Amazon is getting into the auto business with Amazon Vehicles, but not by becoming a sales platform for the cars themselves, but by being a car information center, automotive community and promoting the sales of parts and accessories. They are seeking to become the hub for car buying enabling customers to find crucial information when shopping for vehicles, parts, and accessories.
Amazon is only showing the suggested manufacture prices of cars since they aren’t actually selling the cars themselves. The Amazon Vehicles site does however sell everything else including headlights, brake drums, and radiator hoses. They are using the platform as a marketing tool to become a major supplier of automobile parts and accessories.
Our prediction is that Amazon will next start selling used cars themselves and eventually push legal changes allowing them to sell new cars as well, perhaps starting with Tesla which isn’t currently connected to a dealer network.
“Our goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way,” said Adam Goetsch, Director of Automotive at Amazon.com. “Amazon Vehicles is a great resource for customers who are interested in car information or looking for a broad selection of parts and accessories – all enhanced by the ability to tap into the knowledge, opinions, and experiences of other car owners within the Amazon customer community.”
Amazon Vehicles features:
Research Tools: Customers can now view comprehensive detail pages complete with specifications, images, videos, and customer reviews for thousands of new and classic car models. Finding cars on Amazon Vehicles is simple – just search like you would any other product or browse by year, make, model, customer rating, MPG, towing capacity, and more. Customers can begin researching vehicles today at www.amazon.com/vehicles.
Community Engagement: Customers can browse tens of thousands of customer reviews on Amazon Vehicles, including uploaded images and videos, as well as submit their own. Customers can also ask other car owners questions about their vehicle – anything from “Can you fit two car seats comfortably?” to “How does this car perform in the snow?”
One-Stop Shop: Amazon Vehicles is an extension of the Amazon Automotive store, which enables customers to add information about their current car to the Amazon Garage for shopping parts and accessories designed specifically for that vehicle. To-date, more than 35 million customers have saved their car(s) to the Amazon Garage.
“We believe retail is at a tipping point,” said Robert Peck of SunTrust Robinson Humphrey in a note to clients. “E-Retailers are leveraging new capabilities in old business models to expand existing and new markets like apparel, grocery and personal care, where e-Commerce had only limited penetration till now.” According to BusinessInsider, Peck calls it “E-commerce 2.0.”
Shopping online is growing fast, but still only represents a fraction of total shopping dollars, just under 8%, according to US Census data.
As of the first quarter 2016, the total amount of retail spending online (ecommerce) was $92.8 billion, which was only 7.8% of all retail sales. Ecommerce is in its infancy, which means that there are huge opportunities ahead, not just for the types of Amazon, but for small merchants and startups as well.
Worldwide retail sales, including in-store and internet purchases, surpassed $22 trillion in 2015, up 5.6% from 2014, according to a study by eMarketer. They say that retail ecommerce sales, those purchased over the internet, will make up 7.4% of the total retail market worldwide, or $1.671 trillion. By 2019, that share will jump to $3.578 trillion, yet retail ecommerce will still only account for 12.8% of all retail purchases.
Even though the internet and technology is the source of major disruption for retailers, brick and mortar is alive and well for the foreseeable future.
The study says that retail ecommerce sales are accelerating faster than previously anticipated and will jump 25.1% year on year in 2015. “Online sales growth will outpace brick-and-mortar sales growth by a more than 3-to-1 margin over our forecast period,” the report predicts.
Amazon Reshaping Ecommerce
Amazon recently passed Facebook to become the the fourth-largest US company based on stock market value. By 2020 analysts Rob Sanderson, Managing Director, Senior Research Analyst at MKM Partners, predicts that Amazon will be the largest US company by 2020.
“Amazon has a significant position in two of the largest secular growth opportunities there are,” Sanderson told Barron’s recently. What he was referring to were online retail and cloud computing.
As I said during my keynote @SohnConf, $AMZN is the most durable business in the world. $3T here we come…ps, you’re welcome.
Venture capitalist and part owner of the Golden State Warriors Chamath Palihapitiya of Social Capital said to a crowd at the Sohn Investment Conference recently that Amazon will be a $3 trillion dollar company within 10 years, almost ten times more than its current $366 billion market cap.
“Consider Amazon’s potential in retailing, said a Barron’s post. “It holds a 35% to 40% share of U.S. e-commerce, on its way to 50% by 2018, according to estimates from Doug Anmuth at JPMorgan published last month. And e-commerce is just 11% to 12% of U.S. retail, not counting gas, food and cars, on its way to more than 30% eventually, and 14% by 2018, according to Anmuth. In other words, Amazon is securing a quickly growing slice of a quickly growing pie.”
Internet Is Crushing Department Stores
There is one simple truth, internet retail is booming while brick & mortar department stores are in a free fall. The chart below from Standard Chartered Research tells the story
“U.S. private consumption has shown ongoing resilience,” says a note from Standard Chartered Plc via Bloomberg, “but this macro story masks sizeable divergence at the micro level, and this explains the wide interpretation of ‘how’s the U.S. consumer doing?’ The micro story is characterized by a parabolic rise in internet sales at the expense of ‘bricks and mortar’ stores, particularly department stores.”
The above stat isn’t as bad as you think considering that every department store also has an online presence and are working hard grow that aspect of their business. But even with that department stores are struggling online. “Digital sales continued strong, still growing double digits, but it too grew less rapidly than anticipated,” said Macy’s Chief Financial Officer Karen Hoguet during their May earnings call (PDF).
Internet business guru and financial analyst Robert Peck sees a shift in online shopping toward specialty boutiques and well run mom & pop stores. He says that as the internet generation grew up they don’t have reservations against online shopping like their parents did.
Presumably, one of the main drivers of online shoppers to Amazon was a belief that you wouldn’t get ripped off or have your credit card info passed around. This fear has dissipated over time but is completely non-existent with those that grew up with the internet.
Online Retail Will Diminish Need for Offline Stores
The Ovis report sees an “increasingly fragmented physical footprint,” with branded products moving to the internet. “Demand for large-footprint physical retail space will continue to fall,” says the report.
“Physical retail will still exist, but it will need a good reason to exist.” according to Dunkin’ Brands quoted in the Ovis report. The report portends that most new retail businesses will start online and later add some physical retail for showcasing products. They note that this is already the case in furniture. Retail will only play a supporting role in the future with new online retail stores in order to add trust with customers.
Existing pure-play online retailers will also continue to create physical locations, primarily to “enhance fulfillment and customer service.” They believe that much of this will take the form of the “click-and-collect models” which are common with UK retailers. “The UK today is the most advanced market for click-and-collect models, examples of which include ASOS and Boots, and eBay and Argos, a partnership that started in the UK and has been extended to Ireland,” says the report.
Click and collect is where the shopping is done online, but the items are physically picked up by the consumer at a fulfillment center or a retailer. Walmart in the US is one of the largest retailers offering this service.
According to the 2016 eCommerce Trends Report by Absolunete, an eCommerce agency based in Canada, depending on the types of products sold and the retailer’s network of physical stores, the proportion of consumers who prefer to pick up their purchase in store can reach up to 40%.
“Better still: offering customers the option to “Purchase & Pick-Up” often increases the average purchase value,” says the Absolunete report. “That’s right: 7% of customers who pick up their purchase in-store increase their spending while they’re on site (7% as measured in net sales). In Canada, where the prohibitive cost of residential shipping is an important challenge (the opposite is true in the U.S., where residential shipping is extremely inexpensive.), Purchase & Pick-Up becomes a win-win proposition!”
Absolunete says that “Purchase & Pick-Up” has advantages to the retailer:
Increasing net sales once the consumers is at the store picking up their online order.
Increasing conversion rates by making it easy for consumers to get their merchandise.
Decreasing return due to in-store exchange options.
Decreasing shipping costs and thereby increasing profit margins.
“We expect further partnerships to be made in order to allow Internet-based retailers to build up physical collection points,” states the Ovis report. “We also foresee noncompeting physical retailers collaborating to allow the collection of each other’s products in each other’s stores. This will allow them to maintain a virtual geographic presence despite the need to reduce their own physical store networks.”
From a showroom perspective, Amazon Books is a good example, where it has physical samples of not just popular books but all of Amazon’s products such as the Kindle, Echo and Kindle Fire tablets.
“The already blurred lines between physical-heritage retailers and Internet-heritage retailers will have been eradicated by 2026,” predicts the Ovis report. “The former will continue to reduce the amount of physical space they hold, switching their investment emphases online, while the latter will invest further in establishing physical presences to support the showcasing of brand and private-label products. While the large pure-play Internet retail brands will survive, the term pure play will be rendered obsolete.”
In-Store Digital
The Absolunete report predicts the rise of what it calls “in-store digital”, where consumers make online purchases while inside the physical store. Technology will be used to improve the customer experience and to make it a personal by “integrated gathering that allows retailers to better understand customers and customer behavior.”
The report suggest that it is increasingly common to see in-store advertising screens and tablets, enabling the consumer to search for products and to make online purchases while in the store, presumably of products that aren’t available in the store itself. “Going forward, customization tools and possibilities will go even further to improve customer experience. Paper posters and printed displays, for example, are being replaced by connected kiosks and displays which allow real-time, contextually-relevant messages to be displayed.”
Absolunete one interesting example by Rebecca Minkoff, partnering with Magento and eBay to create a Smart Dressing Room. They say that the system tracks what customers try on at the store and the sizes tried and what they buy and don’t buy. The store uses this data to send updates to the shopper if an item tried on is now available in her size or color. There are many more customization option being experimented with that may be available in the future. They say, “Think of it as cookies (like in your browser) that follow you around in the real world.”
“Engagement with the technology in Minkoff stores has been greater than expected,” said David Geisinger, who was previously eBay’s head of retail and mobile innovation but now is with Magento Commerce. “Engagement is on the customer’s terms, which I think is key, because it’s not intrusive.”
Technology is the Driving Force
eBay is in full preparation for the next commerce revolution and believes the heart of it is technological advancements coming together to reshape online selling. eBay CEO Devin Wenig believes that it is these innovations that will create an enormous opportunity for companies that are prepared to take advantage of them. And eBay is battle ready to just that, for years now seeing itself as both a great technology company… and a great ecommerce company too.
“We have seen the pace of tech innovation advance significantly — in artificial intelligence, cloud computing and virtual reality, all of which have the potential to reshape global technology dramatically in the next few years,” commented Wenig in a company announcement last week. “We are building eBay to be a vibrant and dynamic global technology leader for years to come, and we are starting to see results.”
“Everything we’ve done so far has been about positioning eBay for a future we can see advancing quickly towards us, in which innovations in technology platforms have the power to dramatically reshape the commerce experience,” Wenig says.
“We are entering what we call the Age of Everywhere — the profusion of cloud-connected devices that will bring the Internet to you, globalize the market, and make things faster and more on-demand,” said Wenig.
A report by Ovum, The Future of E-commerce: The Road to 2026 (PDF), predicts that over the next ten years instant gratification, powered by technology, will be a driving force in ecommerce. The report concludes that online retail today is “largely driven by price and convenience”, but by 2026 consumer expectations of the “ecommerce experience” will change dramatically.
“The desire for instant access and fast turnaround, 24/7, will be the norm by 2026, driven in particular by millennials (born approximately 1980–95) and also by Generation Z consumers (born
approximately 1996–2010),” the report says. “Generation Z are digital natives to the power of 10, with technology use their second nature. These generations are constantly connected and inhabit an online environment where events happen in real time without them having to wait, and where social media enables them to dictate terms.”
By 2026 the report predicts that consumer expectations will force online retailers to vastly improve customer support, will have to live up to expectations on the goods or services being delivered and shoppers will expect free delivery anytime and anywhere.
“Smartphone penetration is reaching new heights around the globe, and we are fast approaching the point where being an internet user means being a smartphone user,” commented Felim McGrath, who is the Trends Manager at GlobalWebIndex, in a blog post presenting the report. “This means that mobiles have the potential to become essential online commerce devices.”
McGrath backed up his comment with examples of how in Asia people are just as likely to shop online with their smartphones as they are a desktop computer. “Last month, close to half of South Koreans used their mobile to shop online,” he said. “And in China, mobile commerce has become the norm, with consumers now almost as likely to complete a purchase online via their mobile as via a laptop/PC.”
McGrath says that even though most consumers in Europe and North America are not mobile shoppers at these levels yet, it’s only a matter of time before they are.
The Ovis Report thinks that the trend toward more powerful smartphones with larger screens will help drive ecommerce and that retailers are optimizine the shopping experience for mobile. “Together, these developments are turning the smartphone into a platform that can support the whole shopping journey, from product search and discovery, to comparisons, recommendations,
and payments,” says the report.
The report notes that Android will continue to dominate iOS and that competition for payment systems won’t just be between Apple and Android, but will include multiple payments sytems on the the Android platform.
Social Media is a Key Driver of Ecommerce
Felim McGrath also believes that social media will be a driving force encouraging online shopping. He says that one third of the world’s population is now on social media, which is up an astounding 10% over last year.
“With such a significant amount of online time devoted to social media, there’s clear potential not only for advertising and marketing via social networks, but also for directly monetising users via ‘social commerce’,” said McGrath. “The last year has seen some of the world’s biggest social networks, like Facebook, Twitter, YouTube, Instagram and Pinterest, testing or introducing integrated commerce options, acting as the middle-men between buyers and brands. The networks themselves have a clear interest in pushing this trend, both to increase engagement with their platforms and to open up healthy new revenue streams.”
The research from GWI shows that consumers are now becoming brand aware because of social media and are also using it to research products. McGrath sees this as an important step to using social to complete purchases. “Social commerce has a bright future,” says McGrath.
The Ovum report also predicts that the need for people to document their experiences on social media will motivate retailers to “increasingly align not only their brands but also the
shopping experience itself to this consumer desire for encounters worth sharing.”
“This can already be seen with the emerging trend for integrating social media with in-store retail, with the aim of creating socially driven shopping experiences,” the report notes. “In 2015, Victoria’s Secret encouraged shoppers to take selfies in front of displays and show them to sales assistants in return for a free gift – and hopefully share their selfies/experiences with friends.”
“Any doubters about social media’s powerful role in converting prospects into customers need to immediately re-evaluate their position,” notes the Absolunete report. “Like, now. Though their pure conversion rates are lower than those of organic results or Email, they are powerful tools that promote brand loyalty and are a great way to share the brand’s values. Through community-logic, social media is a valuable resource to convert curious prospects into new customers.”
According to Absolunete, with good social media management online stores can generate results that are sometimes superior to search marketing strategies such as Google Adwords. Social platforms such as Pinterest, Facebook and Twitter are working to enhance their value to online retailers by adding functionalities that will guide the shopper towards a products pages with goal to convert their users into online retail customers.
“You may have noticed more and more “direct purchase” options popping up on social media platforms like Twitter, Instagram, Pinterest and most notably Facebook, which is responsible for 64% of social sales worldwide,” noted the report. “Retailers need to move quickly to capitalize on this; once the big, established eCommerce players will have fully implemented these tools, it’s going to be a lot harder – and more expensive – to stand out.”
On Instagram, for instance, you can now go directly from a picture to a product page which are being used by brands such as Banana Republic via StylePick. What’s more, celebrity endorsers are now being used by brands in this process leveraging their huge numbers of followers to create commerce.
93% of Pinterest users have bought something online in the last 6 months, according to Absolunete. They also note that Pinterest is the source of 16% of all social sales, with their “Rich Pins” allowing retailers to fully integrate online stores and automatically synchronizing product pages with the products “Pin”. J. Crew, Gap and Nordstrom all utilize this effective Pinterest ecommerce motivator.
Ecommerce while Messaging
Another emerging trend is the integration of ecommerce into messaging apps, which is already happening in Asia. McGrath notes that Line and WeChat have already integrated multiple commerce features and other “opportunities for monetization.” He believes this revenue opportunity is the “inspiration” behind Facebook’s move to make Messenger a separate app and their motivation to focus on messaging so aggressively. Indeed they are very focused on messaging, having paid $22 billion for WhatsApp in 2014, a startup that only had revenues $10.2 million in the year before its acquisition.
Again, Asia shows the way forward here. Messaging apps like Line and WeChat have pushed beyond simple chat apps to integrate a broad range of commerce options and opportunities for monetization, forming the clear inspiration for Facebook’s recent development of Messenger Platform. All these developments mean that social commerce has a bright future.
Artificial intelligence also plays a role in messaging. “During this time, we’ve seen artificial intelligence reach an inflection point,” Wenig said. “This innovation is already beginning to take hold of the messaging space with the arrival of conversational assistants. Artificial intelligence has the potential to bring an era of deep personalization to the commerce space.
VR, AR and Wearable Devices
“Due to the proliferation of wearable devices and technology, smart TVs, connected cars and household appliances, beacons, and other technologies, the consumer journey in 2026 will increasingly look like a pretzel that twists, turns and loops back on itself,” noted the Ovum study. “Consumers can start and end their shopping experiences on a mobile platform, in store or online. It is a fluid movement that by 2026 will be even harder for retailers to keep up with or predict because it will include a growing number of devices and touchpoints.
It is key for retailers to not only keep track of consumers across many devices and touchpoints, but to also accurately measure where sales are coming from. This will require retailers and their advertising partners to build to significantly improve ad tracking technology.
One of the key drivers of wearable technology is virtual reality and augmented reality. “Virtual and augmented reality will be the next platform revolution,” says Wenig. “This is already prevalent in the gaming world, but it has the potential to be far more disruptive.”
The Ovum report predicts that by 2026 consumers will expect a more “real” shopping experience which will mean an integration of augmented reality into online stores. Consumers will expect an an “event experience” that will rival walking into a brick and mortar store.
“This will translate into interactive, highly engaging online and real-world retail environments where augmented reality (AR) plays a key role,” the report says. “The provision of distinct and tangible shopping experiences, online and real-world, will become a key means to enhance and differentiate a brand’s value proposition.”
One of the key drivers for augmented reality being used by online stores is increasing the conversion rate. Generally, retailers do much better when a consumer walks into their physical store locations compared with internet shopping, because there is no human connection.
Epson’s Moverio smart glasses are one solution for retailers, where an online shopper can click the the “GoInStore” button and a sales associate at the physical store will walk the customer through high value products with wearing the smart glasses. Clicking the button initiates a two way voice call and a one way video stream of whatever the sales person is looking at.
Luxury car dealer Amari in the UK uses the glasses to show off their extremely expensive cars to online prospects. “Our sales team know every single detail of these cars, even to the level of knowing the tyre pressures,” said Sheikh Amari, CEO of Amari SuperCars in an Internet Retailing post. “This knowledge is difficult to bring across online and we have been looking for ways to bring our expertise into the online environment.”
“This new technology enables our customers to travel to our showroom in real-time and experience the cars remotely – giving us a competitive edge and the ability to close sales quicker, providing our customers a totally unique, convenient and trusted car buying experience,” said Amari. “Our customers – who include investors and collectors – are very busy people, based all around the world, who typically know what they want but often have to rely solely on the pictures that are on the website.”
Dollar Shave Club (DSC), founded just 5 years ago, has been acquired for a reported $1 billion in cash by U.K. based Unilever. DSC was launched in March 2012 by Mark Levine and Michael Dubin and is based in Venice, California which is next to Santa Monica outside of Los Angeles. Michael Dubin will continue to serve as CEO of DSC. Unilver approached Dollar Shave Club about the acquisition, according to Dan Primack of Fortune.
Dollar Shave Club had a simple concept that resonated with men, “Shave Time, Shave Money”, and launched with a YouTube video that immediately became a viral hit. As of today, it has been viewed nearly 23 million times.
If the price is accurate, it will be one of the largest in e-commerce history, with the most expensive acquisition being Zulily in 2015, purchased by Liberty, owner of QVC, for $2.4 billion. DSC had 15% of the men’s razor cartridge market share in the U.S. last year, according to investor David Pakman who is a Partner at Venrock, which was the original investor in Dollar Shave Club. DSC received $163.5 million in 5 Rounds from 21 investors prior to the acquisition.
Michael Dubin, founder and CEO of Dollar Shave Club, added: “DSC couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner. We have long admired Unilever’s purpose-driven business leadership and its category expertise is unmatched. We are excited to be part of the family.”
The company in less than 5 years has not only transformed the shaving category but has singlehandedly supercharged the consumer products subscription category. DSC has over 3.2 million members with revenue of $152 million in 2015 and on track to exceed $200 million in 2016. The Dollar Shave Club brand has also transformed from a single razor to a multi-products lifestyle brand that includes other branded products such as Wanderer, Big Cloud, Boogies and One Wipe Charlies.
“Dollar Shave Club is an innovative and disruptive male grooming brand with incredibly deep connections to its diverse and highly engaged consumers,” said Kees Kruythoff, President of Unilever North America. “In addition to its unique consumer and data insights, Dollar Shave Club is the category leader in its direct-to-consumer space. We plan to leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach.”
Using Digital Disruption to Establish a Direct Customer Relationship
David Pakman posted this slide from the original Series A Dollar Shave Club Pitch Deck saying “His plan was grand, but his formula was simple…”
“I’ve been telling the Dollar Shave story lately as a way to describe the disruption possible when a company uses digital technology to establish a direct relationship with a customer,” said Ted Schadler in his blog. Ted is Vice President & Principal Analyst at Forrester Research. “Dollar Shave Club is in its customers’ daily shower and conscientiousness. It’s a digital disruptor, not because it has a revolutionary product, t’s because it has a revolutionary relationship.” He adds that digital disruption starts with a direct customer relationship.
“In the age of social media, brands must become direct-to-consumer in order to know their own customers,” said Pakman in a blog post giving his insider take on the business. “Success has many fathers, but in this case, there is only one.”
Amazon knocked it out of the park on yesterday’s Prime Day with customer orders surpassing Prime Day 2015 by more than 60% worldwide and more than 50% in the United States. Amazon said it was also the biggest day ever for Amazon devices globally and set sales records for every Amazon device category including Kindle, Alexa, Fire TV, and Fire Tablets. Globally, the Fire TV Stick was Amazon’s best-selling device.
“Prime itself is the best deal in the history of shopping, and Prime Day was created as a special benefit exclusively for our Prime members,” said Greg Greeley, Vice President, Amazon Prime. “We want to thank our tens of millions of members around the world for making this the biggest day in the history of Amazon. We hope you had as much fun as we did. After yesterday’s results, we’ll definitely be doing this again.”
Small businesses and selling partners on Amazon with Prime deals had nearly triple year-over-year sales, both worldwide and in the US. “We offered customers our best products at great deals and they responded in a big way,” said Dov Brafman, CEO of Sharkk, which offers cool and unique audio solutions and other consumer accessories. “Prime Day helped us reach our highest sales day ever.”
Prime day is in full swing and BOY do we feel it! Be sure to check out the Amazing Sharkk deals going live throughout the day! #PrimeDay
“Sales were much higher than I was expecting with that 60% growth rate,” says R.J. Hottovy on CNBC. Hottovy is a Consumer Equity Strategist at Morningstar. “That will probably put the company ahead of where it was last year. You are talking about sales in the $500 to $600 million range for this day alone. The real take-a-ways for me are that international markets seem to be adopting Prime and competing sales from the likes of Walmart don’t seem to be impacting Amazon sales at all. We estimate there are more than 70 million Prime members globally, about 80% of that, or 56 million, coming from the US. What it has shown is that there is real stickiness to this business.”
The real impact of Prime Day for Amazon is not sales but in enticing more “sticky” Prime memberships. “Sales are really besides the point, it’s about driving Prime membership,” said Shelly Banjo of Bloomberg. “One estimate had Amazon adding 6 million Prime members. What that does is lock you in an average of 7 years according to one estimate. Prime is Amazon’s secret sauce.”
People get “hooked on Prime” she says and no longer making shopping lists to go to Walmart or somewhere else. Instead they think of something to buy and with a couple clicks of the phone it’s done.
Below are the complete Prime Day 2016 stats provided by Amazon.
Prime Day 2016 highlights globally:
Sold over 2.5x more Amazon Fire TV devices compared to Prime Day last year – Fire TV Stick was the best-selling Amazon device.
More than two million toys and more than one million pairs of shoes were purchased by customers on Prime Day 2016.
More than 90,000 TVs were purchased on Prime Day 2016.
Hundreds of thousands of Kindle e-readers sold on Prime Day.
Prime member orders on the Amazon app surpassed Prime Day 2015 mobile app orders by more than 2x.
More than a million customers used the Amazon app for the first time on Prime Day to shop and to watch-a-deal.
The Prime Photos sweepstakes had two million submissions worldwide during the lead-up to Prime Day, the winner will be randomly selected on or about July 14.
Prime Day 2016 highlights from the US:
Amazon devices were up over 3x compared to Prime Day last year.
Biggest day ever for Amazon Echo – up over 2.5x compared to previous record day.
The most popular Amazon Dash Button brands purchased on Prime Day were Cascade, Charmin and Tide.
Members purchased over 215,000 Instant Pot 7-in-1 Multi-Functional Pressure Cookers.
Members purchased over 200,000 headphones.
Members purchased over 24,000 Double Hammocks by Vivere.
Members purchased over 23,000 iRobot Roomba 614 Vacuum Cleaning Robots.
Members purchased over 14,000 Lenovo laptops.
Members purchased on average one Alexa-exclusive deal per second during Prime Day using their voice.
Prime members had exclusive access to deals on top rated TV series and blockbuster movies to rent or purchase and instantly stream on the Amazon Video app on TVs, mobile devices, Amazon Fire TV, Fire TV Stick, and Fire tablets, or online – the top three Prime Day deal titles purchased or rented were: Deadpool, Kung Fu Panda 3 and 13 Hours: The Secret Soldiers of Benghazi.
Customers saved over $1 million on Kindle Unlimited memberships on Prime Day and the Prime Day Lead-up Deal on July 5.
The most selected Audible audiobook on Prime Day was A Game of Thrones: A Song of Ice and Fire, Book 1.
Fire TV Stick was Amazon’s best-selling device globally. Other top sellers around the world, excluding Amazon devices were:
U.S.: Instant Pot 7-in-1 Multi-Functional Pressure Cooker
UK: Oral-B Pro 6000 CrossAction Electric Toothbrush with Bluetooth Connectivity and Smart Series
Spain: SanDisk USB memory stick
Japan: Calbee Breakfast Cereal 800 grams
Italy: Lexar JumpDrive
Germany and Austria: Tefal Jamie Oliver Frying Pan
France and Belgium: Game of Thrones DVD – season 1 to 4
Canada: Sennheiser HD 598 Special-Edition Over-Ear Headphones
“How do you price your good or service? It’s one of those questions that you have to have an answer for on day one. And you really, really want to get the right answer,” says John Henry, entrepreneur, venture capitalist and host of eBay’s Open for Business Podcast. “It all starts back in 2008 when a guy named Terry Kniess did something on The Price is Right that hadn’t been done in four decades. He did something that every business owner can learn a valuable lesson from.” What the now legendary Terry Kniess did was “guess” the exact price of $23,473 to win the Showcase prizes in 2008.
What did Terry Kniess and his wife do that entrepreneurs can learn from? Study the data. Once Kniess and his wife decided to attend a Price is Right taping they decided that it would be a good idea to study the show by recording episodes and watching the show looking for clues. “After we decided that that was where we were going to go, I said if we’re going to the Price is Right, let’s do it correctly,” Kniess told Henry. “I said, let’s study the show, and we’ll go in the fall.”
“We’d sit down every night and watch the show and look at the prizes that were up for grabs that day, and we started making a little mental list, of ‘Oh, this has been on before,” said Kniess. “And the first thing we noticed, was that the prizes repeated… and the prices never changed!” That key piece of information was the trick that Kniess used to predict the price of his showcase. “Do your homework. Do your homework. Do your homework.”
Lesson One: Do Your Homework
“Do your homework sounds really simple, but it can feel daunting when you’re first starting out,” stated John Henry, the 23-year-old Dominican-American entrepreneur and founder of the startup accelerator Cofound Harlem and the podcast host. “How do you go about taking all the work and expense, the blood, the sweat, and the tears you’ve put into your business, and distilling all of that into a single number, the price of your product?” Henry noted that picking the wrong price can be disaterous, even leading to business failure. He says, “Do your homework. That’s lesson one. Everything starts there. The thing is, doing your homework used to take a lot of time. In the past, companies had to send people to actual physical stores all over the country, in order to get information about their competitors’ prices and set a baseline number. Now there are tons of e-commerce sites that can help you find the right price. And one of those sites is eBay.”
“I like to think of eBay as sort of like the Kelley Blue Book of everything,” stated Zoher Karu, Chief Data Officer at eBay. “We have such a vast number of items for sale. I think it’s around 900 million now, and eBay, of course, has brand new inventory, but it also has, for example, last season’s model. Or it has maybe a refurbished version. The used version. So it’s that breadth and depth of inventory and sales histories that allows us to think of the Kelley Blue Book of everything.”
In essence, eBay should be used to validate all of your product price points before you add them to your ecommerce website or on eBay itself.
“If you do it right, you can bear fruit for a long time, and if you do it wrong, which is what happens in most cases, you’re digging out of a hole for a long time,” commented Mickey Goodman, who has worked for Kraft and Unilever and has taught classes on pricing strategy at NYU Stern and is now a Professor of Business & Entrepreneurship at Savannah College of Art and Design. Henry points out that most small business owners do something called “cost-based pricing,” and it’s a really bad idea. “Let’s take it back to when I was setting prices for dry cleaning at my first company, Mobile City,” explained Henry. “I called all the dry cleaners in the area, and pretended to be an interested customer. I asked how much for a shirt, how much for a blazer. Eventually, they’d get suspicious and stop giving prices to me over the phone, so I’d get my girlfriend at the time to call. And then, once I knew the price range I was working with, I decided to charge just a little bit more for the service than what it cost me to provide it. In business speak, this is called “cost-based pricing.” And in my case, and lots of other cases, it’s a mistake.”
“That’s what people intuitively do because it kind of makes common sense, which is you take your costs and you say ‘I’d like to make a 20% profit,’ you know, whatever it is,” replied Goodman. “And you add 20% to your costs and you say here’s my price.”
Henry drives the point home with a personal story that all business owners can learn from:
“If you go the cost-based route, you risk underselling yourself and leaving a lot of money on the table. It can cost you your business. It nearly cost me mine. I remember sitting in the living room with my Pops. I was crunching the numbers. I usually did it every Sunday and I realized I was gaining customers, but actually losing money. And that’s because I simply was not charging enough. I called a mentor of mine, and I’ll never forget what he told me. He said, ‘John, you’re delivering five star quality at McDonald’s prices.’ That conversation saved my company. The very next day, I immediately raised my prices. And while I lost a bunch of my customers at first, I ultimately found a new clientele that weren’t as price sensitive. They were happy to pay a premium for the service I provided. This brings us to lesson two: don’t set a price based on what it costs you to make something. Instead, set the price based on what your customers think that thing is worth. This is what Mickey calls “value-based pricing.””
Lesson Two: Use Value-Based Pricing
“It’s based around the concept of you know when people are buying a good or service it’s ‘cause it’s fulfilling some need for them,” stated Goodman. “Now at the most basic level if they’re thirsty and they buy a bottle of water the need is that they were thirsty.” Henry replied, “So lesson number two: value-based pricing. Price your product based on how much it’s worth to your potential customers.”
There is also the question of how to determine value. Jon Wirt, Head of Marketing for Pushd, tests the market for its new products by having people come in and give their feedback on the product, price and value. “How much do you think this costs to buy and what is the max you personally would pay for it,” Wirt asked a beta tester in reference to their new digital picture frame product called the Aura.
Tester: “I think something like this is probably worth $150. I would not pay more than more than $225.”
Wirt tells the beta tester the actual price is $399.
Tester: “Yeah, that’s expensive for the size. I could see if it bled all the way up to the end, I would consider paying $399, but as-is I wouldn’t pay $399.”
“It’s a weird experience to come in and do that,” Wirt said. “Like, you came into a beta test, you’re getting paid, you’re using something that’s half finished in a room where I’m videotaping you and writing down notes. It’s like an awkward experience. And then you’re like guessing this number. I don’t expect them to get it right.”
“I have to ask, you’re framing it like they’re getting the answer wrong,” stated Frances Harlow, Branded Content Producer at Gimlet Media and one of this podcasts producers. “But what if you guys are getting the answer wrong and how do you know that you’re not getting the answer wrong?” Wirt replied, “Until you launch, you don’t really know.” Harlow added, “What Pushd is facing is a problem that lots of business owners face. When we consumers are presented with a product, we naturally and immediately make mental comparisons. We ask ourselves, ‘What is this thing like?’ And then we form our opinion about what the price should be. And in the beta testers case, I got a clue about how this works when Jonathan brought up the iPad, and the tester described his mental comparisons.”
Lesson Three: Manipulate Your Comparisons
“And this challenge that Pushd is facing gets to our third lesson,” stated Henry. “As a business owner, you have to manipulate your comparisons.” Henry elaborated, “Position your product in the marketplace so when people inevitably compare it to similar products out there, they’ll feel like they’re getting a good deal.”
“What you want to do is differentiate your offering so much that there is no straightforward comparison,” added Ruth Bolton who is Professor of Marketing at the W.P. Carey School of Business at Arizona State University and formerly worked in R&D at Verizon for years helping them with their pricing. “You have something that’s somewhat unique.”
“There’s always, in a sense, a competitive offering in that there’s some substitute that the customer will make if they can’t buy the service or the product that you’re offering,” said Bolton. “So it really comes down to kind of benefits per dollar.”
“One other point about manipulating comparisons — or the kinder, gentler way of saying it: creating favorable comparisons,” added Harlow.” One way to position your product in the marketplace is to literally position it, in the right environment. So with Pushd, they want you to think “fancy home decor” when you see the Aura.”
“Well if they want to do that, it might just be helpful to put them in a “fancy, home decor” showroom with the Aura, not a startup’s temporary office space,” said Henry. “And there’s one more thing Ruth would do differently, she doesn’t ask open-ended questions about prices, the way that Jonathan does at Pushd. What she would do is ask each customer a single yes or no question.” Bolton responded, “Would you buy it or not and then you do it with somebody else, would you buy it or not?”
“You don’t push back and you don’t ask how they arrived at that number,” said Henry. “And that’s because it’s more realistic. With pricing, it’s almost always a yes or no question. Would you buy it or not?” Bolton added that “you start varying the price and so you can kind of sort of start to figure out, what the shape of that demand curve is.”
“The shape of the demand curve is what we’ve been talking about this whole time… how to set a price,” said Henry. “There is no guaranteed way to pick the perfect price, but there are concrete steps you can take to get close.”
John Henry’s four steps to picking the perfect price:
1. Do your homework. The good news? It’s now easier than ever with all the data we’re gathering from e-commerce sites, like eBay. That will give you a range of prices.
2. Once you’ve found that range, be bold. Pick a number that reflects the value you bring to your customers, not just your own production costs.
3. Create favorable comparisons. Position your product so that customers feel like they’re getting a fair deal, and one way to position your product is to pay close to attention to how you’re physically positioning it.
4. Be prepared to repeat steps one through three. Prices change. They’re dynamic. That’s part of why they’re so hard to set in the first place. Even on the Price Is Right. After Terry’s spectacular win,, the show’s producers switched it up. The show now features all-new prizes, and guess what? Their prices change.
The Hard Rock Hotel & Casino in Las Vegas discovered a major breach of their credit card processing data with card scraping malware placed on its payment-card system. Cardholders who purchased anything at Hard Rock Las Vegas including restaurant and retail outlets between October 27, 2015 and March 21, 2016, could have been affected. The popular Las Vegas party resort popular with celebrities first noticed irregularities in May.
“The investigation identified signs of unauthorized access to the resort’s payment card environment. Further investigation revealed the presence of card scraping malware that was designed to target payment card data as the data was routed through the resort’s payment card system. In some instances the program identified payment card data that included cardholder name, card number, expiration date, and internal verification code. In other instances the program only found payment card data that did not include cardholder name. No other customer information was involved.”
“Once again, we see another hotel being breached by what is suspected to be malware that was placed on a payment-card system,” stated John Christly, who is a Cybersecurity Evangelist at Netsurion. “Customers like this need to understand that they are in a digital war with the hackers that want this type of data.” Christly bluntly calls this “a a war that is being won, in many instances, by these hackers and that absolutely needs to change.”
Zach Forsyth, Director of Product Strategy at Comodo tells us why hospitality organization are targeted by hackers:
“Hospitality organizations are ideal targets for the cybercriminal today because they handle highly valuable personal and financial information—the proverbial goldmine for the cyberthief. Large, well-known chains are even more susceptible targets due to the sheer volume of data that they store and share.
Unfortunately, many of these companies have antiquated IT security technology in place, which is an easy workaround for the hackers. It’s a harsh reality that the technology some organizations use today is as effective as installing a home security system that alerts you to a break-in after the robbers have already stolen everything, vandalized the house and left. By then, it’s too late. The focus for IT departments needs to be on protection, not detection, and installing modern secure Web gateways and advanced endpoint protection solutions that can stop malware and cyberattacks from compromising data and negatively impacting their businesses and customers.”
“We advise our customers that any business, regardless of size, that processes payment data or offers free Wi-Fi to guests, is a lucrative breach target, but it’s still no secret that large brand name companies like Hard Rock are unfortunate targets for hackers— enticing them with large quantities of valuable information such as credit card data for patrons, sensitive employee data for staff, and sometimes even medical data used by in-house care facilities, added Christly. “Many recent breaches have involved malware that, once installed, works to steal sensitive data.”
“There’s no silver bullet strategy to defend against every threat. However, a strong line of defense is making sure that data doesn’t leave the network without the admin’s knowledge and if data is sent out, it only goes to verified Internet addresses. This is where having a relationship with a managed security provider can help, since it is very difficult to defend against the emerging threats of today’s cybersecurity world on your own.”
According to the Wall Street Journal, “In the past year, Hyatt Hotels Inc., Starwood Hotels & Resorts Worldwide Inc. and Hilton Worldwide Holdings Inc. all reported data breaches of their credit and debit-card processing systems.”
The CEO of Uber, Travis Kalanick, told The Financial Times that Uber is profitable except for its investments in China and other new markets. Uber is in a fierce battle for market share as the number two ride sharing service in China behind Chinese company Didi Chuxing. China is now Uber’s biggest market in the world when measured by number of rides and amazingly accounts for a third of its business worldwide.
“We have hundreds of cities that are profitable globally,” Kalanick said. “That allows us to invest in new places, and to sustainably invest in a very expensive place like China.” Uber had first-mover advantage in China but was quickly followed by Chinese company Didi Chuxing which was flush with investment capital and has now moved into over 400 cities, while Uber has only launched in 60 plus cities, but that is changing fast. Uber lost over $1 billion last year in China and may lose even more this year in order to launch in new cities and gain market share.
China has 16 cities with metropolitan populations of over 10 million making market launches challenging and expensive. By comparison, the largest city in the United States, New York City, has a population of (only) 8.2 million. “We are number two in China, which means that we still have a ways to go,” Kalanick said. “But we are putting everything on the field.” According to FT, Uber’s CEO spent nearly one in five days in China. “Travis was personally invested in the success of Uber in China to a much greater degree than any other country,” noted Allen Penn, head of Asia operations at Uber.
China was always thought of as a huge challenge for Uber, but with potentially huge rewards. “We like to go after the thing that seems impossible,” Kalanick told San Francisco based FT writer Leslie Hook. “It was pretty far-flung for us to try at that time – but that was also what made it exciting.”
In order to combat difficult Chinese regulations targeting foreign owned businesses the company launched in China different than other Silicon Valley heavyweights like Google and Facebook, they created a separate company called Uber China and brought in Chinese investors. This has allowed Uber to do business in China without being hampered by unfair Chinese regulations that favor Chinese based businesses.
That’s the good news. The bad news is that Uber competitor Didi Chuxing is dominating the market and out-competing Uber and has launched in many more markets. Last year it arranged 1.4 billion rides in China, more than Uber has done worldwide in its history.
“We have followed One Kings Lane and loved its site since its inception, and we are thrilled for the opportunity to provide them with additional support and exposure to promote and grow their brand,” noted Steven H. Temares, Chief Executive Officer and Member of the Board of Directors of Bed Bath & Beyond Inc. “At the same time, One Kings Lane will serve as a cornerstone for Bed Bath & Beyond’s growing offerings in furniture and home décor, and together we will be able to do even more for and with our collective customers wherever, whenever and however they wish to interact with us, and to further our mission to be viewed as the expert for the home.”
“We are excited to be part of the Bed Bath & Beyond family,” stated Dinesh Lathi, Chief Executive Officer of One Kings Lane. “This is a tremendous opportunity for our customers, as well as our employees and business partners, to benefit from additional support and resources and gain exposure to new customers. We look forward to being able to continue to differentiate our product offerings and refine our point of view to further delight our current and future customers.”
According to Bed Bath & Beyond the price paid was not material to them and the company expects the transaction to be only slightly dilutive to its net earnings per diluted share for fiscal 2016. According to Dan Primack who covers deals for Fortune, “Bed Bath & Beyond has just $600 million in cash on hand, prior to One Kings Lane purchase.” So it couldn’t have had much of a valuation if its not material to their earnings.
Uber announced via TechCrunch that its app users will soon be presented with an Uber Offers option that will give users a rebate of $5 to $20 off their next ride if they make purchases via their Visa card on file with Uber at a local Shake Shack, Dunkin’ Donuts, or Whole Foods brick-and-mortar locations. They simply have to accept the offer in the app and then buy something at the retail location of the deal being offered within a few days.
In an earlier test Uber Offers were promoted with interstitial screens when users opened the app in selected cities including Boston, New York, Dallas, Miami and San Francisco. Apparently merchants saw good returns with this new form of app advertising.
Google announced the launch of a new tool for Merchant Center called Feed Rules, which lets you convert your existing data from inventory management systems to the format Google Shopping uses.
The tool enables merchants to to export and submit product data in their own format, and use different rules to turn the data into product attributes and values that meet Google’s feed specification. Google says:
Map your column headers to the attribute names supported by Google Shopping. For example, if you have an existing feed with the unsupported column header “main title”, you can set up a rule in Merchant Center to have it recognized as the supported attribute name, “title”.
Transform the values in your feed to values supported by Google Shopping. For example, to submit gender specifications for your products, you can transform the unsupported value “for women” in your existing feed to the supported value “female”.
Populate missing attribute values with a fixed value, or with different values based on conditional criteria. For example, if the “condition” attribute is missing and you’re only selling new products, you can set up a rule to have this attribute automatically set to “new”.
After you specify rules, all uploads in the future will be processed accordingly. Feed Rules can also be used to organize data by implementing rules for custom labels or tagging products with shipping labels.
Google makes it clear that this is just an early version of Feed Rules, and that it will make improvements based on user feedback.
Receiptful has some interesting new research out based on data from 2,687 ecommerce sites, 1.34 million monthly orders, and $848 million in annual sales. It found that the average product page conversion rate (PCR) among ecommerce stores is 7.91%.
The firm also found that ecommerce “unicorns” convert nearly half of their product page traffic into sales and that at the low end of the spectrum, ecommerce brands only convert 0.10% of the traffic that hits their product pages.
“When we cross-tabulated the data, we found a positive correlation between store revenues and product conversion rates,” Receiptful’s Danny Wong tells us in an email. “On average, eCommerce brands with higher sales, up to $500,000 annually, had a better PCR than smaller-sized stores.”
“In eCommerce, one of the most crucial yet underappreciated hurdles to sales is driving visitors to click and view products,” he says in the report. “Unfortunately, the data reveals that, on average, eCommerce stores have a 33.9% bounce rate. This suggests that approximately a third of all of the visitors that hit your homepage abandon the site without ever browsing through your inventory of products. On the bright side though, once a shopper clicks to view a product, you increase the likelihood of closing the sale.”
Last year, eBay launched Promoted Listings, an ad format that enables sellers to get multi-quantity items in front of potential buyers in search results and only pay when the ad is clicked and the item is purchased.
The format has been available for the following categories: Health & Beauty, Musical Instruments & Gear, Toys & Hobbies, Home & Garden, Baby, Sporting Goods, Jewelry & Watches, Clothing, Shoes & Accessories, Cameras & Photo, Video Games & Consoles, Computers/Tablets & Networking, Consumer Electronics, and Cell Phones & Accessories.
The company just announced the addition of seven more categories that can now take advantage of Promoted Listings to boost visibility. These include: Antiques, Collectibles, Dolls & Bears, Pottery & Glass, Sports Mem, Cards & Fan Shop, Stamps, and Travel.
Sellers can have up to 500 listings per campaign, and can promote up to a third of their eligible inventory in the categories listed.
Starting on May 1, eBay is giving Anchor Stores subscribers $25 per quarter in credit to use toward Promoted Listings. The credits expire at the end of each quarter.
eBay made a quick announcement regarding USPS package pickups in light of recent changes made by the Postal Service. In a brief post, the company said:
Sellers can now schedule a pickup on First-Class Package Service without having to choose at least one Priority Mail, Priority Mail Express, Returns or International package.
This is due to a recent update made by the USPS, in which the First-Class Package Service selection was separated from the “Other” category (see screenshot below). The previously communicated workaround is no longer necessary.
In related news, eBay has fixed a major bug in its mobile apps that told consumers there was free shipping on items that didn’t actually offer it.
Earlier this month, we reported on a glitch in eBay’s mobile apps that was telling buyers that some items had free shipping even when the seller had not indicated that they did. This, according to some, had been happening for over a year, but gained more attention in recent weeks.
I had a customer make a Best Offer using their cell phone that showed Free Shipping at the time it was viewed, but this was not a free shipping item. I accepted the offer, but there was no mention of free shipping in the Message section of the offer.
The customer is pretty upset with me. I am aware from the message boards that this is a glitch, but how do I convince the customer of this? … and hopefully doing this without making them even more upset.
Other sellers in the forum acknowledged the issue as well. One responded, “OMG- Ebay keeps saying that this glitch is fixed, but obviously it is not!I had the same thing happen & I was very grateful that I had an understanding buyer.”
Eventually, eBay addressed the issue, saying it was working on a fix. Now, the company claims to have actually fixed it.
In the latest “Weekly chat with eBay staff,” the company says, “The Incorrectly Showing Free Shipping In Accepted Offers in Mobile issue has fixed across all mobile apps.”
Some other issues were fixed as well. These include the shipping amount not showing in sent invoices, missing item titles in billing invoices, random thumbnail images not appearing in search or categories, and USPS international tracking numbers not displaying all info.
Earlier this month, we reported on a glitch in the eBay mobile app that displays free shipping on items that don’t actually include that on their listings. Understandably, this has led to a bunch of frustrated buyers who are presented with unexpected shipping costs and frustrated sellers who have to deal with said buyers and who are worried about how it makes them look as sellers.
It’s a lose-lose for everybody involved, and some buyers are just going ahead and paying the shipping costs to keep customers happy. No seller wants to piss off buyers as things can quickly spiral out of control from there.
The issue has apparently been going on for quite some time without eBay’s acknowledgment. According to Consumerist, its’ been happening for at least a year to some degree.
The publication points to an announcement where eBay finally addresses the issue and says it’s working on a fix. It was brought up at the end of a broader post in the “Weekly Chat with eBay Staff” section of eBay’s forums. There, an eBay employee says:
The Incorrectly Showing Free Shipping In Accepted Offers in Mobile issue has been reported. The mobile team is testing the fix today. If all goes well, the fix should be released within the week.
