Author Topic: Amazon's big picture game plan  (Read 2039 times)

Offline dealfinder11

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Amazon's big picture game plan
« on: May 15, 2017, 03:29:55 PM »
The 10 hour price war that ensued last week was a cool event with many happy beneficiaries. I myself purchased a desk for $25 and a Futon for $50. But to suggest that the two largest retail titans of our life time would simply attempt to out maneuver each other to declare victory doesn't make much sense. Russia and the United States don't throw water balloons at each other.

So what did occur last Tuesday? Perhaps Walmart was experimenting with a "get customers in our stores tactic"? or maybe it was just a publicity stunt to establish a strong position in online retail (though it didn't seem to attract much national attention)? It's hard to say without a real source.

So what is Amazon's real game plan? How do they plan on delivering furniture, more efficiently? Well the Wall Street Journal posted a story on it on Friday.

https://www.wsj.com/articles/amazon-makes-major-push-into-furniture-1494581401

Interesting that they neglected to mention the water fight from just 2 days before, huh?

Offline yitzyk

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Re: Amazon's big picture game plan
« Reply #1 on: May 15, 2017, 04:41:22 PM »
Care to cut and paste the text so we can actually read it (without subscribing)? Otherwise I have no idea what you are referring to.

Offline Dan

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Re: Amazon's big picture game plan
« Reply #2 on: May 15, 2017, 04:42:27 PM »
Care to cut and paste the text so we can actually read it (without subscribing)? Otherwise I have no idea what you are referring to.
Make a Chrome bookmarklet:
javascript:window.location="https://m.facebook.com/l.php?u="+encodeURIComponent(window.location.href);

And click on the bookmarklet when at the paywall...
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

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Re: Amazon's big picture game plan
« Reply #3 on: May 15, 2017, 05:07:06 PM »
Make a Chrome bookmarklet:
Code: [Select]
javascript:window.location="https://m.facebook.com/l.php?u="+encodeURIComponent(window.location.href);
And click on the bookmarklet when at the paywall...
FTFY  :)

Offline dealfinder11

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Re: Amazon's big picture game plan
« Reply #4 on: May 17, 2017, 12:55:03 AM »
In a news article today focusing on Wal-mart's approach to dealing with new rivals in the brick and mortar low-cost grocery market, the WSJ shed some light on Wal-mart's overall approach and policy to adapting to competition in all evolving marketplaces, including Amazon. And I quote

"Lidl’s ar­rival and Aldi’s growth come at an al­ready fraught time for the U.S. gro­cery in­dus­try. Food-price de­fla­tion has eaten into gro­cers’ earn­ings for the past 17 months as of April, the long­est stretch of year-over-year de­clines in re­tail food prices since 1956.
Though that trend could be eas­ing, econ­o­mists say, Wal-Mart is con­tribut­ing to it by mak­ing its own price cuts to shore up its low-cost im­age. Its ex­ec­u­tives have told sup­pli­ers that its prices should be 15% lower than com­peti­tors’ 80% of the time, as it fights on­line re­tailer Ama­zon.­com Inc. and other dis­coun­ters."

(You can read the full article here
https://www.wsj.com/articles/why-wal-mart-is-worried-about-a-german-grocer-1494927001)

Offline Live N Learn

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Re: Amazon's big picture game plan
« Reply #5 on: May 17, 2017, 01:37:28 AM »
Care to cut and paste the text so we can actually read it (without subscribing)? Otherwise I have no idea what you are referring to.

By Brian Baskin and  Laura Stevens
May 12, 2017 5:30 a.m. ET

Amazon.com Inc. AMZN 0.85% wants to furnish your home.

The online retail giant is making a major push into furniture and appliances, including building at least four massive warehouses focused on handling bulky items, according to people familiar with Amazon’s plans.

With that move, the Seattle-based retailer is taking on two companies that dominate online furniture sales— Wayfair Inc. and Pottery Barn owner Williams-Sonoma Inc. Furniture is one of the fastest-growing segments of U.S. online retail, growing 18% in 2015, second only to groceries, according to Barclays. About 15% of the $70 billion U.S. furniture market has moved online, researcher IBISWorld says.

But even the biggest players in online furniture are struggling to get the market right. Unlike established categories such as books and music or even apparel, retailers are still hammering out basic concepts like how much variety to offer on their sites and the most efficient ways to deliver couches and dining sets to customers’ homes.


While Amazon has been selling furniture for years, it has lately decided to tackle the sector more forcefully.

“Furniture is one of the fastest-growing retail categories here at Amazon,” Veenu Taneja, furniture general manager at Amazon, said in a statement. He said the company is expanding its selection of products, with offerings including Ashley Furniture sofas and Jonathan Adler home décor, and is adding custom-furniture design services. Amazon is also speeding up delivery to one or two days in some cities.

The retailer already has an approximately 17% market share in the broader home-furnishings category, according to Morgan Stanley, and it is continuing to gain. The segment includes smaller items, too, such as cookware and towels.

While Amazon has disrupted industries from publishing to fashion with free and fast shipping and app-based one-click buying, furniture can be a tough sector to crack. For one, it costs a company more to deliver a couch and other big items because they take up more space, meaning a driver makes fewer deliveries on his or her daily route. Also, furniture customers typically want “white glove” services, extras like bringing the piece into the home, setting it up and removing trash.

About 15% of the $70 billion U.S. furniture market has moved online, researcher IBISWorld says.
About 15% of the $70 billion U.S. furniture market has moved online, researcher IBISWorld says. PHOTO: JOSEPH PHILIPSON FOR THE WALL STREET JOURNAL
Shoppers are still generally willing to pay for furniture delivery, but some retailers and logistics companies say they are facing growing pressure to ship online orders faster. Wayfair offers free shipping on orders over $49, but delivery times can range from one or two days to just over two weeks. Pottery Barn charges on a sliding scale based on price, with delivery costs running above $100 for more expensive items. Furniture sold and shipped directly by Amazon is free for Prime members and on orders over $25, while items sold by third-party sellers may cost extra.

To guarantee two-day shipping to 99% of consumers, a retailer or logistics company would need up to a dozen large warehouses spread around the country, plus around 110 smaller facilities to stage deliveries to customers’ homes, said Troy Cooper, chief operating officer at XPO Logistics Inc., which manages distribution centers and fulfills online orders for large retailers like IKEA. By comparison, a retailer can deliver furniture within a week to most customers simply by planting a large distribution center on each coast, similar to how they would manage inventory for brick-and-mortar stores, Mr. Cooper said.

Amazon is expected to rely on XPO and other third-party logistics providers to manage distribution centers and handle delivery of furniture and appliances for the near future, even as it brings more of its logistics in house in other parts of its business, people familiar with the company’s plans say. Amazon declined to comment on its delivery plans. XPO declined to comment on its relationship with Amazon.

Rising sales may be helping reduce the cost burden for online furniture retailing. Costs go up for transportation companies as deliveries get more spread out and infrequent.

“Just in the last year, furniture has taken off,” said Richard Phillips, Jr. , chief executive at Pilot Freight Services, a Lima, Pa.-based trucking company that makes larger e-commerce deliveries. The company’s No. 1 business-to-consumer shipment has shifted to furniture, from TVs.

Pilot is one of many logistics companies building out nationwide networks to handle bulky items as retailers look for cheaper ways to ship furniture and appliances ordered online. XPO made 12 million home deliveries last year, up from 9 million in 2015. Estes Express Lines, one of the largest U.S. trucking companies, started a “final mile” service in December after noticing retailers were mixing in more home deliveries.

A worker loads his forklift with furniture for delivery at a Wayfair facility in Perris, Calif.
A worker loads his forklift with furniture for delivery at a Wayfair facility in Perris, Calif. PHOTO: JOSEPH PHILIPSON FOR THE WALL STREET JOURNAL
These companies are filling in part a void left by United Parcel Service Inc. and FedEx Corp. , whose executives have complained about bulky items gumming up distribution centers designed to process millions of small packages at lightning speed.

“You go for what is the largest segment of the market,” said Carl Asmus, senior vice president for e-commerce at FedEx. “The sweet spot is not necessarily refrigerators.”

Boston-based Wayfair started building out its own delivery network about a year and a half ago, said Chief Executive Niraj Shah. The company got into doing its own deliveries because it is vital to retaining customers. “We built it primarily to drive quality, but secondarily it certainly gets you cost benefits at scale,” he said.

He said he isn’t worried about Amazon. The giant retailer is hardly a new entrant to the space, and it is hard to get the customer-service side of the equation right, he said.

Wayfair on Tuesday reported a nearly 30% increase in first-quarter revenue compared with a year earlier, beating most analysts’ forecasts. The company’s shares rallied 21% to an all-time high.

Home deliveries are “exponentially” more expensive but surging demand makes them worth it, said John Paiva, chief operating officer at Estes Final Mile. Estes Express Lines, which is based in Richmond, Va., plans to expand its new service to a majority of its more than 200 U.S. terminals by the end of 2017.

Before launching, Estes spent a year training drivers—more accustomed to dealing with warehouse dock workers—to interact with ordinary people, and built a database of instruction manuals for employees to use when assembling furniture in homes.

“If the driver is having a bad day or doesn’t understand the importance of greeting customers professionally, it can…tarnish the reputation of the [retailer],” Mr. Paiva said.

Write to Brian Baskin at brian.baskin@wsj.com and Laura Stevens at laura.stevens@wsj.com
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