Open that Advertising Kimono Amazon!  

For a while now Amazon Advertising has had a beta for AAP for select partners. This program allows a more self-serve model to test out their retargeting features.

It appears they are expanding enrollments into this program via their latest beta program. I know Amazon has run retargeting ads for quite some time with or without a budget from brands. However, it appears they want to start sharing some of that spend burden.

Three big themes here:

1) As they battle with FB and Google for Ad Share, it appears his is their way of allowing brands to follow that customer beyond Amazon, and multiple devices.

2) First party features continue to roll out to third-party sellers.

​3) Amazon stopped advertising via Product Listings ads on Google this month (May 2018). However, they are still bidding heavily for adwords placements above the organic search results. Is there a possibility, at some point, Amazon will also want to put the adwords spend burden on the seller?

Robot calls are pretty cool pretty cool...And I could see this being useful for dinner reservations, food deliveries, hair cuts (as shown)...however with apps/sites like OpenTable, GrubHub and others, this technology will certainly get disrupted.

Two other thoughts:
1) If this could call and cancel autopayments payments (ie cable)/services, I could see it being super useful. No one likes having those convos. 

​2) At what point will the one on the other end of the call also be a robot? And we just have robots talking to robots? Very soon is my guess.

Macy's Operating Margin:
~6% Amazon's Operating Margin:
~2% We all know that Amazon is perfectly comfortable trading profitability for growing market share. Factors driving this profitability down include a persistence to maintain their image as the low price leader and rising logistics costs. 

I firmly believe Amazon wants to keep prices as close to in-store retail as possible, b/c at some point, they have two things to make this profit back:

1) Retail Presence/Distribution Centers similar to Walmarts scale which is having a location within 10 miles of 90% of the US Population. (Delivery from Whole Foods is just the start). See image included in this article. 

2) Reduced Logistics costs due to the first point, and automated logistic systems like self-driving cars or dare I say drones...that they own. Sorry USPS and UPS, but I think Amazon has to own the logistics to keep their retail prices down. 

I always have to remember it's still day one for Amazon. In day one profit is traded for growth. However, if Amazon is able to achieve the two items above, I believe they will be able to garner better profit and continued growth on day two. 

​Great article by Steve Dennis with more info: https://lnkd.in/gHbBRPt

IMO this came down to Brand Gating. If a brand agrees to sell direct to Jet.com, Jet will not buy that brands products from other third party sources.

With the number of counterfeits which Apple faces, this is a HUGE selling point.  

Seeing that Amazon is an open marketplace, and that creates price competition, they rarely lock down the ability for 3p seller to sell certain brands. This is changing a bit as of late, but not to the level which I've heard Jet will go. 

Amazon wants prices low b/c it helps their customer base out. However, when those prices are low due to authenticity concerns, it can reach a breaking point.

​Thus enter Jet. Beyond that - I believe you will see more brands that compete with Amazon joining efforts to fight back the dominance. 

We all know Amazon is obsessed with becoming the everything store. That includes highly perishable/meltable/fragile or logistically challenged products.

To take on these categories, they have rolled out numerous programs (ie Prime Now, Fresh, WholeFood Delivery)..& their latest is the AmazonLocal Program. It's a marriage between Amazon Selling & Services.

How it works:
1) Offer shows it's sold & shipped by XYZ Store.
2) Customer places order on Amazon.
3) Seller/Store then facilitates all components of delivery.
4) There are even premium delivery options for technical/heavier items which require assembly or hauling of old items.

With regards to the categories highlighted in the video (Chocolate, Flowers, Wine), the last mile delivery plays a crucial role for all these items. Chocolates melt, Flowers get damaged, & Wine cannot be shipped across state lines without additional permits in place.

The program allows more traditional brick & mortar stores the opportunity to expand their reach online. For Amazon, it extends their conquest to become the everything store, & more importantly collect data on shopper behaviors...data which includes ship from/to locations & what was ordered. 

With this data, Amazon could continue to evolve their last mile delivery system, and also figure out new products to extend into for their ever-growing private label brands.

When will Flowers by Amazon and Plants by Amazon be a thing? Last time I both those items are brand agnostic (meaning brand doesn't matter).

AmazonLocal Program Link: http://go.amazonsellerservices.com/DShome

​Re: Amazon Wine - We used to sell Wine 3p on Amazon. It appears (for the most part), Amazon is now selling all wine 1p.

I'm putting together slides for the upcoming SDX Interactive Day. I had some charts from a few years ago comparing retailer market caps, but decided to put together a fresh one. 

I think it's interesting to see Amazon's YOY growth as compared to all the retailers...but really cray cray when you stack em' against Walmart. 

May 2017 Market Cap (b)
Amazon: $457
Walmart: $231

May 2018 Market Cap (b)
Amazon: $771
Walmart: $253

YOY Growth (b)
Amazon: +$314
Walmart: +$22

Are you seeing that?!? Amazon grew its market cap in one year by a greater amount than the TOTAL market cap of Walmart. 

That's nuts. It's really nuts considering it's still Day 1.

​Congrats to all my homies @Amazon with stock options ;-)!

For categories like Grocery & Apparel (both underrepresented in terms of e-commerce sales vs instore), online sales only grow when habits change.

The Whole Foods Aquisition is part of Amazon's grocery habit reforming plan. At the time of acquisition, it's speculated that WF was ~10% of Instacarts business. A year before, WF & Instacart had signed a 5-year deal. The habit was there, at least for some of the WF shoppers. 

Within months of the WF acquisition, Amazon quietly shut down Fresh in at least 9 states. I think the idea of buying fresh groceries from Amazon was too far outside the habit of most. 

Then in 2018, Amazon announced free delivery in select markets from Whole Foods. Instacart built the habit, Amazon is capitalizing on it.  

For the next lowest underrepresented category of Apparel, Amazon  has again launched programs to capitalize on habits other e-commerce companies have cultivated. For example, to take on Trunk Club and others, Amazon has Outfit Compare & their Wardrobe Program...& there are more coming (Google Amazon Body Scan).

Furniture is next, & I'm guessing AR will decide who wins. Having the ability to see the item in your room rather than in store is key. Ikea already has such an app, Amazon as well. As more and more sales shift to mobile, it's only a matter of time before that category falls the way of Amazon for items like cabinets and book shelves. I think items where there's a level of comfort associated with them (ie couches and chairs) will always have at least some brick and mortar footprint. 

Having said that, if you look at the growth of mattress sales online I could be dead wrong. 

​We shall see!

I have written about it before, but video IMO is the new holy grail for Amazon....And in terms of video, LIVE video is the holy grail for conversion in my opinion.

Live video creates a sense of urgency and scarcity if done right. This show (Live from the Amazon Kitchen) hosts a celebrity chef, two dynamic hosts, highlights products on Amazon.

Every few minutes the show goes to a break and runs quirky video commercials of other products on Amazon.

All these products are featured right next to the video, ready to purchase. Does their push toward streaming video, Amazon Fire, and Amazon shorts start making more sense now?

​Super exciting!

I'm sure you've heard the news that Amazon has made an offer to take a big chunk of Flipkart. On the surface, it makes sense considering India is the third largest country by population and Amazon is currently battling with them for market share. 


But beyond that, it makes even more sense because Walmart is interested in buying them as well...and we all know Amazon doesn't like being beat by Walmart. 


Just a year ago Amazon lowered their minimum order size to receive free shipping to $25 after Walmart had dropped their free-shipping minimum to $35 from $49.


Then, in 2017 Walmart launched free 2-day shipping without membership. In return, during holiday Amazon announced free same-day and one-day shipping in over 8,000 cities. 


As Scott Galloway once highlighted, Amazon likes to pull everyone underwater as deep possible because they know they have the largest oxygen tank (capital/patience).


The bigger theme to me going forward is this:  Will Amazon continue to try and build their own presence in other counties, or just acquire market share through purchases of the market leaders like Souq and possibly Flipkart? 


If they are going this far to stop Walmart in India, I'm guessing acquisition is a big part of their plan. 


And, in China, where Amazon.cn only has 1% of market share, Walmart has a partnership with JD who has around 32% of Marketshare.


Alibaba has roughly 51% of China's market share...so is it just a matter of time before they join forces with Amazon? Do they need Amazon? Probably not in China. 


But if they want to deliver on Jack Ma's goal to deliver Web Orders anywhere in the world, in 3 days, logistically Amazon may be their best bet. 


Maybe this should post should have been called:


Walmart and Amazon sitting in a tree, b-a-t-t-l-i-n-g!


Shaka!
Ryan

To me, "Amazon's Choice" is simply their way of serving up the product which has the highest likelihood of converting.

I've opened up a discussion about the likelihood of Amazon serving up their own products for the choice designation. It's their catalog, and they stand to make more margin on the sales of those products. So why not if conversion rate holds?

So I ask of you, what product do you think Amazon puts their coveted choice badge on for a search query of "Google Home"?

I've gotten the result shown in the video a handful of times, but not every time. It leads me to believe that the Choice Badge is fluid. Test it out yourself by searching "Google Home" on Amazon.

FYI - I also search Amazon for "Apple Homepod" and the Amazon's choice was for a Homepod Mount.

Would love to hear your thoughts - Is it algorithm, or intervention?

​ Shaka!