But the social network’s advertising revenue grew 18.4% during the quarter.
Amazon’s apparel test site has inconsistent information, mixed up graphics and a confusing policy about gift certificates, say analysts who have checked the site out.
Amazon.com’s apparel venture is off to a rocky start, say analysts who have tried out the site that launched yesterday. “It’s a mess,” concludes one analyst who clicked on earrings and found watches and on socks and found backpacks. In addition, many of the products on the thumbnail pages carry the notation “no pricing information available” yet the price appears when the customer clicks on the item.
“It’s a test site but there were still more than the average number of glitches you might anticipate,” says Mary Brett Whitfield, senior vice president of Columbus, OH-based consultants Retail Forward Inc.
More problematic than technical snags, which analysts have no doubt Amazon will fix quickly, were bigger issues, such as what it will take to make Amazon an apparel destination and how the apparel shopping experience at Amazon fits into Amazon’s technologies and processes and those of the apparel retailers.
“They appear to be a long way from having a complete apparel experience, like they have in electronics, books and office supplies,” says Lauren Freedman, president of Chicago-based consultants The E-tailing Group Inc.
Even more troublesome, says San Francisco-based retail analyst Duif Calvin, is that Amazon gift certificates are not valid at the apparel shops, a condition that Amazon does not reveal to the customer until checkout. “Gift certificates should be a positive experience,” Calvin says. “The worst thing that could happen is for the giver to give a certificate that the recipient can’t use and then it makes it worse when recipient doesn’t even find out until checkout.”
Further, Calvin says, it appears that the individual retailers’ gift certificates are not good at Amazon.
Amazon has addressed clearly one area that some analysts felt would be a problem: return to stores. Many of the merchants doing business with Amazon allow customers to return online merchandise to stores and some analysts questioned whether that would be true with the Amazon stores. The answer: Yes. Each retail page has a returns policy link at the bottom of the page and most state explicitly that Amazon purchases can be returned to stores.
Some analysts continue to question the strategy of these apparel stores for both Amazon and the retailers. Some say that Amazon will have difficulty switching from their market-leading merchandising and selling of commodity goods, such as books and electronics, to apparel. Others believe that this test may be part of along-term strategy by the retailers--especially those with a chain store base--to get out managing web-based selling. “I’m hypothesizing, but some of these retailers might be hoping to get out of the business of running their own web sites in the long term, especially since some of the store-based retailers have seen that the incremental sales from online are going to be small,” says Whitfield of Retail Forward. “Maybe they are trying to wipe out the expense of running their own sites and aggregating their traffic through Amazon.”
With the new stores, Amazon is tapping into a significant market. At $1.3 billion in the third quarter, apparel and accessories is the third largest category of sales on the web, behind computer hardware at $2.6 billion and office supplies at $1.4 billion, reports comScore Media Metrix. Growth in apparel sales was 22% over Q3 last year.
Meanwhile, Amazon’s 25.6 million unique visitors in September surpassed the 22.3 million shoppers to sites that primarily sell apparel, comScore Media Metrix says. Crossover traffic was only 38% of Amazon’s traffic--9.9 million consumers at Amazon also shopped at apparel sites, comScore says. And that may be good for the apparel retailers, says Ken Cassar, senior analyst with Jupiter Research Inc. “The big apparel sellers online are mostly catalogers,” he says. “And the bulk of their customers online may be people who already are buying from their catalogs. So while they’ve successfully shifted customers from the catalog to online, Amazon offers the potential of bringing them incremental business.”
Amazon will not comment on the apparel project, other than to say that everything it has to say it said in an e-mail to customers encouraging them to try out the apparel site and earn a $30 Amazon gift certificate if they buy $50 worth of merchandise. Apparel is not on Amazon’s home page yet, but is accessible through Amazon.com/ruby.