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As e-commerce growth begins to sputter, Amazon is starting to refine its fulfillment strategy. In the past two weeks, the company made two big announcements, which, in some ways, may seem at odds with each other.
Less than a year ago, a number of businesses made headlines by raising astronomical amounts of capital under the promise that they would find the best Amazon brands, buy them out and add them to their own portfolios. Some claimed to be the next Procter & Gamble -- and touted sophisticated data analysis as a way to assess which brands would be the best to scoop up and grow. But things have changed over the last few months.
Many roll-up businesses promised to buy successful Amazon businesses and flip them to make an updated e-commerce portfolio strategy. But then, some of the biggest players that had raised hundreds of millions of dollars reportedly had layoffs and stopped scooping up new brands. Forum Brands' Brenton Howland spoke about the current state of aggregators and why his business is still acquiring Amazon brands.
Amazon has transformed from anathema to DTC brands to an integral part of their playbooks. This was apparent at the Modern Retail DTC Summit, held this week in New Orleans.
Last week, Amazon said it is adding a 5% fuel and inflation surcharge for sellers using Fulfillment by Amazon (FBA). In the days leading up to April 28, when the surcharge kicks in, Amazon sellers are contemplating ways to offset the costs and maintain their profitability.
Existing inventory that fits the qualification for the extra-large storage type will automatically be reclassified as extra-large. Amazon also adjusted the price threshold for its U.S. small and light program to $10 from $8, effective April 28.
Later this year, Amazon will open its first brick-and-mortar fashion store, Amazon Style, while at the same time shutting down its bookshops, pop-ups and four-star stores. Analysts interviewed by Modern Retail think a brick-and-mortar effort makes sense for a category reliant both on fit and, often, in-person inspiration. However, as Amazon's previous investments in improving fashion discoverability show, the e-commerce giant is still in experimentation mode.
Last Friday, Starbucks’ flagship Manhattan store and roastery voted yes on unionization, the tenth store to do so in the last four months. That same day, workers at an Amazon warehouse in Staten Island also voted to unionize, the first warehouse in Amazon’s history to do so. Labor experts point to a shared worker-led structure and similar public sentiment as key points of overlap. In turn, the successes – and challenges – that Starbucks organizers have faced may serve as a guide for what’s to come at Amazon.
According to new data from Marketplace Pulse, U.S.-based sellers made up 55% of the most popular Amazon brands in the U.S. this month, compared to 48% in November 2020. It's been a slow but steady increase over that period of time, and it hints at some major global dynamic shifts.
Amazon aggregator Forum Brands is betting on six categories for growth, including family, home and kitchen and pets.
That Amazon is building out digital ad offerings in its physical stores isn't surprising. But it may well send a shiver down other retail media executives' spines. New details showcase how Amazon is building out its in-store ad offerings and the type of data it will be able to give to brands.
Amazon 4-star stores were an experiment in curation. First unveiled in 2018 with a location in Soho, the idea of the brick and mortar shop was to feature highly rated products available. And their sunsetting hints at Amazon admitting what parts of its current physical retail strategy don't work -- and potentially what does.
Businesses that offer services catering to Amazon and third-party marketplaces are becoming a more popular area for acquisitions, thanks to aggregators raising tens of millions of dollars in venture capital and retailers like Walmart, Target, Instacart and GoPuff increasingly building out their own retail media businesses. The most recent example is Acadia's acquisition of Bobsled Marketing.
Third-party sellers on Amazon are raising prices to stay in the black during a dynamic trading environment. Many small to mid-sized businesses are still grappling with supply chain delays induced by the pandemic. While Amazon has eased some of its storage restrictions at its warehouses that hurt sellers during the crucial holiday period, additional headwinds including inflation and increased fulfillment and shipping costs still linger.
Despite Amazon establishing its grocery business in the U.K. with the help of local supermarket supply partners, its success could hinge on the strength of its owned brand goods. Now, as its grocery business continues to grow, the e-commerce giant is trying to find new ways to grow its market share in that region.
Target's operating margin dropped from 30% to 26% year-over-year, as the retailer discounted inventory, navigated supply chain issues and increased staff wages. Analysts explained that Target's earnings highlight the increasing difficulty of getting the right product at the right time amid headwinds ranging from inflation to continued supply issues.
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