Amazon Vs The Department Stores – Wholefoods & Wardrobes
- Has Amazon declared war on the department stores?
- Amazon acquires Wholegoods in the USA
- Amazon announces Prime Wardrobe, try before you buy service
- Walmart buys Bonobos to expand its online fashion reach
Amazon is arguably dominating ecommerce in the western world and that is likely to be the case for the foreseeable future, but, Amazon has now gone one step further in what can only be seen as their plan for global retail dominance.
Amazon in a matter of days has acquired Wholefoods and launched its new “try before you buy” clothing service, Prime Wardrobe.
So who are Wholefoods, why the big deal about Prime Wardrobe, are the department stores fighting back and what does it mean for the online seller?
Who are Wholefoods
Whole Foods is an American grocery chain that supplies natural and organic foods through an array of brick mortar stores. Amazon acquired Wholefoods for $13.7B in cash.
This move has not only has it allowed Amazon to expand its own reach into the Organic food industry (as many online retailers in this industry have now been asked to produce their certification and fill in additional specifications) but it also gives them a new platform to expand into traditional brick and mortar which they have been dabbling with by owning a few stores.
What is Amazon Prime Wardrobe
Amazon has answered the answer to the uncertainty of buying clothing online, now if you are a prime member you can select a number of clothing items in a “try before you buy” scheme. Amazon will send you a box of clothes with free shipping to you and also free return shipping to them.
Unlike services such as Stitchfix and TrunkClub, the buyer gets to choose the their items to put in their box. Additionally if the buyer decides to keep two to three items then a 10% discount will be applied. A further discount of 20% will be applied for those who pick four or more items.
At the moment, not all clothing sold on Amazon will be eligible but the ones that are will be marked with a logo for the service. Currently there are over 1 million products available on Prime Wardrobe.
Walmart fights back with the acquisition of Bonobos
Well there is one department store that is not taking Amazon’s expansion plans lightley. Walmart, already having their own online marketplace, acquired JET an additional online marketplace and are now buying Bonobos, the online fashion retailer for $310 million… cash.
This is a clear strategy to expand their ecommerce presence and take the fight back to Amazon on their front door. The acquisition of Bonobos is a direct counter move to Amazon’s Prime Wardrobe and it will be interesting to see what Walmart does with Bonobos in the future.
What does this mean for the Online Seller
Both Amazon and Walmart are playing a giant metaphorical game of retail chess, and why this is happening it does leave a small window for some online sellers who are willing to push hard.
But let me reiterate, this is a small window, Amazon & Walmart, unlike eBay and Etsy are not just online marketplace but retailers themselves. Much like when mobile/cell phone shops early on where ran by independents, a lot of them were acquired or crushed by national chains, this is going to be the same in ecommerce.
If you have your own brand (or white label goods) then you have 3 options:
- Carry on doing the same (get crushed)
- Plan for a buyout (work hard on your brand)
- Become a retail giant (work harder on your brand and offering)
It is vital that if you are relying purely on Amazon then you NEED to expand to other marketplaces and also take real focus on your online store. To have your eggs in one basket is dangerous and to not have a website with decent turnover means you are not really a brand but another online seller that can be replicated.
If you are a reseller of other branded goods then this is the time to start worrying, unless you products are very niche and you don’t make too many sales then Amazon has the data a trends on how well your industries do. It is time to expand your offering and look at creating your own brand of products.