Monday, June 15, 2015

Have Department Stores A Better Future Than Amazon?

The topic is a bit catchy, but people tends to critique a lot Amazon's strategy and inability to deliver profits and deliver dividends to share holders. Indeed, and this is my vision of things, brick & mortar retailers have a bright future ahead of them in the war on the Internet that has already started. 

The idea is based on two things:
  • The store network Macy's own, which allows to provide better customer service than a pure player.
  • The technology Macy has developped to provide great mobile application, up to date in store and online inventory, and to have a better interface with customers.
Scott also remarks that Amazon spent $6.6 billion on delivery and received $3.1 billion in shipping fees, but I don't believe it matters as Amazon has its own business modell, and obviously, Macy's also have costly service it proposes to customers that don't have a direct return on invstment.

Indeed, I believe that Macy's has a bright future ahead of him, for all these reasons, and for sure other brick&mortar will earn a large marketshare of the new Ecommerce world. Nevertheless, we should not understimate Amazon. I know that I have questionned a lot lately their ability to perform on a long term, as they still don't have no profits and don't deliver any dividends. But Amazon has:

  • A strong brand 
  • A strong customer service and customer relationship
  • A large market share that will help him keeping an edge on competition
  • A technology that allows him right now the larger choice on eath on pretty much anything
  • A robust supply chain, which is efficient and fast to deliver
  • And still have a lot of rooms in category they are not working yet, or with a lot of room for growth (cosmetic, petfood, dairy products...)
Amazon has a lot of tools to compete and to remain the leader online, but as the article points out, the battle will be rough, and has already started.