Nov 18, 2021 - Economy & Business

Retailers take another page from Amazon's playbook

Illustration of a mechanical arm moving a mountain of Amazon boxes
Illustration: Sarah Grillo/Axios

Amazon's competitors are multiplying. Traditional retailers are trying to replicate the e-commerce giant's playbook.

Driving the news: Macy’s is set to launch a third-party sellers marketplace next year, the company said today, becoming the latest legacy retailer to enter an arena dominated by Amazon.

Why it matters: The pandemic helped brick-and-mortar stores get even better at selling online — handing consumers more buying options and putting pressure on Amazon to stay competitive.

By the numbers: Amazon's year-over-year sales growth during the third quarter, at 15%, was its slowest in almost seven years.

  • Meanwhile, Macy’s digital sales were up 19% in Q3.

What they’re saying: A third-party marketplace could be beneficial to Macy's existing e-commerce business because the platform could generate commissions like Amazon does, without needing Macy's to hold any additional inventory, David Swartz, a consumer equity research analyst at Morningstar, tells Axios.

  • Third-party sellers want to be on as many platforms as possible to reach as many people as possible, as long as selling conditions are similar, Zachary Warring, an equity analyst at CFRA Research, says.

The big picture: While their digital efforts are paying off, retailers are still opting to shed underperforming brick-and-mortar locations.

  • Macy's is in the midst of closing 125 department stores (it's also hired consultants to evaluate a proposal by activist investor Jana Partners to monetize its e-commerce business).
  • CVS today said it'll close about 300 stores every year for the next three years. 

What to watch: While Amazon may be forced to lower its take from sales, it will likely continue to have the biggest audience, says Warring.

  • Yes, but: "It will be interesting to see if other [players] can start [to] lead in niche markets such as apparel or grocery," he added.
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