Amazon's Future - In Clothing?
Here we are, blog #3, the grand finale. Throughout my two earlier blogs I touched on my use of Amazon Prime, as well as how I plan to use other Amazon services such as Amazon Fresh, Amazon Prime Now, and Amazon Prime Air due to my customer loyalty towards Amazon. However, for this third blog I want to dive deep into a market segment currently untapped by Amazon that I believe they could succeed greatly in. After all, at this point what doesn't Amazon do? They're by far the most successful e-commerce company in history, and now they've even branched into the grocery business with their recent acquisition of Whole Foods (Vega). The next market I would like to see Amazon branch into, both because of my personal consumer behavior desires and because of Amazon's proven track record to succeed with expansion, is the clothing business.
Now, I know what you're thinking. "Uh, hello, I buy clothes off Amazon all the time, wake up Jack." Yes, I buy Nike socks off Amazon all the time because my laundryman loses at least one a month, but that's not the type of clothing I'm referring to. I want to see Amazon produce it's own clothing. Why? Because they have the size, market share, customer loyalty, and the incredibly forward-looking CEO to succeed in doing so. The amount of value that consumers see in Amazon because of its wide-ranging selection and quick delivery services is unbelievable. 64% of households in the United States are Amazon Prime members and $4 out of every $10 spent online in the US is with Amazon, which shows how incredibly large their customer base is (Hyken). As one of those 80 million Amazon Prime members, I would be immensely interested in purchasing Amazon clothing because I see how their diversification strategy has worked with previous acquisitions in the past and I trust their brand.
Specifically, with their acquisition of Whole Foods, Amazon was able to not only enter into the grocery industry, but more importantly they were able to enter into the offline retail industry as well (YouTube). Whole Foods became Amazon's first brick and mortar stores, which may seem like a backwards strategy to most consumers seeing how most industries are stressing digital presences instead. However, Amazon already dominates the online retail industry, that's not going to change any time soon (Vega). So, might as well branch into the brick and mortar industry, which is still going to exist to some extent no matter what, and begin to dominate retail as a whole. Now that Amazon has branched into brick and mortar stores with Whole Foods, they're beginning to open their own brick and mortar stores as well. The 1,800 square foot Amazon Go store is about to launch in downtown Seattle and Amazon will see how it performs before potentially opening more and more around the world (Korosec). If you're interested in a tangent and want to read more about Amazon Go, click here.
So, what does all this mean? You're probably thinking we were talking about Amazon and potentially branching into clothing, where does this Whole Foods acquisition fit in to that? It's crucial to note when understanding Amazon's acquisition strategy and their ability to expand into other industries. When looking at the clothing industry, to the surprise of many Amazon has already acquired several clothing companies that now sell exclusive merchandise on their website such as Goodthreads, Buttoned Down, and several others (Green). This is the Whole Foods brick and mortar acquisition, if you're playing along with the analogy. Therefore, what's next that's in line after the original acquisition? An Amazon branded presence with Amazon Go for brick and mortar and for clothing it'd be Amazon's own produced clothing.
To hear more about the strategy behind the Whole Foods acquisition, watch this CBS News video below:
Amazon's track record proves they know how to expand into new industries, but most importantly they know how to appeal to the ever-changing consumers. Amazon's customers have developed a habit cycle, and a pretty simple one at that. The cue is any every day task that is inhibited for any reason whatsoever. Toilet paper ran out? Go on Amazon. Dropped your glass of milk and the glass shattered everywhere? Go on Amazon. House smells terrible because of the filthy living conditions college students deal with? Go on Amazon. You get the point. The routine is the "Go on Amazon" thought that followed after every cue. And lastly, the reward is the incredible two-day Amazon Prime shipping to my door with exactly what I needed. Amazon can do the exact same with their own clothing line, particularly because of the consumer behavior concept of cultures.
The vast majority of people in the Millenial generation, Amazon's most common users, wear clothing from all of the same brands (Vega). Nike, Lululemon, JCrew, etc. (sorry, only really familiar with male clothing brands). This is because we all want to wear what is socially acceptable. It's the mindset of "everyone else is wearing these brands so now I want to wear those brands too to fit in." Amazon already has the Millienal generation hooked with its e-commerce business because of it's widespread marketplace and ease of purchase. With Amazon branching into the clothing production industry, they will invite their incredibly loyal customer base to experience it and the customer base will certainly oblige. So, when everyone asks what's next for Jeff Bezos and Amazon, tell them clothing production is the next train to leave the station.
References:
Green, Dennis, and Sarah Jacobs. “Amazon's New Clothing Line.” Business Insider, 23 June 2017, www.businessinsider.com/amazon-brand-mens-work-clothing-review-2017-6/#each-piece-of-clothing-came-in-its-own-plastic-bag-1.
Hyken, Shep. “Sixty-Four Percent of US Households Have Amazon Prime.” Forbes, 17 June 2017, www.forbes.com/sites/shephyken/2017/06/17/sixty-four-percent-of-u-s-households-have-amazon-prime/#6c9084df4586.
Korosec, Kirsten. “Amazon Prepares to Launch Its Physical Store With No Cashiers.”Fortune, 15 Nov. 2017, fortune.com/2017/11/15/amazon-prepares-to-launch-its-physical-store-with-no-cashiers/.
Vena, Danny. “Amazon Is Becoming the Go-To Spot for Millennial Shoppers.” The Motley Fool, The Motley Fool, 9 May 2017, www.fool.com/investing/2017/05/09/amazon-is-becoming-the-go-to-spot-for-millennial-s.aspx.
“What Is Amazon's Long Term Strategy for Whole Foods?” YouTube, CBSNews, 25 Aug. 2017, www.youtube.com/watch?v=5OfhJhlZemg.
Now, I know what you're thinking. "Uh, hello, I buy clothes off Amazon all the time, wake up Jack." Yes, I buy Nike socks off Amazon all the time because my laundryman loses at least one a month, but that's not the type of clothing I'm referring to. I want to see Amazon produce it's own clothing. Why? Because they have the size, market share, customer loyalty, and the incredibly forward-looking CEO to succeed in doing so. The amount of value that consumers see in Amazon because of its wide-ranging selection and quick delivery services is unbelievable. 64% of households in the United States are Amazon Prime members and $4 out of every $10 spent online in the US is with Amazon, which shows how incredibly large their customer base is (Hyken). As one of those 80 million Amazon Prime members, I would be immensely interested in purchasing Amazon clothing because I see how their diversification strategy has worked with previous acquisitions in the past and I trust their brand.
Specifically, with their acquisition of Whole Foods, Amazon was able to not only enter into the grocery industry, but more importantly they were able to enter into the offline retail industry as well (YouTube). Whole Foods became Amazon's first brick and mortar stores, which may seem like a backwards strategy to most consumers seeing how most industries are stressing digital presences instead. However, Amazon already dominates the online retail industry, that's not going to change any time soon (Vega). So, might as well branch into the brick and mortar industry, which is still going to exist to some extent no matter what, and begin to dominate retail as a whole. Now that Amazon has branched into brick and mortar stores with Whole Foods, they're beginning to open their own brick and mortar stores as well. The 1,800 square foot Amazon Go store is about to launch in downtown Seattle and Amazon will see how it performs before potentially opening more and more around the world (Korosec). If you're interested in a tangent and want to read more about Amazon Go, click here.
So, what does all this mean? You're probably thinking we were talking about Amazon and potentially branching into clothing, where does this Whole Foods acquisition fit in to that? It's crucial to note when understanding Amazon's acquisition strategy and their ability to expand into other industries. When looking at the clothing industry, to the surprise of many Amazon has already acquired several clothing companies that now sell exclusive merchandise on their website such as Goodthreads, Buttoned Down, and several others (Green). This is the Whole Foods brick and mortar acquisition, if you're playing along with the analogy. Therefore, what's next that's in line after the original acquisition? An Amazon branded presence with Amazon Go for brick and mortar and for clothing it'd be Amazon's own produced clothing.
To hear more about the strategy behind the Whole Foods acquisition, watch this CBS News video below:
Amazon's track record proves they know how to expand into new industries, but most importantly they know how to appeal to the ever-changing consumers. Amazon's customers have developed a habit cycle, and a pretty simple one at that. The cue is any every day task that is inhibited for any reason whatsoever. Toilet paper ran out? Go on Amazon. Dropped your glass of milk and the glass shattered everywhere? Go on Amazon. House smells terrible because of the filthy living conditions college students deal with? Go on Amazon. You get the point. The routine is the "Go on Amazon" thought that followed after every cue. And lastly, the reward is the incredible two-day Amazon Prime shipping to my door with exactly what I needed. Amazon can do the exact same with their own clothing line, particularly because of the consumer behavior concept of cultures.
The vast majority of people in the Millenial generation, Amazon's most common users, wear clothing from all of the same brands (Vega). Nike, Lululemon, JCrew, etc. (sorry, only really familiar with male clothing brands). This is because we all want to wear what is socially acceptable. It's the mindset of "everyone else is wearing these brands so now I want to wear those brands too to fit in." Amazon already has the Millienal generation hooked with its e-commerce business because of it's widespread marketplace and ease of purchase. With Amazon branching into the clothing production industry, they will invite their incredibly loyal customer base to experience it and the customer base will certainly oblige. So, when everyone asks what's next for Jeff Bezos and Amazon, tell them clothing production is the next train to leave the station.
References:
Green, Dennis, and Sarah Jacobs. “Amazon's New Clothing Line.” Business Insider, 23 June 2017, www.businessinsider.com/amazon-brand-mens-work-clothing-review-2017-6/#each-piece-of-clothing-came-in-its-own-plastic-bag-1.
Hyken, Shep. “Sixty-Four Percent of US Households Have Amazon Prime.” Forbes, 17 June 2017, www.forbes.com/sites/shephyken/2017/06/17/sixty-four-percent-of-u-s-households-have-amazon-prime/#6c9084df4586.
Korosec, Kirsten. “Amazon Prepares to Launch Its Physical Store With No Cashiers.”Fortune, 15 Nov. 2017, fortune.com/2017/11/15/amazon-prepares-to-launch-its-physical-store-with-no-cashiers/.
Vena, Danny. “Amazon Is Becoming the Go-To Spot for Millennial Shoppers.” The Motley Fool, The Motley Fool, 9 May 2017, www.fool.com/investing/2017/05/09/amazon-is-becoming-the-go-to-spot-for-millennial-s.aspx.
“What Is Amazon's Long Term Strategy for Whole Foods?” YouTube, CBSNews, 25 Aug. 2017, www.youtube.com/watch?v=5OfhJhlZemg.
Jack, great job on your last blog. I think this could be a really interesting idea, as we've seen Amazon move into just about every industry from entertainment to brick and mortar. Recently, Amazon partnered with Kohl's allowing people to bring their Amazon returns here. We've seen Amazon succeed in just about everything they try, and their name is everywhere. They have unparalleled brand awareness and trust with consumers. I didn't know that $4/10 in the US is spent on Amazon, which is absolutely crazy.
ReplyDeleteI would be curious to see what types of clothing they would produce. Most of the time I would assume someone wearing Amazon clothes works for Amazon, but I'm sure they could move past this stereotype. I think they could move into wearable tech and really integrate their smart home features into clothes somehow. Another idea could be trying to create something like Google Glass, or another type of wearable AR. All in all, I really enjoyed your blogs this semester and they're very relateable to me!