Amazon has captured 5 percent of America’s retail sales, is growing and putting fear into the rest of the market.
But according to Richard Baum, managing partner of Consumer Growth Partners, retailers can find strategies to protect their market share from Amazon. “There’s a lot of light at the end of the tunnel and it’s not an incoming train,” Baum concluded at the end of a Retail Marketing Society luncheon and panel discussion in Manhattan on Thursday on “the soft underbelly” of Amazon and how to exploit it.
Baum moderated the panel, which included Andrew Oshrin, cofounder and chief executive officer of Milly, the contemporary fashion brand; Joshua Rockoff, an expert in digital and omnichannel transformation, and Helaine Suval, partner, Collective Growth Partners LLC. Lawrence DeParis, president of the Retail Marketing Society, and chief operating officer and chief financial officer of the LT Apparel Group, opened the session.
Among the conclusions of the panelists:
• Amazon is strong selling commodities, weak on marketing fashion collections, but is rapidly growing, through acquisitions, private label development and by going up against Fed Express and UPS with its own logistics.
• Brands should partner with Amazon, either by wholesaling or joining the Amazon marketplace, but not ignore other platforms and marketplaces.
• Amazon is weak on the service side and returns, and personalized customer engagement. The company’s “frustration free” brown box packaging, while easy to unwrap, does little to enhance the image of the brand products in the box.
• The Amazon retail stores, which primarily sell books and electronics, so far, will in the future add apparel to the offering.
“Amazon is really a technology company not a retailer,” Rockoff said. “Amazon is predominant in a couple of areas and shallow in others. Amazon’s home services are a complete failure,” Rockoff said, adding that Amazon still lacks “follow through.” He advised the audience, “Focus on customer engagement, focus on the service side,” to differentiate your brand, though he said placing products on Amazon has become “a necessary evil.…Amazon doesn’t care about you. They care about your customers.”
With its growth and accumulation of consumer and product data, Amazon is “losing nimbleness” and putting out “shallow” marketing messages, Rockoff added.
“If you are selling a collection, a whole bedding ensemble for example, it’s [Amazon] a really poor shopping experience,” Suval said.
“Amazon wants to be narrow and deep, and not necessarily specialize in a brand,” observed Milly’s Oshrin. “For many years, Amazon approached us to be a wholesale customer. We were scared that there would be a dilution of the brand. The risk wasn’t worth the reward.” But after joining Amazon, to increase brand awareness, “it hasn’t affected our business with our wholesale partners. Our business with wholesale partners has grown…profit margins are competitive with other businesses.”
Suval noted that with Amazon’s fees on its marketplace increasing, brands need to consider what the bottom line implications are. She also said only 12 percent of Americans see Amazon offering the latest fashions, and that retailers and brands can help themselves withstand the impact of Amazon by building relationships with customers, and building content on the website and building philanthropic endeavors to help differentiate the brand.
“Why don’t you diversify? Go to other platforms,” Rockoff advised. “There’s Walmart, eBay, Etsy. There are tons of marketplaces. Find other channels.”