Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
The definition of a retailer is profoundly changing. The Internet did much more than create a new class of merchant or merchandising channel.
At the beginning of the last century, the word retailer typically defined someone who ran a local store. Then came grocery, dime, department and, finally, specialty store chains. The definition of retailer became nearly synonymous with that of the chain. Catalogers who didn’t operate stores were, well, catalogers. The advent of television merchandising brought those wild and crazy direct-TV merchants, but even less frequently than catalogers were they included in anyone’s definition of retailer. The fact was that before retailing came to the Internet in the mid-1990s, a retailer ran stores; a cataloger marketed catalogs; and a direct-TV merchant sold gadgets, anti-aging creams and greatest hits compilations that you couldn’t get in stores.
Fast-forward ten years and the definition of a retailer is profoundly changing. The Internet did much more than create a new class of merchant or merchandising channel. More than any other innovation in merchandising, the Internet created a space where all merchants compete on common turf. Plenty of chains do not have catalogs; name one that doesn’t have a web store. Many catalogers still have no stores, but they get more than a third of their business from the web. And those direct-TV merchants are all over the Internet.
As this column has noted before, the idea of multi-channel merchandising simply did not get traction until the web came along. Merchants of all types are on it, even the new “merchants” from the manufacturing sector who once shied away from selling direct to consumer for fear of “channel conflict,” a concept that seems positively quaint today. More important, merchants in all segments of the retail market are realizing the benefits of using the web to do what only the web can-link all the sales channels into a multi-channel retailing business.
So, is that the new definition of retailer, someone who sells stuff to consumers over a wide variety of merchandising channels? Not so fast. I believe the Internet has only begun to rewrite the meaning of the word retailer. As cable television and the Internet morph into a common medium that will re-shape communication in this century in the manner that TV and radio did in the last one, retailers may well find it beneficial to vastly expand their skills and scope or to partner with others who can help them grow beyond today’s concepts of merchandising.
As we report in this month’s cover story, being a retailer in the age of Internet TV involves much more than efficiently moving merchandise from factory to consumer. With the Internet-television merger, the retailer now has an unlimited opportunity to use the web to promote the sale of merchandise with electronic programming that informs, entertains, enlightens and persuades. The opportunity is not reserved to retailers. If they wait to expand the definition of retailing, the media and entertainment goliaths will be only too happy to fill that void. The media moguls have the entertainment and information business nearly locked up, and they’re already selling merchandise on the web. For any one of them, a massive increase in their stake in e-retailing is only an acquisition away.
So the idea of Amazon.com putting Bill Maher on its web site isn’t really a stretch under this new definition of retailer. Besides, their partnership goes way back. The books, movies and DVDs available at the comedian’s official web site (billmaher.com) are all sold through Amazon.com-even Bill’s 1989 flick “Cannibal Women in the Avocado Jungle of Death.”
Jack Love, Publisher