LAS VEGAS — What would Amazon do?
It’s an answer to a question retailers are asking from strategic and competitive standpoints as Amazon Marketplace’s reach continues to grow. Next-generation commerce — and all that entails, whether it’s artificial intelligence, personalization, payments or marketing — were tackled throughout the second annual Shoptalk conference, which wrapped its four-day run here Wednesday. However, it was Amazon Marketplace — its continued growth and what to do about it — along with the marketplace concept in general (multiple third parties selling on a single platform) that were the topics du jour day in and day out throughout the conference.
Nearly every single hand shot up when Peter Faricy, Amazon Marketplace vice president, asked who in the room was a member of Prime. The executive, who has been leading Marketplace for the past eight years, delivered some sobering stats during his Shoptalk presentation that backed what all in the room already knew: the Amazon factor in business is nothing to scoff at or ignore.
There are 11 Amazon Marketplaces throughout the world with more than half of what’s sold on Amazon coming from small- or medium-sized brands or entrepreneurs. Customers are spending more time on Amazon: about 75 minutes per unique visitor. Faricy said there were two metrics from the past year indicative to the Amazon team of Marketplace’s success. First, 100,000 entrepreneurs notched more than $100,000 in sales on Amazon in 2016 and, second, those businesses created some 600,000 jobs last year.
The three connected biospheres Amazon is building in Seattle is an analogy for how the company sees its relationship with the brands selling on Marketplace globally, Faricy said. The biosphere project — which will be WiFi-enabled, of course — will bring in more than 3,000 unique species of plants from around the world, in a move akin to what takes place on Marketplace.
That thinking is one reason the e-commerce behemoth about four years ago launched its own lending program, which to date has loaned about $1.5 billion to small- and medium-sized businesses, giving it an even greater pulse on budding brands. There’s also drone delivery — Faricy said the “potential there is incredible.” And the company is looking at how it can better support intellectual property concerns brands have about what’s being sold in the online store today.
That all said, competitors from some of the largest retailers that took the stage throughout the conference were repeatedly asked about how they perceive Amazon and whether the answer to the question of the future of retail is in marketplaces. The answers were mixed.
“First of all, this is an extremely competitive category we’re in. That’s not new,” Kohl’s Corp. chairman, chief executive officer and president Kevin Mansell said when asked how concerned he was about the Amazon factor. “I’ve been doing this for a long time and it’s always been that way so the competitors change. The names change, but it’s extremely competitive. I don’t think it’s more competitive. I think it’s moving faster. If you’re not faster, you’re not more agile and flexible, you’re not going to be able to get to the answer as fast as the other guy.”
The ceo acknowledged Amazon as a competitor, noting the shared danger in competing in the off-price channel. For Kohl’s, insulating itself from that competition is about shoring up its stores, improving its loyalty program and taking comfort in the fact that about half of the brands it sells are proprietary lines — none of which Mansell said are set to be sold on Amazon Marketplace, at least in the immediate future.
Target chairman and ceo Brian Cornell seemed to share a similar view as it related to the future and marketplaces.
“We’re going to constantly look at ways to connect with our guest and digital’s a big part of it,” he said. “I really think about our stores as this new smart network.”
Marc Lore, Jet.com founder and now president and ceo of Wal-Mart e-commerce for the U.S., obviously believes in marketplaces, having built and then sold Jet for $3.3 billion to Wal-Mart Stores Inc. However, it has to be part of a larger omnichannel plan because those are the kinds of companies that can truly compete moving forward.
“It’s not just about the customer experience…it’s really about the value chain,” Lore said.
EBay president and ceo Devin Wenig hit value creation on the head in talking about taking share in an increasingly competitive marketplace landscape where there’s not only Amazon but start-ups to contend with, and the litmus test he uses for potential acquisition targets. Like anything, what will end up breaking through the noise are those marketplaces and companies that create actual disruption.
“If you have funding, you can build a commerce business,” Wenig said. “It’s not that hard to generate growth if you have a big balance sheet. It’s extra hard to create value….Generating growth, throwing out a [gross merchandise volume] number is yesterday’s news. It’s not that hard to sell a $1,000 television for [less] that doesn’t generate value. If you’ve got a look into the future of VR or AI, then come talk to us.”
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