marketing402blog

[marketing402blog]

Gap Partners with Amazon

Gap, Inc. has been struggling in terms of their stock price as of late.  Their stock price year over year from about $25 to $12.33.  This is in part due to their plummeting sales according to the article.  They have entered several partnerships with celebrities and other companies such as Kanye West and Walmart trying to rejuvenate their sales, but they have been less than successful.  Gap has tried to boost sales amid their struggles in the retail industry through partnerships and marketing strategies with little success as of late.  However, their most recent partnership with the e-commerce tech giant Amazon could be the saving grace of the company.

(https://www.retaildive.com/news/gap-sells-on-amazon-expand-sales/636349/)

Source: Yahoo Finance

Gap has partnered with Amazon to sell its adult, teens, kids, and baby gear through Amazon’s Amazon Fashion and nursery furniture on the main website as well as Gap’s own website across the U.S. and Canada.  Gap opening up their brand to Amazon is seen by some including Sucharita Kodali as “a Hail Mary pass that is more about challenged situation of the company than a brilliant strategic move”, which may be true, but that does not mean it is not a good strategic marketing decision.  It is no secret Amazon is the biggest e-commerce site in the world so entering this new market could be very beneficial for Gap.

 

Even though Gap has its own website, they have been severely struggling in the e-commerce business, just as in many aspects of their business.  Enter Amazon.  Amazon accounts for a whopping 37.8% of retail e-commerce companies in the United States as of June 2022 according to Statista.  The next closest retailer is Walmart at a mere 6.3%.  In fact, Amazon accounts for more of the market than its next at least 14 competitors (the graph does not go beyond 14).  This is an example of market expansion.

Source: Statista

Market expansion is the use of breaking into new markets with existing products.  Gap is trying to rescue their current products by expanding into a new market.  Gap’s success has been primarily in brick-and-mortar stores whereas Amazon is almost entirely e-commerce.  They have more of a following and will expose Gap to a new segment of the e-commerce market.  This is not Gap’s first partnership with a major retailer.  Last year, Gap partnered with Walmart, the second largest e-commerce retailer, to sell their home goods and furniture collections.

 

Even though Gap has tried partnerships like this before with little to no success, no company is quite like Amazon.  Gap is in trouble and Amazon may be the kickstart they need.  The company’s traditionally well performing brands like Old Navy and Athleta have also suffered as of late.  The Gap brand chief Mark Breitbard issued a statement saying “We are excited to take this step with Amazon Fashion, to expand our product offereing and to deepen our connection with consumers through the Gap brand store,” which shows the goal of this strategy is to expand and increase revenue.  It will be interesting to see how this partnership will turn out compared to Gap’s past failures.  My question to Gap is “How many more failed partnerships can the company take before the damage becomes irreversible?” seeing as their stock cannot take too much more of a hit.

[marketing402blog]

Drizly’s Rebrand

Drizly began as an alcohol delivery service.  With the alcohol industry spiking in growth since the COVID-19 pandemic, companies like Drizly have seen growth.  Now, they are expanding from, “an on-demand alcohol delivery platform to an e-commerce resource for any occasion”.  This move is part of a brand refresh that encompasses all aspects of the business, from television advertising to naming the company’s bear mascot Molly.

(https://www.marketingdive.com/news/drizly-brand-identity-holiday-marketing-alcohol/635791/)

 

This new marketing campaign implemented by Drizly includes an updated logo, thirty and fifteen second television advertisements, an updated presence on social media, as well as adding new features to the existing app.  This campaign implements multiple aspects of product-market growth techniques including diversification and product expansion.  Diversification is implementing new products in new markets and product expansion is implementing new products into existing markets.  

 

Diversification is a good way to grow your business as you create new sources of revenue while also tapping into previously unexplored markets.  Drizly is introducing a new gift-giving focus into their platform while also expanding into more markets than solely the alcohol market.  This decision has a lot of upsides for Drizly.  With the projected growth of the food service delivery industry, expanding into this market could provide a substantial growth in revenue.  According to CB Insights, the food delivery market is valued at about $150 billion with over 100% projected growth by 2029 to over $300 billion.  This pairing with the new gift-giving focus of the company opens up a lot of doors for increased revenue.

 

Product expansion is another good way to grow your business.  Drizly is taking a new product and introducing it into a market they have already had success in.  This new product is a new feature of the company.  It is introducing a “now or later” option for ordering food and other products.  This allows customers to place an order and choose whether they would like it delivered as soon as possible or if they would like it scheduled for a certain time later on.  This move will bring them more success and create opportunity for more revenue growth within the food delivery market.  

 

The company has made several television advertising campaigns to promote the changes and the new direction of the company to help make customers aware.  According to a Drizly study, “84% of respondents said they enjoy receiving alcohol as a gift” as well as having an increased interest in drinking at home instead of going out which bodes well for Drizly as alcohol delivery is their bread and butter and they are refocusing their brand towards a gift giving focus.  The marketing strategy Drizly has begun to implement shows promise to increase the brand’s revenue, which is the goal of any marketing strategy.  One thing I wonder about is if they will still focus on their alcohol sales in their new brand identity, or if they will take a broader approach and focus their efforts on all aspects of the business.  For example, it is clear that they will be focusing on being identified as a gift-giving service, but is that limited to alcohol gifts or will they focus on all e-commerce gifts?

[marketing402blog]

Walmart's New Black Friday

Black Friday has become arguably the biggest day of year for the retail industry.  It is filled with deals that can make shoppers go crazy trying to get the best price on a certain item.  In recent years, Black Friday has turned into more than just Friday.  It started with stores offering deals starting on Thanksgiving Day, which turned into the entire week of Thanksgiving.  This year, it has exploded.

(https://www.retaildive.com/news/walmart-announces-early-black-friday-deals-online-in-store/634573/)

Walmart announced that they will have a whopping nearly three-week long “Black Friday Deals for Days” campaign spanning most of November (11/07-11/25) with another discount event set for the much newer “holiday”, Cyber Monday.  These events contain deals on everything from electronics to apparel.  Walmart+ members will also have early access to the deals, one of the subscription’s several perks. Here is a link to the official press release mentioned in the article that contains the schedule for the events as well as other specifics shoppers should know.

This strategy is very interesting.  Walmart is adapting to the times in more ways than one.  Not only are they adapting to the new normality of the Black Friday “season” as the article calls it, but they have also revamped their website to make it more user-friendly and they have implemented their “Walmart Creator platform” which allows influencers and content creator to earn a commission on products they share across their social media platforms. 

Creating a nearly three-week long event for Black Friday is a huge change from even just five years ago.  But it is a good one.  This allows shoppers to not feel cramped and confined to one day, so they are more likely to shop at some point during the event, perhaps multiple times.  Black Friday had become a somewhat dangerous event as people were going crazy for the incredible deals, but now with it stretched out over weeks, more customers will shop in peace and Walmart will have more sales.  Revamping their website is also a huge plus for Walmart.  Customers are all about having a smooth and easy experience while shopping.  Without an easy-to-use website, companies can lose out on countless sales.  Introducing their creator platform is also a big step in the right direction.  Social media is becoming the newest way of marketing your brand and with the amount of stock influencers’ and content creators’ opinions have on the general public's choice of where to shop, it is a smart move to pair with them and have your name attached to theirs.

Overall, I am a fan of Walmart’s marketing strategy heading into the holiday shopping season.  It shows great potential to increase sales and is consistent with the direction the retail industry is headed with the rise of social media and the focus on user experience.  However, I wonder how much of a sustainable competitive advantage Walmart can/will attain from this strategy.  Sure, all of these programs and campaigns are sustainable, but there are dozens and dozens of their competitors that are all doing the exact same things.  It will be interesting to see if Walmart gets the advantage over their competitors or if they will have to play catch up.