Amazon – shop until you bop
Amazon's unexpected acquisition of a Midwestern clothing retailer has left some analysts wondering how the purchase might fit into Amazon's overall scheme for world domination.
Others felt it was exactly the right move at exactly the right time.
Amazon has morphed from a bookseller into a vast online mall over the past decade, now offering everything from cosmetics to power tools, but until Monday had apparently been content to allow clothing retailers to set up camp on Amazon.com. Now the online giant has its very own online retail site.
The terms of the deal weren't publicly announced, but Shopbop.com, a women's apparel and accessories retailer, will not be tucked safely and securely under Amazon's silicon roof. The site will continue to operate independently, with its existing executive team.
"We're incredibly happy to have Shopbop.com become part of the Amazon family," said Russ Grandinetti, vice president for Amazon's apparel and accessories, in a statement. "We look forward to introducing their incredible brand and store to Amazon's tens of millions of customers."
Amazon owns Internet Movie Database, which also operates independently, but information from the database boosts the offerings of Amazon's A9 search engine and facilitates the purchase of DVDs from Amazon.com. On the surface, Shopbop would not add any value to Amazon's existing mix, despite the site's strong offering of trendy designer brands such as True Religion, Juicy Couture, Diesel, 7 for All Mankind and Marc Jacobs.
Wall Street has been less than keen on Seattle-based Amazon recently; the company's disappointing fourth-quarter profit report sent shares of Amazon down 15 cents to $39.11 last Thursday.
Over at the "Motley Fool", the acquisition of Shopbop was described as "odd" and "ill timed."
"Although Internet retail is Amazon's forte, I'm having a hard time imagining how Shopbop.com might fit into its overall worldview," wrote the Fool's Alyce Lomax.
But Sucharita Mulpuroo, an analyst with Forrester Research, said that the move could be a smart one for Amazon.
"Amazon has had real trouble in the retail clothing space, because none of the big names wanted to sign with them," said Mulpuroo. "This gives them some traction. If you don't have brands in the apparel space, you don't have much leverage in that category."
In its fourth quarter report last week, Amazon revealed its operating expenses have been rising at a faster rate than its sales, due in part to increased postage rates (the company offers free shipping on some items) and investments in new technology.
Some investors hope that part of that technology expenditure will become the backbone of Amazon's anticipated broader digital media offerings. Trade publication "Daily Variety" reported in January that Amazon was planning to sell digital downloads of movies. And last week, the "Wall Street Journal" reported that Amazon will offer its own digital media player and a subscription-based music service similar to Napster by the summer.
"Clearly, this is a business model that has a lot of traction," said Mulpuroo of Amazon's reported push into digital downloads. "I don't see what the downside is. They already have resonance with the consumer as a purveyor of music. It seems like a no-brainer."
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