Who's afraid of Amazon.com? Walmart and QVC!
Two more signs that Amazon.com is rattling competitors: Shares of QVC (Liberty Interactive), the West Chester-based shopping service, fell more than 20 percent Friday, after it reported women's clothing sales had fallen this summer just as Amazon.com rolled out its own women's clothing sales platform.
Two more signs that Amazon.com is rattling competitors:
Shares of QVC (Liberty Interactive), the West Chester-based shopping service, fell more than 20 percent Friday, after it reported women's clothing sales had fallen this summer just as Amazon.com rolled out its own women's clothing sales platform.
After years of forcing department and big-box stores out of business, is Amazon "taking market share" from QVC? asked Barton Crockett, retail analyst for FBR Capital Markets, in an investor conference call Friday with QVC boss Michael George.
"The biggest drop was clearly in fashion, which had been the thing that was propelling our business," George admitted.
Still, citing internal customer interviews, George said QVC's heavy users - mostly working-age women - use Amazon for mundane purchases like "pet food and cleaning supplies," not clothes or other QVC mainstays. He said QVC expects sales to recover later this year. Shares rose nearly 4 percent Monday.
Meanwhile, in Hoboken, Marc Lore, the Bucknell grad who sold Diapers.com (Qdisi) to Amazon.com for $500 million six years ago, had another fat payday Monday. He, his partners, and their investors sold Jet.com, their high-tech warehouse development in Swedesboro near the Commodore Barry Bridge, and other assets, to Wal-Mart Stores Inc. for $3 billion in cash plus $300 million in stock.
With client sales of $1 billion a year from retailers including Barnes & Noble, GNC, Toys "R" Us, and Sports Authority (now in bankruptcy), Jet will now help Walmart, the nation's largest retail chain, try to catch up to Amazon's long lead in direct-from-the-warehouse retail.
Walmart wants Jet for the company's "dynamic pricing and sourcing," said Stefan Weitz, chief product and strategy officer at Radial (formerly eBay Enterprise), a King of Prussia company that manages mobile and online sales for retailers.
"One of Jet.com's value propositions is that they are able to reprice items in your basket, based on the other items you buy," Weitz told me.
"Jet is able to do this because they are constantly repricing their goods based on the [profit] margins they've decided they need to hit," and the savings from sending many items to a single buyer.
The software needed to match profit targets to inventory and location, adjust prices, and deliver on time "is a phenomenally complex computer science task" - and has special resonance for Walmart, Weitz added.
Jet's "dynamic pricing" recalls Walmart's former "Rollback" in-store price-cut program, which relied on old-fashioned inventory and sales tracking to target products for discounts.
By bringing back Rollback-like savings online, Jet.com makes Walmart more appealing to longtime customers as they move online, so they'll buy more and keep coming back, Weitz said.
The deal enriches Jet founders and investors: Jet raised around $470 million from venture capitalists at Boston's Fidelity and Bain investment firms, Philadelphia-based MentorTech, Accel Partners and Google Ventures of Silicon Valley, New Enterprise Associates of suburban Washington, New York-based Goldman Sachs, and others, mostly in 2014, according to SEC reports.
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