The two firms will become independent publicly traded companies in 2015. The move follows pressure from investor Carl Icahn to spin off the payments ...
Retailing has always been part theatre - and Amazon is taking that concept online, literally.
In his first interview on “Amazon Fishbowl with Bill Maher,” the live video program that premiered on Amazon.com in January, political humorist Maher quips to author Stephen King about the massive change underway in entertainment media while recalling a past interview from another realm. “A couple of months ago on my other show, on television,” he starts out, then interjects with a dismissive laugh echoed by King: “Television, so 20th Century.”
The studio audience of 300 people also joins in the laughter. And you can see and hear it all on Amazon.com, where the premiere Fishbowl show is still available in an online video file.
Television and video programming aren’t going away any time soon, of course, and video on the web is not a new thing for retailers, who have been offering early versions of it for years. But now TV and video programming are being repackaged, redistributed and retargeted at consumers via the web like never before. Online retailers like Amazon.com Inc., J.C. Penney Co. Inc., Nordstrom Inc. and Wal-Mart Stores Inc. have emerged under this new light as more than just retailers, but also as developers and distributors of customer-engaging entertainment that opens up new ways of selling merchandise.
“This has the potential to generate a whole new approach to online retailing, in books, music as well as other products,” says Todd Shanko, an analyst who specializes in TV, film and digital products industries for Jupiter Research. Analysts note that the success of such online media is due in part to the spread of broadband Internet access into homes. A stunning 68% of all households with Internet access connect via broadband, Nielsen/NetRatings reported in March.
Not surprisingly, Amazon is taking the lead in innovation as the first to run live programming produced exclusively for a retail web site. “Amazon is once again raising the bar for everybody by teaching consumers to do things differently,” says Amy Klaris, a New York-based retail strategist at consultants Kurt Salmon Associates. “Amazon taught people how to buy online and had a good experience that benefited all retailers. Now they’re teaching consumers they can elect to watch something rather than wait for something to be advertised to them.”
And, she adds, consumers now have the instant ability to purchase what’s featured in the video programming they’re watching. As Maher interviews King, for example, just below the online video clip are promotional content and hot links enticing viewers to buy the main topic of the interview, King’s novel “Cell,” as well as other works by King and other authors.
While it’s too soon to know if adding entertainment to a retail web site actually drives sales, industry expectations are high. “Whatever a retailer’s niche, this entertainment-generated traffic will be very valuable,” says Mary Brett Whitfield, analyst and senior vice president at consultants Retail Forward Inc., Columbus, Ohio. “Retailers should be able to drive higher conversion rates by commanding their attention with entertainment at the point of purchase-a strategy the web makes possible by the ability to show a video and a buy button on the same web page.”
Looking for compelling
Other leading retailers, meanwhile, are making major inroads as entertainment-producers in their own right. “If the entertainment medium makes you compelling as a place to shop, it differentiates you from the competition,” Whitfield says.
Wal-Mart’s Walmart.com is setting up musicians in music video recording studios around the country to produce unique music videos that can be purchased only through Walmart.com’s Soundcheck service or on CDs in Wal-Mart stores. “This is expanding our relationships with customers, because music is an important part of their lives,” says Cameron Janes, senior music business manager at Walmart.com. “We’re bringing compelling content to them and enhancing their ability to discover new music.”
J.C. Penney, in its multi-media and multi-channel sponsorship of this year’s Academy Awards, ran its Oscar-night TV commercials on its retail web site, JCP.com, and on special Oscar sites offered by AOL and Yahoo. The online versions of the TV spots are identical to those shown on TV-fun-filled, rock-music-enhanced displays of how women and men in J.C. Penney’s exclusive apparel designs turn heads and set off car alarms-but with the added feature of letting viewers click the video to instantly purchase online the items worn by the commercial’s model-actors.
Retailing as entertainment, while offering new ways to engage consumers, is also providing new ways for retailers and suppliers to collaborate, creating new forms of cooperative marketing as well as new revenue streams for retailers.
“This is all part of Amazon’s ongoing effort to help customers discover new films, new music and new books, and help the creators of those works to find new audiences,” an Amazon spokesman says.
Likewise, the Soundcheck service enhances Wal-Mart’s relationship with its music label partners as well as individual artists, Janes says. “We’re constantly looking for new ways to give recording artists new visibility in the market and helping our music label partners offer something unique,” he says. “Music labels have been coming to us asking for more opportunities to expose their artists.”
Moreover, both Wal-Mart and Amazon are incorporating paid sponsorships into their online entertainment. “Retailers are thinking of themselves as more than just retailers,” Whitfield says. “They’re looking to see if they can leverage the traffic to their web sites by selling advertising.”
Wal-Mart, while creating a new advertising venue in Soundcheck, has enlisted Proctor & Gamble Co.’s Gillette brand to sponsor both its online music videos and complementary in-store promotions. “We’re extremely pleased to be working with Gillette on this exciting new music performance series,” a Walmart.com spokeswoman says.
The Amazon Fishbowl series includes video commercials by sponsor UPS. And, expanding the sponsorship into the homes of Amazon customers in a “reality” form of entertainment, UPS and Amazon are cooperating on a deal that shows video clips of celebrities joining UPS drivers to personally deliver orders. A preview of the Fishbowl program-at Amazon.com/entertainment-shows a clip of comedian/writer/director Paul Reiser arriving in a UPS truck to deliver a copy of the DVD of his movie, “The Thing About My Folks,” to a customer who had ordered it through Amazon.com.