By Lisa Johnston
New products on display at the American International Toy Fair, held in N
SEATTLE – As VP of consumer electronics for Amazon.com, Ben Hartman heads the third-largest CE retail operation on the planet. In this exclusive interview with TWICE, the onetime investment banker and financial analyst shares his thoughts on showrooming, UPP, vendor relations, third-party sellers, mobile commerce and the industry’s most promising new products and technologies.
TWICE: How’s business?
Ben Hartman, Amazon.com: 2013 is a very exciting time in CE, particularly for customers shopping on Amazon.com. Amazon’s sales are growing both in established categories like PCs and cameras, and in newer areas which are driving accelerated growth. We’re seeing opportunity as manufacturers introduce products across many categories that work with a broader ecosystem of connected devices, both at home and on the go.
We’re seeing the most growth among products and categories that easily integrate digital services like streaming content and cloud storage, and allow customers to access their content, on demand, wherever they are.
TWICE: What is your third-party sellers’ share of Amazon’s total sales? How do they shape or influence Amazon’s own CE assortment?
Hartman: Third-party, or 3P, sellers are thriving on Amazon – our millions of third-party sellers had a tremendous holiday season in 2012 with more than 40 percent unit growth year-over-year. Third-party sales now represent 39 percent of total units sold on Amazon.
Within CE, our third-party platform ensures customers have access to a broad selection, with the availability to purchase items with limited supply, including end-of-life items that may no longer be in production, emerging technologies that may not yet be mainstream, and popular items that are in high demand.
There are several services for sellers to leverage in addition to the Amazon Marketplace, such as Fulfilled By Amazon [FBA], Webstore, our payments platforms and Product Ads.
TWICE: What is Amazon’s reaction to manufacturers’ UPP and MAP policies that limit how you can price their products?
Hartman: We believe in delivering the best possible value to our customers and we want Amazon to be the place they trust to find competitive prices. We also believe it is in the long-term interest of manufacturers to focus on providing a fair and transparent shopping experience that best meets the needs of customers. We do not believe price controls are in the best interest of customers or support innovation. In any event, Amazon will always set its retail prices independently.
TWICE: What about vendor policies that restrict third-party resellers from selling certain classes of product?
Hartman: I am not aware of continuing vendor restrictions on authorized sellers that will have meaningful impact on Amazon customers in CE. Customers appreciate the selection, convenience and value offered by sellers on Amazon. Vendors are looking for ways to expand interaction with Amazon.com customers, not limit exposure.
TWICE: How can Amazon participate in the custom- installation and home-automation services side of the business?
Hartman: We are always looking to innovate on behalf of our customers and we have been expanding our service offerings. We now offer free tech support with the purchase of a TV, and customers can also find a robust set of additional services, including installation, assembly and warranties. As our customers seek our help through additional services, Amazon can meet their needs both through our own services as well as through partnerships with other service providers.
TWICE: Do you anticipate additional vendor “storefronts” like the Sony Electronics Store?
Hartman: Customers increasingly view Amazon as their first point of research and discovery regardless of their retail purchase channel. As a result, many vendors now leverage Amazon both as a retail partner and as a marketing platform to reach customers showing purchase intent. Used together, Amazon’s brand stores, rich product detail pages and advertising campaigns via Amazon Media Group help CE vendors drive brand awareness and sales across every retail channel.
Sony utilizes these levers to highlight their full ecosystem to their target customers. The Sony brand store offers a personalized customer experience, dynamically featuring the most relevant parts of the Sony brand portfolio to each customer that visits. Sony also leverages Amazon’s digital ecosystem. For example, Amazon Instant Video comes preloaded on Bravia TVs. Together, all of these marketing levers have enabled Sony to build customer relationships, both prepurchase and post-purchase.
While Sony has a strong presence using Amazon’s brand store capabilities, we are seeing many other vendors taking advantage of brand stores, Amazon Media Group and Amazon’s digital ecosystem to drive national awareness and customer acquisition.
TWICE: Do you share your commerce data with vendors? How do they benefit from it?
Hartman: Vendors receive a variety of metrics and information pertaining to their business, including sales data, customer feedback, customer demographics and advertising campaign performance. Vendors could tell you better how they use this data, but I generally see vendors using the data to both improve their products and enhance customer messaging and targeting.
TWICE: Do vendors consider customer reviews a mixed blessing?
Hartman: Customer reviews are one of the most important pieces of information customers seek when shopping for CE. A recent study by [global public relations agency] Weber Shandwick found that 74 percent of CE customers search for reviews online for products they are considering for purchase. Most vendors value this direct customer feedback on what customers like about their products as well as areas for improvement. Our reviews enable vendors to learn and address customer concerns quickly, thereby improving their products’ performance.
TWICE: How has Amazon’s digital content helped drive sales of CE hardware?
Hartman: Amazon customers and Amazon Prime customers are looking to purchase CE devices that are compatible with Amazon Instant Video, Prime Instant Video, Amazon MP3, Amazon Cloud Player and Kindle books, so they have instant and seamless access to the content they already own as well as easy access to new content. As an example, Prime Instant Video provides Amazon Prime members with unlimited access to thousands of movies and TV shows for no additional cost, and Prime customers over-index on sales of CE devices with streaming capabilities.
Amazon’s digital content ecosystem – books, music and video – offers the best cross-platform interoperability. There are Amazon apps available on hundreds of devices and platforms so customers can access content anytime, anywhere. We aren’t going to lock customers into an ecosystem – we’re all about choice: choice to buy physical or digital music, videos and books, and choice about what device to listen, watch and read it on. That’s great news for customers who love electronics products.
TWICE: How has your AmazonBasics private-label accessories business helped you? Do you anticipate extending it to more complex CE products?
Hartman: Our intention with AmazonBasics is to offer our customers high-quality products at low prices on basic items, such as HDMI cables. We can’t predict the future, but we expect Amazon.com customers to continue to migrate towards well-recognized brands for most CE products and we are focused first on providing branded products to our customers.
TWICE: How is the m-commerce channel performing?
Hartman: While we can’t comment on specific figures, we can tell you that year over year we’re experiencing a high volume of growth in mobile. ComScore found that Amazon is the leading retail site visited by smartphone users: Of 86 million adults visiting a retail destination in July 2012, 50 million visited Amazon. Additionally, the Amazon mobile app is consistently among the top lifestyle apps in iTunes/Apple App Store and one of the top shopping apps in the GooglePlay store.
We’re working hard to provide the best mobile shopping experience, and offer convenient shopping features like notifications that alert customers when their package has shipped and arrived, opt-in push notifications for daily deals, enhanced recommendation engines and more. Our goal for mobile shopping is for a customer to go from wanting something to purchasing it in under 30 seconds, and features like Amazon Prime and One-Click allow us to do that on mobile devices.
TWICE: Is showrooming a real phenomenon or has it been overstated?
Hartman: We live in a world where information is readily available to customers who can do their research on computers, or from wherever they are, using a mobile device. We know that four out of five CE customers research online, and we know Amazon is the first destination for 30 percent of online shoppers.
We want what is best for our customers. Oftentimes customers research products on Amazon.com and purchase from stores. We’re okay with that. Today’s shopper expects to easily find a product and have the option to buy it from wherever they choose – online or offline. Customers have a lot of options, and we believe customers should shop however works best for them.
TWICE: How do you balance your everyday-lowprice strategy with daily Lightning Sales promotions?
Hartman: Our goal is to offer customers the best value, every day and all year round. Additionally, we offer lightning deals – a limited number of discounts offered for a short period of time – as part of our Gold Box Deals page. The Gold Box Deals page is a single destination for our customers to easily find the best deals from across the Amazon site. We believe customers appreciate knowing they are getting great value every day on our products, but can also shop for a limited set of special deals through the Gold Box Deals page.
TWICE: What promising new CE technologies are you looking forward to?
Hartman: Within home entertainment, 4K Ultra HD and OLED have the potential to create life-like picture quality, while smart functionality including motion activation and voice recognition are making TVs more interactive and multifunctional. In audio, we continue to see improvements in sound from today’s sleek soundbars while wireless multi-room systems and Bluetooth speakers are helping customers access and enjoy their music anywhere. In computing, form factor continues to drive greater flexibility and functionality among tablets, Chromebooks, Ultrabooks and convertibles, while solid-state drives also continue to gain traction with customers seeking to upgrade their computing performance. In imaging, connected/smart capabilities are being eagerly sought by customers.
Lastly, I’m eager to see the capabilities of Sony’s PS4 and Microsoft’s new Xbox One as both attempt to move consoles beyond gaming and into the entertainment hub of the living room.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.