Amazon: Frenemy or Enemy?

Art Peck, Gap CEO at the company's annual investor meeting recently said:

“To not be considering Amazon and others would be -- in my view -- delusional. We are always considering all of the opportunities beyond our traditional mix of channels and stores. Amazon is certainly one, and there are others as well.”

The comments resulted in a frenzy of comments from analysts to industry insiders asking whether Gap has lost their mind. So much so that Art had to quickly retract his comments by stating in no way is this an indication of an imminent partnership with Amazon. 

Despite the comments, Peck is right. The impact of Amazon on the retail market, customer expectations and customer service is undeniable. Let's just focus on the Apparel industry in the US, Gap's current top market and consider these facts:

  • Amazon will be the largest apparel retailer by 2017
  • Amazon ranked #1 in customer satisfaction when compared to other internet retailers and retailers
  • Half of US households will be Prime members by 2020
  • 45% of shopping searches begin on Amazon
  • 61% of merchandise sold on Amazon was by 3rd party sellers that can control their price, inventory, marketing and brand aesthetic

Based on the above, why wouldn't you consider working with Amazon and at least listing product as a 3rd party and not selling directly? Without Amazon in your arsenal, your product isn't part of the largest marketplace filled with captive and satisfied customers thoughtlessly pressing one-click buy buttons. Gap's product is already on the site, why not control what's on the site and use it to your advantage. Maybe focus on only selling clearance. Maybe focus on only selling one particular line.

The point is that Amazon allows you to own control of your brand if you so desire. Retailers and brands that realize this and use Amazon as a frenemy will be those that ride the coattails of profitable ecommerce growth in sales and awareness.