Amazon’s impact on commerce is impossible to ignore. The pioneering e-tailer has nearly perfected the arts of e-commerce and logistics to bring customers the shop-from-anywhere experience we couldn’t have imagined 20 years ago. Order it today, and it’s in your house in less than two days from just about and vendor in the world.
But a flurry of announcements and acquisitions in the last week signaled the next stage in its plan for world domination.
Amazon has mastered a massive niche in warehouse-to-customer fulfillment via online order. Amazon is able to control most of the variables in that world, which allow it to optimize for price, delivery and overall customer experience. If you can control those three things, you can win a lot of business.
Amazon also doesn’t make much money. Oh, it makes more than enough to make Jeff Bezos absolutely filthy rich, but Amazon prioritizes growth over profits to an unheard of extent. That leads to price cutting and a lot of pressure on any other business in its markets. In truth, many retailers rely on Amazon for sales, but suffer from its competition.
Now Amazon is reaching far beyond its niche in ways that could rewrite other areas of commerce. And those innovations could remake the entire shopping word in its image.
The most notable move was snapping up Whole Foods, a favorite grocery chain among affluent customers, with stores in some of the most desirable retail real estate in America. Speculation on how Amazon will use that purchase has run rampant since it was made, but the advantages are numerous.
The obvious next step would be for Amazon to use Whole Foods as a jumping off point for home food delivery, a space it’s been trying to crack for years but never had the grocery distribution network to cover. That will allow it to apply the kind of logistical expertise it has in non-perishable goods to the grocery market, and compete with the PeaPods and Fresh Directs of the world.
It could also launch a subscription box service like Blue Apron; which is a big enough threat that it’s actually impacting Blue Apron’s IPO.
2. Amazon Prime Wardrobe
Of course, being an online retailer has limits. It’s hard for customers to try on clothes from the other side of the Internet. But subscription clothing services like Trunk Club allow users to try on clothes at home and only pay for what they keep.
Yesterday, Amazon announced its own version of that service, called Amazon Prime Wardrobe. Customers in the program can order clothes that come in a resealable box with UPS return labels.
Try on the clothes, pay for what you like (currently there would be a discount for keeping multiple pieces) and return the rest.
Add the Echo Look — which combines the echo personal assistant device with a camera for personal stylist-like functionality — and you have a transformative clothes buying experience.
3. A ‘Prime’ Low-Income Segment
I mentioned earlier that Amazon is in the business of growth more than profits, and perhaps no move shows that more than it’s price cut to Prime for low-income customers.