No wonder Amazon.com Inc. (NASDAQ:AMZND) is tearing up online retail, threatening to replace FedEx Corp. (NYSE:FDXA) and United Parcel Service Inc. (NYSE:UPSC) and commanding an ever growing share of holiday sales on a worldwide basis.
The company is, after all the world’s most valuable retail brand, according to the 2016/17 BrandZ “Most Valuable Global Retail Brands” report, produced by Kanta and Millward Brown.
Comfortably Ahead Of Rivals
With a value of $98.98 billion, Amazon sits comfortably ahead of second place Alibaba Group Holding Ltd. (NYSE:BABAD) with a brand value of $49.29 billion. Amazon showed a 59% positive change in brand value compared to a year ago while BABA was down 26% over the same period.
Others in the top 5 included The Home Depot Inc. (NYSE:HDB) with a 32% jump in brand value, ending at $36.44 billion, Wal-Mart Stores Inc. (NYSE:WMTC) at $27.27 billion, down 23% from a year ago and nonprofit, IKEA up 6% at $18.08 billion.
Profits Not The Be-All End-All
Although Amazon reported lower than expected profits in Q3 2016, the company outshined the competition with regard to its drive to expand worldwide and dive into new product categories in which to trade. According to the report, “Amazon’s scale and its strong reputation for customer service and fulfilment make it a serious player in all aspects of retailing, including fresh grocery."
The report further added that, "While it is known as an e-commerce site, at its heart Amazon is a technology business. It is now disrupting the entertainment and IT sectors in the way it disrupted physical retail stores a decade ago."
The BrandZ report concluded, "As Amazon moves into business services, private-label grocery, electronics, FMCGs and the Internet of Things, it is difficult to imagine a business sector in which Amazon could not find a place."
Calendar Confluence Helps Amazon
Thanks to the fact both Christmas and the beginning of Hanukkah fall on a weekend, brick mortar stores had to plan for their last big shopping weekend a full week in advance. This means last-minute shoppers may be more likely to go online this week, especially if they are Amazon Prime members and can count on free 2-day shipping.
Amazon plans to take advantage of its unique situation by offering a service called, “Procrastinator’s Delight,” which offers 1 or 2 hour delivery via the company’s Prime Now service until midnight Dec. 24.
FedEx Plays Hardball
Adding to Amazon’s selling advantage and resulting ‘most valuable brand’ designation, FedEx said Tuesday it was raising prices for some customers and dropping some retailers that would not agree to pay up.
Explaining the reasoning behind the pressure on customers to pay higher fees, FedEx CEO Fred Smith said, “You can get a lot of volume that is completely non-compensatory and just not make any money.”
FedEx executives said the majority of the company’s $60 billion in annual revenue isn’t from delivering packages for Amazon or other e-commerce retailers. It’s also worth noting that Amazon has been developing its own shipping solution designed to compete directly with UPS and FedEx.