Archives for June 24, 2018

Amazon Replaces Merchants with Bots: How Levi's, Wolverine Worldwide and Saks Can Compete

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I came across an interesting article in Bloomberg last week. Amazon has been synonymous with robotics and automation, but for the most part that has been relegated to stocking the shelves and other operational tasks in the warehouse. Interestingly, according to the article, automation is starting to take over the roles of the white collar workforce as well. The article states:

“Machines are beating people at the critical inventory decisions that separate the winners and losers in retail. For the staffers deciding how many books, games or plastic pool toys to peddle, the tradeoff can be stark: Order too little and you miss out. Order too much and you’re forced into costly clearance sales. Amazon’s algorithms, refined through years of monitoring customer behavior, are getting the Seattle-based company out of the guessing game.”

Data-backed decisions are a topic that I discuss a lot on Forbes. It’s something that I firmly believe in. Retailers and brands can no longer rely solely on intuition given the power that the consumer has at his or her fingertips. Customers can find any product they want at the price they want, so how are retailers and brands going to deliver that differentiated product AND keep up with Amazon?

Not all retailers can be as fortunate as Walmart, who has the ability to purchase other companies to keep pace with Amazon. Acquisitions like Jet.com and Flipkart are enabling Walmart to compete on the web and in India, respectively. I will be writing more about this next week on the BUILD vs BUY mentality that Amazon and Walmart are exhibiting. For now though, its partnership with Lord & Taylor and acquisitions of ModCloth and Bonobos are also enabling the company to stake a firm claim in fashion. I expect Walmart is already on the prowl for its next acquisition, which likely would be similar to Amazon’s new technology.

So, while Amazon’s strategy has been to develop technologies internally and Walmart’s is to acquire technologies, how can the rest of retailers and brands like Levi’s, Wolverine Worldwide and Saks Fifth Avenue keep pace? Not everyone’s checkbook can afford a multi-million or even billion dollar investment, but you MUST compete.

It’s the same principle as any other facet of your life. If you’re heading on a trip and you need a GPS system to navigate you there, your first thought isn’t, “I should develop something.” Instead, you log onto the App Store, read reviews and download what you think is the best GPS solution for your needs.

The same is true in this scenario. As I’ve stated before, there are numerous technologies that retailers and brands should be doubling down on to compete with Amazon and position themselves best against their competition. Technologies that aid in critical product development and inventory decisions are just the latest that Amazon has shined a spotlight on.