Retail TouchPoints asked industry experts to weigh in on where the e-Commerce giant could be expanding its retail reach, and what to expect beyond 2017. Each expert predicted that Amazon is likely to take a break from major retail acquisitions in the near term, but will continue to express interest in segments such as pharmacy, beauty and specialty retail.
Here are some key takeaways from 5 leading retail analysts and consultants:
Charlie O’Shea, VP and Lead Retail Analyst at Moody’s Investors Service: “We are betting the lion’s share of Amazon’s investments will turn into profits over time, and the content side is driving Prime memberships. Anybody can ship for free, but no other retailer has built an ecosystem of content like Amazon has to support Prime.”
Natalie Kotlyar, Leader of the Consumer Business practice at BDO: “I could see Amazon turning Alexa into a GPS service; an ‘Alexa On-the-go’ so to speak, where Alexa could possibly replace Siri.”
Nikki Baird, Managing Partner at Retail Systems Research (RSR): “I think Echo Show is the most important investment Amazon has made around Alexa. Voice is great for asking questions, but it’s not necessarily so good at giving answers, not when a picture can be worth a thousand words.”
Mike Kim, Director and Head of Center of Data Excellence (CODE) at AArete business consultancy: “Given Amazon’s known mastery of supply chain, it would be logical for a combined Amazon/Whole Foods to push further into food, by acquiring food distribution or delivery companies.”
Jim Fosina, CEO of Fosina Marketing Group: “Amazon now needs to think outside of its channel by leveraging the personal transaction data that they have about customers’ affinity to brands and sectors to be more proactive in connecting with their customers. This could be Amazon Advice or Amazon Alerts.”
The experts also shared 4 predictions, noting that Amazon will:
- Increase emphasis on original Prime content to retain and acquire new customers;
- Prioritize fashion, which already is being realized through its Prime Wardrobe service and its ongoing launches of private label brands;
- Expand the Alexa platform to power more professional services outside the home; and
- Enter India and China markets.
Read on for more detailed insights from each industry expert.
Charlie O’Shea, VP and Lead Retail Analyst at Moody’s Investors Service
It’s really hard to measure where Amazon is going to be. I was on CNBC several days ago and I characterized it as almost a laboratory experiment.
Amazon is spending a lot of money on Prime — the content spend — and we’ve been saying for a while that the content part of Prime is where a lot of the value lies, and that’s why the company’s spending a lot of money there. We are betting the lion’s share of Amazon’s investments will turn into profits over time, and the content side is driving Prime memberships. Anybody can ship for free, but no other retailer has built an ecosystem of content like Amazon has to support Prime. When you look back at the products that sold heavily on Prime Day, it’s mostly Amazon’s proprietary content delivery products.
It’s clear that Amazon wants to do more in food; that’s an easy one. And it’s clear the company felt it needed a brick-and-mortar partner to scale food more rapidly. Apparel is an area where there’s obvious room for growth. I don’t want to say consumer electronics is played out, but a lot of the low-hanging fruit is gone there.
I know there has been public comment on certain segments, but I’m not sure they are that advantageous to Amazon — pharmacy is tough, for example. Walgreen, CVS and Rite Aid are fairly well embedded. I’ve seen some reports saying, “Is Amazon getting in that business?” but a lot of the pharmacy benefit managers (PBMs) [have already tried] online prescriptions. I…