cash pile of more than $10 billion and a willingness to sacrifice profits in pursuit of growth and market share, Amazon could establish a brick and mortar foothold. But it is unclear whether investors would support such a costly move given an already declining EPS backdrop resulting from massive gambits in areas such as fulfillment technology and warehousing.<\/span><\/p>\n<p><span style=\"color: #000000;\">Even if it never invests in brick-and-mortar, where will margin improvement come from? Raising prices might be an option if Amazon were willing to sacrifice market share. But given the recent <a style=\"color: #000000;\" href=\"http:\/\/www.bloomberg.com\/news\/articles\/2015-06-02\/amazon-debuts-free-shipping-on-small-goods-without-minimum-order\">news<\/a> that it will offer free shipping on sub-8 oz. items to <em>non-Prime members<\/em>, with no minimum purchase, that does not appear likely.<\/span><\/p>\n<p><span style=\"color: #000000;\">Indeed, its shipment costs continue to dwarf its shipping fees, and its fulfillment advantage is being eroded by on-demand payment and delivery a la <a style=\"color: #000000;\" href=\"http:\/\/techcrunch.com\/2015\/04\/28\/uber-is-quietly-testing-a-massive-merchant-delivery-program\/\">Uber<\/a> and <a style=\"color: #000000;\" href=\"http:\/\/boingboing.net\/2015\/04\/21\/like-uber-but-for-shipping-stu.html\">Shyp<\/a>.<\/span><\/p>\n<p><span style=\"color: #000000;\">The other major trend looming over Amazon is social shopping. Amazon has failed to extend its reach into social media communities where massive numbers of like-minded people gather and recommend products. It has not established a presence that extends beyond Amazon.com, a shortcoming in our hyper-connected world. And it has no real way of capturing buyers who don\u2019t already have an intention of purchasing. Today\u2019s consumer is far less dependent on a single marketplace, physical or virtual, to discover and purchase products.<\/span><\/p>\n<p><span style=\"color: #000000;\">Marketers are <a style=\"color: #000000;\" href=\"https:\/\/www.internetretailer.com\/2015\/04\/16\/social-media-ad-spending-soars\">expected<\/a> to spend nearly $36 billion advertising on social networks by 2017 to capture these shoppers, and the powerhouses of social media are clearly stepping up their game. In April, Twitter <a style=\"color: #000000;\" href=\"https:\/\/investor.twitterinc.com\/releasedetail.cfm?ReleaseID=909180\">announced<\/a> it would buy TellApart, providing retailers with cross-device retargeting through ads and email marketing; Instagram lets retailers link to product pages from Instagram ads; Facebook has already added a \u201cbuy\u201d button and has acquired ecommerce search app TheFind; Pinterest is launching <a style=\"color: #000000;\" href=\"http:\/\/blog.demandware.com\/experience\/demandware-enables-buyable-pins-on-pinterest\">Buyable Pins<\/a>; while not a social play, Google will soon <a style=\"color: #000000;\" href=\"http:\/\/blogs.wsj.com\/digits\/2015\/05\/27\/google-confirms-a-buy-button-is-imminent\/\">incorporate<\/a> a buy button alongside search results.<\/span><\/p>\n<p><span style=\"color: #000000;\">A November 2014 report from L2 noted that brands participate on an average of seven social media platforms. In other words, Amazon isn\u2019t the only game in town. Merchants don\u2019t have to risk brand dilution on Amazon, where third parties selling their products compete for customers with the lowest price.<\/span><\/p>\n<p><span style=\"color: #000000;\">Further, consumers who arrive to retail sites from social networks or share an item on a social network spend an average of 8.2% more than other shoppers spend, <a style=\"color: #000000;\" href=\"http:\/\/learn.addshoppers.com\/2014\/\">according<\/a> to AddShoppers, which analyzed data from 10,000 ecommerce sites.<\/span><\/p>\n<p><span style=\"color: #000000;\">Meanwhile, Amazon\u2019s social media forays have been limited to a May 2014 deal allowing Twitter users to add items to their Amazon shopping carts by including a hashtag within a tweet, an initiative that does not appear to have borne much fruit.<\/span><\/p>\n<p><span style=\"color: #000000;\">Yet another disruptive force in retail is the way in which brands leverage content to engage with consumers and build brand value. Leading retailers today are using their home court advantage by investing in and embracing content and commerce to tell their brand story. This results in a shopping experience that Amazon just can\u2019t match, and some brands are shunning Amazon for that reason.<\/span><\/p>\n<p><span style=\"color: #000000;\">One example: Jessica Alba <a style=\"color: #000000;\" href=\"http:\/\/www.cnbc.com\/id\/102507167\">said<\/a> at the South by Southwest Conference in March that she will not sell her Honest line of natural products ($150 million in 2014 sales) on Amazon because does not want to relinquish control of the customer experience.<\/span><\/p>\n<p><span style=\"color: #000000;\">More broadly, while Amazon\u2019s selection is vast, it is not all-inclusive. Many brand-name retailers and \u201cprestige brands\u201d do not sell their wares directly on Amazon. According to L2, only 16% of luxury fashion brands <a style=\"color: #000000;\" href=\"http:\/\/www.l2inc.com\/research\/amazon-2014\/amazon-luxury-fashion-2014\">officially distribute on Amazon<\/a>.<\/span><\/p>\n<div class=\"vestpocket\"><span style=\"color: #000000;\">\u00a0<\/span><\/div>\n<p><span style=\"color: #000000;\">In early 2014, Amazon was <a style=\"color: #000000;\" href=\"http:\/\/www.wsj.com\/articles\/SB10001424052702303636404579395443152132198\">reportedly<\/a> in talks with retailers including J.Crew, Abercrombie &amp; Fitch and Neiman Marcus to carry those brand\u2019s listings on its site \u2013 that deal never materialized.<\/span><\/p>\n<p><span style=\"color: #000000;\">The next phase of major disruption in retail is here, driven by endless touch points, the convenience of physical stores, social commerce, and a personalized brand experience. Disruption is the natural selection of the business world, causing seemingly unbeatable companies to become beatable. Forbes <a style=\"color: #000000;\" href=\"http:\/\/www.forbes.com\/sites\/stevedenning\/2011\/11\/19\/peggy-noonan-on-steve-jobs-and-why-big-companies-die\/\" target=\"_self\">pointed out<\/a> that that fifty years ago, the life expectancy of a company on the Fortune 500 was about 75 years. It is less than 15 years today and falling.<\/span><\/p>\n<p><span style=\"color: #000000;\">There\u2019s no question that marketplaces like Amazon will have a place in the retail landscape, but the concept of an \u201ceverything store\u201d owning all of retail will not pan out. Why? Because brands and consumers find it easier than ever to find each other in this connected world. Ultimately this comes down to choice and convenience for the customer, and that trumps the ambitions of any one company.<\/span><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0\u00a0 \u00a0 \u00a0 \u00a0Here&#8217;s an interesting article from Forbes, the author feels that Amazon has peaked and that customers are rediscovering &#8220;stores&#8221; (i.e. brick and mortar.) \u00a0 \u00a0I guess it&#8217;s the natural cycle of companies to hit a brick wall in terms of annual growth and ways to expand, but personally I think Amazon will <a class=\"read-more\" href=\"http:\/\/re-tales.net\/?p=1073\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,11],"tags":[],"class_list":["post-1073","post","type-post","status-publish","format-standard","hentry","category-retail-companies","category-retail-trends"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/1073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1073"}],"version-history":[{"count":4,"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/1073\/revisions"}],"predecessor-version":[{"id":1084,"href":"http:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/1073\/revisions\/1084"}],"wp:attachment":[{"href":"http:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1073"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}