Is there anything Jeff Bezos won’t try? Amazon’s founder and CEO is an American technology and retail entrepreneur, investor, computer scientist, and philanthropist. Although Bezos is most often associated with tech-giant Amazon, his list of professional pursuits and endeavors run deep. In 2000, Bezos founded Blue Origin, a human spaceflight startup company, partially as a result of his fascination with space travel. Although the company remained a secret for several years, it became publicly known in 2006 when it purchased a large acreage of land in west Texas for a launch and test facility. In a 2011 interview, Bezos indicated that he founded Blue Origin to help ‘anybody to go into space’ and went on to state that the company was committed to decreasing the cost and increasing the safety of spaceflight. “Blue Origin is one of several start-ups aiming to open up space travel to paying customers”. Bezos recently revealed that he was selling approximately $1billion in Amazon stock per year to help finance Blue Origin, wholeheartedly believing in his mission to explore outer space.
Bezos also purchased the Washington Post in 2013 for $250 million in cash. Notably, Amazon was not to be involved, although its principles in customer access, ease of use, and instant gratification were almost immediately implemented. In March 2014, once the sale was finalized, Bezos lifted the online subscriber paywall for a number of US local newspapers, effectively increasing the reach and subscriber base to his newly owned circular. It was later revealed in 2016 that Bezos conducted ‘no due diligence’ when accepting the first offer from former Washington Post owner. Other endeavors that have been funded at least in part by Bezos include Airbnb, Crowdrise, MakerBot, Nextdoor, Sapphire Energy, Twitter, and Uber. Most recently, Amazon is said to be scooping up Whole Foods and now, the longstanding and recently unpopular Kenmore appliance brand.
So what does Bezos see in the Kenmore appliance brand?
Well, for starters, it’s a proverbial foot in the door into a $343 billion global market. Aside from third-party resellers, Amazon has remained noticeably absent in selling major appliances through its ecommerce site. What else could Bezos see in selling the Kenmore brand? Rumors abound that the ecom giant is testing the waters with selling the brand before eventually acquiring and purchasing the Kenmore brand.
Let’s start with the partnership between Amazon and Sears…
On the surface, the partnership between the two appears to be about distribution. The agreement temporarily aids Sears with its goal to get its products into the hands of consumers in the midst of a failing retail landscape. Sears’ retail locations are shuttering faster than we can keep up and with that, the retailer also sacrifices its store fronts aimed at housing these products. Within the last year, Sears has been diligently working to offload its signature brands, Diehard, Kenmore, and Craftsman tools. To date, Sears has successfully sold Diehard and Craftsman but has yet to offload Kenmore. Could Bezos be the next owner? If so, the partnership will allow Amazon to gain access to Kenmore’s brand equity, Sears’ distribution network (of which its having an incredibly difficult time sustaining), and the longstanding retailer’s 104 year old knowledge and experience with pricing, selling, and promoting its venerable Kenmore brand.
But, you may ask ‘Would Amazon buy a brand? It’s not its own manufacturer of appliances!’
I believe the possibility abounds. More complicated contractual acquisitions have happened, and if the details can be worked out mutually between the components providers (think LG, Whirlpool, Electrolux, and Samsung), it presents new opportunities for all parties involved both branding wise and manufacturing wise. When news broke of the Amazon and Sears partnership, stocks dipped across home appliance manufacturers and retailers, such as Home Depot and Lowe’s. To face the Amazon e-commerce giant is daunting for any competitor, despite the uncharted territory that this presents for purchasing home appliances online.
The dichotomy of assorting major appliances online is a complex one. We know that more people than ever are opting to make their purchases online rather than within a traditional brick-and-mortar store. We also know that purchasing an appliance online sight unseen is not something that has been historically popular. Many large ticket items remain purchases that consumers like to experience with the five senses. Initial reports from Sears indicate it is a hope that Amazon will drive consumers back into its physical locations, although from a consumer perspective, this seems unlikely. Is it possible that Amazon could fuel Sears’ future stand-alone appliance show rooms? Based upon Bezos’ initiative to open brick-and-mortar book stores, I would say it’s certainly possible. Currently, Amazon is displaying a wide array of Kenmore products as placeholders, not yet available for purchase. According to online details, shipping is free and available in select cities only. Additionally, consumers purchasing an appliance on Amazon can select a 3 or 5-year Kenmore warranty program, fulfilled directly from Kenmore. While products are currently available in select cities, a nationwide expansion is expected in the coming months as select test regions are tapped. While these are unknowns, what goes without saying is that if anybody can pull this off, it’s Bezos & Amazon with their incredible distribution and delivery network.
This partnership is likely to benefit Amazon far more than Sears in the long run.
In addition to its entrance into the appliance market, a strong relationship with the Sears Kenmore brand will only aid Amazon in catapulting its smart home capabilities beyond expectation. Amazon has seen strong consumer adoption with its Dash replenishment technology and its Alexa platform currently allows consumers to control thermostats, lighting, and features voice integration. Merging these technologies together with a strong appliance brand partially under its control is expected to boost Amazon and its endeavors into a new realm of appliance shopping. After all, if Bezos was willing to purchase The Washington Post on a gut feeling and is chasing his dreams of outer space travel with Blue Origin, he’s likely to see a unique opportunity in Kenmore and the ailing Sears.
Here at gap intelligence, we’re all data nerds at heart. Rest assured that gap intelligence will remain at the forefront of tracking and monitoring the budding Amazon and Sears partnership. As Kenmore’s products continue to capture placement on Amazon.com, gap intelligence will be reporting e-commerce pricing, promotional activity, and future placements on a week over week basis.