In 1995 a computer scientist working at Kaleida Labs named John Wainwright made history when he bought a book. The book was Douglas Hofstadter's “Fluid Concepts And Creative Analogies: Computer Models Of The Fundamental Mechanisms Of Thought,” which on its own would not have been historically significant except for the fact that Wainwright bought the book as part of an invite-only beta by a newly-launched eCommerce startup called Amazon.
Wainwright’s was its first order.
And though when interviewed he noted he still remembers making the purchase, even if he didn’t a quick visit to the Amazon campus would likely jog his memory since it has a building named after him. Or, he could just check his order history on Amazon.com — it’s still there.
While Amazon was selling its first book, Walmart was selling — well a lot of everything. Four years off of displacing Sears as the nation’s largest retailer, Walmart generated $88.7 billion in revenue in 1995 and profits of $2.7 billion.
It’s a little bit bigger now.
But then so is Amazon, which has gone from the internet’s favorite bookstore to everyone’s favorite everything store — and managed to knock Walmart from the top retailer perch when it comes to market cap. When it comes to capturing consumer spend and their share of the Whole Paycheck?
That’s a more complicated story, with Walmart holding a lead that’s diminishing in the face of Amazon’s rapid growth, and both moving and counter-moving nearly daily to hold their ground while grabbing new market share.
And this week was no exception.
Play of The Week: The Powerful Pull of Prime
The growth, according to the study, will come largely from lower income households that have heretofore been resistant to Prime being brought in with the installment plan for membership payments.
“New membership is driven by the company’s continuous expansion of Prime product categories, like groceries, apparel and pantry — as well as new options for media consumption, like books and video games,” said Martín Utreras, eMarketer’s vice president of forecasting. Utreras further noted that Amazon Household, which allows family members to share linked Prime accounts for shopping and content, have also been an incentive for new memberships.
Apart from paying for the subscription, Prime Members are a solid investment for Amazon as they tend to spend more per year — $1,400 on average as opposed to about $600 for non-members.
Marketplace Moves: Merchants Can Now Sell For Less On Other Platforms
Third-party sellers on the Amazon marketplace will no longer be banned from selling their goods on other platforms for lower prices. Amazon dropped the longstanding rule for its marketplace merchants this week — reportedly for fear it could put the company on the wrong side of antitrust laws.
Amazon has confirmed the policy change, but has offered no official explanation for putting it into place. The move follows news that Senator Richard Blumenthal had reached out to the Department of Justice and the Federal Trade Commission calling for an investigation into whether or not the eCommerce giant was violating antitrust rules by requiring merchants to match the price on all the websites they sell on.
“Amazon’s price parity provisions may raise prices for consumers both in the short term and in the long run,” Blumenthal wrote. The letter went on to say that “Amazon’s price parity provisions may work to block the emergence of more efficient online marketplaces that might offer consumers lower prices on their favorite goods.”
Blumenthal isn’t the only senator making noise about Amazon of late in regards to trust law — presidential hopeful Senator Elizabeth Warren has called for Amazon to be broken up (along with Google and Facebook) under a new law she is proposing. The law would also ban Amazon from selling its own branded goods on its site.
That news would certainly disappoint the 51 percent of households who voluntarily joined Prime because they like (among other things) Amazon’s branded products.
Addition of The Week: Beauty Is In the Eye of the Exclusive Seller
A new beauty brand is out this week — and it’s only available on Amazon. Fast Beauty Company comes to the market care of Amazon’s brand accelerator program.
Designed to help create brands exclusively for sale on the Amazon marketplace, the accelerator supports independent startups with ideas and offerings in areas where Amazon wants to expand — but without launching its own private label offering. Fast Beauty is the brainchild of New York dermatologist Dhaval Bhanusali and Latvian models Simona and Diana Kubasova. The line includes hydration products enhanced with collagen, a collection of charcoal-based products and skincare favorites such as masks, moisture creams and makeup removing wipes. Most of the products are priced at $5 and up.
The launch moved Amazon forward on two axes it has been looking to pursue. The first is an additional move into the health and wellness segment, which has been a growing area of interest for the eCommerce giant for the last 18 months.
The other axis is the push for more exclusive content that Amazon can make available on its eCommerce site without having to necessarily create. In October, reports emerged that Amazon was pushing manufacturers to create Amazon exclusive materials in greater numbers. By January, reports said Amazon’s push was getting more aggressive — as the brand vastly prefers exclusive content to the time and expense entailed in developing its own private label.
But Amazon wasn’t the only player thinking about making us all a little more beautiful this week.
Walmart’s mind was on aesthetics as well — and for an often underserved group in this regard ... men.
Play of the Week: Building a Tablet For Everyone
It looks like Walmart is going to try and take on Amazon and Apple — with a tablet offering all its own.
According to reports this week, the nation’s largest retailer has filed a wireless product application for a tablet design with the Federal Communications Commission. The tablet looks as though it will be released under the Walmart ONN store brand and is targeted toward younger consumers. A Chinese supplier will build the hardware and Google’s Android operating system will be the software.
Tara House, a Walmart spokeswoman, confirmed the product is in the works, but offered no further details on when the product might be released, or what it might cost when it is.
The move comes as Walmart is looking to redesign and revitalize its electronics department — an arena where Amazon’s sales have long since surpassed Walmart’s. Tablets, however, could be a tricky investment, given that users replace them less often than smartphones and consumers have been less enamored of them in recent years.
In 2018 tablet shipments fell 6.2 percent, according to data tracker Strategy Analytics. Apple Inc.’s iPad brand is the top seller, followed by lines from Samsung Electronics Co. and Amazon.com Inc. But Walmart’s entrance into the market — particularly at the right price point — is thought to have the potential to inject some life into the otherwise rather still market.
Walmart’s ONN store brand mainly sells accessories like headphones, charging cables and television sound bars, and the tablet would be its largest launch under its branded heading to date.
Addition of the Week: Makeovers For Men With Johnny’s Chop Shop
While women’s wellness and beauty products draw the lion’s share of attention in retail, there is a large and growing cohort of brands reaching out to those of the masculine persuasion to remind them that there is nothing inherently manly about bad skin or oily hair.
And it seems Walmart is getting in on the act, with an assist from barbershop brand Johnny’s Chop Shop.
Johnny’s range of men’s grooming goods — which include moisturizer, paraben-free hair clays, dry shampoo and hairspray — will be coming to 3,500 Walmart stores nationwide. The retailer will sell seven of its most popular products at the Walmart stores, according to the report.
Jonny’s target demographic skews younger — ages 14 to 25 — and urban.
Will it bring the young and the stylish into Walmart to spend? Time will tell.
Will Amazon have its own line of men’s products to offer up soon? If past is prologue — probably.
And when it launches you can read all about it here, in the Whole Paycheck tracker.