Amazon Weekly News: November 21, 2017

Time for the weekly recap of Amazon news! It's always good to keep up with events related to the fast-moving world of the Amazon ecosystem. I select the most important news updates to share with subscribers each week, which you can sign up to receive right here.

 

Calvin Klein’s Amazon Exclusive

Calvin Klein will sell a new line of underwear exclusively on Amazon this holiday season. This marks the beginning of a totally new strategy for this brand in particular, as well as other  brands that generally have a tendency to keep their ‘exclusive’ product lines off Amazon. But Amazon wooed CK with some really interesting ideas, which may give an indication of Amazon’s future retailing model. 

There are some of the unique parts of the partnership, many revolved around Pop-up shops in New York City and Los Angeles. The experience also sounds like an advertisement for Amazon’s Echo devices.

  • Pop-up store visitors will purchase products by scanning a barcode in the Amazon App.
  • Purchases can either be taken with them, or delivered to their home.
  • Amazon Echo devices will be in the fitting rooms. Visitors can use Alexa to get more information about products, control the lighting, and play music in the fitting room.
  • Customization stations where customers can get their Calvin’s personalized with special embroidery. 
  • Areas for visitors to create social media clips. Presumably, this means things like exclusive filters for Snapchat.
  • Lounges that connect store visitors between the LA and NYC stores via video link on the Amazon Echo Show.
  • Special events with celebrities.

 

Finally, the exclusive range will also be available in the online brand store on Amazon.com/mycalvins (note, brands selling on Amazon can create a similar page using Amazon’s new Store Pages).

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What does this mean for brands?

Firstly, like the landmark Nike deal where Amazon agreed to proactively manage unauthorized third-party sellers on the brand’s product listings, it indicates that Amazon is actually willing and able to pull out all the stops for brands that it really wants to work with. 

Secondly, Amazon wants exclusive products. They want to have an edge with their assortment so that customers continue to want to shop on Amazon first. 

Finally, brands like CK are recognizing that their previous core customer (department stores) is dwindling, and they should just invest where customers want to shop - on Amazon. Brand discovery and engagement is still important though, hence the unique pop-up store.  
 

Amazon will help marketplace merchants collect sales tax

States have been crying foul for years over Amazon’s insistence that they are not responsible for collecting, or even helping to collect, sales tax from third-party merchants that sell on the Amazon platform. These merchants hold inventory in multiple states through Amazon’s fulfillment network. Merchants who use Amazon’s network have no control over where their inventory is held since Amazon shifts it around to maximize capacity and delivery times to customers.

But recently Amazon introduced the Marketplace Tax Collection service to collect and remit sales tax on behalf of third-party sellers. Starting January 1st, 2018, Washington will be the first state to have this option, and presumably, many more will follow suit to start accessing billions of dollars in lost revenue. 

We will have CPA Mario Lucibello from Greenhaus, Riordan & Co, LLP on our podcast soon to talk about what this means for brands selling on Amazon now and in the future. So make sure you subscribe to the podcast on iTunes so you don’t miss it.

 

Will Amazon kill UPS and FedEx? Goldman Sachs doesn’t think so

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Though many retail pundits consider Amazon to be more of a fulfillment company than a retail company, Goldman thinks the two incumbent delivery providers have a competitive edge which is defensible. 

Amazon has made large inroads into its own fulfillment network, which now includes planes, a fleet of tractor trailers, and their own last-mile delivery system in metro areas. For Amazon, the benefit of investing in this infrastructure is to better control the margins on their retail business, which are heavily impacted by delivery costs, and also to gain better control over delivery times and experiences instead of relying on third parties.

 

This is all the news I have to share with you this week. Stay tuned for my next update!