Fancy an Amazon Echo with that Thanksgiving turkey?
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Fancy an Amazon Echo with that Thanksgiving turkey?

As Thanksgiving approaches, Amazon has set up pop-up shops in hundreds of Whole Foods stores across America. These stores will be pushing Amazon devices to shoppers buying their Thanksgiving feasts, as Amazon uses its new brick-and-mortar presence to coax people onto their ecosystem.

The strategy is simple: knock a few bucks off the price of a turkey to get people into store, and get as many as possible buying an Amazon Echo. Once Alexa (the name given to Echo’s virtual personal assistant) is in your house, you’ve become a part of the Amazon ecosystem – and the company has demonstrated time and time again that it knows how to drive engagement in that ecosystem through the roof.

Amazon’s share price has gone up by 50% year to date

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SOURCE: Yahoo Finance

Suzanne Tager, a retail analyst at Bain & Co. explains: "They are making a huge investment to push all of their Echo devices and the Alexa platform in general. One of the most important pillars to growing brands has always been visibility and distribution, and they are trying to win the penetration race by getting more devices on the street."

Online spending for the holidays is forecast to grow by 14% to $1.7.4 billion this year – with Amazon predicted to pick up half of that growth. But the company’s plan to push Alexa into homes is aimed at longer-term growth. Alexa will be featured on banner ads on the Ecommerce giant’s online retail platform, and pop-up shops will appear not just in Whole Foods but a range of other places. It’s a typically bold strategy from Bezos’ company designed to maintain and further its lead in the smart speaker market. After all, Apple and Google are dangerous competitors.

Nonetheless, at the moment, Amazon is outpacing its rivals handily. It commands a 70% share of the smart speaker market, and, through Alexa and Prime, offers a host of benefits to users. Victoria Petrock, analyst at EMarketer Inc., says: "Amazon has really flooded the market with these low-cost devices to get consumers used to interacting with them. Amazon wants to lock up all the different ways to shop. They’ve got online. They’ve got in-store. And now they want voice."

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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