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Amazon's Next Big Move Could Be Mass Customization


 
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 2 months ago '15        #1
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Amazon's Next Big Move Could Be Mass Customization
 

 
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Amazon (AMZN - Get Report) has gone to great lengths to re-invent the marketplace for consumer goods, from broadening the selection to slashing prices to drastically cutting delivery times.

One area where Amazon hasn't done much, but where it could do so in a big way, are the products themselves, and how they take shape in the first place.

Amazon has received patents on a number of aspects of product customization that suggest it could become a marketplace for more than off-the-shelf products. It could either offer custom goods or become a facilitator for a total reinvention of how goods are designed.

The benefits to the company could be enormous: Control of some exclusive kinds of custom goods, but also a much deeper understanding of how consumer preferences consciously or unconsciously shape product design. That last point would make Amazon an invaluable hive of design choice, which would in turn boost the company's overall economic value.

Consider the patents. One from 2017, previously reported in the media, specifies an entire a*sembly line to cut and stitch apparel to users' specification.

A patent granted this past September describes an "apparatus for on-demand customization of products" across a broad swath of items, from vehicle parts to toys to consumer electronics, to apparel, or "in general any real-world, physical product or item that may be enhanced, extended, customized, or combined with other products." These things, says Amazon, could be built using 3-D manufacturing, or other methods.

Amazon's interest is not just how such custom things are built, but how they're specified by a manufacturer and a consumer. A patent granted in August describes how a manufacturer can populate a catalog with various options for a product and also details a corresponding shopping Web page -- very much like an Amazon product page -- where a person can select products to be made for them.

There are several reasons why Amazon might want to move in the direction of facilitating more custom goods.

The least important reason is the immediate financial payoff. It's possible that by selling custom goods in its own "first-party" items, including its budding apparel business, Amazon could get some kind of premium pricing for unique items. But that's not really Amazon's style, with its relentless focus on lower prices.

Amazon could certainly offer tools via cloud computing to enable on-demand production. For example, it could help coordinate the movement of materials and designs from product designers to a third-party 3-D printing house. But the revenue from doing so wouldn't be likely to move the needle, as they say, compared to its already enormous cloud computing operation, Amazon Web Services.

A second, more important, reason, is that customers might like custom goods, and Amazon certainly seems to like what makes customers keep coming back.

The third, most important reason to offer customization is that mass-market goods that are identical really don't involve consumer preference very much. Goods are conceived by product designers and contract manufacturers at a very early stage in the process of their development. What is foisted on the public is basically the best guess of all those parties, months or years earlier, at the beginning of the process.

In contrast, by collecting user orders for preferences on an ongoing basis, Amazon could amass a real-time dataset of user choice and preferences. Think of it like the Amazon recommendations system -- "People who bought this also bought X." But here, choices affect the product itself.

Amazon would then be not just an incredibly powerful gatekeeper of retail but also an incredibly powerful gatekeeper of fundamental design and manufacturing of physical goods.

A big hurdle to all this is the economics of making it happen. Selling customized goods might go against the economies of scale the company has cultivated. As Mark Mahaney, who covers Amazon for RBC Capital Markets and rates it a Buy, points out, "The challenge is really how you scale that," meaning customization of any sort.

Amazon could try the Stitch Fix (SFIX) business model, matching standard items to user preferences. But Mahaney says he's not sure "Amazon wants to go too far down the customization continuum," all the way to shaping widgets to every individual users' preference.

However, as a facilitator, not a maker of things, Amazon could avoid the cost of actual customization while skimming the valuable knowledge. Consider the power of having millions of Amazon customers dictating product features on an ongoing basis. It's certainly a tantalizing direction beyond selling and moving the same old junk at lower and lower prices.
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12 comments for "Amazon's Next Big Move Could Be Mass Customization"

 2 months ago '05        #2
_Player2 417 heat pts417
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Who eventually buys who out of Google vs Amazon

Or do they stay separate entities forever
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 2 months ago '06        #3
Hit Em' Up 63 heat pts63
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 _Player2 said
Who eventually buys who out of Google vs Amazon

Or do they stay separate entities forever
Whichever one falls first
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 2 months ago '17        #4
DaddyHipo 
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This is actually pretty cool , because then you can customize your clothing wardrobe. Instead of buying work dress pants at the store, and then having drive to get them hemmed and tailored at another location, you can just just provide the measurements of a perfect pant fitting that you might already have.

Or also make your clothes more fitting on T-shirtís/V necks. Sometimes going bigger in a size makes the arms hella bulky or too long in the torso area. So customizing would be great.

You could make Joggers even more fit if youíre into that for weight lifting. I currently get my jeans tailored cuz itís really hard to find a good fit especially being tall, so getting that slim fit looks clean. Just my honest opinion.

Side track from amazon prime - but did anyone else notice they are not delivering on the weekends anymore?? They delivery on business days only so that kind of defeats the purpose of 2-day delivery. I ordered some stuff last Friday and itís gonna show up on Wednesday. WTF.
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 2 months ago '16        #5
The Waraba 22 heat pts22
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Its the logical move, if one entity in this case Amazon, can have the ressources and means to have business proposal to potential clients that goes in the extent of
"What do you exactly need or want? I can manufacture it for you and ship it to you"

That's really materializing the concept offer and demand, or may I say demand and offer.

Amazon transforming into a Shenron like company


[pic - click to view]

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 2 months ago '04        #6
sheva07 
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Amazon have already began the transition into this customization generation. Merch by Amazon is a growing initiative for them and they continue to explore other consumer goods.

It's only a matter of time until they eliminate the middle men (as they always do), do everything in-house and continue to grow toward being deemed the biggest retailer.

Walmart's revenue just reached $500b, Amazon's just $177b but continues to grow at 20-30% yearly whereas Walmart's growth is only about 1-3% per year.
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 2 months ago '04        #7
Grisly 38 heat pts38
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interesting

future is getting real
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 2 months ago '10        #8
jhust4ever 33 heat pts33
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Google forever

 2 months ago '19        #9
Gold Face 1 heat pts
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Rip mom and pop stores

Unemployment line just got longer

Save your money the robots are coming

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 2 months ago '14        #10
B Murda 10 heat pts10
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 DaddyHipo said
This is actually pretty cool , because then you can customize your clothing wardrobe. Instead of buying work dress pants at the store, and then having drive to get them hemmed and tailored at another location, you can just just provide the measurements of a perfect pant fitting that you might already have.

Or also make your clothes more fitting on T-shirtís/V necks. Sometimes going bigger in a size makes the arms hella bulky or too long in the torso area. So customizing would be great.

You could make Joggers even more fit if youíre into that for weight lifting. I currently get my jeans tailored cuz itís really hard to find a good fit especially being tall, so getting that slim fit looks clean. Just my honest opinion.

Side track from amazon prime - but did anyone else notice they are not delivering on the weekends anymore?? They delivery on business days only so that kind of defeats the purpose of 2-day delivery. I ordered some stuff last Friday and itís gonna show up on Wednesday. WTF.
I got a package last saturday

Was it sold/shipped by Amazon? That might have something to do with it cuz I ordered something yesterday from a different seller but was still marked as "prime" but it says its not expected to come until monday.
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 2 months ago '17        #11
DaddyHipo 
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 B Murda said
I got a package last saturday

Was it sold/shipped by Amazon? That might have something to do with it cuz I ordered something yesterday from a different seller but was still marked as "prime" but it says its not expected to come until monday.
I think thatís what it is. Theyíre indicating 2 day prime but itís coming from the vendors directly and not the prime warehouses?

 2 months ago '15        #12
jimpurple 5 heat pts
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First books , then everything else, now ya mans T-shirt "brand is cancelled
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 2 months ago '14        #13
B Murda 10 heat pts10
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 DaddyHipo said
I think thatís what it is. Theyíre indicating 2 day prime but itís coming from the vendors directly and not the prime warehouses?
Thats what im guessing. Not sure why they still show up as prime if they cant guarantee 2 days tho.

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