Amazon Offers a New Prime Option: Monthly Membership

Since it launched in 2005, Amazon has offered its annual Prime membership plan for $99. That breaks down to $8.25 a month. This week the company launched two new subscription plans: a monthly Prime membership plan for $10.99 a month and a monthly Prime Video membership plan for $8.99. Neither requires an annual commitment.

The monthly Prime membership will include all of the same benefits you receive with an annual Prime plan, including free two-day shipping. The Prime Video membership includes all of Prime’s video content, but does not include the free shipping. Industry observers are calling the new video membership a direct challenge to Netflix and Hulu. With the success of critical hits like Transparent and Mozart in the Jungle, Amazon has worked to expand its Prime Video service over the past year and plans to release several more original series in 2016.

Though Amazon does not typically release specific Prime data, it has been estimated that there are at least 46 million U.S. members and that Prime members spend up to twice as much as non-Prime members in the course of a year. The e-tail giant has recently been making a number of competitive maneuvers designed to expand the reach of Prime. These include bundling Prime as a monthly service for Sprint mobile subscribers and making its Prime Now same-day delivery option more accessible by adding it in 11 new markets. And while the two new plans will cost consumers more than the original annual plan, they offer a way to ease into a Prime membership without a major commitment.

Source: Chain Store Age and Wired.com

Macy's CEO Thinks Amazon Threat is Overstated

Last year, Wall Street firm Cowen & Co. famously predicted that Macy’s would be be dethroned by Amazon.com as the top apparel retailer in the U.S. But Macy’s CEO Terry Lundgren believes that Macy’s nearly 800 stores offer a huge advantage over Amazon. He noted that shoppers typically order multiple sizes of the same piece of clothing, keep the one that fits, and send the rest back.

According to a Cowen research report published in July, Amazon’s apparel business was on pace to hit $16.34 billion for the year, compared to $22.2 billion for Macy’s in 2015. But as Amazon pushes further into fashion beyond basic clothing, it could get dinged by all that merchandise being sent back.

“They’re going to have an interesting challenge when they start getting all those returns coming back online,” said Lundgren. He added, “The large, large majority of online purchases which are returned in our case come back to stores because they’re so convenient. And so we at least have a shot at selling them something else.”

Despite closing 36 stores this year, Macy’s is now the fourth largest U.S. internet retailer according to eMarketer, with annual online sales in 2015 of about $5 billion. Their position as a leader in the online market is a result of years of multi-billion dollar investments in integrating its stores and its digital business. The ability to handle returns of online orders is key to generating traffic to stores.

Source: Fortune.com

AMAZON ANNOUNCING INCREASED SHIPPING FEES AND A PRIVATE LABEL APPAREL LINE MAY BE ON THE WAY

Big changes are being announced at Amazon.com. Based on shipping price increases imposed by UPS and FedEx late last year, Amazon announced its threshold for free shipping is increasing by 40%, to $49 in orders. However, Amazon is not raising the threshold with an interest in shipping revenue, but instead to incent more customers to become members of Amazon Prime. Amazon Prime members always receive free shipping on all orders, but membership costs $99 per year. These customer spend on average double what Amazon’s other customers spend, and absorbing shipping costs will be nothing to them compared to the billions of dollars in sales the company may gain.

Amazon is also hiring heavily to staff up its Amazon Fashion Private Label unit, which could take on fast-fashion chains to sellers of basic apparel. An analyst at Women’s Wear Daily estimates Amazon could launch a private label apparel brand by early 2017. Amazon can undercut prices that other fashion retailers have at brick and mortar stores, and its ability to collect customer data can help them to give customers exactly what they want.

Many Accelerated Analytics’ vendors utilize our POS reporting and analysis tools to manage their Amazon sales and inventory. These vendors sell online with the retail giant in addition to selling at department store brick and mortar stores and online sites. Being able to compare sales trends between them is a key tool to help them win at retail and ensure customers are able to access the products they want to buy regardless of which retailer they are shopping with.

Sources: Wall St. Journal, New York Business Journal

Amazon Stock Price Plummets Despite Tremendous Success

After the market’s close on Thursday, Amazon.com Inc. reported fourth quarter earnings that missed expectations and the company’s stock plunged 13%. Wall Street analysts were forecasting record revenue of $35.9 billion for the company. Amazon did hit a new revenue record, but it missed expectations with sales of $35.7 billion.

That’s despite successes that were in stark contrast to their competitors. Amazon posted record profit last quarter and double-digit sales growth over the previous year. Prime memberships grew by 51% last year and according to a Consumer Intelligence Research Partners study, just under half of all U.S. households subscribe to prime.

Amazon Web Services, which boasts big name customers like Netflix, Airbnb, Major League Baseball, Expedia and Yelp, grew from 1.4 billion in 2014 to 2.4 billion in 2015, a 71% increase.

The biggest part of Amazon remains its retail business, and it’s smart home assistant, Echo, is poised to become the company’s third billion-dollar business soon. Echo has only been widely available for about 7 months but it consistently ranks high in Amazon’s best sellers list. It is a virtual assistant and audio speaker that lets you control and connect with other services through your voice. Echo was one of the surprise stars at this year’s Consumer Electronics Show and will be prominently featured in the online store’s first-ever Super Bowl ad.

Specialized retailers capturing DIY marketshare and amazon joins the home improvement ranks

The Farnworth Group published a study that found that specialized retailers are taking more of the DIY market from big-box home improvement stores like Lowe’s and The Home Depot. Amazon is making its appearance as a favorite online home improvement source.

The study analyzed purchase behaviors among a variety of retail channels and different buying audiences, looking at in-store and online purchasing, category differences and top motivators. 44% of homeowners ages 45-54 turn to specialty retailers rather than big-box stores for flooring needs. Homeowners ages 18-34 are twice as likely as their parents to shop at a paint store. All homeowners agreed that getting the best deal and being able to shop online were key motivating factors.

Retailers and their manufacturers who understand the younger buyer are creating marketing strategies like innovative apps to reach their audience. Consumers are shopping for home improvement items online more than ever, and Amazon continues to increase its influence.

Home improvement stores still have most of the market, but increased competition from online and specialty retailers will require those retailers to focus on knowledgeable employees and local expertise.

Source: benzinga

There is still halloween candy to eat, but retailers put the 'creep' into holiday shopping right away

Due to Christmas creep, retailers are moving out the pumpkins and putting out winter holiday right away, if not already. Some retail trends shoppers can look forward to now:

• Early season deals are popping up and not waiting for Black Friday. Wal-Mart announced November 1 launches “savings and holiday retailtainment”. The iPad mini will be priced at $199 instead of $268. Target, Amazon, Kmart and Toys R Us all introduced their “hot toy” lists in early Fall with sales starting now.
• Thanks to the broad effects of Amazon Prime, Best Buy and Target and many other retailers are offering free shipping throughout the season.
• Many retailers have implemented their in-store and curb pick-up programs in time for the holidays, using online pre-purchasing and mobile apps in store to get shoppers checked out quickly.

 Sales will increase dramatically on Thanksgiving and Black Friday, as usual, but predictions are that 15-18% sales growth will come from online sales on those days. The National Retail Federation (NRF) forecasts holiday sales to rise 3.7% this year with online sales far outpacing brick-and-mortar sales. Counting on those online sales are retailers who have decided to be closed this Thanksgiving to appeal to families: Staples, Home Depot, Lowe’s, Costco, GameStop and Nordstrom.

 Source: Money.com

amazon plans to hire more than 100,000 this season, expecting high e-commerce sales

Amazon.com Inc. announced plans to increase hiring by 25% over last year’s holiday season, to 100,000 workers. Workers will be in Amazon’s 50 warehouses and 20 package sorting centers around the US. This is higher than United Parcel Service (UPS) plans to hire this holiday season. Amazon is responding to US Census Bureau reports that US e-commerce sales grew 14.1% in the second quarter, while brick and mortar retail increased 1% year over year.

Most retailers’ hiring is expected to remain flat. Target, Macy’s and Walmart announced they are holding their hiring steady. Walmart is looking to hire 60,000 workers this year and Target plans for 70,000 seasonal workers. Macy’s plans to hire 85,000. All are about the same as last year.

Source: The Wall St Journal

AMAZON EXPANDS SELLING IN MEXICO

Amazon successfully launched its Mexican Kindle store in 2013. Now, the online retailer has launched a Spanish-language Mexican website and mobile app with millions of unique items.

“Our mission at Amazon is to be Earth's most customer centric company, and we strive to be the destination where people can find anything they want to buy online,” said Alexandre Gagnon, director, international expansion, Amazon. “With Amazon.com.mx, customers in Mexico will find more of what they want – the largest selection in the country, low prices, fast and reliable delivery, all with a trusted and convenient experience.”

Customers in Mexico can pick up their purchases from hundreds of locations across the country, as well as paid shipping options. There is free shipping available for certain purchase amounts. Amazon plans to offer more payment options, such as monthly payments.

Source: Chain Store Age

CONSUMER SATISFACTION WITH RETAIL IS ON A DECLINE

The American Consumer Satisfaction Index (ACSI) reports that consumer satisfaction with retail is on the decline for the first time in four years.

The ACSI report states brick-and-mortar customer satisfaction fell flat or weakened, while Internet retail is up from last year. By category, overall satisfaction with department and discount stores stayed flat at 77, while the gap between best- and worst-ranked companies grew. Nordstrom was the top rated, gaining 4% to 86. They are followed by Dillard’s (81), Kohl’s (-1% to 80) and Macy’s (79). Walmart dropped 4% to 68 and is at the bottom of the category behind Target (+4% to 80), Meijer (78) and Sears (-5% to 73).

Among home improvement chains, Lowe’s rated best at 81, while Home Depot falls to the category’s bottom dropping 4% to 76.

Amazon remains at the top of the Internet sector, at 86. Netflix improved for the third straight year gaining 3% to 81. Overstock and eBay both dropped to 77 and 79, respectively.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the US. The ACSI uses data from 70,000 customers annually for measuring satisfaction with more than 230 companies in 47 industries.

Resource: Retailing Today

US Consumer Survey Unveils 2014 Favorite Retailers

PwC’s annual global consumer survey of about 1,000 US respondents list Amazon as most favorite retailer with 52% of the vote. Amazon was followed by Walmart with 41% and Target 29%.

These retailers were followed by several department stores. Kohl’s was rated the highest of the department stores with 14% of the vote. Other department stores in the top 10 included Macy’s and J.C. Penny.

Home Depot came in 10^th and was the only DIY retailer to make the list.

The top reason cited by consumers were “Their prices are good”, followed by retailers having the items shoppers want in stock.

The US pattern mirrors the global pattern in another PwC survey.

The survey also captured whether consumers are “showrooming”, or browsing at physical stores but then shopping online. 68% of respondents said they have done so. However, 73% of consumers do the opposite, or “webrooming”, browsing online and buying in stores. Their reasons included delivery fees, being able to touch the merchandise, and getting the merchandise immediately.

PwC: Price Waterhouse Coopers

Resource: MarketWatch