business news in context, analysis with attitude

The Wall Street Journal reports this morning that "Express Inc., best known as a presence in American malls, has been testing a new strategy: selling other brands’ merchandise online.

"Visitors to the retailer’s website can shop for items from dozens of other brands in addition to Express apparel. That approach is an increasingly popular one as retailers like Express, Urban Outfitters Inc. and J.Crew Group Inc. look to benefit from listing products that are sold and shipped by other sellers. The goal is to increase the chances shoppers can find what they need on the company’s site, boosting web traffic - and revenue - without veering too far off brand."

It is, the Journal notes, a strategy first employed at scale by Amazon, which has gotten to the point where more than half of its sales are generated by third-party sellers in its online marketplace, and more recently adopted by Walmart and Target.

The approach, the story says has "created a whole new calculus for businesses. Host retailers need to determine whether they dilute their own brands by featuring others. Likewise, sellers need to figure out whether being on these bazaars helps boost their brand - not to mention their profit, once they pay for the lead. And for shoppers, marketplaces can be confusing if they aren’t sure who they are ordering from or what to do if problems arise."

KC's View:

I'm not sure about the wisdom of this approach - it may generate some sort-term revenue, but the dilution of brand equity could be a real problem.

After all, Amazon was positioned from the beginning as an "everything store," and Walmart has a similarly expansive view of its role.  More targeted, niche retailers ought to have more focus, not less … and this strikes me as a short-term solution to a long-term viability issue.