The main draw online shoppers cite is two-day shipping. Though most retailers now offer this perk, people continue to associate it with Amazon, which all but willed this cultural change into existence. Bezos had originally appalled Wall Street when he announced what promised to be a money-losing proposition of unlimited two-day shipping to get people to pay into a yearly "membership."
Those risks led GWW stock to essentially stall out starting in 2013. And they came home to roost last year. Disappointing earnings — particularly, falling margins — seemed to signal that pressure from Amazon was a real problem. By September, GWW traded at its lowest levels in almost six years. Grainger seemed destined to be another dominant business undone by a nimbler online competitor.
On the surface, the move into the private label business (in which goods are sold under the retailer’s name rather than that of an outside vendor) appears to be a deft move by Amazon. Analysts predict that nearly half of all online shopping in the United States will be conducted on Amazon’s platform in the next couple of years. That creates a massive opportunity for Amazon to more than double revenue from its in-house brands to $25 billion in the next four years, according to analysts at SunTrust Robinson Humphrey. That’s the equivalent of all of Macy’s revenue last year.
Estimates on Prime memberships have been the subject of much speculation, especially since the numbers also serve as a metric for Amazon’s whopping revenue stream. The math can be difficult to parse: It’s not quite as simple as multiplying the cost of a $119 annual membership by 100 million. Some members — students, for example — have options to pay less, while others pay more for a monthly subscription.
In 2012, Amazon announced the launch of Vine.com for buying green products, including groceries, household items, and apparel. It is part of Quidsi, the company that Amazon bought in 2010 that also runs the sites Diapers.com (baby), Wag.com (pets), and YoYo.com (toys). Amazon also owns other e-commerce sites like Shopbop.com, Woot.com, and Zappos.com.