Whole Paycheck Tracker: Amazon And Fashion Make A Sleek Outfit - pymnts.com

Whole Paycheck Tracker: Amazon And Fashion Make A Sleek Outfit - pymnts.com


Whole Paycheck Tracker: Amazon And Fashion Make A Sleek Outfit - pymnts.com

Posted: 18 Sep 2020 08:08 AM PDT

The year was 2016. Captain America and Star Wars ruled the movies. Justin Bieber and Drake topped the pop charts. Brexit and the U.S. presidential election dominated the news. And Amazon was trying to break into the fashion business. A sampling of the press coverage at that time shows that the Seattle crew might have been having a rough go of it.

Engadget: "Why The Fashion World Won't Let Amazon In"

Business Of Fashion: "Amazon will capture all of the massive but uncool parts of the apparel industry."

The Nation: "Amazon's many tentacles provide it with novel ways to strong-arm suppliers."

In fact, the press' and analysts' perceptions of Amazon and fashion have always been a bit like blue slacks and a brown jacket: They don't match. But the truth is very far away from that perception. Even some of this week's headlines revealing that the company is finally launching its luxury store were met with skepticism. But data from the industry –and from PYMNTS' exclusive Whole Paycheck tracker from Q2 – paint a very different picture. Not only is Amazon crushing the apparel business, but there's no reason to think it won't crush the couture business as well.

First, the data from the PYMNTS Whole Paycheck tracker. The average American spends about $2,270 per year on clothing and apparel, which translates to 3.4 percent of retail spend. Outside of food and beverage (8 percent) and health and personal care products (5.3 percent), it is the highest spend category. In a typically Amazonian fashion, Amazon's sales in the category have grown in the past few years. In 2016, it logged $20.5 billion in clothing and apparel, more than doubling that number at $48.3 billion in 2019. By way of comparison, Amazon's total sales for its highest spend category – electronics and appliances – were $71.6 billion in 2019. In Q2 2019, it took in $10.9 billion from the category; that number jumped to $16.2 billion in Q2 2020.

Take a look at the total share of consumer spending, and the numbers are even more impressive. Even in the early days of 2016, Amazon had 25 percent of eCommerce spend in the category, on its way to 40.5 percent in 2019. In Q2 2019, it clocked in at 38.7 percent, then up to 40 percent in the most recent quarter. It really doesn't matter what the fashion business thinks about Amazon: The consumer has already voted.

That's not to say that other eCommerce sites aren't running healthy businesses: They just can't touch Amazon. For example, Harper's Bazaar recently ran a piece on the best eCommerce sites for women's fashion. The ranking was based on editorial judgments, but the numbers are telling. Net-a-Porter was listed at No. 1; in 2019, its take was $710 million. The RealReal was listed at No. 19 by the magazine, most likely because its selection is off-season and consigned. But even it can't get into the same conversation as Amazon. Its 2019 revenue was $318 million – not bad, but not Amazon.

By the way, Walmart, the standard comparison for Amazon results, couldn't hang on the clothes rack, either. Its highest share of consumer spend in the category (eCommerce plus in-store) was 10.5 percent in Q2 2020.

So the questions about "why fashion?" should be put to rest. Bezos himself might have put it best in this 2007 quote: "In order to be a two-hundred-billion-dollar company, we've got to learn how to sell clothes and food."

Subscriptions + Loyalty = Profit

On the week that Amazon opened its Luxury Stores, Walmart launched Walmart+. While the jury is out on exactly how it competes with Amazon Prime without a streaming service component, it's worth looking at the potential upside for subscription services for retailers, even those who aren't market leaders.

First, Amazon Prime is a subscription play, but it doubles as a loyalty program. Nothing ties consumers to purchase recency and frequency like an effective loyalty program, and that's what Prime is. It's essentially a loyalty bond on the order of a telco contract, with the exception that there's no other telco to go with. A consumer who wants to bail on AT&T can go to T-Mobile or Verizon. A consumer who wants to cut the cord with Amazon Prime can go to … well, no one really.

Which is one of the reasons that Walmart launched its service. At least it's a stake in the ground on the subscription side, and on the loyalty side. It's also worth looking at Amazon's take from Prime as Walmart+ flies out to the market. Amazon has copped to having "more than 100 million" members globally, but a recent look by the Consumer Intelligence Research Partners puts it at 112 million. Regardless of what the number is, the annual revenue from Prime (using the 100 million-member number) is about $12 billion.

And even that number goes up in Amazonian increments. According to the Whole Paycheck tracker research, Amazon's "subscriptions and other" line has gone up significantly over the past three years. That line is defined by PYMNTS as Prime, the co-branded Chase credit card and advertising services. In 2016, it was $7 billion. In 2017, after the two co-branded cards debuted, it jumped to $11 billion, on its way to $27.4 billion in 2019. Amazon doesn't break out Prime out for its quarterly reports, but it's easy to see why that revenue – and that customer bond – is so important.

——————————

LIVE PYMNTS TV OCTOBER SERIES: POWERING THE DIGITAL SHIFT – B2B PAYMENTS 2021 

Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

Citi To Face Regulators' Rebuke Over Faulty Risk Management - pymnts.com

Posted: 14 Sep 2020 02:07 PM PDT

Regulators are expected to reprimand Citigroup for its faulty risk management system, which works to detect problematic transactions, risky trades and other such issues, and that has apparently sped up retirement plans for Chief Executive Michael Corbat, according to a report in The Wall Street Journal.

Corbat was expected to keep serving in his position for several more years, but will now be stepping down in February, Citi announced.

Citing sources, the news outlet reported that while regulators didn't ask Corbat to retire, the CEO came to believe the costly, years-long overhaul of the risk system would be a job best fit for his successor, Jane Fraser.

The reprimands expected from the Office of the Comptroller of the Currency and the Federal Reserve could impel the bank to come up with a plan to fix its risk system, which is affected by the firm's infrastructure. The issue is that Citi's various business arms, including for commercial banking, credit cards and corporate advisory services all run on their own individual systems, with different methods for tracking customers and transactions, the Journal reported.

That can mean a customer with multiple reasons to do business at Citi could find themselves with numerous different identification codes. Regulators require banks to track customers across all operations, with an eye toward catching crimes such as money laundering. The myriad of different systems Citi has in place could make it vulnerable to attacks, some sources said, according to the newspaper.

One example is the $900 million recently sent by mistake to a group of Revlon lenders, which Citi discovered was due to outdated software installed in the 1990s.

The consent order could require Citigroup to develop and execute a plan to fix its risk management system, though it's unclear what level of regulation or oversight there could be on that plan. In January, a Citigroup executive said there was a plan to hire 2,500 coders to help with the technology underpinning dealings with investment and corporate banking.

And in June, the hiring of Karen Peetz as chief administrative officer was intended to work on bank safety issues and, according to Corbat, bring more clarity to dealings with regulators.

——————————

LIVE PYMNTS TV OCTOBER SERIES: POWERING THE DIGITAL SHIFT – B2B PAYMENTS 2021 

Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

Comments

Popular posts from this blog

Window for Small Businesses to Apply for PPP Funding Closes Saturday - Bay News 9

List of Easy Approval Net 30 Accounts for 2020 - Nav

This new business index offers a more accurate way to forecast recessions - MIT Sloan News