By this time next week, Amazon’s Q3 results will be in the books and if recent history is any guide, they probably will be seen as disappointing among the three dozen analysts who follow the company’s every move.
This, as the Seattle-based company’s results have fallen short of both sales and EPS estimates in three of the past four quarters, even though the proverbial “bar” for both had been sharply lowered leading up to the actual release. The same is true again this year, as it is for Walmart, where a similar batch of Wall Street analysts has been guiding Q3 forecasts down for months.
“During the quarter, we saw improvement in many of our key operational metrics, including in-stock levels and delivery speed and saw a subsequent step-up in consumer demand,” Amazon CFO Brian Olsavsky began his second quarter commentary to investors 90 days ago.
While there’s certainly plenty of room for debate over the present prospects of Amazon and Walmart, recent data would suggest that the broader economic climate has not improved while concerns surrounding in-stock levels have shifted towards over-stocked levels, causing retailers of all sizes to ramp up sales promotions earlier and deeper than in recent years.
“Our customers are counting on us more than ever to help them find the season’s best gifts,” Walmart U.S. Chief Merchandising Officer Charles Redfield said in a release announcing the company’s newly expanded sales event for the entire month of November. “Black Friday has evolved over the years from a single day to an entire season and is without a doubt the most anticipated shopping event of the year.”
Whether Walmart’s latest salvo in the holiday sales arms race is a sign of prudence or something more akin to panic will be answered in the weeks to come. In the meantime, Amazon, Walmart and most of their major rivals are busy coming up with news way to connect with consumers, not only to create new touchpoints but also to derive fresh non-core revenues when organic sales growth is tough to find.
Control What We Can
Time and again, the retail chiefs and heads of the multinational companies that supply them have said they’re focused on what they control, and that they must simply deal with the present headwinds while hoping the storm passes quickly.
It’s a storm, of sorts, that has catalyzed a push for new businesses and sparked a renewed interest in developing those aforementioned touchpoints, which not only come with the revenue component, but also bring the added benefit of frequency — which is retail-speak for the number of times a customer visits your store.
To the point, Walmart continued its recent run of initiatives this week to build its social commerce offering via the launch of a new suite of content creation tools that will allow creative types and influencers to produce slick little video morsels or images of curated products.
“We know our customers are inspired by the content and stories they see from their favorite influencers in their social feeds every day,” William White, chief marketing officer, Walmart U.S., said in a company press release. “This next step in our strategy will help fuel inspiration for our customers by connecting their favorite creators directly with our brand and the brands they love at Walmart.”
To sweeten the pitch, Walmart will also pay commissions to creators whose work drives sales, and it has also thrown in some professional-grade traffic and engagement analytics so these artsy entrepreneurs can measure and track their progress.
Never to be outdone, the eCommerce leader rolled out a pair of new services this week that will have its mass of customers and paid Prime subscribers interacting with it in new ways, via its new Amazon Insurance platform in the U.K., and its first Amazon Style shop in Columbus, Ohio.
“Amazon Style uses innovative technology to help you find looks you’ll love at the same great prices as on Amazon.com,” the company’s website said of its inaugural effort, while also inviting customers to make advance reservations to come in a try-on a box of items they have pre-chosen online in specially designed fitting rooms.
Whether either new experience clicks with customers and keeps them coming back remains to be seen, but it is a marked difference from the one-click, free-ship model that first brought them in the door.
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