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Amazon.com shook up the e-commerce world Jan. 3, unveiling a new site that offers free overnight shipping for all purchases.
The new site—called Endless.com—is focused on the highly competitive footwear and handbag sector, where sites like Zappos.com have long offered free shipping. But by upgrading the free shipping to overnight, Amazon is trying to shake things up a bit.
Gartner analyst Avivah Litan said the move is indeed daring, but that Amazon.com needs to take a few more chances today than it did a few years ago, when it held a more dominant role.
“Amazon is taking a dramatic step by offering free overnight shipping, but they need to take dramatic steps to get the competitive edge back into their company. Amazons stock has performed poorly in 2006. It is down nearly 19 percent, while the major indexes went up between 8 percent and 15 percent,” Litan said. “Innovation characterized Amazon back in the late 1990s, but the firm seems to have lost it in recent years.”
Litan said that this particular niche might be a good place to try out this approach. “Being able to shop for shoes by heel height and pay no shipping could be a winning formula for the millions of women who crave new shoe styles and handbags to match. Just maybe, satisfying their fetishes will help give Amazon the boost its market cap sorely needs. But even if this venture is wildly successful, its just one step out of many that Amazon needs to take to turn its fortunes around.”
Other analysts agreed that the move is a good one for Amazon, but it might reveal a slightly more desperate company. “This is a great way to get traffic to the site, but it signifies that either Amazon is willing to take a loss to build traffic—much like when they started Amazon—or they have killer supplier relationships that ensure that they can make a solid margin even with paying for overnight shipping,” said IHL President Greg Buzek, who added that the nature of shoes might cost them a lot in returns. “My concern for them is that they are dealing in products here that lend themselves to a touch-and-feel consumer. Unless someone has the specific model number from bricks-and-mortar research so they know what it looks like and feels like, there will be an inordinate number of returns due to size and texture differences.”
Paula Rosenblum, from the Retail Systems Alert Group, sees the move as Amazon acknowledging the importance to consumers of free shipping. “Clearly, Amazon uses its customer data and analyst research. Data shows that customers still look for free shipping in their online experience,” Rosenblum said. “Offering free overnight shipping guarantees new and existing customers will take a long look at Amazons new site. A great way to launch a new business.”
Amazon officials in charge of the Endless.com site agreed that the competitive realities of the footwear and handbag space forced their hand. “Had we just offered free shipping, we would have had nothing more than our competitors,” said Garth Mader, one of the Amazon senior managers in charge of Endless.com.
Mader said the new site logically grew out of Amazons move into selling shoes in the fall of 2002. To try out some new technology, the company decided to launch it as a new site, rather than add to Amazons already overflowing site. “No other single product in the apparel space has been more successful” than shoes, Mader said.
Amazon.com is also keeping its people close to their talking points. In an interview with eWEEK.com Jan. 3, Mader said the company wanted to start the new site from scratch. “We wanted to take out a fresh, clean piece of paper,” he said. About 90 minutes after Mader made that comment in the interview, the Associated Press ran a story quoting Steven Goldsmith, vice president of apparel and accessories for Amazon.com and vice president of Endless.com, saying, “We started with a blank sheet of paper.”
Online shoe sales were estimated to reach $2.9 billion in 2006 and are expected to almost double to $5.7 billion by 2011, according to Forrester Research figures.
Amazons move follows a similar effort by The Gap, which in mid-October rolled out Piperlime.com, launching with about 100 shoe brands. By comparison, Amazon launched its site with about 250 brands and “more than 15,000 styles of shoes,” Mader said.
Another pricing differentiation is that Endless.com—which went live Dec. 11 but wasnt announced until Jan. 3—is touting a 110 percent price guarantee, where the site will pay any customer a 10 percent convenience check and refund the full sale price if they can find a better price on any non-auction site within 14 days.
“It really needs to be the same size, the same color, the same style, and it needs to be in stock” and it “applies to Web sites only,” Mader said. Asked about the possibility of consumers creating their own Web sites and typing in a low price, Mader said he wasnt too concerned and Endless.com is imposing no restrictions on the kind of Web site the sale appears on. “Were going to be listening and watching and seeing what happens,” he said.
A 365-day return policy is fairly standard with shoe sites and Amazons policy requires that the shoes be returned “in their original condition” and “cannot be showing any streetwear.”
The site itself has some capabilities that differ from the core Amazon site, such as automatic detailed Zoom features for all products. The site also promises that only items that are in stock will be shown, with a system that instantly deletes a product once it goes on backorder.
Endless.com also gets creative with ways to do searches by sizes (including heel size), styles, color and vendor, even allowing shoppers to search multiple criteria simultaneously.
“If a customer would like to conduct a search for gold and red ballet flats by Jessica Simpson, Steve Madden and BCBGirls in a size 8 and an 8.5, or conduct a different search for mens oxfords by Bruno Magli and Kenneth Cole in size 11 within a certain price range, they can,” Amazon.com said in a statement.
Retail Center Editor Evan Schuman can be reached at [email protected].