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Retail Briefing: Amazon’s reputation problem

It shouldn’t come as much of a surprise but, no, Amazon doesn’t have a good reputation in retail.

Amazon may be the biggest player in retail, but it’s not the most popular among brands.

It’s often seen as untransparent and tightfisted with its data. And its presence in a generally volatile industry is seen as threatening. Entire categories like fashion often turn it away, falling back on the persistent (if a bit tired) question, “Do we really want to be bought in the same cart as toilet paper?”

“Amazon has a very bad reputation in the industry,” said Rina Yashayeva, the vp of marketplaces at the integrated agency Stella Rising, and a former business development manager at Amazon, from 2015 to 2018. “It was my job to recruit brands as sellers — specifically beauty brands — and I would introduce myself at trade shows, and they would turn away from me and tell me no one was there to talk to me. If you’re from Amazon, they don’t want to speak to you. Some would even put signs outside their booths that said ‘No Amazon.’”

Amazon’s success isn’t going to be threatened just because it’s unpopular among brands and other retailers — what matters is that it’s popular with customers. Amazon’s made it clear that its customers are the priority, anyway. But, Amazon’s desire to be the go-to marketplace for everything means that being unable to crack into certain categories in a meaningful way could hold it back.

“Amazon’s overarching goal remains: To be this “everything store” concept. Have literally every product possible. And if there’s exclusivity on top of that, that’s big for Amazon as well,” said Kyle Olson, business manager at OrcaPacific.

To change made-up minds and grow its inventory, Amazon will have to work on its reputation. It’s not impossible: Amazon’s already succeeded in doing that once, when it rolled out its Luxury Beauty hub. Yashayeva, who worked on Amazon’s beauty business at the time it launched, said Amazon was successful in getting high-end beauty and skin care brands to sell on the site — including L’Occitane, Vichy and Stila — because of how it built the platform. It’s more curated, with more room for editorial imagery, but most importantly, it’s gated. Brands selling via Luxury Beauty on Amazon are guaranteed that no unauthorized sellers of the brands’ products will also be selling anywhere else on Amazon’s platform.

It seems like an easy fix, particularly for fashion brands that are dealing with a sprawling gray market of unauthorized Amazon sellers. But for now, Amazon hasn’t shown that it’s willing to expand that strategy to other categories.

“That’s the most attractive part of the Luxury Beauty site for brands, but I don’t think they can broaden that out. They’re not just a retailer, they’re a marketplace. So it doesn’t matter if the product is coming from the brand or a third-party seller as long as the product is good, the price is good, it’s in stock and the customer can get it in two days. That’s always going to be Amazon’s main priority,” said Yashayeva. — Hilary Milnes

Shopify borrows from Amazon’s playbook
Shopify announced today that it’s launching Shopify Studios, a full TV and video production house. It’s led by Jason Badal, Shopify’s head of media business partnerships who joined last summer from Rogers Media. An original docu-series, “And Nowhere Else,” is currently available to watch on YouTube, as well as “Studios Films,” a short film series. Other deals with Anonymous Content, Spoke Studios and Saville Productions are in the work. Shopify, which has been the successful backend operator for direct-to-consumer brand sites, is seeing an Amazon-sized opportunity in the original video content market, but it’s limiting its sights on a specific focus. All the content produced from Shopify Studios will tie into an overall theme around entrepreneurship. Netflix’s and Hulu’s Fyre Festival documentaries showed that there’s tons of viewer interest in watching what happens when entrepreneurs fail spectacularly. Less proven is the eager viewers waiting to watch other people succeed. — Hilary Milnes

Target goes all-in on contactless payments
On Tuesday, Target began enabling mobile payment platforms Apple Pay, Google Pay and Samsung Pay, along with contactless cards, at checkout. This is Target’s second push into mobile payments in the past 18 months; in late 2017, it rolled out a barcode-based digital wallet for Redcard members that live within the Target app. At the time, we reported that Wallet hit on two key strategic points for Target by merging loyalty and payments in one place, and making personalized offers easier. By turning on mobile payment capabilities beyond Target’s owned and operated channels, however, there’s a risk of losing that ownership of the customer relationship.

According to Target, customer convenience is the driver. Analysts say adding contactless payment vehicles increases customer engagement at Target, which ultimately drives sales.

“They realized that keeping contactless acceptance turned off didn’t equal more customers adopting [Wallet] in the end,” said Brendan Miller, principal analyst at Forrester.

Meanwhile, Walmart’s strategy to focus on its own digital wallet is underpinned by a focus on protecting its data overall, owing to its size, demographics and emphasis on the transaction, Paygility Advisors partner David True told Digiday. — Suman Bhattacharyya

Coffee’s got legs
On Tuesday, Starbucks began offering deliveries via Uber Eats in the U.S., for a $2.49 booking fee, the result of a successful pilot in Miami in the fall of 2018. Delivery service began Tuesday in San Francisco, with plans to expand to Boston, Chicago, Los Angeles, New York, and Washington D.C. Adding delivery follows the online-offline strategy the company has tested in Asia, aiming for a greater share of the $95 billion online food delivery market globally. The company also plans to roll out delivery via Uber Eats in the U.K. later this year.

Meanwhile, the We Company (formerly known as WeWork) opened its first coffee shop and workspace in New York, where customers can reserve workspaces by the minute or day, with no membership required. It’s the latest (and more modest) addition to the co-working company’s business verticals, which include WeWork (co-working), WeLive (apartments) and WeGrow (schools). The Made by We workspace also offers opportunities for WeWork member companies to sell their products to customers, expanding on its retail initiatives, which include self-serve retail kiosks and member product stores inside WeWork locations. — Suman Bhattacharyya 

The offline rebound escalates
Physical retail is on the rebound, but it looks nothing like it did before. That’s the key finding from a new report from eMarketer this week that looks at the biggest trends in retail for the year. So-called direct-to-consumer brands that were born online are now investing heavily in physical stores.

Turns out online was only the first chapter in growth, with real estate company JLL estimating that 850 stories will be opened by digitally native brands over the next five years. JLL estimates found that stores opened by DTC companies are a fourth the size of regular stories — averaging 2,800 square feet compared to more than 8,800 feet for average US stores. A big part of that growth story is pop-ups. Pop-ups, once thought of as a fad, are here to stay — less as an experiment for brands, and more as a way to test retail “experiences” versus transactional venues. That’s something spilling over to legacy retailers like Walgreens, which is working with Birchbox for a pop-up store in a store, and Target doing the same with Casper.

Turns out the spate of retail closures may only be half of the story. — Shareen Pathak

DTC’s TV buys by the numbers
Digiday reporter Ilyse Liffreing reported on Tuesday that, in order to scale, direct-to-consumer companies need good old-fashioned TV ads. Here are the numbers to know.

  • According to the Video Advertising Bureau, which tracked 120 DTC brands using Nielsen data, DTC brands spent over $2 billion in TV in 2018 (excluding December).
  • That’s up from $1.1 billion two years ago.
  • Of the 120 DTC brands, 70 are buying TV ads for the first time.
  • These brands spent more than $100 million each on TV in 2018, and are steadily increasing their marketing spend for the medium.
  • Peloton, for instance, spent $108.7 million on TV ads in 2017 and $141.9 million in 2018, with the past couple months fluctuating between $11 million and $12 million, according to Nielsen data.
  • Chewy spent $99.4 million on TV ads in 2017 and $123.4 million in 2018.
  • Meanwhile, mattress company Leesa spent $63.4 million on TV in 2017, and more than $73 million in 2018, according to Nielsen.

Read the rest of the story.

What else we’ve covered
Amazon is putting the brakes on Whole Foods’ bargain offshoot 365 stores, in an effort to consolidate its grocery retail businesses. Blain Bradley, a former regional marketer for three New York Whole Foods locations, said the 365 store concept didn’t catch on because it diluted the overall brand proposition.

Men’s clothing brand Untuckit is using Amazon as a place to sell through older styles faster, but not at a discount. The brand sees Amazon’s mass reach as a way to get past styles in front of more people.

Launched two years ago, Amazon’s influencer program still isn’t quite going anywhere, say brands, agencies and influencers.
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