From bookseller to virtual megastore, in 2016 Amazon rocketed to the top of the apparel market, leaving everyone except Walmart in its dust. The company now holds 7 percent of the apparel market pie beating Target and Macy’s by nearly 2 percent. Morgan Stanley estimated that the Seattle-based e-tailer’s clothing sales increased by $1.1 billion by mid-2016. By comparison, Macy’s, Nordstrom, Sears, Kohl’s, J.C. Penney and Dillard’s together lost $660 million.
Not content to simply sell products, it seems Amazon wants to control the whole supply chain. Amazon is testing the waters for a move into the $350 billion freight forwarding industry. In a move that’s sure to make waves, Amazon China has filed paperwork with the Federal Maritime Commission. The company is said to be capitalizing on the low costs in the sector brought on by low demand.
In a bid to entice more people into Prime memberships, which guarantee fast, free shipping, the online marketplace upped the amount non-Prime members must spend in order to be eligible for free shipping. Once $35, shoppers must now commit to at least $49 in goods to enjoy the perk. The hope is that having to pay for deliveries will make customers see the value of Prime. And once addicted, these consumers won’t be able to resist the siren call of free shipping, making additional purchases on the site an obvious no-brainer.
Private label, the secret weapon of apparel retailers everywhere, is now the focus of Amazon’s latest push into fashion. Early last year, seven collections launched on the site with little to no fanfare followed by subsequent clothing debuts. The e-tail giant hopes to mimic the success it has had with private brands in other categories like batteries and diapers for which it is rapidly taking market share. Armed with years of extensive customer data, the retailer is poised to be a formidable threat to traditional retailers.
To keep up with its growing universe of Prime members, who expect speedy deliveries, Amazon is expanding. Prime Air, the Seattle-based e-commerce company’s first branded cargo plane, debuted along with an announcement that the retailer would add 40 additional Boeing 767-300 cargo planes to its fleet of 11. The planes joins its network of 4,000 trailer trucks, 125 fulfillment centers and 20-plus sorting centers.
To alleviate issues with deliveries within the EU, Amazon now stores and delivers vendors’ goods. European sellers now have access to the retailer’s 29 distribution centers in the region. The move should encourage more sales, as 50 percent of Amazon vendors in the EU sold goods in multiple EU countries during the first quarter of 2016.
Chinese shoppers can now enjoy near instant gratification via Prime’s free shipping model. Amazon hopes the membership offer will help it chip away at behemoth Alibaba, which already offers free shipping. It could use the boost. So far, it’s estimated that the e-tailer has little more than 1 percent of the market.
Amazon expanded the number of products available to Prime members by authorizing vetted vendors to use the service’s coveted badge and ship directly to consumers at Prime speeds. The Seller Fulfilled Prime program opened the service up to 6 million new products in the U.S., U.K., France, Germany and Japan. These products are sure to see a boost, as Prime members tend to gravitate to those goods that are eligible for free delivery.
Amazon is planning to capitalize on the gig economy, creating an app that taps into a fleet of on-demand freight carriers. Let’s call it Amazon Uber. Though not scheduled to launch until mid 2017, it got plenty of 2016 tongues wagging. The move, which allows truckers to find shippers in need of their services, cuts out the broker and their 15 percent commission. While the retailer isn’t the only player looking to disrupt the logistics market, it’s the only vertical with products and consumers already in place.
The mega retailer piloted person-less package distribution with its first drone delivery in the U.K. The delivery, which consisted of the company’s Fire TV stick and some popcorn, arrived in just 13 minutes. (Take that Amazon Prime Now!) Dubbed Amazon Prime Air, the drone force is the e-commerce giant’s latest attempt to make purchases instantaneous and circumvent third-party delivery companies. No word on when the company will gain the air rights to unleash its fleet of drones in the U.S.