Walled Gardens Limiting Consumer Choice; Acquisition of Body Labs Brings Amazon Closer to Matching In-store Experience

RetailTechNews’ weekly Amazon Watch brings you some of the company’s biggest moves from the past seven days, analysing how the giant is revolutionising the retail space. In this week’s edition: Walled gardens limiting consumer choice; Acquisition of Body Labs brings Amazon closer to matching in-store experience; Creation of digital pocket money will boost teen loyalty; and New delivery services will improve Prime Now capabilities.

Walled gardens limiting consumer choice

Commerce companies are concerned about the rise of physical-digital giants and their maintenance of walled gardens, such as Amazon, according to research by Criteo. Retailers and brands are unsettled by this industry-wide disruption and how it will affect their ability to compete in the marketplace.

Data held within Amazon’s walled garden will offer shoppers two things: more targeted offerings and decreased choice. If Amazon has access to the bulk of a shopper’s history, they are able to better engage them with offers of other products they may be interested in. Dependant on the individual, this could help them get the products they need in a quicker manner, or could disengage them with over-targeted adverts.

With Amazon in control of so much customer data, if they are able to create engaging ads suggesting additional purchases, consumer choice will suffer. The findings show that 62% of retailers feel large-scale walled gardens cause consumers to turn away from small retailers, who cannot offer the same level of targeting or convenience, while 58% say walled gardens make it harder to compete overall. As Amazon’s walled garden strengthens, smaller retailers will be unable to compete, and many could go out of business, cutting consumer choice.

However, though walled gardens might represent a death knell for smaller retailers, it’s not so bad for consumers. Two-fifths (41%) of respondents believe the greatest business outcome from working with a walled garden is improved customer satisfaction. The relevance of the products offered to shoppers is clearly deemed enough to offset the lack of choice.

Acquisition of Body Labs brings Amazon closer to matching in-store experience

Amazon has acquired Body Labs, a startup specialising in 3D body scanning and modelling software for fashion and gaming applications. The purchase is thought to have been for between USD$50m-USD$70m.

The technology is used to predict and measure the 3D shape of your customers from a single image, helping fashion brands get the right fit for a customer using a mobile app. It is expected that Amazon will use Body Labs’ technology to improve its fashion business, with Jeff Bezos recently diverting funds into private-label fashion brands and Amazon Wardrobe.

The purchase should act as a warning sign to major retailers, both online and brick-and-mortar, and it represents Amazon’s latest step in matching the in-store experience. Not only can shoppers virtually try on clothes, but earlier this year the launch of the Echo Look enabled shoppers to take selfies, and have styles suggested for them. At present, smaller brick-and-mortar clothing retailers rely on their in-store experience (the ability to try on clothes, make sure they fit etc.) to maintain their customer base.

If Amazon is matching these offerings from the convenience of a shoppers home, what chance do brick-and-mortar stores with limited online offerings have for survival?

Creation of digital pocket money will boost teen loyalty

Kids aged 13-17 years old can now use their parents’ accounts to create their own login and account on the Amazon app. This will allow them to shop or stream content under digital parental supervision. Parents get a text or email to approve each order.

This move comes at a time when brick-and-mortar stores catering to teens are having a particularly tough time staying afloat. Kids aren’t spending their time in shopping malls anymore, and commerce is moving increasingly online. The creation of what is essentially online pocket money for kids means that, while the likes of Abercrombie & Fitch, once a mainstay with teenage audiences, fail to connect with new teenagers, Amazon is there to welcome the new generation of shoppers with open arms.

However, while traditional shopping malls are becoming relics, Amazon is fast making itself a digital mall, allowing kids to spend money and watch videos on one platform. It will drive loyalty among parents too, looking for a safe online environment for their kids.

New delivery services will improve Prime Now capabilities

Amazon is trialling a service called ‘Seller Flex’, to provide delivery services for customers on its platform. The service involves Amazon managing the package pickup of its goods, all the way through to delivery. While this doesn’t mean the retail giant will cease to work with the likes of UPS and FedEx for completing the deliveries, it does give Amazon control over how and by whom packages get delivered.

From a consumer perspective, the move should expand Amazon’s Prime Now capabilities – the company’s quickest delivery option – as delivery logistics will be better managed. This will mean more goods which will be with the customer only a few hours after confirming the purchase online. Amazon is making the shopping experience as quick and convenient as possible.

Of course, this is bad news for competing retailers. With the deals it already has in place with giants such as FedEx, and these enhanced delivery offerings, no one will be able to match Amazon for speed. This means online retailers will have to convince shoppers that speed of delivery is not the be all and end all of e-commerce, as they try to find other ways to better Amazon.