Amazon Weekly News: October 17, 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.


A day in the life of Jeff #2

Jeff Wilke, Amazon CEO Worldwide Consumer and one of the most important people in the company, was interviewed by the Wall Street Journal last week.

Wilke’s job spans retail, operations, technology, Whole Foods integration, Amazon Marketplace, and seller services.

I love learning about Amazon’s internal culture because I find that it reflects heavily in the strategy and execution of the company. There are two key ideas I took away from the interview:

“Once we make a decision, we move on”. Wilke disagreed with Bezons about launching the Kindle, but admits that “we have all been wrong at different times”. Amazon has had spectacular successes and spectacular failures (remember the Fire Phone?), every decision is made with the customer in mind rather than ego or political agendas.

Regarding the Whole Foods acquisition, Wilke says: “I hope we’re going to learn about how physical stores work”. I’m not going to try to read too deeply into this comment except to imagine that regardless of how the Whole Foods acquisition actually shakes out, Amazon will take those lessons and apply them to building or acquiring retail storefronts in other industries besides books and groceries.


More rumors about Amazon entering prescription medication market

The Chicago Tribune reports on ongoing rumors that Amazon will attempt to enter the prescription drug market. The heavily regulated drug market would be a boon to Amazon, helping them grow sales in a category they have been excluded from in the past.

As a consumer, I’d be thrilled with Amazon disrupting this industry. They will be up against deep-pocketed giants - but that’s never stopped them in the past, has it?

News reports suggest that Amazon will make an announcement on this before Thanksgiving, but this has not been confirmed by Amazon.


Target joins ‘Team Google’ in the fight against Amazon

Google announced last week that Target will begin supporting its Google Express shopping service in the contiguous US. This news comes after Walmart also teamed up with Google. This helps Google expand its selection and delivery network around the country, becoming a much more viable competitor to Amazon in both the retail sector as well as the smart home/voice commerce sector
Looking at the Google Express homepage today, I see that orders over $35 qualify for free delivery - just like on Amazon.


Amazon entering Activewear market?

Amazon is said to have enlisted vendors used by Gap and Lululemon to develop and manufacture a line of athletic wear. 

Amazon now has a strong stable of Private Label apparel brands, ranging from women's intimates to casual and fashion-forward accessories. Adding activewear, a wardrobe staple for millennials, moms, and remote workers (*cough*), is a smart move on Amazon’s part.

 It seems to me that while Amazon has struggled to woo brands in some categories (luxury brands, apparel, and CPG being top of mind), they are able to swiftly create private label brands that round out their assortment in these categories. My argument has always been that brands who refuse to engage with Amazon are losing, because resellers rapidly move in to offer those products, and those resellers may not adequately represent the brand.

However, now brands have a more serious threat: Amazon themselves cutting their grass. As it usually happens when such a rumor is announced, the stocks of competitors Lululemon, Nike and Under Armor crashed after the news broke. 


Retail marketing budgets shift toward Amazon

B2C retail marketers are more likely to increase their budgets for Amazon than they are for Google, Bing, Facebook or Twitter, according to a new survey by ClickZ Intelligence and digital marketing agency Catalyst. 

According to the study, 63% of companies advertising on Amazon plan to increase this budget over the next 12 months, compared to 54% for Google, 53% for Facebook, 27% for Bing and 23% for Twitter. Meanwhile, only 15% of marketers agree they are using Amazon Marketing Services (AMS) to its full potential, and only 17% said they have a fully defined AMS strategy.

At the same time, equity research firm Atlantic Equities predicts that Amazon ad sales will nearly quintuple during the next four years.
"Amazon's advertising business is growing in importance, representing an increasingly material source of profits as Sponsored Products continues to grow rapidly and more brand-oriented offerings are introduced," analyst James Cordwell wrote.
To apply a real-world case study, Digiday reported on Clorox’s success in increasing sales online by 50%, partly through the use of Amazon Sponsored Product Ads.  Clorox’s product portfolio includes Burt’s Bees, Brita, Kingsford and Glad, as well as the Clorox household cleaning brand. According to Clorox's CMO, their e-commerce business grew by 50% overall and 98% on Amazon alone; crediting this to running search marketing on Amazon and executing lookalike audience targeting.


Amazon Storefronts disappear momentarily

Last week we noticed an issue spanning across all our client accounts and the associated Amazon Stores we built for them. The Stores randomly disappeared both from the public website and from navigation within Seller Central and AMS midway through last week. Another day, another quirk in the system!


Amazon’s own Private Labels: Deep Dive 

One of my favorite podcasts is the Jason and Scot show, and in last week’s episode they took a deep dive on Amazon’s Private Label brands which have taken over some categories, notably apparel as discussed earlier. On this episode of the show they brought in new research from 1010data, reporting on Amazon’s market share of sales in these categories. This is a fascinating episode for any brand playing in the same categories as Amazon’s new private labels. 


Amazon gives Teens their own Prime membership

There’s plenty of opportunity for Amazon to instill a love for the Prime program in the young, and that’s exactly what Amazon has done by allowing teens to have their own Amazon Prime logins where they can submit orders for their parents’ approval. 
As some industry experts at RetailWire commented, the benefits to users are that it provides parents with a simple workflow to manage purchases from their children. Amazon gains from early adoption among a population segment with big spending power and allows them to accurately separate teens’ shopping behavior from their parents’. Detractors commented that teens should instead be spending their allowance in more ‘interactive’ ways - such as actually talking with their parents or walking into a retail store.


Amazon releases Holiday Gift Guides

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Amazon says its guides are “thoughtfully curated and inspired by Amazon product experts, influencers, kids and parents” - so not necessarily the top sellers in each category. Still, the gift guides should provide brands with inspiration and insight around what will be selling well this holidays season. This year, Amazon has introduced interest-specific categories like “STEM Stars” for kids, and the ability to shop the selection using Amazon Alexa.

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