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Robin Gaster

President, Incumetrics
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  • Posted on: 02/19/2022

    Amazon says first clothing store will be a fashion and technological revelation

    Sounds just like Amazon in groceries, which will be an enormous and expensive failure. Technology-push projects at other companies have failed for decades ... and there is no sign at all that Amazon has any significant competitive advantage in either fashion or bricks and mortar generally. QR codes will transform B&M shopping? Really? Waiting for delivery to a dressing room is better than simply picking clothing off the rack? Amazon will offer double the number of styles provided by competitors at similar size stores? So either it can magically create space in demand, or it will carry fewer sizes or fewer copies of each style. The former in particular is problematic. This is Amazon looking for ways to grow the top line as that becomes more and more difficult (given the scale involved). And as with other B&M efforts ( eg Amazon Fresh), there is no evidence whatsoever that Amazon's tech will tip the balance in a highly competitive environment in which all of Amazon's real competitive advantages don't apply.
  • Posted on: 02/14/2022

    Amazon Care reaches across the country

    This is part of a much bigger conversation about Amazon and healthcare. It has enormous ambitions right across the healthcare stack, from wellness to infrastructure of hospitals and health care system. Most important in the long run, Amazon wants to become the gateway to the healthcare system via Alexa. See my article on Amazon and healthcare.
  • Posted on: 02/14/2022

    What is it about Amazon’s retail profitability that we just don’t get?

    Amazon's recent financials illuminate the reality that it's not a standard retail business, where revenues from customers covers costs and profits. Instead, it's a complex web that built on four distinct revenue streams -- customer revenues, Marketplace fees, Prime subscriptions, and Advertising. Those multiple streams let Amazon sell in retail often at below nominal cost, while still making a profit. Together, they cover the enormous lake of red ink generated by Amazon's s own retail operations. Other big retailers cannot match this -- they don't have Prime, they don't have a working Marketplace at scale, and they don't have a monster advertising business. This new model is laid out in my article below, and in more detail in my book "Behemoth, Amazon Rising."
  • Posted on: 07/12/2021

    Are Amazon’s ‘warrant’ partnering deals monopolistic?

    From the company's perspective, they are clearly being bullied into something that is likely I their best interest: not only will the stock bump, Amazon will be more likely to keep them as a vendor - reducing an enormous source of uncertainty, especially as Amazon is now running Vendor Central by AI as much as possible. More broadly, however, this is just more of the same: the Amazon Behemoth maximally exploiting the existing rules to its own benefit, using its weight to get what it wants. Even though I believe this is perfectly legal (I am not a lawyer!), it shows just how Amazon sees the world: as the lion in a savanna full of prey. Amazon is the biggest, smartest, and most ruthless predator we have - and one that in this case (as in many others) delivers important benefits to its prey as it feasts.
  • Posted on: 07/08/2021

    Could Dollar General become a go-to healthcare resource in rural America?

    Mohamed, you put your finger on it. DG is well placed to provide very modest additional categories in pharmacy deserts. Period. Not services, not expensive products (and most prescription AND nonprescription medical items ARE expensive, not prescriptions. In short, this is an extremely modest initiative, basically adding categories that DG probably should have added years ago. No threat to Walmart, CVS or anyone else.
  • Posted on: 07/02/2021

    Will online reviews keep their Teflon reputation?

    Excellent points, Doug. Ironically, Amazon's default setting of "best" reviews is far less reliable than "most recent." Amazon's recent call for social media companies to fix the problem is really just nonsense. The professional business press has dutifully reported Amazon's claims even though they literally make no sense at all: how exactly is Facebook supposed to police Amazon's platform? The problem of course is with Amazon -- it's recent shift to allow star reviews with no text (which generates many more reviews) encourages fake reviews by not even requiring English language capabilities.
  • Posted on: 06/30/2021

    What does it take for stores to satisfy their pickiest customers?

    Perhaps companies should consider how many of those "picky" customers they can afford. These customers are expensive in time and resources, so they present a classic top line/bottom line contradiction. Expert retailers know that they want the right customers, not just any customers, for precisely that reason.
  • Posted on: 06/30/2021

    Did Amazon or a rival, say Target, gain the most from Prime Day?

    There is nothing at all here to suggest that Amazon lost ground over Prime Day. The slower gains were inevitable given its existing dominance. What matters is that Amazon continues to pivot strategically away from its own 1P business toward a future dominated by 3P sellers on the Marketplace. Thrasio's claims seem to ignore its enormous acquisition activity -- so it seems likely that 2020 to 2021 is not an apples to apples comparison.
  • Posted on: 06/10/2021

    Does every online retailer need to have a third-party marketplace?

    This is beyond stupid. Marketplaces require a critical mass of both sellers and customers. Without enough sellers the catalog is bare, and without enough customers there are no sellers. Hudson Bay and Lands' End have no chance of gathering either. It is possible to build a marketplace to challenge Amazon - I recently wrote about Gearflow for example - but this isn't it. TBH there is no sign that either Walmart+ or the Target marketplace are meeting these twin requirements. It's also unclear what purpose this would serve. If modestly successful it would dilute attention from the host brand - the very thing it wishes to avoid - in exchange for a modest increase in customer visits.
  • Posted on: 05/27/2021

    D.C. attorney general sues Amazon for price fixing

    There's no doubt Amazon twists the arms of its sellers to keep prices low — just as the DC suit states — in multiple ways. It eliminated the relevant clause in its seller agreement a few years ago, but the objective and many of the methods are the same. However. Antitrust is in general an exceptionally blunt instrument, and one that's unlikely to change Amazon's behavior significantly, especially in light of court rulings over the past 4 decades. But this suit is not even aimed at the most important target at Amazon. My analysis in "Behemoth, Amazon Rising" shows that Amazon loses massive amounts on its own 1P business — so it is systematically engaged in predatory pricing. An antitrust finding on that point could indeed force major structural change at Amazon. Still, the wider problem with antitrust is that it's reactive, not proactive. It could take a decade to finally get a ruling, and by then Amazon would be a different company, and the targeted sellers would be out of business. It's like one guy with a harpoon trying to keep out an invasive species (for the fisher people out there). Instead, we need a new approach based on three pillars: a new set of principles to cover platform management; a new regulator to manage the big tech companies; and real time access to their internal information, based on the utility model of information access. Without those three pillars, Amazon can just laugh it off.
  • Posted on: 05/27/2021

    Is retail going to the ‘doges’ with cryptocurrency?

    A bad idea, at least for now. These "currencies" are extremely volatile, so it's hard to maintain accurate dollar pricing in real time. That's a lawsuit waiting to happen. And which cryptcurrencies to accept? Bitcoin? probably. Dogecoin. Not necessarily. Ethereum? Others? Who knows. All this in order to be part of the cool crowd. Because one thing is for sure: accepting these currencies surely won't cause lines of new customers outside your doors. There's also no rush here. Retailers can afford to lose the handful of customers who might be offended that "their" currency isn't accepted. Maybe five years down the road things will be different, but for now, risks massively outweigh gains. It's a no for me, Katy.
  • Posted on: 05/03/2021

    Why did Amazon open a hair salon?

    This is mostly about the tech. Finding good commercial use cases for VR has been hard outside gaming, so this is an opportunity to test customer adoption and acceptance. I doubt the actual beauty business (especially the retail side) is a significant target. Too labor intensive.
  • Posted on: 04/17/2021

    Should Amazon open clearance stores?

    Why is further involvement in physical stores a good idea for Amazon? Here's a quote from Jeff Bezos: "I often get asked, 'When are you going to open physical stores?' That’s an expansion opportunity we’ve resisted. It fails all but one of the tests outlined above. The potential size of a network of physical stores is exciting. However: we don’t know how to do it with low capital and high returns; physical-world retailing is a cagey and ancient business that’s already well served; and we don’t have any ideas for how to build a physical world store experience that’s meaningfully differentiated for customers." Nothing has changed on this since 2006 when Bezos wrote that.
  • Posted on: 03/28/2021

    Amazon’s no good, very bad PR week

    Amazon has internal contradictions that drive this. Amazon seeks employees who are committed to the cause, and it validates its own behavior by constant reference to its North Star: the great god of the customer. So it finds it very hard to accept that workers are not in fact committed, and that they don't see bad working conditions as a kind of badge of honor. From Amazon's perspective, the problem is always with the worker, and with outsiders (like Bernie) who have an axe to grind. It generates a peculiar and wide-reaching blind spot. By definition, everything Amazon does is for the customer and hence good. Outsiders just don't get it. And insiders who raise a fuss are also by definition breaching the prime commandment. So it's not that Amazon regularly stumbles over PR by accident; it genuinely believes that there is nothing to see here. Cults usually have a hard time understanding what others find objectionable.
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