Daniel Gulati: What’s changed with Amazon is, historically, you used to be able to red-line categories as Amazon-proof. Amazon is an intent-based environment and doesn’t really do well on discovery. They’re not going to get fashion, the inspiration, and emotional connection of buying a $300 dress online. On the grocery front, Amazon doesn’t have a fresh supply chain.
This idea of being Amazon-proof is fading away. Specifically within fashion, Amazon has a bunch of leading direct to consumer fashion brands now. We’re past this world where you can categorically say that Amazon is not going to enter my market. That said, one of two things is going to be true. Either Amazon goes and takes 100% marketshare of e-commerce or they’ll take less and there will be room for other big players to emerge.
I think that the thing with Amazon is, you still can point to one core belief that, at least I have, that if I shop on Amazon, that is a generic mass market stall. Me shopping at Amazon gives the world zero sense of who I am as a consumer whereas if I go and shop for luggage from Away, that is a lifestyle brand that I’m buying into.
Specifically in the direct to consumer world, Amazon has the balance sheet and the team to go out and spin up 200 brands in fashion or consumer durables. But are they going to be able to deliver the customer experiences and delight that a Casper does? Casper has this quirky advertising style using handwritten ads. They’re just so well-messaged. Every single email that you get is just so well-crafted. The copy is so on-point. Then post-purchase, you have the 100-day return policy and can call up and speak to someone on the phone straight away.
I think there’s a difference between the perception of Amazon coming into my market versus really understanding the consumer and the vertical you’re in and being able to tailor a product and experience to that consumer. That’s something that Amazon will have to compete in the B2C world. Casper, at this point, is top of mind for mattresses. If Amazon wants to go out and launch their own private-labeled mattresses, they’ll have to compete with Casper.
The direct to consumer world is a world that we’re still very excited about as investors. It’s a decade-long transformation that incumbent CPGs and brands would have to negotiate. For the longest time, a lot of these brands were holding out on e-commerce. Now they’re realizing that the consumer wants to transact that way. A lot of them are stuck when it comes to the core capabilities and DNA around e-commerce. They’ll have to make acquisitions.
Walmart has been very aggressive on that front. This is the start of a decade-long transition for incumbent brands to become digital-first brands. That’s one example where all is not lost and there are still big companies to be built. For sure, we’re seeing Amazon gain steam.