TECHNOLOGY

Amazon launches new subscription box—for kids

BY Deena M. Amato-McCoy

Amazon is going back to its roots for its newest subscription box offering — but these titles target story time.

The online giant introduced its Prime Book Box program, a subscription box of board books for children under 2 years old, or hardcover books for readers between 3 and 12 years old. Each delivery contains two hardcover books or four board books, depending on the child’s age.

The Prime Book Box program, which is invitation-only for Prime members in the United States, is $22.99 plus tax, and all boxes ship free. Books are sold for 35% off of merchandise list prices, and all books are equal or lower in price than books found on Amazon’s website, according to the company’s “Frequently Asked Questions” page.

Here’s how the program works: Prime members create a profile for their young reader’s preferences and then choose if they would like to receive a box every one, two or three months. Members can preview a list of options to tailor the box or let Amazon editors curate the shipment. Amazon also monitors the customer’s purchase history to avoid including a book that may have already been purchased.

Amazon sends members an email that enables them to preview contents before the box ships. Members have five days to make any changes. Boxes, which ship free, arrive within 5-10 days. Any item can be returned within 30 days of delivery.

While the program is invitation-only, Prime members can request an invitation on Amazon’s website. An email will notify them when they can sign up, according to the FAQ page.

This is not Amazon’s first try at subscription boxes. The online retailer features beauty boxes sponsored by Julep and Allure, respectively, as well as its Carnivore Club, a box that contains a selection of handcrafted cured meats.

In May, Amazon launched its “Sample Box,” which enables Prime members to purchase samples across a variety of categories, including beverages and food, sports nutrition, beauty and grooming, baby, personal care and household, and vitamins and supplements.

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M.Sapir says:
May-02-2018 06:34 am

Again, we have Amazon suggesting to parents to sign up their infants to a book club to cultivate an entire generation living out of a box. The library and stores is where kids go to Development skills and social skills. Amazon is attempting to influence an entire culture to stay home, do not socialize and wait for a box. Chain Store Age need to interview myself or Trump on the “Amazon Invasion” it’s very dangerous and Millennials are suffering the affects. Michael Sapir, CEO, Sapir Real Estate Development.

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TECHNOLOGY

Digital Deals and Partnerships Powering Growth in Retail

The U.S. retail industry is experiencing another turbulent year. After a strong start to the 2017 holiday season, where sales rose to $691.9 billion – the largest gain since the Great Recession – they quickly fell again in January and February as consumers tightened their purse strings and focused on rebuilding their finances post-Christmas.

While retailers are being challenged by changing market conditions, consumption habits and technological disruption, traditional retailers are undoubtedly struggling the most. According to reports, 1,773 stores have shut down operations in the U.S. since the start of 2018, many are at risk of defaulting on their debts, and analysts predict the number of retailers filing for bankruptcy this year could match or even exceed last year’s highs.

Current market upheaval is forcing retailers to rethink their growth strategy, particularly many of the iconic traditional bricks-and-mortar and department stores who have been slow to innovate or have failed to keep up with their customers. Ecommerce players are not exempt. While online sales continue to grow at a steady pace, online players face a different type of challenge, specifically around scale, speed and cost of delivery, and fulfilment.

Digital Deals and Partnerships Take Off

Over the course of the next year we’ll see many legacy retailers acquire digital players in quick succession to accelerate growth by bolstering e-commerce capabilities and enhancing the overall omnichannel experience. Nordstrom is one of the latest players to do exactly this, recently announcing the acquisition of digital start-ups, BevyUp and MessageYes. These digital capabilities will offer customers greater personalization, instant purchasing options and new social experiences.

The motivation behind the digital deal trend is growing appetite from retailers to quickly gain cutting-edge technologies they don’t currently possess, benefit from a new talent injection, and accelerate competitive advantage due to increasing pressure from ecommerce players. According to new research, 82% of retailers globally said they have either acquired or have considered acquiring a digital company in the past two years, and over a third globally have completed five or more digital acquisitions in the same period.

Preferring to buy digital capabilities over building them from scratch, traditional retailers are becoming savvier at identifying digital acquisition targets which can look very different to traditional targets. Fifty-seven percent of retailers are already using a different pre-deal team and evaluation criteria for digital M&A transactions, and another 58% are using different valuation and cost models.

In addition to going down the acquisition route, many retailers are also joining forces with digital players through partnerships and ecosystems to offer customers new value and experiences. For instance, Walmart has recently announced it is expanding its partnership with digital automotive marketplace, CarSaver, to sell cars from kiosks at Walmart stores.

Likewise, Kohl’s recently announced that it will lease store space to food grocer, Aldi, in a bid to optimize its existing real estate footprint and increase store footfall by offering customers new value. Both examples demonstrate how retailers are rethinking the in-store environment and giving consumers access to a wider array of products and services.

Steps for Digital M&A Success
For retailers to gain maximum value from digital acquisitions, they should consider:

• Understanding the exact need for digital capabilities: For example, is the goal to create new digital products and services? Create an enhanced customer experience? Connect in-store and online channels? Or better leverage customer insights to inform strategy?

• Rethinking the search process: Digital acquisition targets look very different from traditional targets. Finding them can be challenging. Target ideas may come from research universities, innovation labs, patent searches or partners at venture capital firms. Very often the technologies are cutting-edge, highly specific and not yet fully tested for viability.

• Reworking the valuation approach: Traditional valuation models were not built for digital assets and can break down as a result. It is imperative to consider the original purpose and intent of the acquisition and test that it fits with the wider business.

• Mapping the value in multiple ways: Plays into an emerging space are rarely ever a one-and done event. Instead, they usually require stringing together multiple acquisitions into a single coherent capability. Be open-minded when mapping forays into emerging areas and consider what else is necessary to make a strong play before proceeding.

With the pressure on retailers to find a new growth formula, digital deals can help boost capabilities and offer customers new value. While it’s always been important to get M&A strategy right, the digital deal arena presents new challenges. Identifying hot targets and snapping them up in a compressed timeframe before competitors do can be challenging, but with a revised approach and different evaluation criteria, retailers will be well-positioned to accelerate their digital gains.

Frank Layo, is managing director, Kurt Salmon, part of Accenture Strategy; J. Neely is managing director, global M&A lead, Accenture Strategy.

 

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TECHNOLOGY

Predictive analytics help Rue21 drive speed to market with right items

BY Deena M. Amato-McCoy

Rue21 is creating assortments based on customer buying behavior.

The teen apparel retailer’s new predictive analytics solution from First Insight is helping the company make design and buying decisions across its apparel, footwear and accessories categories based on customer sentiment. The technology will also enable the company to invest in merchandise that will differentiate their assortments.

The solution’s online social engagement tools gather real-time preference, pricing and sentiment data on potential product offerings. The information is filtered through First Insight’s predictive analytic models that determine which products present the greatest opportunity. As a result, Rue21 can evaluate a greater number of products, and reflect direct consumer input in their buying decisions, according to the company.

“First Insight is enabling us to test a wide range of possible new products within 24 to 48 hours,” said Karen Pinney, chief merchandising officer. “This capability enables us to drive speed to market with the right items, which is critical for a fast fashion retailer. When compared to in-store testing, First Insight is faster, more accurate and less costly because we avoid buying unproductive store test inventory.”

The solution also ensures the company can differentiate its assortments with merchandise that its customers want to purchase. “We are already seeing results through eliminating under-performing products early in the selection process, while re-investing our inventory dollars into higher performers,” said Michael Appel, CEO of Rue21.

Rue21 currently operates 752 stores in 45 states.

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