Think Tank: Four Lessons the Off-Price World Can Learn From Amazon

Ronen Lazar, chief executive officer and cofounder of Inturn, serves up tactics for staying competitive.

Amazon Wardrobe


There is no question that retail is having a tough go. Department stores have experienced a steady decline in sales since 1999 and the trend doesn’t appear to be changing. Though recent quarterly reports demonstrated overall improvement in sales trend, as recently as June, U.S. department store sales fell by almost 4 percent year-over-year.

This overall lackluster retail performance can be attributed to changing consumer needs and an evolving retail marketplace. Shoppers have come to expect speed and convenience and with most department stores carrying a similar assortment of products, shoppers have developed a real addiction to discounts.

But there is a bright spot in retail. And it’s known as the off-price market. Off-price retailers sell merchandise from brands at deep discounts — sometimes up to 70 percent — compared with similar merchandise sold in department stores. While this might be challenging for traditional retailers, it is a huge opportunity for off-price retailers.

In fact, off-price retailers recently reported quarterly financial results that showed comparable store sales growth of up to 3 percent and a very bullish forecast for the full year.

While the future looks bright for these off-price retailers, they would be remiss not to stay on their toes and evolve. And who better to learn from than Amazon, the retail juggernaut who seemingly has mastered virtually every sector of retail.

There are four lessons brands, department stores and off-price retailers can learn from Amazon to stay competitive and leverage their position in today’s retail market:

Fail Fast to Innovate Faster

Nobody is perfect. Not even Amazon. One reason for its overwhelming success is its willingness to take chances to achieve digital transformation success and venture into many different verticals. Yet, when one isn’t working, they know to get out fast.

For example, Destinations was a hotel deal microsite that Amazon started in April 2015. It was the company’s attempt to compete in the travel industry. After failing to gain traction in this competitive market, Amazon shut the site down just six months after its launch. They had a similar experience with their daily deals program. According to an Amazon spokesperson, the company learns from its failures and looks to “…apply these lessons in the future as we continue to innovate on behalf of our customers…”

Brands and retailers looking to sell excess inventory to off-price retailers should adopt a similar mind-set. They should be acutely aware of what is and isn’t selling and should pull slow-moving inventory as quickly as possible and move it to an off-price retailer. Leaving slow-moving product on shelves results in multiple markdowns, thus exponentially reducing the value that can ultimately be retrieved by selling to off-price retailers at a later date.

Really Know Your Customer…And Serve Them What They Want

We’ve all experienced it. We’re contemplating a new Amazon purchase and up pops an ad for that product. Or a similar one. It’s as if Amazon can read our minds. The company serves its users ads based on what they are truly interested in. Amazon knows its customers and serves them exactly what they want.

Brands and department stores looking to move merchandise to off-price retailers should do the same — know their customer really well. Advanced analytics now exist that allow suppliers to truly understand what the off-price buyers are looking for. Data can be used to analyze historical trends, understand when and where in the global retail market particular products sell best and what a particular buyer has purchased in the past. Curating an offering to a buyer’s specific needs and interests will maximize the price brands and department stores receive for their merchandise.

Big Data Can Mean Big Dollars

Amazon leads the pack when it comes to tracking. They collect enormous amount of data from searches, purchases, reviews, returns — you name it. They then analyze this treasure trove of data to reveal patterns, trends and associations that help with product selection, marketing, conversions and ultimately sales.

The off-price world is overflowing with data as well. Brands and department stores collect abundant customer and product data that, if gathered and analyzed effectively, can maximize sell through and leverage the use of off-price retailers to maximize margins and increase profitability. Just collecting data isn’t enough. Brands and retailers should use advanced analytic tools available today to know what to look at and how to use it effectively to help their bottom line.

User Experience Is Key

Shopping on Amazon is always a pleasure. Product searches load quickly and consistently, the user interface is easily navigable and intuitive and transacting is a breeze.

Brands and retailers looking to sell merchandise to off-price buyers should look to create a similar experience. Historically, the process of selling merchandise to off-price buyers was a very linear, slow and manual experience. The process relied on spreadsheets that weren’t dynamic and were prone to human error.

A solution now exists that fully automates the process, allowing sellers of excess inventory to easily upload product images and descriptions, better manage and optimize pricing and reach a much larger, global group of prospective buyers. This solution offers a better workflow, increased recovery value and faster turnaround time.

Technology in the off-price market has finally caught up with the innovation in the rest of the retail sector. Brands and retailers should leverage these tools to create an exceptional user experience to maximize the value of their inventory.

So much has been written about Amazon and its domination in virtually every retail category. Rather than look at this negatively, the off-price world should look to borrow some plays from the retail giant. Amazon has figured out how to most effectively develop products and services that appeal to their customers, and use data and technology to improve their workflow and serve their consumers exactly what they need and want. Many of these same lessons can apply in the off-price sector and can help brands and retailers maximize the value of their inventory.

Ronen Lazar is chief executive officer and co-founder of Inturn.

For More WWD Business News, See:

Analyst: Success of Asos Is Based on Strategic Pricing, Assortment

Amazon, Wal-Mart and Apple Top List of Biggest E-commerce Retailers

Consumer Preferences Reshaping Retail Landscape

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